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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                  _____________

                                    FORM 10-K

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

  For the Fiscal Year Ended December 31, 2002 - Commission File Number 1-11823
                                  _____________

                              PAB BANKSHARES, INC.
                             (A Georgia Corporation)
                 IRS Employer Identification Number: 58-1473302

                3250 NORTH VALDOSTA ROAD, VALDOSTA, GEORGIA 31602
                        TELEPHONE NUMBER: (229) 241-2775

           SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

        TITLE OF EACH CLASS           NAME OF EACH EXCHANGE ON WHICH REGISTERED

    Common Stock, no par value                American Stock Exchange
    --------------------------                -----------------------

       SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:  None.

As of February 28, 2003, the registrant had 9,430,413 shares of common stock
outstanding.  The aggregate market value of common stock held by non-affiliates
on February 28, 2003 was approximately $65.05 million.

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 [ ]

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 the 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. [X]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act.)
Yes [ ] No [X]

As of June 30, 2002, the registrant had 9,430,413 shares of common stock
outstanding. The aggregate market value of common stock held by non-affiliates
on June 30, 2002 was approximately $60.68 million.

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive Proxy Statement for the 2003 Annual
Meeting of Shareholders to be filed with the Securities and Exchange Commission
within 120 days of the registrant's fiscal year end is incorporated by reference
in answer to Part III of this Form 10-K.
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<PAGE>
                                TABLE OF CONTENTS
                                -----------------

                                                                           Page
                                                                           ----
PART I
Cautionary Notice Regarding Forward-Looking Statements. . . . . . . . . .     3
     1.   BUSINESS
               General. . . . . . . . . . . . . . . . . . . . . . . . . .     3
               Supervision and Regulation . . . . . . . . . . . . . . . .     5
     2.   PROPERTIES. . . . . . . . . . . . . . . . . . . . . . . . . . .    10
     3.   LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . .    10
     4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . .    10

PART II
     5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
               STOCKHOLDER MATTERS. . . . . . . . . . . . . . . . . . . .    11
     6.   SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . .    12
     7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
               AND RESULTS OF OPERATIONS
               Statistical Disclosures. . . . . . . . . . . . . . . . . .    13
               Liquidity and Capital Resources. . . . . . . . . . . . . .    20
               Results of Operations. . . . . . . . . . . . . . . . . . .    21
     7A.  QUANTATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. . . .    25
     8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
               Quarterly Financial Summary for 2002 and 2001. . . . . . .    27
               Management's Responsibility For Financial Reporting. . . .    28
               Reports of Independent Public Accountants. . . . . . . . .    29
               Consolidated Balance Sheets at December 31, 2002 and 2001.    31
               Consolidated Statements of Income for the Three Years
                 Ended December 31, 2002. . . . . . . . . . . . . . . . .    32
               Consolidated Statements of Comprehensive Income (Loss)
                 for the Three Years Ended December 31, 2002. . . . . . .    33
               Consolidated Statements of Stockholders' Equity for
                 the Three Years Ended December 31, 2002. . . . . . . . .    34
               Consolidated Statements of Cash Flows for the Three Years
                 Ended December 31, 2002. . . . . . . . . . . . . . . . .    35
               Notes to Consolidated Financial Statements . . . . . . . .    37
     9.     CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
               AND FINANCIAL DISCLOSURES. . . . . . . . . . . . . . . . .    59

PART III
     10.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. . . . . .    59
     11.    EXECUTIVE COMPENSATION. . . . . . . . . . . . . . . . . . . .    59
     12.    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
              MANAGEMENT. . . . . . . . . . . . . . . . . . . . . . . . .    59
     13.    CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. . . . . . . .    59
     14.    CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . .    59

PART IV
     15.    EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
             ON FORM 8-K. . . . . . . . . . . . . . . . . . . . . . . . .    60

SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    62

CERTIFICATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    63

EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    65


                                        2
<PAGE>
PART I

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", as well as oral statements made by PAB
Bankshares, Inc. ("PAB", and also referred to in this Report as either "the
Company", "we", "us", or "our") or the officers, directors, or employees of PAB
may constitute "forward-looking statements" within the meaning of Section 27A of
the Securities Act of 1933, as amended (the "Securities Act").  Forward-looking
statements include statements about the competitiveness of the banking industry,
potential regulatory obligations, our charter consolidation plan, our entrance
and expansion into higher growth markets, our other business strategies and
other statements that are not historical facts.  When we use words like
"anticipate", "believe", "intend", "plan", "expect", "estimate", "could",
"should", "will", and similar expressions, you should consider them as
identifying forward-looking statements.  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, including our charter
consolidations, may be greater than expected; (6) expected cost savings
associated with our charter consolidations may not be fully realized or realized
within the expected time frame; (7) deposit attrition, customer loss or revenue
loss following our charter consolidations may be greater than expected; (8)
competitors may have greater financial resources and develop products that
enable such competitors to compete more successfully than us; (9) adverse
changes may occur in the bond and equity markets; (10) war or terrorist
activities may cause further deterioration in the economy or cause instability
in credit markets; and (11) restrictions or conditions imposed by our regulators
on our operations may make it more difficult for us to achieve our goals.  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.


ITEM 1.  BUSINESS

GENERAL

PAB Bankshares, Inc. is a bank holding company headquartered in Valdosta,
Georgia.  PAB was organized and incorporated in 1982 under the laws of the State
of Georgia as the holding company for The Park Avenue Bank (the "Bank").  The
Bank was founded in Valdosta, Georgia in 1956, and became a state-chartered
commercial bank in 1971.  In 2001, the Bank became a state member bank of the
Federal Reserve System.  Since our incorporation in 1982, we have acquired five
other Georgia financial institutions and one Florida financial institution and
merged those institutions into the Bank.  Currently, the Bank operates 18
offices in Georgia and Florida.  Based on the FDIC/OTS Summary of Deposits
report as of June 30, 2002, the Bank is the 10th largest financial institution
headquartered in Georgia in terms of total in-state deposits.  Further
information on each of our markets is provided below under "Markets and
Competition".

Through our banking offices, we provide a broad array of products and services
to commercial and consumer customers in the communities we serve.  Our product
line includes, among other things, loans to small- and medium-sized businesses,
residential and commercial construction and development loans, commercial real
estate loans, farmland and agricultural production loans, residential mortgage
loans, home equity loans, consumer loans, and a variety of commercial and
consumer demand, savings and time deposit products.  We also offer Internet
banking, on-line cash management, electronic bill payment services, safe deposit
box rentals, telephone banking, credit and debit card services, and the
availability of a network of ATMs to our customers.  In addition, with two
licensed financial advisors on staff, we are able to offer a complete line of
financial and investment products and services to our customers.

More information on the Company is available on our Internet website at
www.pabbankshares.com and on the Bank at www.parkavebank.com.  We are not
---------------------                    -------------------
incorporating by reference into this Report the information contained on our
websites and, therefore, the content of our websites is not a part of this
Report.


                                        3
<PAGE>
Markets and Competition
The financial services industry is highly competitive.  In our markets, we face
competitive pressures from both larger regional banks and smaller community
banks and thrifts in attracting and retaining commercial and consumer accounts.
The competitive environment is amplified in some of our smaller markets as there
are more financial service providers competing for fewer customers.  The
principal factors in competing for such accounts include interest rates, fee
structures, the range of products and services offered, convenience of office
and ATM locations, and flexible office hours.  Other competition for such
accounts comes from credit unions, retail brokerage firms, mortgage companies,
and consumer finance offices.  Other investment alternatives such as stocks and
mutual funds made readily accessible by the Internet have also had an effect on
our ability to grow deposits in our markets.

Our investment in "human capital" is one of our greatest assets.  When it comes
to competing with the larger financial institutions in our markets, we believe
that our people make the difference.  Our experience and strong community
relationships in our local markets allow us to deliver a higher level of
customer service to the small- to mid-sized commercial and individual consumer
accounts.  In addition, over the past three years, we have upgraded and invested
heavily in systems and support to provide a product line that is comparable to
the larger regional banks and gives us a competitive edge over many of the
smaller financial institutions in our local markets.

During the fourth quarter of 2000, we adopted a strategy to enter into higher
growth metropolitan markets that would complement our stable position in our
existing South Georgia markets.  This expansion began with the opening of an
office in McDonough, Henry County, Georgia in October 2000.  At the end of 2000,
we acquired a bank with two offices in Ocala, Marion County, Florida.  In
October 2001, we opened an office in Oakwood, Hall County, Georgia.  Both the
Henry County and Hall County offices initially began as loan production offices
and were subsequently developed into full service branches.  In October 2002, we
opened a loan production office in Duluth, Gwinnett County, Georgia.  We do not
have any plans to convert the Gwinnett County office to a full service branch at
this time.  Our offices in Henry, Hall, and Gwinnett counties are also referred
to collectively as our "Metro Atlanta" offices in this Report.

The table below provides summary demographic data on each of our markets.

<TABLE>
<CAPTION>
     MARKET                                        MARKET SHARE(1)
     ------                      TOTAL DEPOSITS  ------------------   # OF                       PCT(%)
     COUNTIES             STATE   IN MARKET(1)   PCT(%)     RANK     OFFICES  POPULATION (2)  CHANGE (3)
     --------             -----  --------------  ------  ----------  -------  --------------  ----------
<S>                       <C>    <C>             <C>     <C>         <C>      <C>             <C>
     Lowndes/Cook         GA     $    1,317,267    21.4   1st of 15        5         108,105         0.2
     Decatur/Grady        GA            491,153    24.9    1st of 9        4          51,889           *
     Bulloch              GA            573,143    12.0    4th of 7        2          56,918         1.7
     Appling/Jeff Davis   GA            334,864    26.0    1st of 7        2          30,234         0.4
     Henry                GA          1,082,577     2.5  11th of 16        1         132,581        11.1
     Marion               FL          2,928,964     1.6  14th of 20        2         267,889         3.5
     Hall (4)             GA          1,897,725       -           -        1         145,664         4.6
     Gwinnett (5)         GA          6,364,200       -           -        1         621,528         5.6

<FN>
=========================================================================================================
     1    Dollars in thousands. Based on FDIC/OTS Summary of Deposits data as of
          June 30, 2002. Market share data only includes FDIC insured depository
          institutions. Credit unions, retail brokerage firms, mortgage
          companies, and consumer finance offices are not included.

     2    County populations are based on 2001 estimates provided by the U.S.
          Census Bureau.

     3    Percentage change in county populations from 2000 to 2001 is based on
          U.S. Census Bureau data. * = percentage change was less than 0.1%.

     4    We did not open our branch and begin accepting deposits from this
          location until July 2002. Prior to that date, our presence was limited
          to a loan production office in this market.

     5    We opened a loan production office in this market in October 2002.
</TABLE>


                                        4
<PAGE>
Nonbanking Services and Operations
The Bank provides agency transactional services for customer investments as
permitted under the regulations of the Federal Reserve.  We are able to provide
our customers with securities brokerage services, including securities execution
services on national securities exchanges.  Our brokerage activities are
restricted to buying and selling securities solely as an agent for the account
of our customers, and do not include underwriting or dealing in securities.  In
addition, we are permitted to act as an agent for the private placement of
securities in accordance with federal securities laws.  We also provide
investment advisory services to our customers, such as furnishing general
economic information and investment advice, and providing instructional
materials for customers on individual financial management matters.

Although we provide products and services under two distinct regulatory-defined
operations (i.e., banking and nonbanking), our nonbanking operations do not meet
the minimum materiality requirements for separate segment reporting under the
provisions of Statement of Financial Accounting Standards ("SFAS") No. 131.

Employees
As of February 28, 2003, we had a total of 298 full-time and 27 part-time
employees on our payroll.


SUPERVISION AND REGULATION

The banking industry is heavily regulated at both the federal and state levels.
Legislation and regulations authorized by legislation influence, among other
things:

     -    How, when and where we may expand geographically;
     -    Into what product or service market we may enter;
     -    How we must manage our assets; and
     -    Under what circumstances money may or must flow between and among the
          parent bank holding company and the subsidiary bank.

Set forth below is an explanation of the major pieces of legislation affecting
our industry and how that legislation affects our actions.

General
PAB is a bank holding company registered with the Board of Governors of the
Federal Reserve System (the "Federal Reserve") and the Georgia Department of
Banking and Finance (the "Georgia Department") under the Bank Holding Company
Act of 1956, as amended (the "BHC Act") and the Financial Institutions Code of
Georgia (the "FICG"), respectively.

The Bank is a member of the Federal Deposit Insurance Corporation ("FDIC"), and
as such, our deposits are insured by the FDIC to the maximum extent provided by
law.  The Bank is also a state member bank of the Federal Reserve and it is
subject to regulation, supervision, and examination by the Federal Reserve and
the Georgia Department.  These regulatory agencies regularly examine our
operations and are given authority to approve or disapprove mergers,
consolidations, the establishment of branches, and similar corporate actions.
The agencies also have the power to prevent the continuance or development of
unsafe or unsound banking practices or other violations of law.

On May 20, 2002, the Company's Board of Directors adopted a Resolution requested
by the Federal Reserve, which, among other things, restricts us from redeeming
our capital stock, paying dividends, modifying existing debt agreements, or
incurring additional debt without the prior approval of our banking regulators.
The Resolution is the result of an examination that found the Bank to be in less
than satisfactory condition due primarily to serious weaknesses identified in
the asset quality of the Bank's loan portfolio.  This Resolution will remain in
effect until removed by the regulators.

Acquisitions
The BHC Act requires every bank holding company to obtain the prior approval of
the Federal Reserve before:  (i) it may acquire direct or indirect ownership or
control of any voting shares of any bank if, after such acquisition, the bank
holding company will directly or indirectly own or control more than 5% of the
voting shares of the bank; (ii) it or any of its subsidiaries, other than a
bank, may acquire all or substantially all of the assets of any bank; or (iii)
it may merge or consolidate with any other bank holding company.


                                        5
<PAGE>
The BHC Act further provides that the Federal Reserve may not approve any
transaction that would result in a monopoly or would be in furtherance of any
combination or conspiracy to monopolize or attempt to monopolize the business of
banking in any section of the United States, or the effect of which may be
substantially to lessen competition or to tend to create a monopoly in any
section of the country, or that in any other manner would be in restraint of
trade, unless the anticompetitive effects of the proposed transaction are
clearly outweighed by the public interest in meeting the convenience and needs
of the communities to be served.  The Federal Reserve is also required to
consider the financial and managerial resources and future prospects of the bank
holding companies and banks involved and the convenience and needs of the
communities to be served.  Consideration of financial resources generally
focuses on capital adequacy, and consideration of convenience and needs issues
generally focuses on the parties' performance under the Community Reinvestment
Act of 1977.

Under the Riegle-Neal Interstate Banking and Branching Efficiency Act, the
restrictions on interstate acquisitions of banks by bank holding companies were
repealed.  As a result, PAB, and any other bank holding company located in
Georgia, is able to acquire a bank located in any other state, and a bank
holding company located outside of Georgia can acquire any Georgia-based bank,
in either case subject to certain deposit percentage and other restrictions.
The legislation provides that unless an individual state has elected to prohibit
out-of-state banks from operating interstate branches within its territory,
adequately capitalized and managed bank holding companies are able to
consolidate their multistate banking operations into a single bank subsidiary
and to branch interstate through acquisitions.  De novo branching by an
out-of-state bank is permitted only if it is expressly permitted by the laws of
the host state.  Georgia does not permit de novo branching by an out-of-state
bank.  Therefore, the only method by which an out-of-state bank or bank holding
company may enter Georgia is through an acquisition.  Georgia has adopted an
interstate banking statute that removes the existing restrictions on the ability
of banks to branch interstate through mergers, consolidations and acquisitions.
However, Georgia law prohibits a bank holding company from acquiring control of
a financial institution until the target financial institution has been
incorporated three years.

Activities
The BHC Act has generally prohibited a bank holding company from engaging in
activities other than banking or managing or controlling banks or other
permissible subsidiaries and from acquiring or retaining direct or indirect
control of any company engaged in any activities other than those determined by
the Federal Reserve to be closely related to banking or managing or controlling
banks as to be a proper incident thereto.  Provisions of the Gramm-Leach-Bliley
Act (the "GLB Act"), discussed below, have expanded the permissible activities
of a bank holding company that qualifies as a financial holding company.  In
determining whether a particular activity is permissible, the Federal Reserve
must consider whether the performance of such an activity can be reasonably
expected to produce benefits to the public, such as a greater convenience,
increased competition, or gains in efficiency, that outweigh possible adverse
effects such as undue concentration of resources, decreased or unfair
competition, conflicts of interest, or unsound banking practices.

Gramm-Leach-Bliley Act
The GLB Act implemented major changes to the statutory framework for providing
banking and other financial services in the United States.  The GLB Act, among
other things, eliminated many of the restrictions on affiliations among banks
and securities firms, insurance firms, and other financial service providers.  A
bank holding company that qualifies as a financial holding company will be
permitted to engage in activities that are financial in nature or incidental or
complimentary to a financial activity.  The GLB Act specifies certain activities
that are deemed to be financial in nature, including underwriting and selling
insurance, providing financial and investment advisory services, underwriting,
dealing in, or making a market in securities, limited merchant banking
activities, and any activity currently permitted for bank holding companies
under Section 4(c)(8) of the BHC Act.

To become eligible for these expanded activities, a bank holding company must
qualify as a financial holding company.  To qualify as a financial holding
company, each insured depository institution controlled by the bank holding
company must be well-capitalized, well-managed, and have at least a satisfactory
rating under the Community Reinvestment Act.  In addition, the bank holding
company must file a declaration with the Federal Reserve of its intention to
become a financial holding company.

The GLB Act designates the Federal Reserve as the overall umbrella supervisor of
the new financial services holding companies.  The GLB Act adopts a system of
functional regulation where the primary regulator is determined by the nature of
activity rather than the type of institution.  Under this principle, securities
activities are regulated by the Securities and Exchange Commission (the "SEC")
and other securities regulators, insurance activities by the state insurance
authorities, and banking activities by the appropriate banking regulator.  As a
result, to the extent that we engage in non-banking activities permitted under
the GLB Act, we will be subject to the regulatory authority of the SEC or state
insurance authority, as applicable.


                                        6
<PAGE>
Payment of Dividends
PAB is a legal entity separate and distinct from its subsidiaries.  Its
principal source of cash flow is dividends from its subsidiary bank.  There are
statutory and regulatory limitations on the payment of dividends by the
subsidiary bank to PAB, as well as by PAB to its stockholders.

If, in the opinion of the federal banking agencies, a depository institution
under its jurisdiction is engaged in or is about to engage in an unsafe or
unsound practice (which, depending on the financial condition of the depository
institution, could include the payment of dividends), such authority may
require, after notice and hearing, that such institution cease and desist from
such practice.  The federal banking agencies have indicated that paying
dividends that deplete a depository institution's capital base to an inadequate
level would be an unsafe and unsound banking practice.  Under the Federal
Deposit Insurance Corporation Improvement Act of 1991 ("FDICIA"), a depository
institution may not pay any dividend if payment would cause it to become
undercapitalized or if it already is undercapitalized.  See "Prompt Corrective
Action".  Moreover, the federal agencies have issued policy statements that
provide that bank holding companies and insured banks should generally pay
dividends only out of current operating earnings.

Pursuant to a Resolution entered into with our federal and state regulatory
agencies on May 20, 2002, neither the Bank nor PAB can declare a dividend
without obtaining prior governmental approvals.  This Resolution will remain in
effect until removed by the regulators.  In March 2003, we requested and
received approval from the Federal Reserve for the payment of a First Quarter
2003 dividend in the amount of $.03 per share to stockholders of record on March
31, 2003.

Capital Adequacy
We are required to comply with the capital adequacy standards established by the
federal banking agencies.  There are two basic measures of capital adequacy for
bank holding companies that have been promulgated by the Federal Reserve: a
risk-based measure and a leverage measure.  All applicable capital standards
must be satisfied for a bank holding company to be considered in compliance.

The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profiles among banks and bank
holding companies, to account for off-balance-sheet exposure, and to minimize
disincentives for holding liquid assets.  Assets and off-balance-sheet items are
assigned to broad risk categories, each with appropriate weights.  The resulting
capital ratios represent capital as a percentage of total risk-weighted assets
and off-balance-sheet items.

The minimum guideline for the ratio of Total Capital to risk-weighted assets
(including certain off-balance-sheet items, such as standby letters of credit)
is 8.0%.  Total Capital consists of Tier 1 Capital, which is comprised of common
stock, undivided profits, minority interests in the equity accounts of
consolidated subsidiaries and noncumulative perpetual preferred stock, less
goodwill and certain other intangible assets, and Tier 2 Capital, which consists
of subordinated debt, other preferred stock, and a limited amount of loan loss
reserves.  At December 31, 2002, our consolidated Total Capital Ratio and our
Tier 1 Capital Ratio were 14.0% and 12.7%, respectively.

In addition, the Federal Reserve has established minimum leverage ratio
guidelines for bank holding companies.  These guidelines provide for a minimum
ratio (the "Leverage Ratio") of Tier 1 Capital to average assets, less goodwill
and certain other intangible assets, of 3.0% for bank holding companies that
meet certain specified criteria, including those having the highest regulatory
rating.  All other bank holding companies generally are required to maintain a
Leverage Ratio of at least 3.0%, plus an additional cushion of 100 to 200 basis
points.  Our Leverage Ratio at December 31, 2002 was 10.0%.  The guidelines also
provide that bank holding companies experiencing internal growth or making
acquisitions will be expected to maintain strong capital positions substantially
above the minimum supervisory levels without significant reliance on intangible
assets.  Furthermore, the Federal Reserve has indicated that it will consider a
"tangible Tier 1 Capital Leverage Ratio" (deducting all intangibles) and other
indicators of capital strength in evaluating proposals for expansion or new
activities.

The Bank is subject to risk-based and leverage capital requirements adopted by
its federal banking regulators, which are substantially similar to those adopted
by the Federal Reserve for bank holding companies.  Pursuant to an agreement
entered into with our federal and state regulatory agencies on May 20, 2002, the
Bank is required to maintain a minimum Tier 1 Capital Leverage Ratio of 7.5% at
all times.  The Bank was in compliance with all applicable minimum capital
requirements as of December 31, 2002.


                                        7
<PAGE>
Failure to meet capital guidelines could subject a bank or bank holding company
to a variety of enforcement remedies, including issuance of a capital directive,
the termination of deposit insurance by the FDIC, a prohibition on the taking of
brokered deposits, and certain other restrictions on its business.  As described
below, substantial additional restrictions can be imposed upon FDIC-insured
depository institutions that fail to meet applicable capital requirements.  See
"Prompt Corrective Action".

The federal bank agencies continue to indicate their desire to raise capital
requirements applicable to banking organizations beyond their current levels.
In this regard, the Federal Reserve and the FDIC have, pursuant to FDICIA,
recently adopted final regulations requiring regulators to consider interest
rate risk (when the interest rate sensitivity of an institution's assets does
not match the sensitivity of its liabilities or its off-balance-sheet position)
in the evaluation of a bank's capital adequacy.  The bank regulatory agencies
have concurrently proposed a methodology for evaluating interest rate risk that
would require banks with excessive interest rate risk exposure to hold
additional amounts of capital against such exposures.

Support of Subsidiary Institutions
Under Federal Reserve policy, we are expected to act as a source of financial
strength for, and to commit resources to support, the Bank.  This support may be
required at times when, absent such Federal Reserve policy, we may not be
inclined to provide such support.  In addition, any capital loans by a bank
holding company to any of its banking subsidiaries are subordinate in right of
payment to deposits and to certain other indebtedness of such subsidiary banks.
In the event of a bank holding company's bankruptcy, any commitment by a bank
holding company to a federal bank regulatory agency to maintain the capital of a
banking subsidiary will be assumed by the bankruptcy trustee and entitled to a
priority of payment.

Prompt Corrective Action
FDICIA established a system of prompt corrective action to resolve the problems
of undercapitalized institutions.  Under this system, the federal banking
regulators have established five capital categories (well capitalized,
adequately capitalized, undercapitalized, significantly undercapitalized and
critically undercapitalized), and are required to take certain mandatory
supervisory actions, and are authorized to take other discretionary actions,
with respect to institutions in the three undercapitalized categories.  The
severity of the action will depend upon the capital category in which the
institution is placed.  Generally, subject to a narrow exception, the banking
regulator must appoint a receiver or conservator for an institution that is
critically undercapitalized.  The federal banking agencies have specified by
regulation the relevant capital level for each category.

An institution that is categorized as undercapitalized, significantly
undercapitalized, or critically undercapitalized is required to submit an
acceptable capital restoration plan to its appropriate federal banking agency.
A bank holding company must guarantee that a subsidiary depository institution
meets its capital restoration plan, subject to certain limitations.  The
controlling holding company's obligation to fund a capital restoration plan is
limited to the lesser of 5.0% of an undercapitalized subsidiary's assets or the
amount required to meet regulatory capital requirements.  An undercapitalized
institution is also generally prohibited from increasing its average total
assets, making acquisitions, establishing any branches or engaging in any new
line of business, except under an accepted capital restoration plan or with FDIC
approval.  In addition, the appropriate federal banking agency may test an
undercapitalized institution in the same manner as it treats a significantly
undercapitalized institution if it determines that those actions are necessary.

At December 31, 2002, the Bank had the requisite capital level to qualify as
"well capitalized" under the regulatory framework for prompt corrective action.

FDIC Insurance Assessments
The FDIC has adopted a risk-based assessment system for insured depository
institutions that takes into account the risks attributable to different
categories and concentrations of assets and liabilities.  The system assigns an
institution to one of three capital categories: (i) well capitalized; (ii)
adequately capitalized; and (iii) undercapitalized.  These three categories are
substantially similar to the prompt corrective action categories described
above, with the "undercapitalized" category including institutions that are
undercapitalized, significantly undercapitalized, and critically
undercapitalized for prompt corrective action purposes.  The FDIC also assigns
an institution to one of three supervisory subgroups within each capital group.
The supervisory subgroup to which an institution is assigned is based on a
supervisory evaluation that the institution's primary federal regulator provides
to the FDIC and information that the FDIC determines to be relevant to the
institution's financial condition and the risk posed to the deposit insurance
funds.  The FDIC then determines an institution's insurance assessment rate
based on the institution's capital category and supervisory category.  Under the
risk-based assessment system, there are nine combinations of capital groups and
supervisory subgroups to which different assessment rates are applied.
Assessments range from 0 to 27 cents per $100 of deposits, depending on the
institution's capital group and supervisory subgroup.


                                        8
<PAGE>
The FDIC may terminate its insurance of deposits if it finds that the
institution has engaged in unsafe and unsound practices, is in an unsafe or
unsound condition to continue operations or has violated any applicable law,
regulation, rule, order or condition imposed by the FDIC.

Safety and Soundness Standards
The FDIA, as amended by the FDICIA and the Riegle Community Development and
Regulatory Improvement Act of 1994, requires the federal bank regulatory
agencies to prescribe standards, by regulations or guidelines, relating to
internal controls, information systems and internal audit systems, loan
documentation, credit underwriting, interest rate risk exposure, asset growth,
asset quality, earnings, stock valuation and compensation, fees and benefits,
and such other operational and managerial standards as the agencies deem
appropriate.  The federal bank regulatory agencies have adopted a set of
guidelines prescribing safety and soundness standards pursuant to FDICIA, as
amended.  The guidelines establish general standards relating to internal
controls and information systems, internal audit systems, loan documentation,
credit underwriting, interest rate exposure, asset growth and compensation and
fees and benefits.  In general, the guidelines require, among other things,
appropriate systems and practices to identify and manage the risks and exposures
specified in the guidelines.  The guidelines prohibit excessive compensation as
an unsafe and unsound practice and describe compensation as excessive when the
amounts paid are unreasonable or disproportionate to the services performed by
an executive officer, employee, director, or principal shareholder.  In
addition, the agencies adopted regulations that authorize, but do not require,
an agency to order an institution that has been given notice by an agency that
it is not satisfying any of such safety and soundness standards to submit a
compliance plan.  If, after being so notified, an institution fails to submit an
acceptable compliance plan or fails in any material respect to implement an
acceptable compliance plan, the agency must issue an order directing action to
correct the deficiency and may issue an order directing other actions of the
types to which an undercapitalized institution is subject under the "prompt
corrective action" provisions of FDICIA.  See "Prompt Corrective Action".  If an
institution fails to comply with such an order, the agency may seek to enforce
such order in judicial proceedings and to impose civil money penalties.  The
federal regulatory agencies also proposed guidelines for asset quality and
earnings standards.

Community Reinvestment Act
Under the Community Reinvestment Act ("CRA") the Bank, as an FDIC insured
institution, has a continuing and affirmative obligation to help meet the credit
needs of the entire community, including low- and moderate-income neighborhoods,
consistent with safe and sound banking practices. The CRA requires the
appropriate federal regulator, in connection with its examination of an insured
institution, to assess the institution's record of meeting the credit needs of
its community and to take such record into account in its evaluation of certain
applications, such as applications for a merger or the establishment of a
branch.  An unsatisfactory rating may be used as the basis for the denial of an
application by the federal banking regulator.  The Bank has received
satisfactory ratings in its CRA examinations.

Privacy
The GLB Act also modified laws related to financial privacy.  The new financial
privacy provisions generally prohibit a financial institution from disclosing
nonpublic personal financial information about consumers to third parties unless
consumers have the opportunity to "opt out" of the disclosure.  A financial
institution is also required to provide its privacy policy annually to its
customers.  Compliance with the implementing regulations was mandatory effective
July 1, 2001.  The Bank implemented the required financial privacy provisions by
July 1, 2001.

Monetary Policy
The earnings of the Bank are affected by domestic and foreign conditions,
particularly by the monetary and fiscal policies of the United States government
and its agencies.  The Federal Reserve has had, and will continue to have, an
important impact on the operating results of commercial banks through its power
to implement monetary policy in order, among other things, to mitigate
recessionary and inflationary pressures by regulating the national money supply.
The techniques used by the Federal Reserve include setting the reserve
requirements of member banks and establishing the discount rate on member bank
borrowings.  The Federal Reserve also conducts open market transactions in
United States government securities.

USA Patriot Act of 2001
In October 2001, the USA Patriot Act of 2001 (the "Patriot Act") was enacted in
response to the terrorist attacks in New York, Pennsylvania, and Washington,
D.C. that occurred on September 11, 2001.  The Patriot Act impacts financial
institutions in particular through its anti-money laundering and financial
transparency laws.  The Patriot Act establishes regulations which, among others,
set standards for identifying customers who open an account and promoting
cooperation with law enforcement agencies and regulators in order to effectively
identify parties that may be associated with, or involved in, terrorist
activities or money laundering.


                                        9
<PAGE>
Georgia Fair Lending Act
The Georgia Fair Lending Act (the "GFLA") became initially effective on October
1, 2002 and establishes a number of prohibitions for loans that are "covered" by
the statute.  Generally, a loan is "covered" by the GFLA if it has an annual
interest rate that exceeds the prime rate or comparable yield on treasury
securities by an amount specified by the statute or if its points and fees
exceed a specified percentage of the total loan amount.  The GFLA has a broad
definition of points and fees.  Any creditor who violates the GFLA may be liable
to the borrower for actual damages; statutory damages equal to two times the
interest paid under the loan; forfeiture of interest; punitive damages; costs;
and/or reasonable attorney's fees.  For any violation for which statutory
damages may be awarded, the GFLA provides the borrower with a right of
rescission.

The GFLA is a controversial law because of provisions such as those creating
potential liability for assignees and holders of "covered" loans.  As a result,
the GFLA was amended, effective March 7, 2003, by the Georgia legislature in an
effort to address a number of those provisions.  In addition, there are issues
concerning federal preemption of the GFLA pending.  The Office of the
Comptroller of the Currency (the "OCC") has begun the process of issuing a
determination or order regarding the preemption of GFLA.  If the OCC determines
that federal law preempts the GFLA, then banks operating under a national
charter will not be subject to the GFLA while banks operating under a state
charter will be required to comply with the GFLA.  Depending upon (i) the OCC's
determination regarding preemption, and (ii) the amendments to the GFLA passed
by the Georgia legislature, state-chartered banks could be at a competitive
disadvantage to banks operating pursuant to national charters in certain
segments of the lending market.  We are monitoring developments in this area
and, even though the Bank is a state-chartered bank, we do not believe that we
will be exposed to any significant competitive disadvantage as a result of GFLA.

Availability of Filings on Company Website
The Company's website address is www.pabbankshares.com.  Under the link entitled
                                 ---------------------
"Investor Relations", any person may access the Company's filings for the past
five years with the SEC by selecting "Documents".  We are not incorporating by
reference into this Report the information contained on our websites and,
therefore, the content of our websites is not a part of this Report.


ITEM 2.  PROPERTIES

We operate 16 banking offices in Georgia and 2 in Florida.  With the exception
of one of our offices in Ocala, Florida, and our loan production office in
Duluth, Georgia, we own all of the real property and/or buildings in which our
offices are located.  The Ocala office is under a five-year operating lease that
expires in May 2003.  The Duluth office is under a three-year operating lease
that expires in September 2005.  In addition, we own a three-story
administrative building, which houses our corporate offices, and an operations
center in Valdosta, Georgia.  All of the properties are in a good state of
repair and are appropriately designed for the purposes for which they are used.

Other than the normal real estate and commercial lending activities of the Bank,
we generally do not invest in real estate, interests in real estate, real estate
mortgages, or securities of persons primarily engaged in real estate activities.


ITEM 3.  LEGAL PROCEEDINGS

The nature of the business of PAB and the Bank ordinarily results in a certain
amount of litigation.  Accordingly, we are party to a limited number of lawsuits
incidental to our respective businesses.  In our opinion, the ultimate
disposition of these matters will not have a material adverse impact on our
consolidated financial position or results of operations.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of our stockholders during the fourth
quarter of 2002.


                                       10
<PAGE>
PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
           STOCKHOLDER MATTERS

Our common stock has been listed for quotation on the American Stock Exchange
("AMEX") under the symbol "PAB" since July 9, 1996.  As of February 28, 2003,
there were 2,430 holders of record of our common stock.

Our ability to pay dividends is primarily dependent on earnings from operations,
the adequacy of capital and the availability of liquid assets for distribution.
Our ability to generate liquid assets for distribution is primarily dependent on
the ability of the Bank to pay dividends up to the parent holding company.  The
payment of dividends is an integral part of our goal to retain sufficient
capital to support future growth and to meet regulatory requirements while
providing a competitive return on investment to our stockholders.  However,
pursuant to the Resolution adopted on May 20, 2002, the Company must seek prior
approval from its banking regulators before paying a dividend.  Accordingly, in
March 2003, we requested and received approval from the Federal Reserve for the
payment of a First Quarter 2003 dividend in the amount of $.03 per share to
stockholders of record on March 31, 2003.  For more information on dividend
restrictions see the "Supervision and Regulation" section in Item 1 of this
Report.

The following table sets forth, for the indicated periods, the high and low
closing sales prices for our common stock as reported by AMEX, the cash
dividends declared, and the diluted earnings per share.

<TABLE>
<CAPTION>
                                Sales Price
                               -------------
         Calendar Period        High    Low    Dividends   Earnings
         --------------------  ------  ------  ----------  ---------
<S>                                     <C>     <C>     <C>
         2001
              First Quarter    $13.00  $ 9.38  $     0.11  $    0.18
              Second Quarter    12.35   10.50        0.11       0.19
              Third Quarter     11.99   10.28        0.11       0.14
              Fourth Quarter    10.89    9.90        0.11      -0.49
         2002
              First Quarter    $11.30  $ 9.21  $     0.11  $    0.18
              Second Quarter    10.01    8.15           -       0.18
              Third Quarter      8.83    7.70           -       0.18
              Fourth Quarter     9.00    8.00           -       0.13
</TABLE>

Equity Compensation Plan Information
The following table summarizes the Company's equity compensation plans as of
December 31, 2002.

<TABLE>
<CAPTION>
                            Number of Securities                         Number of Securities
                             To be Issued Upon      Weighted-Average     Remaining Available
                                Exercise of         Exercise Price of    for Future Issuance
                                Outstanding            Outstanding          Under Equity
                             Options, Warrants      Options, Warrants       Compensation
         Plan Category           and Rights             and Rights             Plans *
     ---------------------  --------------------  ---------------------  -------------------
<S>                         <C>                   <C>                    <C>
     Equity Compensation                 366,546  $               11.41              573,171
     Plans Approved by
     Security Holders

     Equity Compensation                     n/a                    n/a                  n/a
     Plans Not Approved by
     Security Holders

<FN>
-------------------------------
* excluding securities reflected in the second column
</TABLE>

In addition to the equity compensation plans approved by our stockholders, we
have the Employee and Director Stock Purchase Program (the "SPP"). The Bank,
serving as the SPP custodian, uses funds contributed from employees and
directors up to an amount specified in the SPP, matched by the Company a rate of
50%, to purchase shares of our common stock. A participant may request a
distribution of his or her entire account at any time. A participant's
participation in the SPP terminates immediately upon termination of employment
or director status. The SPP is administered by a committee appointed by the
Board of Directors. We may amend or terminate the SPP or suspend the employer
matching contributions at any time. For more information about the SPP, see Note
15 in the accompanying Notes to Consolidated Financial Statements. Also, a full
text of the SPP is attached to this Report as Exhibit 10.9.


                                       11
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA

The following table presents selected consolidated financial data for PAB.  This
selected financial data is derived in part from, and should be read in
conjunction with, the Consolidated Financial Statements and the Notes in Item 8
and Management's Discussion and Analysis of Financial Condition and Results of
Operations in Item 7 of this Report.

<TABLE>
<CAPTION>
(In thousands, except per share and other data)         2002         2001         2000         1999         1998
--------------------------------------------------------------------------------------------------------------------
<S>                                                  <C>          <C>          <C>          <C>          <C>
Summary of Operations:
  Interest income                                    $   48,079   $   62,715   $   57,526   $   49,495   $   48,385
  Interest expense                                       19,989       35,600       28,674       22,906       23,439
  ------------------------------------------------------------------------------------------------------------------
    Net interest income                                  28,090       27,115       28,852       26,589       24,946
  Provision for loan losses                               2,575       12,220        4,099          985          903
  Other income                                            8,013       11,923        5,756        6,060        5,266
  Other expense                                          24,368       26,921       21,874       18,966       17,224
  ------------------------------------------------------------------------------------------------------------------
    Income (loss) before income tax expense               9,160         (103)       8,635       12,698       12,085
  Income tax expense                                      2,813         (251)       2,909        4,005        4,098
  ------------------------------------------------------------------------------------------------------------------
    Net income                                       $    6,347   $      148   $    5,726   $    8,693   $    7,987
  ==================================================================================================================
  Net interest income (taxable-equivalent)           $   28,225   $   27,216   $   28,968   $   26,718   $   25,108
Selected Average Balances:
  Total assets                                       $  779,958   $  847,100   $  694,674   $  629,634   $  597,461
  Earning assets                                        719,352      780,120      640,889      576,729      554,127
  Loans                                                 586,712      616,156      534,340      467,149      425,210
  Deposits                                              641,449      694,219      548,276      500,582      488,322
  Stockholders' equity                                   67,975       72,268       70,706       68,161       62,913
Selected Year End Balances:
  Total assets                                       $  747,911   $  859,143   $  794,907   $  664,969   $  620,111
  Earning assets                                        683,456      790,546      722,490      606,464      569,291
  Loans                                                 555,238      637,825      580,737      494,417      440,515
  Allowance for loan losses                              12,097       15,765        8,185        5,037        5,172
  Deposits                                              606,730      720,398      637,180      516,204      504,087
  Stockholders' equity                                   71,265       65,372       70,780       69,611       66,063
Common Share Data:
  Outstanding at year end                             9,430,413    9,409,913    9,501,947    9,617,406    9,604,027
  Weighted average outstanding                        9,426,761    9,482,709    9,528,387    9,612,634    9,602,946
  Diluted weighted average outstanding                9,459,768    9,550,080    9,598,790    9,749,162    9,813,825
Per Share Ratios:
  Net income - basic                                 $     0.67   $     0.02   $     0.60   $     0.90   $     0.83
  Net income - diluted                                     0.67         0.02         0.60         0.89         0.81
  Dividends declared                                       0.11         0.44         0.43         0.39         0.28
  Book value                                               7.56         6.95         7.45         7.24         6.88
Profitability Ratios:
  Return on average assets (ROA)                           0.81%        0.02%        0.82%        1.38%        1.34%
  Return on average equity (ROE)                           9.34%        0.20%        8.10%       12.75%       12.70%
  Net interest margin                                      3.92%        3.49%        4.52%        4.63%        4.53%
  Efficiency ratio (excluding merger and
    conversion costs)                                     67.04%       74.02%       60.39%       57.12%       55.06%
Liquidity Ratios:
  Total loans to total deposits                           91.51%       88.54%       91.14%       95.78%       87.39%
  Average loans to average earning assets                 81.56%       78.98%       83,37%       81.00%       76.74%
  Noninterest-bearing deposits to total deposits          14.45%       11.31%       11.09%       12.58%       14.30%
Capital Adequacy Ratios:
  Average equity to average assets                         8.72%        8.53%       10.18%       10.83%       10.53%
  Dividend payout ratio                                   16.39%     2855.42%       72.08%       43.54%       33.95%
Asset Quality Ratios:
  Net charge-offs to average loans                         1.06%        0.75%        0.26%        0.24%        0.17%
  Nonperforming loans to total loans                       1.87%        1.91%        1.27%        0.54%        0.40%
  Nonperforming assets to total assets                     1.56%        1.57%        0.99%        0.52%        0.37%
  Allowance for loan losses to total loans                 2.18%        2.47%        1.41%        1.02%        1.17%
  Allowance for loan losses to nonperforming loans       116.56%      129.44%      111.03%      188.79%      292.87%
--------------------------------------------------------------------------------------------------------------------
</TABLE>


                                       12
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
           AND RESULTS OF OPERATION

GENERAL

The following discussion and analysis of the consolidated financial condition
and results of operations of PAB should be read in conjunction with the
Consolidated Financial Statements and related Notes, and is qualified in its
entirety by the foregoing and other more detailed financial information
appearing elsewhere.  Historical results of operations and the percentage
relationships among any amounts included, and any trends which may appear to be
inferred, should not be taken as being necessarily indicative of trends in
operations or results of operations for any future periods.

We have made, and will continue to make, various forward-looking statements with
respect to financial and business matters.  Comments regarding our business
which are not historical facts are considered forward-looking statements that
involve inherent risks and uncertainties.  Actual results may differ materially
from those contained in these forward-looking statements.  For additional
information regarding our cautionary disclosures, see the "Cautionary Notice
Regarding Forward-Looking Statements" at the beginning of this Report.


STATISTICAL DISCLOSURES

DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY; INTEREST RATES AND
INTEREST DIFFERENTIAL

On May 20, 2002, the Board of Directors adopted a Resolution requested by our
primary federal regulator, the Federal Reserve Bank of Atlanta, which, among
other things, restricts us from redeeming our capital stock, paying dividends,
modifying existing debt agreements, or incurring additional debt without the
prior approval of our banking regulators.  The Resolution is the result of a
recent examination that found the Bank to be in less than satisfactory condition
due primarily to serious weaknesses identified in the asset quality of the
Bank's loan portfolio.  This Resolution had a profound impact on our financial
condition and results of operations in 2002, and it shall remain in effect until
removed by the regulators.

The Company's balance sheet has been in a period of contraction since the end of
2001.  At December 31, 2002, our total assets were $747.9 million, a $111.2
million, or 13%, decrease from total assets of $859.1 million at December 31,
2001.  The majority of the decrease in assets was in the loan portfolio.  Total
loans decreased $82.6 million, or 13%, in 2002.  Total deposits decreased $113.7
million, or 16%, in 2002.  Of those decreases, $10.4 million in loans and $4.3
million in deposits were sold with our Richmond Hill branch office in January
2002.  Overall, our residential mortgage loan portfolio is down $43.1 million,
or 21%, since the beginning of 2002 due primarily to the high level of mortgage
refinancing activity.  Our consumer loans are down $15.7 million, or 30%, for
the year.  Loans for commercial purposes (including commercial real estate and
construction and development loans) are down $21.6 million, or 6%.  The decline
in consumer and commercial loans during 2002 is primarily the result of the
following factors: (1) some of our markets have been in an economic recession
and there has been a corresponding slow down in loan demand; (2) new loan growth
in our South Georgia markets has been hampered by our internal focus on
improving asset quality, high turnover in senior lenders, and the adoption of a
more conservative underwriting philosophy; (3) payoffs of some large
out-of-market participation loans were not replaced; (4) general portfolio decay
resulting from customer reaction to the consolidation of our banking charters,
and (5) net charge-offs of $6.1 million in those categories for the year.  Loan
growth has been positive in our new markets in Metro Atlanta, but not at a pace
to replenish the contraction in some of our South Georgia markets.

Without any net new loans driving asset growth in 2002, we have reduced the
liability side of our balance sheet by allowing time deposits to either roll off
the balance sheet or into other deposit accounts at maturity.  Time deposits
have declined by a net $125.8 million, or 29%, since the beginning of 2002.  At
the same time, we have continued to focus on building customer relationships and
seeking core deposits.  Balances in demand and savings accounts increased $12.1
million, or 4%, during 2002.  In addition, we reduced our advances from the
Federal Home Loan Bank of Atlanta by a net $2.1 million, or 5%, during 2002.

Total stockholders' equity increased $5.9 million, or 9%, during 2002.  Equity
was increased primarily from the contribution of $6.3 million from 2002 earnings
net of $1.0 million in dividends paid prior to the adoption of the Resolution
previously mentioned.  As a percentage of total assets, equity represented 9.5%
at end of 2002, compared to 7.6% at the beginning of 2002, with the increase
resulting from an increase in equity and a decline in assets during the year.


                                       13
<PAGE>
Interest rates remained at near-historic lows throughout most of 2002.  While
the lower rate environment resulted in downward repricing of our earning assets,
we were also able to reduce the cost of funding those earning assets during the
year.  The next two tables illustrate the effects of the decline in interest
rates and a decrease in the volume of loans and other earning assets on our
interest income during 2002.  The impact of interest rates and volume on our
earnings are more fully discussed under "Results of Operations" below.

Average Balances, Interest and Yields
The following table details the average balance of interest-earning assets and
interest-bearing liabilities, the amount of interest earned and paid, and the
average yields and rates realized for each of the last three years.  Federally
tax-exempt income is presented on a taxable-equivalent basis assuming a 34%
Federal tax rate.  Loan average balances include loans on nonaccrual status.

<TABLE>
<CAPTION>
For the Years Ended
December 31,                                     2002                              2001                         2000
---------------------------------------------------------------------------------------------------------------------------------
                                               Interest    Average               Interest   Average            Interest   Average
                                   Average     Income/     Yield/     Average    Income/    Yield/    Average   Income/   Yield/
                                   Balance     Expense      Rate      Balance    Expense     Rate     Balance   Expense    Rate
---------------------------------------------------------------------------------------------------------------------------------
                                                                          (Dollars In Thousands)
<S>                               <C>         <C>        <C>         <C>        <C>        <C>       <C>        <C>       <C>
ASSETS
Interest-earning assets:
  Loans                           $ 586,712   $ 42,645        7.27%  $616,156   $  54,163     8.79%  $534,340   $ 51,045    9.55%
  Investment securities:
    Taxable                          92,942      4,638        4.99%    93,377       5,468     5.86%    68,702      4,028    5.86%
    Nontaxable                        6,157        398        6.46%     4,607         299     6.49%     5,009        344    6.86%
  Other short-term
    investments                      33,541        533        1.59%    65,980       2,886     4.37%    32,838      2,225    6.78%
                                  ----------  ---------              ---------  ---------            ---------  --------
      Total interest-
        earning assets              719,352     48,214        6.70%   780,120      62,816     8.05%   640,889     57,642    8.99%

Noninterest-earning assets:
  Cash                               22,541                            23,329                          25,170
  Allowance for loan losses         (14,903)                           (8,429)                         (5,650)
  Unrealized gain (loss)
    on securities
    available for sale                1,095                             2,340                            (240)
  Other assets                       51,873                            49,740                          34,505
                                  ----------                         ---------                       ---------
      Total assets                $ 779,958                          $847,100                        $694,674
                                  ==========                         =========                       =========

LIABILITIES AND
  STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
  Demand deposits                 $ 167,986   $  2,330        1.39%  $141,314   $   3,624     2.56%  $116,661   $  3,357    2.88%
  Savings deposits                   38,289        430        1.12%    34,535         732     2.12%    28,723        725    2.52%
  Time deposits                     350,697     14,309        4.08%   443,486      27,012     6.09%   335,935     20,128    5.99%
  FHLB advances                      36,863      2,014        5.46%    51,248       3,213     6.27%    56,674      3,796    6.70%
  Notes payable                      10,000        608        6.08%     7,930         468     5.90%         -          -
  Other short-term
    borrowings                       16,870        298        1.77%    13,958         551     3.95%    13,717        668    4.87%
                                  ----------  ---------              ---------  ---------            ---------  --------
      Total interest-
        bearing liabilities         620,705     19,989        3.22%   692,471      35,600     5.14%   551,710     28,674    5.20%

Noninterest-bearing liabilities
  and stockholders' equity:
  Demand deposits                    84,476                            74,884                          66,957
  Other liabilities                   6,802                             7,477                           5,301
  Stockholders' equity               67,975                            72,268                          70,706
                                  ----------                         ---------                       ---------
        Total liabilities and
          stockholders'
          equity                  $ 779,958                          $847,100                        $694,674
                                  ==========                         =========                       =========

Interest rate spread                                          3.48%                           2.91%                         3.79%
                                                         ==========                        ========                       =======

Net interest income                           $ 28,225                          $ 27,216                        $28,968
                                              =========                         =========                       ========

Net interest margin                                           3.92%                           3.49%                         4.52%
                                                         ==========                        ========                       =======
</TABLE>


                                       14
<PAGE>
Rate / Volume Analysis
The following table shows a summary of the changes in interest income and
interest expense on a fully taxable equivalent basis resulting from changes in
volume and changes in rates for each category of interest-earning assets and
interest-bearing liabilities.  The change in interest attributable to rate has
been determined by applying the change in rate between years to average balances
outstanding in the later year.  The change in interest due to volume has been
determined by applying the rate from the earlier year to the change in average
balances outstanding between years.  Thus, changes that are not solely due to
volume have been consistently attributed to rate.

<TABLE>
<CAPTION>
  For the Years Ended December 31,          2002 vs. 2001                   2001 vs. 2000
  ----------------------------------------------------------------------------------------------------
                                                     Changes Due To                  Changes Due To
                                      Increase    -------------------   Increase    ------------------
                                     (Decrease)     Rate      Volume   (Decrease)     Rate     Volume
                                     -----------  ---------  --------  -----------  --------  --------
                                                          (Dollars In Thousands)
<S>                                  <C>          <C>        <C>       <C>          <C>       <C>
  Increase (decrease) in:
    Income from:
      Loans                          $  (11,518)  $ (8,930)  $(2,588)  $    3,118   $(4,698)  $ 7,816
      Taxable securities                   (830)      (805)      (25)       1,440        (7)    1,447
      Nontaxable securities                  99         (2)      101          (45)      (17)      (28)
      Other short-term investments       (2,353)      (934)   (1,419)         661    (1,585)    2,246
  ----------------------------------------------------------------------------------------------------
          Total interest income         (14,602)   (10,671)   (3,931)       5,174    (6,307)   11,481
  ----------------------------------------------------------------------------------------------------

  Expense from:
    Demand deposits                      (1,294)    (1,978)      684          267      (442)      709
    Savings deposits                       (302)      (382)       80            7      (140)      147
    Time deposits                       (12,703)    (7,052)   (5,651)       6,884       440     6,444
    FHLB advances                        (1,199)      (297)     (902)        (583)     (220)     (363)
    Notes payable                           140         18       122          468         -       468
    Other short-term borrowings            (253)      (368)      115         (117)     (129)       12
  ----------------------------------------------------------------------------------------------------
        Total interest expense          (15,611)   (10,059)   (5,552)       6,926      (491)    7,417
  ----------------------------------------------------------------------------------------------------

        Net interest income          $    1,009   $   (612)  $ 1,621   $   (1,752)  $(5,816)  $ 4,064
  ====================================================================================================
</TABLE>

INVESTMENT PORTFOLIO

The carrying values of investment securities at the indicated dates are
presented below.  Changes in the mix of our investment portfolio will vary over
time given changes in market conditions and liquidity needs of the Bank.

<TABLE>
<CAPTION>
     As of December 31,                        2002      2001     2000
     -------------------------------------------------------------------
<S>                                           <C>      <C>       <C>
                                               (Dollars in Thousands)
     U. S. Government and agency securities   $25,622  $ 56,504  $51,031
     State and municipal securities             8,614     4,999    4,967
     Corporate debt securities                 12,397     8,389        -
     Mortgage-backed securities                32,066    32,199   21,127
     Marketable equity securities              13,500     4,827    2,817
     Restricted and other equity securities     5,827     6,356    4,983
     -------------------------------------------------------------------
          Total                               $98,026  $113,454  $84,925
     ===================================================================
</TABLE>

The following table shows the maturities of non-equity investment securities at
December 31, 2002 and the weighted-average yields (on a fully taxable basis
assuming a 34% tax rate) on such securities.  The maturities presented for
mortgage-backed securities are based on the average lives of those bonds at the
then projected prepayment speeds.  Actual maturities usually differ from
contractual maturities because certain security issuers have the right to call
or prepay obligations with or without call or prepayment penalties.

<TABLE>
<CAPTION>
                                             U.S. Government   State, County,        Corporate        Mortgage-
                                                 and  Agency   and  Municipal             Debt           Backed
                                                  Securities       Securities       Securities       Securities
     As of December 31, 2002                  Amount   Yield   Amount   Yield   Amount   Yield   Amount   Yield
     -----------------------------------------------------------------------------------------------------------
<S>                                           <C>      <C>     <C>      <C>     <C>      <C>     <C>      <C>
                                                                 (Dollars In Thousands)
     Due in one year or less                  $ 1,068   6.09%  $ 1,195   2.80%  $ 4,057   3.43%  $   130   0.00%
     Due after one year through five years     18,985   4.42%    2,305   5.74%    7,340   5.30%   16,695   4.49%
     Due after five years through ten years     5,569   6.10%    1,758   6.24%    1,000   6.75%   12,332   5.41%
     Due after ten years                            -      -     3,357   6.70%        -      -     2,909   5.94%
     -----------------------------------------------------------------------------------------------------------
          Total                               $25,622   4.85%  $ 8,614   5.81%  $12,397   4.79%  $32,066   4.91%
     -----------------------------------------------------------------------------------------------------------
</TABLE>


                                       15
<PAGE>
The estimated fair market value of our investment portfolio at December 31,
2002, was approximately $1.6 million, or 1.6%, above amortized cost; however,
market values vary significantly as interest rates change.  Of the investments
in U.S. Government and agency securities maturing after one year, approximately
$16.4 million, or 67%, are potentially callable at par value within one year.

Our investment portfolio policy stresses quality and liquidity.  With the
exception of three bonds with a total carrying value of $1.6 million, or 1.7% of
our total portfolio, the bonds which are selected as investments carry an "A"
rating or better by either Standard and Poor's or Moody's Investors Service,
Inc.  The three non-rated investments are small, private placements for two
Georgia municipalities and one Georgia bank holding company.  These investments
were reviewed for credit and market risk and deemed appropriate for the Bank's
portfolio by management.  The portfolio is monitored to assure there is no
unreasonable concentration of securities in the obligations of a single debtor.


LOAN PORTFOLIO

We make both secured and unsecured loans to individuals, corporations, and other
entities with the goals of safety, soundness, profitability and responsiveness
to community needs.  The loan portfolio contains no foreign or energy-related
loans or significant concentrations in any one industry or loan type, with the
exception of loans secured by residential and commercial real estate in our
market areas.

Types of Loans
The amount of loans outstanding at the indicated dates is presented in the
following table according to type of loan.

<TABLE>
<CAPTION>
     As of December 31,                                     2002       2001       2000       1999       1998
     ----------------------------------------------------------------------------------------------------------
<S>                                                       <C>        <C>        <C>        <C>        <C>
                                                                          (Dollars in Thousands)
     Commercial and financial                             $ 55,840   $ 80,493   $ 72,942   $ 59,328   $ 56,531
     Agricultural                                           22,178     26,428     23,064      8,197      6,759
     Real estate - construction                             75,076     63,486     40,130     31,858     22,567
     Real estate - mortgage (commercial and residential)   354,628    402,988    376,000    332,008    298,211
     Installment loans to individuals and other             47,739     64,806     68,880     63,424     56,825
     ----------------------------------------------------------------------------------------------------------
                                                           555,461    638,201    581,016    494,815    440,893
     Unearned income, net                                     (223)      (376)      (279)      (398)      (378)
     ----------------------------------------------------------------------------------------------------------
                                                           555,238    637,825    580,737    494,417    440,515
     Allowance for loan losses                             (12,097)   (15,765)    (8,185)    (5,037)    (5,172)
     ----------------------------------------------------------------------------------------------------------
          Loans, net                                      $543,141   $622,060   $572,552   $489,380   $435,343
     ==========================================================================================================
</TABLE>

The percentage of loans outstanding at the indicated dates is presented in the
following table according to type of loan.

<TABLE>
<CAPTION>
     As of December 31,                                    2002     2001     2000     1999     1998
     ------------------------------------------------------------------------------------------------
                                                                    (Dollars in Thousands)
<S>                                                       <C>      <C>      <C>      <C>      <C>
     Commercial and financial                              10.06%   12.62%   12.56%   12.00%   12.83%
     Agricultural                                           3.99%    4.15%    3.97%    1.66%    1.54%
     Real estate - construction                            13.52%    9.95%    6.91%    6.44%    5.12%
     Real estate - mortgage (commercial and residential)   63.87%   63.18%   64.75%   67.15%   67.70%
     Installment loans to individuals and other             8.60%   10.16%   11.86%   12.83%   12.90%
     ------------------------------------------------------------------------------------------------
                                                          100.04%  100.06%  100.05%  100.08%  100.09%
     Unearned income, net                                  -0.04%   -0.06%   -0.05%   -0.08%   -0.09%
     ------------------------------------------------------------------------------------------------
                                                          100.00%  100.00%  100.00%  100.00%  100.00%
     Allowance for loan losses                             -2.18%   -2.47%   -1.41%   -1.02%   -1.17%
     ------------------------------------------------------------------------------------------------
          Loans, net                                       97.82%   97.53%   98.59%   98.98%   98.83%
     ================================================================================================
</TABLE>

There was a definite change in both the volume and mix of the Bank's loan
portfolio during 2002.  Overall, the portfolio decreased $82.6 million, or
12.9%, from $637.8 million at the beginning of the year to $555.2 million at
year end.  As a percentage of the portfolio, construction and development loans
expanded from 9.95% at the end of 2001 to 13.52% at the end of 2002 due to
growth in our Metro Atlanta offices.  The largest category in our portfolio,
commercial and residential real estate loans, held at approximately 63% of the
portfolio over the past year.


                                       16
<PAGE>
Maturities and Sensitivities of Loans to Changes in Interest Rates
A schedule of loans maturing, based on contractual terms, is presented in the
following table for selected loan types.

<TABLE>
<CAPTION>
                                                     Commercial                  Real Estate -   Real Estate -   All Other
     As of December 31, 2002                        & Financial   Agricultural    Construction      Mortgage       Loans
     ----------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>           <C>            <C>             <C>             <C>
                                                                             (Dollars in Thousands)
     Due in one year or less                        $     33,135  $      10,824  $       58,362  $       89,348  $   22,551
     Due after one year through five years                18,408         10,873          10,231         190,370      19,431
     Due after five years                                  4,297            481           6,483          74,910       5,757
     ----------------------------------------------------------------------------------------------------------------------
          Total                                     $     55,840  $      22,178  $       75,076  $      354,628  $   47,739
     ======================================================================================================================

     Of the above loans maturing after one year,
          those with predetermined fixed rates      $     10,763  $       3,907  $        5,103  $      116,059  $   25,188
          those with floating or adjustable rates         11,942          7,447          11,611         149,221           -
     ----------------------------------------------------------------------------------------------------------------------
               Total maturing after one year        $     22,705  $      11,354  $       16,714  $      265,280  $   25,188
     ======================================================================================================================
</TABLE>

Nonperforming Loans
The amount of nonperforming loans outstanding at the indicated dates is
presented in the following table by category.

<TABLE>
<CAPTION>
     As of December 31,                                           2002     2001     2000    1999    1998
     ----------------------------------------------------------------------------------------------------
<S>                                                              <C>      <C>      <C>     <C>     <C>
                                                                        (Dollars in Thousands)
     Loans accounted for on a nonaccrual basis                   $10,378  $10,581  $2,430  $2,395  $1,567
     Accruing loans which are contractually past due
        90 days or more as to principal or interest payments           -    1,598     509     273     199
     Other impaired loans                                              -        -   4,433       -       -
     ----------------------------------------------------------------------------------------------------
          Total nonperforming loans                              $10,378  $12,179  $7,372  $2,668  $1,766
     ====================================================================================================
</TABLE>

Total nonperforming loans decreased $1.8 million, or 14.8%, from 2001.  Included
in the group of nonperforming loans at December 31, 2002, are loans totaling
$4.2 million, or 40.5% of the total, that are due from four borrowers.   Three
of the four borrowers, whose debts with the Bank total $1.5 million, are farmers
whose loans are secured by farmland and agricultural equipment.  The other
borrower owes the Bank $2.7 million on a real estate and golf course
development.  In December 2001, we took a $2 million write-down on this line due
to a potential collateral deficiency.

Included in nonperforming loans at the beginning of 2002, were loans totaling
$3.3 million due from one commercial borrower.  These loans were partially
guaranteed by the U. S. Department of Agriculture (the "USDA").  We wrote-off
the unguaranteed portions of these loans in December 2000 when it became
apparent the borrower could no longer adequately service the debt.  In September
2002, after an unsuccessful effort to collect the loans from the borrower, the
remaining balance of these loans were charged-off and a formal claim was filed
with the USDA for a recovery of the guaranteed portion plus uncollected interest
and legal and collection fees.  Our claim is currently under review at the USDA,
and at this time, we can provide no assurances as to the timing or amount of a
recovery, if any.

Although we have made some progress in addressing our nonperforming loans, we
still have a challenge ahead of us as we work to bring our level of
nonperforming loans to a more acceptable level.  Our ratio of nonperforming
loans to total loans was 1.87% at year end, compared to an average ratio of
0.77% for our national peer group (all commercial banks having assets between
$500 million and $1 billion).  Unfortunately, with a slowing economy we would
expect to see additional problems develop in both consumer and commercial loans
in 2003.

The accrual of interest on loans is discontinued when, in our judgment, the
borrower may be unable to meet payments as they become due, unless the loan is
well secured.  All interest accrued but not collected for loans that are placed
on nonaccrual status is reversed against interest income.  Interest income on
nonaccrual loans is subsequently recognized only to the extent cash payments are
received unless and until the loan is returned to accrual status.

For the year ended December 31, 2002, the gross interest income that would have
been recorded if our nonperforming loans had been current in accordance with
their original terms was approximately $1.1 million.  The amount of interest
income on the above nonperforming loans that was included in net income for the
year ended December 31, 2002 was approximately $199,000.

A potential problem loan is any loan which is not disclosed above as
nonperforming, but where known information about possible credit problems of the
borrower causes management to have serious doubts as to the ability of such
borrower to comply with the present loan repayment terms.  As of December 31,
2002, there were approximately $894,000 in loans not classified as nonperforming
that management considered potential problem loans.


                                       17
<PAGE>
SUMMARY OF LOAN LOSS EXPERIENCE

Analysis of the Allowance for Loan Losses
The following table summarizes the activity in the allowance for loan losses,
the average balance of loans outstanding, and the ratio of net losses
experienced for each of the last five years.

<TABLE>
<CAPTION>
     For the Years Ended December 31,                         2002       2001       2000       1999       1998
     ------------------------------------------------------------------------------------------------------------
<S>                                                         <C>        <C>        <C>        <C>        <C>
                                                                           (Dollars in Thousands)
     Balance at beginning of year                           $ 15,765   $  8,185   $  5,037   $  5,172   $  4,996
     Charge-offs:
       Commercial, financial and agricultural                  3,771      1,619        680        444        207
       Real estate - construction                                  -      2,001        110         13          -
       Real estate - mortgage (commercial and residential)     1,752        538        393        191         45
       Installment loans to individuals and other loans        1,079        675        401        568        571
     ------------------------------------------------------------------------------------------------------------
                                                               6,602      4,833      1,584      1,216        823
     ------------------------------------------------------------------------------------------------------------
     Recoveries:
       Commercial, financial and agricultural                     89         55         59         10         16
       Real estate - construction                                  -          -          -          -          -
       Real estate - mortgage (commercial and residential)       119         72         72          -         22
       Installment loans to individuals and other loans          151         66         51         86         58
     ------------------------------------------------------------------------------------------------------------
                                                                 359        193        182         96         96
     ------------------------------------------------------------------------------------------------------------
       Net charge-offs                                         6,243      4,640      1,402      1,120        727
     ------------------------------------------------------------------------------------------------------------
     Additions provided to the allowance
       charged to operations                                   2,575     12,220      4,099        985        903
     Allowance for loan losses of acquired bank                    -          -        451          -          -
     ------------------------------------------------------------------------------------------------------------
     Balance at end of year                                 $ 12,097   $ 15,765   $  8,185   $  5,037   $  5,172
     ============================================================================================================

     Average balance of loans outstanding                   $586,712   $616,156   $534,340   $467,149   $425,210
     ============================================================================================================

     Ratio of net charge-offs during the year to average
       loans outstanding during the year                        1.06%      0.75%      0.26%      0.24%      0.17%
     ============================================================================================================
</TABLE>

The allowance for loan losses as a percentage of nonperforming loans was 116.6%
at December 31, 2002, compared to 129.4% at December 31, 2001.  The allowance
for loan losses related to our nonperforming loans amounted to $2.4 million and
$4.8 million at December 31, 2002 and 2001, respectively.  Our level of
charge-offs has increased substantially in 2002 and 2001 compared to the
previous years due primarily to $6.7 million in write-downs taken on two larger
credits.

At December 31, 2002, the allowance as a percent of total loans was 2.18%,
compared to 2.47% at December 31, 2001.   We consider the current level of the
allowance for loan losses adequate to absorb losses from loans in the portfolio.
We have a comprehensive methodology for determining the adequacy of our
allowance for loan losses.  This methodology includes an assessment for specific
valuations on larger loan lines and nonperforming loans, and an assessment based
on environmental factors applied to other smaller homogenous groups of otherwise
performing loans.  The environmental factors considered in developing our loss
measurements include:

     -    levels of and trends in delinquencies and impaired loans;
     -    levels of and trends in charge-offs and recoveries;
     -    trends in volume and terms of loans;
     -    effects of any changes in risk selection and underwriting standards
            and other changes in lending policies, procedures, and practices;
     -    experience, ability, and depth of lending management and other
            relevant staff;
     -    national and local economic trends and conditions;
     -    industry conditions; and
     -    effects of changes in credit concentrations.

This evaluation is inherently subjective as it requires estimates that are
susceptible to significant revision as more information becomes available.
While we use the best information available to make the evaluation, future
adjustments to the allowance may be necessary if there are significant changes
in economic conditions or other environmental factors.  In addition, regulatory
agencies, as an integral part of their examination process, periodically review
the Bank's allowance for loan losses, and may require the Bank to make additions
to the allowance based on their judgment about information available to them at
the time of their examinations.


                                       18
<PAGE>
Allocation of the Allowance for Loan Losses
We have allocated the allowance for credit losses according to the amount deemed
to be reasonably necessary at each year end to provide for the possibility of
losses being incurred within the categories of loans set forth in the table
below.  The allocation of the allowance to each category is not necessarily
indicative of future losses and does not restrict the use of the allowance to
absorb losses in any other category.

The components of the allowance for credit losses for each of the past five
years are presented below.

<TABLE>
<CAPTION>
As of December 31,          2002            2001             2000             1999             1998
-----------------------------------------------------------------------------------------------------------
                            Percent of       Percent of       Percent of       Percent of       Percent of
                              Loans in         Loans in         Loans in         Loans in         Loans in
                              Category         Category         Category         Category         Category
                              to Total         to Total         to Total         to Total         to Total
                        Amount   Loans   Amount   Loans   Amount   Loans   Amount   Loans   Amount   Loans
-----------------------------------------------------------------------------------------------------------
<S>                     <C>      <C>     <C>      <C>     <C>      <C>     <C>      <C>     <C>      <C>
                                                     (Dollars In Thousands)

Commercial, financial
  and agricultural      $ 2,422   14.0%  $ 2,823   16.7%  $ 1,203   16.5%  $   687   13.7%  $   742   14.3%
Real estate -
  construction            1,293   13.5%    1,572    9.9%      973    6.9%      324    6.4%      265    5.1%
Real estate -
  mortgage                7,660   63.9%    9,244   63.2%    4,779   64.7%    3,380   67.1%    3,498   67.7%
Installment loans to
  Individuals               722    8.6%    2,126   10.2%    1,230   11.9%      646   12.8%      667   12.9%
Unallocated                   -                -                -                -                -
-----------------------------------------------------------------------------------------------------------
  Total                 $12,097  100.0%  $15,765  100.0%  $ 8,185  100.0%  $ 5,037  100.0%  $ 5,172  100.0%
===========================================================================================================
</TABLE>

DEPOSITS

The following table summarizes average deposits and related weighted average
rates of interest paid for each of the three years presented.

<TABLE>
<CAPTION>
     For the Year Ended December 31,       2002               2001             2000
     ------------------------------------------------------------------------------------
                                     Amount    Rate     Amount     Rate    Amount   Rate
     ------------------------------------------------------------------------------------
<S>                                 <C>       <C>      <C>       <C>      <C>       <C>
                                                     (Dollars In Thousands)

     Noninterest-bearing demand     $ 84,476       -   $ 74,884       -   $ 66,957     -
     Interest-bearing demand         167,986    1.39%   141,314    2.56%   116,661  2.88%
     Savings                          38,289    1.12%    34,535    2.12%    28,723  2.52%
     Time                            350,697    4.08%   443,486    6.09%   335,935  5.99%
     ------------------------------------------------------------------------------------
          Total                     $641,449    2.66%  $694,219    4.52%  $548,276  4.44%
     ------------------------------------------------------------------------------------
</TABLE>

The maturities of time deposits of $100,000 or more as of December 31, 2002 are
summarized below.

<TABLE>
<CAPTION>
                                       Amount (in thousands)
     --------------------------------------------------------
<S>                                               <C>
     Three months or less                         $    25,577
     Over three through six months                     22,527
     Over six months through one year                  23,260
     Over one year                                     27,413
     --------------------------------------------------------
          Total                                   $    98,777
     ========================================================
</TABLE>

With a decline in loan volume during 2002, we elected to not compete
aggressively for time deposits of $100,000 or more.  Within our portfolio of
time deposits, those with balances of $100,000 or more decreased by $58.6
million, or 37%, during the year.  Other time deposits also declined as we
lowered our offering rates during the year and depositors moved into
interest-bearing demand and savings accounts.  Along with the decrease in
volume, the average rate paid on time deposits dropped 201 basis points from
6.09% in 2001 to 4.08% in 2002.  The decrease in both volume and rate on these
deposits allowed us to improve our net interest margin and keep our net interest
income from falling to a less profitable level.


                                       19
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

Liquidity is an important factor in our financial condition and affects our
ability to meet the borrowing needs and deposit withdrawal requirements of our
customers.  Assets, consisting primarily of loans and investment securities, are
funded by customer deposits, borrowed funds, and retained earnings.  Maturities
in the investment and loan portfolios also provide a steady flow of funds for
reinvestment.  In addition, our liquidity continues to be enhanced by a
relatively stable core deposit base and the availability of additional funding
sources.

At December 31, 2002, our liquidity ratio was 22.5% and our net noncore funding
dependency ratio was 16.3%.  Our liquidity and funding policy provides that we
should maintain a liquidity position of greater than or equal to 15% and a net
noncore funding dependency ratio of less than or equal to 25%.  Although we
intend to tighten our liquidity levels in early 2003, since year end we are
aware of no trends or events likely to result in a material change in our
ability to meet the borrowing needs and deposit withdrawal requirements of our
customers.

Borrowings
We will often utilize external funding sources to fund growth and operations.
We utilize deposits, federal funds lines of credit with our correspondent banks,
and customer repurchase agreements to provide liquidity and short-term funding,
while long-term funding needs are often met through advances from the Federal
Home Loan Bank of Atlanta (the "FHLB") and other borrowing arrangements.  Our
FHLB advances outstanding averaged $36.9 million during 2002.  The advances
outstanding at December 31, 2002 totaled $36.1 million with a weighted-average
stated interest rate of 5.35%.

On November 28, 2001, PAB Bankshares Capital Trust I ("PAB Trust") issued $10
million of Floating Rate Capital Securities, also referred to as "trust
preferred securities".  We formed PAB Trust, a statutory business trust created
under the laws of the State of Delaware, for the sole purpose of issuing the
trust preferred securities and investing the proceeds in Floating Rate Junior
Subordinated Debentures issued by us.  The interest rates on both the trust
preferred securities and the debentures are reset semi-annually at LIBOR plus
3.75% (currently 5.17%) with a rate cap of 11.0% through December 8, 2006.  We
entered into agreements which, taken collectively, fully, irrevocably and
unconditionally guarantee, on a subordinated basis, all of PAB Trust's
obligations under the trust preferred securities.  PAB Trust's sole asset is the
debentures issued by us.  The debentures will mature on December 8, 2031, but
are callable at par at our option in whole or in part anytime after December 8,
2006.  The proceeds from the issuance of the trust preferred securities qualify
as Tier 1 Capital under the risk-based capital guidelines established by the
Federal Reserve.

Investment Portfolio
The Bank's investment portfolio is another primary source of liquidity.
Maturities of securities provide a constant flow of funds that are available for
cash needs.  Contractual investment securities that mature within one year total
$6.3 million.  However, mortgage-backed securities and securities with call
provisions create cash flows earlier than the contractual maturities.  Estimates
of prepayments on mortgage-backed securities and call provisions on Federal
agency and state and municipals increase the forecasted cash flows from the
investment portfolio.

Our liquidity from investments is somewhat limited since we pledge certain
investments to secure public deposits, certain borrowing arrangements, and for
other purposes.  At December 31, 2002, approximately 49.7% of our $98 million
investment portfolio was pledged as collateral to others.

Commitments of Capital
Our financial statements do not reflect various commitments and contingent
liabilities that arise in the normal course of business.  These
off-balance-sheet financial instruments include commitments to extend credit and
standby letters of credit.  These financial instruments are included in the
financial statements when funds are distributed or the instruments become
payable.  We use the same credit policies in making commitments as we do for
on-balance-sheet instruments.  Our exposure to credit loss in the event of
nonperformance by the other party to the financial instrument for commitments to
extend credit, standby letters of credit and credit card commitments is
represented by the contractual amount of those instruments.  At December 31,
2002, we had outstanding commitments to extend credit through open lines of
credit of approximately $70.3 million and outstanding standby letters of credit
of approximately $1.4 million.


                                       20
<PAGE>
At December 31, 2002, we had an outstanding commitment to complete the
construction of a branch office in Hall County, Georgia.  Our plan is to fund
the remaining $350,000 estimated for final construction costs and to furnish and
equip this office during the first quarter of 2003 with cash provided from
operations.  Our cash flow from operations for the past three years has ranged
between $9.5 and $14.5 million per year.  There are no other binding commitments
for material cash expenditures outstanding.

Stockholders' Equity
We are required to comply with capital adequacy standards established by our
regulatory agencies.  See the section titled "Capital Adequacy" under
Supervision and Regulation in Item 1 of this document for more information on
the regulatory capital adequacy standards.

The following table summarizes our consolidated regulatory capital ratios at
December 31, 2002, 2001 and 2000.

<TABLE>
<CAPTION>
                                                                                       Minimum
                                                                                    Regulatory
                                                               2002  2001   2000   Requirement
     ------------------------------------------------------------------------------------------
<S>                                                           <C>    <C>    <C>    <C>
     Total Capital to Risk Weighted Assets                    14.0%  12.0%  12.5%          8.0%
     Tier 1 Capital to Risk Weighted Assets                   12.7%  10.7%  11.1%          4.0%
     Tier 1 Capital to Average Assets (Leverage Ratio)        10.0%   8.0%   8.7%          4.0%
     ------------------------------------------------------------------------------------------
</TABLE>

RESULTS OF OPERATIONS

NET INTEREST INCOME

The primary component of a financial institution's profitability is net interest
income, or the difference between the interest income earned on assets,
primarily loans and investments, and interest paid on liabilities, primarily
deposits and other borrowed funds.  Our net interest income for 2002, on a tax
equivalent basis, increased by $1 million, or 3.7%, over 2001.  Interest income
decreased $14.6 million, or 23.2%, while interest expense decreased by $15.6
million, or 43.8%, during 2002.  The decrease in interest income is primarily
the result of a $60.8 million, or 7.8%, decrease in the volume of average
earning assets held in 2002 compared to 2001.  In addition, due to the low
interest rate environment, the average yield on those earning assets fell 135
basis points from 8.05% in 2001 to 6.70% in 2002.  The decrease in interest
expense is also the result of a decline in volume and rates.  Average
interest-bearing liabilities decreased by $71.8 million, or 10.4%, during 2002,
and the average rates paid on those funds decreased 192 basis points from 5.14%
in 2001 to 3.22% in 2002.

Net interest income for 2001 decreased by $1.8 million, or 6%, from 2000.  The
decrease in 2001 from 2000 was the net result of a rapid decrease in interest
rates during 2001 offset somewhat by an increase in volume over 2000.  The
repricing of our fixed-rate time deposits and other borrowings lagged nine to
twelve months on average behind the almost instantaneous repricing of the bulk
of our loans during 2001.

The net interest margin is net interest income expressed as a percentage of
average earning assets.   Our net interest margin increased from 3.49% in 2001
to 3.92% in 2002, a 43 basis point improvement.  Although our net interest
margin steadily improved each quarter during 2002, from 3.32% during the fourth
quarter of 2001 to 4.18% during the fourth quarter of 2002, our ability to
continue to improve our net interest margin going forward will be a challenge as
long as interest rates hold at or slide even lower than the current levels.


PROVISION FOR LOAN LOSSES

The provision for loan losses is the charge to operating earnings necessary to
maintain an adequate allowance for loan losses.  Through the provision, we
maintain an allowance for loan losses that we believe is adequate to absorb
losses inherent in our loan portfolio.  However, future additions to the
allowance may be necessary based on changes in economic conditions and other
internal and external environmental factors.  In addition, various regulatory
agencies, as an integral part of their examination procedures, periodically
review our allowance for loan losses.  Based on their judgments about
information available to them at the time of their examination, such agencies
may require us to recognize additions to the allowance for loan losses.


                                       21
<PAGE>
The provision for loan losses was $2.6 million in 2002.  This is a decline of
$9.6 million from 2001.  The decline is due to a shrinking loan portfolio and
some stabilization in the level of nonperforming loans.

The provision for loan losses increased to $12.2 million in 2001 from $4.1
million in 2000 due primarily to a $7.2 million provision required by the
examiners for the Federal Reserve.  The increased provisions in 2001 were
necessary to cover the rise in nonperforming loans, to keep pace with an
increase in charge-offs, and to reserve for other weaknesses identified in the
loan portfolio.


NONINTEREST INCOME

The following table summarizes noninterest income during the last three years.

<TABLE>
<CAPTION>
     For the Year Ended December 31,               2002                       2001                      2000
     ----------------------------------------------------------------------------------------------------------
                                                                Percent                   Percent
                                                                Change                    Change
                                                   Amount    2002 vs. 2001   Amount    2001 vs. 2000   Amount
     ----------------------------------------------------------------------------------------------------------
<S>                                                <C>       <C>             <C>       <C>             <C>
                                                                     (Dollars In Thousands)

     Service charges on deposit accounts           $ 5,295        -5.0%      $ 5,575        43.6%      $ 3,881
     Mortgage origination fees                         838        19.4%          702        59.9%          439
     Brokerage commissions and fees                    485        58.5%          306       144.8%          125
     ATM/debit card fee income                         329       149.2%          132        -2.9%          136
     Insurance commissions and fees                      6       -96.3%          161       -23.2%          210
     Other commissions and fees                        227         1.3%          224        14.9%          195
     Securities transactions, net                      261       -85.0%        1,741     7,354.2%          (24)
     Earnings of unconsolidated subsidiary               -           -           590         4.8%          563
     Earnings on bank-owned life insurance             478        -2.8%          492       251.4%          140
     Write-down due to impairment in value
       of branch office *                             (372)          -             -           -             -
     Gain (loss) on disposal of assets *                 -           -            (1)       99.4%         (154)
     Gain on sale of branch office *                   100           -             -           -             -
     Gain on sale of unconsolidated subsidiary *         -           -         1,462           -             -
     Other noninterest income                          366       -32.1%          539       120.0%          245
     ----------------------------------------------------------------------------------------------------------
          Total Noninterest Income                 $ 8,013       -32.8%      $11,923       107.1%      $ 5,756
     ==========================================================================================================
<FN>
     *  Non-recurring  items  for  discussion  purposes
</TABLE>

Noninterest income decreased 32.8% in 2002, from $11.9 million in 2001 to $8
million in 2002.  However, as a percentage of average assets, noninterest
income, excluding securities transactions and other non-recurring items, has
been approximately 1.03%, 1.03%, and 0.85% for each of the last three years
ending December 31, 2002, 2001 and 2000, respectively.

Service charges on deposit accounts dropped slightly from 2001 to 2002 as we
continued to promote a free checking product and the average balance per
transaction account increased over 2001, thus reducing the monthly service fees.
The fee income generated from an overdraft privilege product that was launched
in March 2001 and resulted in an increase in revenues that year also tapered off
in 2002.

Mortgage origination fees increased 19.4% in 2002 due to a rise in refinancing
activity as interest rates remained low during the year.  If the demand for
refinancing slows during 2003, we expect our mortgage origination fee income to
decline as well.

Brokerage income increased 58.5% in 2002 to $485,000 during the third year of
that operation.  We do not expect to be able to generate as much income in 2003
as retail investing activity has slowed.

Fee income from ATM and debit cards increased 149.2% in 2002 as the volume of
point-of-sale transactions has increased and, to a lesser degree, we increased
the fees we charge non-bank customers for the use of our ATM's during the year.

Fee income for sales of consumer credit insurance decreased by 96.3% in 2002 as
we moved away from paying our lenders commissions for the product.


                                       22
<PAGE>
Gains on securities transactions decreased nearly $1.5 million in 2002.  There
was a $1.7 million gain on the sale of stock in the Federal Home Loan Mortgage
Corporation in 2001.

We did not record any earnings from our equity investment in an unconsolidated
subsidiary in 2002 because we sold our 50% equity interest in December 2001 for
a gain of approximately $1.5 million.

We recorded a $100,000 gain on the sale of our branch office in Richmond Hill,
Georgia in January 2002.  In December 2002, we recognized a $372,000 write-down
on the impairment of a branch office in Ocala, Florida after an updated
appraisal of the property failed to support the carrying value recorded when the
branch was acquired in December 2000.


NONINTEREST EXPENSE

The following table summarizes noninterest expenses during the last three years.

<TABLE>
<CAPTION>
     For the Year Ended December 31,         2002                     2001                    2000
     ------------------------------------------------------------------------------------------------
                                                        Percent                   Percent
                                                        Change                    Change
                                            Amount   2002 vs. 2001   Amount   2001 vs. 2000   Amount
     ------------------------------------------------------------------------------------------------
<S>                                         <C>      <C>             <C>      <C>             <C>
                                                             (Dollars In Thousands)
     Salaries and wages                     $10,921      -13.7%      $12,648       36.6%      $ 9,259
     Employee benefits                        2,958        8.9%        2,716       20.4%        2,256
     Net occupancy expense of premises        1,716        8.6%        1,580       35.6%        1,165
     Furniture and equipment expense          2,396       -6.1%        2,553       47.4%        1,732
     Amortization of intangible assets            -          -           409       13.6%          360
     Advertising and business development       512      -14.8%          601       14.3%          526
     Supplies and printing                      638      -33.1%          953       51.0%          631
     Telephone and internet charges             638       15.0%          555       48.8%          373
     Postage and courier                        644        5.1%          613       33.6%          459
     Legal and accounting fees                  883       97.5%          447      -13.9%          519
     Conversion and consolidation costs           -          -           313      -62.4%          833
     Other noninterest expense                3,062      -13.3%        3,533       -6.1%        3,761
     ------------------------------------------------------------------------------------------------
          Total Noninterest Expense         $24,368       -9.5%      $26,921       23.1%      $21,874
     ================================================================================================
</TABLE>

Noninterest expense decreased 9.5% in 2002.  As a percentage of average assets,
noninterest expense has been approximately 3.12%, 3.18%, and 3.15% for each of
the last three years ending December 31, 2002, 2001 and 2000, respectively.

Salaries and employee benefits decreased 9.7% in 2002, from $15.4 million to
$13.9 million.  In 2001, we incurred a charge amounting to $2.2 million related
to the cancellation of two executives' employment agreements.  When this amount
is excluded, salaries and employee benefits for 2002 increased 5.3% from 2001 to
2002.  This increase is the result of annual raises, promotions, health
insurance premium increases, etc. as the number of full-time equivalent
employees in the organization actually fell from 318 at the end of 2001 to 314
at the end of 2002.

Occupancy expense increased 8.6% in 2002 due to the addition of new facilities
and an increase in property taxes, insurance, and utilities.  Furniture and
equipment expense decreased 6.1% in 2002 due primarily to a decrease in
depreciation expense.

With the adoption of SFAS No. 142, Goodwill and Other Intangible Assets, on
January 1, 2002, the prior straight-line amortization of our goodwill ceased.
This resulted in a decrease in goodwill amortization cost of $352,000 from 2001.

Legal and accounting fees increased by 97.5% in 2002.  The majority of this
increase can be attributed to an increase in legal fees for the collection and
recovery of problem loans.  Both legal and accounting fees also increased due to
regulatory matters.

Telephone, postage and courier costs all increased as we have geographically
expanded our offices further away from our headquarters in Valdosta over the
past two years.  Most other operating expenses were down in 2002 as a result of
a tighter budgeting process, the consolidation of our banking charters, and
other cost savings measures.


                                       23
<PAGE>
INCOME TAXES

The provision for income tax expense as a percentage of pre-tax income was 30.7%
for 2002.  The difference between the effective rate and the statutory federal
rate of 34% is due primarily to income earned on our investments in and loans to
tax-exempt municipalities and earnings on the cash value of our bank-owned life
insurance.


FOURTH QUARTER RESULTS

For the fourth quarter of 2002, our net income was $1.3 million, or $0.13 per
share, compared to a loss of $4.7 million in the fourth quarter of 2001.  The
loss in 2001 was due primarily to an additional $7.2 million provision for loan
losses recorded during the quarter.  Our net interest margin for the fourth
quarter of 2002 was 4.18% compared to 3.32% in 2001.  The average yield on
earning assets fell 63 basis points to 6.57% in 2002 from 7.20% in 2001.
However, the average rate paid on interest-bearing liabilities improved 160
basis points to 2.81% in 2002 from 4.41% in 2001.


IMPACT  OF  INFLATION

Inflation impacts the growth in total assets in the banking industry and causes
a need to increase equity capital at higher than normal rates to meet capital
adequacy requirements.  We cope with the effects of inflation through managing
our interest rate sensitivity gap position, by periodically reviewing and
adjusting our pricing of services to consider current costs, and through
managing our dividend payout policy relative to our level of income.


CRITICAL ACCOUNTING POLICIES

The preparation of financial statements and the related disclosures in
conformity with accounting principles generally accepted in the United States
requires that management make estimates and assumptions which effect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period.  Actual results could
differ from those estimates.  We believe that our determination of the allowance
for loan losses and the fair value of assets, including the impairment of
goodwill, affect our most significant judgments and estimates used in the
preparation of our consolidated financial statements.  The Company's accounting
policies are described in detail in Note 1 of our Consolidated
Financial Statements provided in Item 8 of this Report.  The following is
a brief description of the Company's critical accounting policies involving
significant management valuation judgment.

Allowance for Loan Losses
The allowance for loan losses represents management's estimate of losses
inherent in the existing loan portfolio.  The allowance for loan losses is
increased by the provision for loan losses charged to expense and reduced by
loans charged off, net of recoveries.  The allowance for loan losses is
determined based on management's assessment of several factors including, but
not limited to, reviews and evaluations of specific loans, changes in the nature
and volume of the loan portfolio, current economic conditions and the related
impact on segments of the loan portfolio, historical loan loss experiences and
the level of classified and nonperforming loans.

Loans are considered impaired if, based on current information and events, it is
probable that the Bank will be unable to collect the scheduled payments of
principal or interest when due according to the contractual terms of the loan
agreement.  The measurement of impaired loans is based on either the fair value
of the underlying collateral, the present value of the future cash flows
discounted at the historical effective interest rate stipulated in the loan
agreement, or the estimated market value of the loan.  In measuring the fair
value of the collateral, management uses assumptions (e.g., discount rate) and
methodologies (e.g., comparison to the recent selling price of similar assets)
consistent with those that would be utilized by unrelated third parties.

Management's assessment is inherently subjective as it requires estimates that
are susceptible to significant revision as more information becomes available.
Changes in the financial condition of individual borrowers, economic conditions,
historical loss experience, or the condition of the various markets in which
collateral may be sold may affect the required level of the allowance for loan
losses and the associated provision for loan losses.  Should cash flow
assumptions or market conditions change, a different amount may be reported for
the allowance for loan losses and the associated provision for loan losses.


                                       24
<PAGE>
Estimates of Fair Value
The estimation of fair value is significant to a number of the Company's assets,
including, but not limited to, investment securities, other real estate owned,
and other repossessed assets.  These are all recorded at either fair value or at
the lower of cost or fair value.  Fair values are volatile and may be influenced
by a number of factors.  Circumstances that could cause estimates of the fair
value of certain assets and liabilities to change include a change in prepayment
speeds, discount rates, or market interest rates.  Our estimates and assumptions
are reviewed periodically and the effects of revisions are reflected in the
consolidated financial statements in the period they are determined to be
necessary.

Fair values for most investment securities are based on quoted market prices.
If quoted market prices are not available, fair values are based on the quoted
prices of similar instruments.  The fair values of other real estate owned are
typically determined based on appraisals by third parties, less estimated costs
to sell.

Estimates of fair value are also required in performing an impairment analysis
of goodwill.  The Company reviews goodwill for impairment on at least an annual
basis and whenever events or circumstances indicate the carrying value may not
be recoverable.  An impairment would be indicated if the carrying value exceeds
the fair value of a reporting unit.


RECENT ACCOUNTING PRONOUNCEMENTS

In management's opinion, there are no recent accounting pronouncements that have
had a material impact on PAB's earnings or financial position as of or for the
year ended December 31, 2002.



ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are subject to exposure from U.S. dollar interest rate changes and
accordingly, we manage our exposure by considering the possible changes in the
net interest margin.  We do not engage in trading activity nor do we classify
any portion of the investment portfolio as held for trading.  We do not engage
in any hedging activities or enter into any derivative instruments with a higher
degree of risk than mortgage-backed securities, which are commonly held pass
through securities.  Finally, we have no material direct exposure to foreign
currency exchange rate risk, commodity price risk, and other market risks.

Interest rates play a major part in the net interest income of a financial
institution.  The sensitivity to rate changes is known as "interest rate risk."
The repricing of interest earning assets and interest-bearing liabilities can
influence the changes in net interest income.  As part of our asset/liability
management program, the timing of repriced assets and liabilities is referred to
as gap management.  It is our policy to maintain a gap ratio in the one-year
time horizon between 0.80 and 1.20.  However, with interest rates at historic
lows and the shape of the interest rate curve, the Company has exceeded policy
limits by adjusting the balance sheet to a more asset-sensitive position.  At
December 31, 2002, our one-year management-adjusted gap ratio of 1.41 was
outside of our policy guidelines, however, this exception to policy was
mitigated by our strategy to position our balance sheet to benefit from an
increase in interest rates.  Also, our assumptions on prepayments speeds, based
in part on the Mortgage Bankers Association's Refinancing Index that reached
record high levels during 2002, may or may not be sustainable throughout the
next year.


                                       25
<PAGE>
The table below has two measures of gap; regulatory and management-adjusted.
The regulatory gap considers only contractual maturities or repricings.  The
management-adjusted gap includes assumptions regarding prepayment speeds on
certain rate sensitive assets, the repricing frequency of interest-bearing
demand and savings accounts, and the stability of core deposit levels, all of
which are adjusted periodically as market conditions change.  The
management-adjusted gap indicates we are highly asset sensitive in relation to
changes in market interest rates in the short-term.  Being asset sensitive would
result in net interest income increasing in a rising rate environment and
decreasing in a declining rate environment.

<TABLE>
<CAPTION>
     CUMULATIVE REPRICING GAP ANALYSIS
                                        3-Month   6-Month    1-Year
      --------------------------------------------------------------
                                         (Dollars in thousands)
<S>                                    <C>       <C>       <C>
     Regulatory Defined

     Rate Sensitive Assets (RSA)       $398,585  $424,976  $461,525
     Rate Sensitive Liabilities (RSL)   324,114   392,723   478,107
      --------------------------------------------------------------
     RSA minus RSL (Gap)               $ 74,471  $ 32,253  $(16,582)

     Gap Ratio (RSA/RSL)                   1.23      1.08      0.97

     Management-Adjusted

     Rate Sensitive Assets (RSA)       $417,803  $463,412  $537,758
     Rate Sensitive Liabilities (RSL)   131,445   200,054   381,773
      --------------------------------------------------------------
     RSA minus RSL (Gap)               $286,358  $263,358  $155,985

     Gap Ratio (RSA/RSL)                   3.18      2.32      1.41
</TABLE>

We use simulation analysis to monitor changes in net interest income due to
changes in market interest rates.  The simulation of rising, declining, and flat
interest rate scenarios allows us to monitor and adjust interest rate
sensitivity to minimize the impact of market interest rate swings.  The analysis
of the impact on net interest income over a twelve-month period is subjected to
increases or decreases in market rates on net interest income and is monitored
on a quarterly basis.  As of year end, the simulation model projected net
interest income would increase 12.7% over the next year if market rates
immediately rose by 200 basis points.  On the other hand, the model projected
net interest income to decrease 27.5% over the next year if market rates
immediately fell by 200 basis points.  The high volatility in our results is due
primarily to our asset-sensitive balance sheet mix and our behavioral
assumptions for repricing and prepayment speeds.  Our policy states that net
interest income cannot be reduced by more than 10% using this analysis, and
technically, we were outside of policy guidelines at year end.  However, this
exception was mitigated because a further 200 basis point drop was not realistic
given that the federal funds rate stood at 1.25%.  If market rates immediately
fell by 100 basis points, a more plausible but still unlikely scenario, our
model projected net interest income to decrease 13.0% over the next year.

The following table shows the results of these projections for net interest
income expressed as a percentage change over net interest income in a flat rate
scenario for both a gradual change in market interest rates over a twelve-month
period and an immediate change, or "shock", in market interest rates.

<TABLE>
<CAPTION>
                       Effect on Net Interest Income
     Market            -----------------------------
     Rate Change       Gradual             Immediate
     -----------       --------           ----------
<S>                    <C>                <C>
     +300 bps             12.3%                15.8%
     +200 bps             11.1%                12.7%
     +100 bps              7.9%                 8.5%
     -100 bps            -11.4%               -13.0%
</TABLE>


                                       26
<PAGE>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

<TABLE>
<CAPTION>
   INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
   ----------------------------------------------------

<S>                                                                                <C>
     Quarterly Financial Summary for 2002 and 2001. . . . . . . . . . . . . . . .  27
     Management's Responsibility For Financial Reporting. . . . . . . . . . . . .  28
     Reports of Independent Public Accountants. . . . . . . . . . . . . . . . . .  29
     Consolidated Balance Sheets at December 31, 2002 and 2001. . . . . . . . . .  31
     Consolidated Statements of Income for the Three Years Ended December 31,
          2002. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  32
     Consolidated Statements of Comprehensive Income (Loss) for the Three Years
          Ended  December 31, 2002. . . . . . . . . . . . . . . . . . . . . . . .  33
     Consolidated Statements of Stockholders' Equity for the Three Years Ended
          December 31, 2002 . . . . . . . . . . . . . . . . . . . . . . . . . . .  34
     Consolidated Statements of Cash Flows for the Three Years Ended December 31,
          2002. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  35
     Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . .  37
</TABLE>


QUARTERLY FINANCIAL SUMMARY FOR 2002 AND 2001

(The sum of the quarterly results presented may not agree with the results for
the full year due to rounding.)

<TABLE>
<CAPTION>
                                                   Quarterly Period Ended
                                        March 31   June 30   September 30    December 31
  ---------------------------------------------------------------------------------------
                                             (In Thousands, Except Per Share Data)
<S>                                     <C>        <C>       <C>            <C>

  Year Ended December 31, 2002:
    Interest income                     $  12,990  $ 12,116  $      11,619  $     11,354
    Interest expense                        6,069     5,150          4,627         4,142
  ---------------------------------------------------------------------------------------
      Net interest income                   6,921     6,966          6,992         7,212
    Provision for loan losses                 456       519            513         1,088
  ---------------------------------------------------------------------------------------
      Net interest income
        after provision for
        loan losses                         6,465     6,447          6,479         6,124
    Other income                            2,186     1,973          2,012         1,842
    Other expenses                          6,113     5,951          6,107         6,197
  ---------------------------------------------------------------------------------------
      Income before
        income taxes                        2,538     2,469          2,384         1,769
    Income tax                                800       769            734           511
  ---------------------------------------------------------------------------------------
      Net income                        $   1,738  $  1,700  $       1,650  $      1,258
  =======================================================================================

    Basic earnings per share            $    0.18  $   0.18  $        0.18  $       0.13
    Diluted earnings per share          $    0.18  $   0.18  $        0.18  $       0.13


  Year Ended December 31, 2001:
    Interest income                     $  16,359  $ 16,410  $      15,453  $     14,492
    Interest expense                        9,412     9,479          8,876         7,833
  ---------------------------------------------------------------------------------------
      Net interest income                   6,947     6,931          6,577         6,659
    Provision for loan losses                 280       301            488        11,151
  ---------------------------------------------------------------------------------------
      Net interest income
        after provision for
        loan losses                         6,667     6,630          6,090        (4,492)
    Other income                            1,912     2,445          2,199         5,367
    Other expenses                          6,178     6,382          6,451         7,909
  ---------------------------------------------------------------------------------------
      Income (loss) before
        income taxes                        2,401     2,693          1,837        (7,034)
    Income tax (benefit)                      721       854            526        (2,352)
  ---------------------------------------------------------------------------------------
      Net income (loss)                 $   1,680  $  1,839  $       1,311  $     (4,682)
  =======================================================================================

    Basic earnings (loss) per share     $    0.18  $   0.19  $        0.14  $      (0.49)
    Diluted earnings (loss) per share   $    0.18  $   0.19  $        0.14  $      (0.49)
</TABLE>


                                       27
<PAGE>
MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL REPORTING

We are responsible for the preparation of the financial statements, related
financial data and other information in this Annual Report.  The financial
statements are prepared in accordance with accounting principles generally
accepted in the United States and include amounts based on management's
estimates and judgment where appropriate.  Financial information appearing
throughout this Report is consistent with the financial statements.

Our accounting system, which records, summarizes and reports financial
transactions, is supported by an internal control structure which provides
reasonable assurance that assets are safeguarded and that transactions are
recorded in accordance with our policies and established accounting procedures.
As an integral part of the internal control structure, we maintain a
professional staff of internal auditors who monitor compliance with and assess
the effectiveness of the internal control structure.

The Audit Committee of the Board of Directors, composed solely of outside
directors, meets regularly with management, internal auditors and independent
public accountants to review matters relating to financial reporting, internal
control structure and the nature, extent and results of the audit effort.  The
independent public accountants and the internal auditors have access to the
Audit Committee with or without management present.

The financial statements have been audited by Mauldin & Jenkins, LLC,
independent public accountants, who rendered an independent opinion on our
financial statements.  Their appointment was recommended by the Audit Committee
and approved by the Board of Directors.  Their examination provides an objective
assessment of the degree to which we meet our responsibility for financial
reporting.  Their opinion on the financial statements is based on auditing
procedures, which include reviewing the internal control structure to determine
the timing and scope of audit procedures and performing selected tests of
transactions and records as they deem appropriated.  These auditing procedures
are designed to provide a reasonable level of assurance that the financial
statements are fairly presented in all material respects.


/s/ Michael E. Ricketson
------------------------------------
Michael E. Ricketson
President and
Chief Executive Officer

/s/ Donald J. Torbert, Jr.
------------------------------------
Donald J. Torbert, Jr., CPA
Senior Vice President and
Chief Financial Officer

/s/ Laura A. Hancock
------------------------------------
Laura A. Hancock, CPA
Vice President and
Controller


                                       28
<PAGE>
                          INDEPENDENT AUDITOR'S REPORT


To the Board of Directors
PAB Bankshares, Inc.
Valdosta, Georgia

          We  have  audited  the accompanying consolidated balance sheets of PAB
BANKSHARES,  INC.  AND  SUBSIDIARIES  as  of December 31, 2002 and 2001, and the
related  consolidated  statements of income, comprehensive income, stockholders'
equity and cash flows for each of the two years in the period ended December 31,
2002.  These  financial  statements  are  the  responsibility  of  the Company's
management.  Our  responsibility  is  to  express  an opinion on these financial
statements based on our audits. The financial statements of PAB Bankshares, Inc.
and  subsidiaries  for  the  year  ended December 31, 2000 were audited by other
auditors,  whose  report dated January 26, 2001 expressed an unqualified opinion
on  those  statements.

          We  conducted  our  audits  in  accordance  with  auditing  standards
generally accepted in the United States of America. Those standards require that
we  plan  and perform the audit to obtain reasonable assurance about whether the
financial  statements  are  free  of  material  misstatement.  An audit includes
examining,  on  a test basis, evidence supporting the amounts and disclosures in
the  financial  statements.  An  audit  also  includes  assessing the accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating  the  overall  financial  statement presentation. We believe that our
audits  provide  a  reasonable  basis  for  our  opinion.

          In  our  opinion,  the  consolidated  financial statements referred to
above  present  fairly,  in all material respects, the financial position of PAB
Bankshares,  Inc.  and  subsidiaries,  as of December 31, 2002 and 2001, and the
results  of  their  operations and their cash flows for each of the two years in
the  period  ended  December  31, 2002, in conformity with accounting principles
generally  accepted  in  the  United  States  of  America.




                                      /s/  MAULDIN  &  JENKINS,  LLC



Albany, Georgia
January 24, 2003


                                       29
<PAGE>
                          INDEPENDENT AUDITOR'S REPORT




Board of Directors and Stockholders
PAB Bankshares, Inc. and Subsidiaries

We  have  audited  the  accompanying consolidated statements of condition of PAB
Bankshares,  Inc. and its Subsidiaries as of December 31, 2000 and 1999, and the
related  consolidated  statements of income, comprehensive income, stockholders'
equity  and  cash  flows for the years then ended.  These consolidated financial
statements  are  the  responsibility  of  the  Company's  management.  Our
responsibility  is  to  express  an  opinion  on  these  consolidated  financial
statements  based on our audits.  We did not audit the statement of condition as
of  December  31,  2000  of Friendship Community Bank, a wholly-owned subsidiary
which statement reflects total assets constituting 6.2% as of December 31, 2000,
of  the  related consolidated total assets.  That statement was audited by other
auditors  whose  report has been furnished to us, and our opinion, insofar as it
relates  to  the amounts included for Friendship Community Bank, is based solely
on  the  report  of  the  other  auditors.

We conducted our audit in accordance with generally accepted auditing standards.
Those  standards require that we plan and perform the audit to obtain reasonable
assurance  about  whether  the  consolidated  financial  statements  are free of
material  misstatement.  As  audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the consolidated financial statements.
An  audit also includes assessing the accounting principles used and significant
estimates  made  by  management,  as  well  as  evaluating the overall financial
statement  presentation.  We believe that our audits and the report of the other
auditors  provide  a  reasonable  basis  for  our  opinion.

In  our  opinion,  based on our audits and the report of the other auditors, the
consolidated  financial  statements  referred  to  above  present fairly, in all
material  respects,  the  financial  position  of  PAB  Bankshares, Inc. and its
Subsidiaries  as  of  December  31,  2000  and  1999,  and  the results of their
operations  and  their  cash  flows  for the years then ended in conformity with
generally  accepted  accounting  principles.

We  previously  audited  and  reported on the consolidated statements of income,
comprehensive  income,  stockholders'  equity  and cash flows of PAB Bankshares,
Inc.  and  its Subsidiaries for the year ended December 31, 1998, prior to their
restatement  for  the  1999  pooling  of  interests.  The  contribution  of  PAB
Bankshares,  Inc. and Subsidiaries to revenues and net income for the year ended
December  31,  1998  represented  84% and 83% of the respective restated totals.
Separate  financial  statements  of  the  other  companies  included in the 1998
restated  consolidated statements of income, comprehensive income, stockholders'
equity,  and  cash  flows  were  audited  and  reported  on  separately by other
auditors.  We  also  audited  the  combination  of the accompanying consolidated
statements  of  income,  retained  earnings,  and  cash flows for the year ended
December  31, 1998, after restatement for the 1999 pooling of interests.  In our
opinion,  such  consolidated statements have been properly combined on the basis
described  in  Note  1  of  the  notes to the consolidated financial statements.


/s/ Stewart, Fowler & Stalvey, P.C.
-----------------------------------


Valdosta, Georgia
January 26, 2001


                                       30
<PAGE>
<TABLE>
<CAPTION>
                          PAB BANKSHARES, INC. AND SUBSIDIARIES
                               CONSOLIDATED BALANCE SHEETS
                               DECEMBER 31, 2002 AND 2001

----------------------------------------------------------------------------------------


                                                                2002           2001
                                                            -------------  -------------
<S>                                                         <C>            <C>
ASSETS
  Cash and due from banks                                   $ 25,199,278   $ 28,188,779
  Interest-bearing deposits in other banks                       974,848     15,940,115
  Federal funds sold                                          30,784,000     24,205,000
  Investment securities, at fair value                        98,025,604    113,454,135

  Loans                                                      555,238,242    637,825,571
  Allowance for loan losses                                  (12,096,988)   (15,765,373)
                                                            -------------  -------------
      Net loans                                              543,141,254    622,060,198
                                                            -------------  -------------

  Premises and equipment                                      22,555,234     23,508,083
  Goodwill                                                     5,984,604      5,984,604
  Cash value of bank-owned life insurance policies             9,950,135      9,471,936
  Foreclosed assets                                            1,284,487      1,311,933
  Other assets                                                10,011,854     15,018,471
                                                            -------------  -------------

      Total assets                                          $747,911,298   $859,143,254
                                                            =============  =============

LIABILITIES AND STOCKHOLDERS' EQUITY
  Deposits:
    Noninterest-bearing                                     $ 87,667,055   $ 81,493,517
    Interest-bearing                                         519,063,178    638,904,142
                                                            -------------  -------------
      Total deposits                                         606,730,233    720,397,659
                                                            -------------  -------------

  Federal funds purchased and securities sold under
    agreements to repurchase                                  17,520,242     15,708,621
  Advances from the Federal Home Loan Bank                    36,144,910     38,228,478
  Guaranteed preferred beneficial interests in debentures
    (trust preferred securities)                              10,000,000     10,000,000
  Other liabilities                                            6,251,175      9,436,613
                                                            -------------  -------------
      Total liabilities                                      676,646,560    793,771,371
                                                            -------------  -------------

  Stockholders' equity:
    Preferred stock, no par value; 1,500,000 shares
      authorized; no shares issued                                     -              -
    Common stock, no par value; 98,500,000 shares
      authorized; 9,430,413 and 9,409,913 shares issued        1,217,065      1,217,065
    Additional paid-in capital                                28,785,476     28,657,351
    Retained earnings                                         40,228,327     34,917,898
    Accumulated other comprehensive income                     1,033,870        579,569
                                                            -------------  -------------
      Total stockholders' equity                              71,264,738     65,371,883
                                                            -------------  -------------

      Total liabilities and stockholders' equity            $747,911,298   $859,143,254
                                                            =============  =============

See accompanying notes to consolidated financial statements.
</TABLE>


                                       31
<PAGE>
<TABLE>
<CAPTION>
                               PAB BANKSHARES, INC. AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF INCOME
                            YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

---------------------------------------------------------------------------------------------------


                                                               2002          2001          2000
                                                            -----------  ------------  ------------
<S>                                                         <C>          <C>           <C>
INTEREST INCOME
  Interest and fees on loans                                $42,645,210  $54,162,805   $51,045,640
  Interest and dividends on investment securities:
    Taxable                                                   4,637,821    5,468,147     4,028,030
    Nontaxable                                                  262,446      197,206       226,732
  Other interest income                                         533,048    2,886,541     2,225,325
                                                            -----------  ------------  ------------
        Total interest income                                48,078,525   62,714,699    57,525,727
                                                            -----------  ------------  ------------

INTEREST EXPENSE
  Interest on deposits                                       17,068,902   31,368,578    24,209,959
  Interest on federal funds purchased and securities sold
    under agreements to repurchase                              298,310      550,840       668,246
  Interest on Federal Home Loan Bank advances                 2,013,671    3,212,932     3,796,126
  Other interest expense                                        607,778      468,029             -
                                                            -----------  ------------  ------------
      Total interest expense                                 19,988,661   35,600,379    28,674,331
                                                            -----------  ------------  ------------

      Net interest income                                    28,089,864   27,114,320    28,851,396

Provision for loan losses                                     2,575,000   12,220,250     4,098,663
                                                            -----------  ------------  ------------
      Net interest income after provision for loan losses    25,514,864   14,894,070    24,752,733
                                                            -----------  ------------  ------------

OTHER INCOME
  Service charges on deposit accounts                         5,294,753    5,574,871     3,880,560
  Other fee income                                            1,884,885    1,524,909     1,105,167
  Securities transactions, net                                  261,178    1,740,720       (23,630)
  Equity in earnings of unconsolidated subsidiary                     -      590,370       562,979
  Other noninterest income                                      572,341    2,492,190       231,290
                                                            -----------  ------------  ------------
      Total other income                                      8,013,157   11,923,060     5,756,366
                                                            -----------  ------------  ------------

OTHER EXPENSES
  Salaries and employee benefits                             13,879,438   15,364,051    11,515,415
  Occupancy expense of premises                               1,716,338    1,579,803     1,164,663
  Furniture and equipment expense                             2,396,318    2,552,914     1,731,930
  Amortization of goodwill and other intangibles                      -      408,635       359,520
  Other noninterest expense                                   6,376,134    7,105,193     7,102,166
                                                            -----------  ------------  ------------
      Total other expenses                                   24,368,228   26,920,596    21,873,694
                                                            -----------  ------------  ------------

      Income (loss) before income tax expense (benefit)       9,159,793     (103,466)    8,635,405
Income tax expense (benefit)                                  2,812,954     (250,626)    2,908,808
                                                            -----------  ------------  ------------

      Net income                                            $ 6,346,839  $   147,160   $ 5,726,597
                                                            ===========  ============  ============

EARNINGS PER COMMON SHARE:
  Basic                                                     $      0.67  $      0.02   $      0.60
                                                            ===========  ============  ============
  Diluted                                                   $      0.67  $      0.02   $      0.60
                                                            ===========  ============  ============

See accompanying notes to consolidated financial statements.
</TABLE>


                                       32
<PAGE>
<TABLE>
<CAPTION>
                           PAB BANKSHARES, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
                        YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

-------------------------------------------------------------------------------------------


                                                         2002          2001         2000
                                                      -----------  ------------  ----------
<S>                                                   <C>          <C>           <C>
Net income                                            $6,346,839   $   147,160   $5,726,597

Other comprehensive income (loss):
  Unrealized holding gains arising during
    the period, net of tax of $322,761; $442,595;
    and $531,975                                         626,678       859,035    1,032,658
  Reclassification adjustment for (gains) losses
    included in net income, net of (tax) benefit of
    ($88,801); ($591,845); and $8,034                   (172,377)   (1,148,875)      15,596
                                                      -----------  ------------  ----------
                                                         454,301      (289,840)   1,048,254
                                                      -----------  ------------  ----------

      Comprehensive income (loss)                     $6,801,140   $  (142,680)  $6,774,851
                                                      ===========  ============  ==========

See accompanying notes to consolidated financial statements.
</TABLE>


                                       33
<PAGE>
<TABLE>
<CAPTION>
                                      PAB BANKSHARES, INC. AND SUBSIDIARIES
                                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                                   YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

-----------------------------------------------------------------------------------------------------------------


                                                                                      ACCUMULATED
                                      COMMON STOCK        ADDITIONAL                     OTHER
                                 ----------------------    PAID-IN       RETAINED    COMPREHENSIVE
                                   SHARES    PAR VALUE     CAPITAL       EARNINGS    INCOME (LOSS)      TOTAL
                                 ----------  ----------  ------------  ------------  --------------  ------------
<S>                              <C>         <C>         <C>           <C>           <C>             <C>

BALANCE, DECEMBER 31, 1999       9,617,406   $1,217,065  $31,236,921   $37,336,119   $    (178,845)  $69,611,260
  Net income                             -            -            -     5,726,597               -     5,726,597
  Other comprehensive income             -            -            -             -       1,048,254     1,048,254
  Cash dividends declared,
    $.4325 per share                     -            -            -    (4,122,994)              -    (4,122,994)
  Stock acquired and cancelled
    under stock repurchase plan   (119,616)           -   (1,512,152)            -               -    (1,512,152)
  Stock options exercised            4,157            -       29,515             -               -        29,515
                                 ----------  ----------  ------------  ------------  --------------  ------------
BALANCE, DECEMBER 31, 2000       9,501,947    1,217,065   29,754,284    38,939,722         869,409    70,780,480
  Net income                             -            -            -       147,160               -       147,160
  Other comprehensive loss               -            -            -             -        (289,840)     (289,840)
  Cash dividends declared,
    $.44 per share                       -            -            -    (4,168,984)              -    (4,168,984)
  Stock acquired and cancelled
    under stock repurchase plan   (123,534)           -   (1,293,808)            -               -    (1,293,808)
  Stock options exercised           31,500            -      196,875             -               -       196,875
                                 ----------  ----------  ------------  ------------  --------------  ------------
BALANCE, DECEMBER 31, 2001       9,409,913    1,217,065   28,657,351    34,917,898         579,569    65,371,883
  Net income                             -            -            -     6,346,839               -     6,346,839
  Other comprehensive income             -            -            -             -         454,301       454,301
  Cash dividends declared,
    $.11 per share                       -            -            -    (1,036,410)              -    (1,036,410)
  Stock options exercised           20,500            -      128,125             -               -       128,125
                                 ----------  ----------  ------------  ------------  --------------  ------------
BALANCE, DECEMBER 31, 2002       9,430,413   $1,217,065  $28,785,476   $40,228,327   $   1,033,870   $71,264,738
                                 ==========  ==========  ============  ============  ==============  ============

See accompanying notes to consolidated financial statements.
</TABLE>


                                       34
<PAGE>
<TABLE>
<CAPTION>
                                   PAB BANKSHARES, INC. AND SUBSIDIARIES
                                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                               YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

----------------------------------------------------------------------------------------------------------


                                                                   2002           2001           2000
                                                               -------------  -------------  -------------
<S>                                                            <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net income                                                   $  6,346,839   $    147,160   $  5,726,597
  Adjustments to reconcile net income to net cash
    provided by operating activities:
    Depreciation, amortization and accretion, net                 3,112,790      2,674,847      2,019,426
    Provision for loan losses                                     2,575,000     12,220,250      4,098,663
    Provision for deferred taxes                                  1,180,948     (3,343,255)      (968,127)
    Net realized (gain) loss on securities transactions            (261,178)    (1,740,720)        23,630
    Net (gain) loss on disposal of assets                              (404)           839        153,817
    Gain on sale of interest in unconsolidated subsidiary                 -     (1,461,739)             -
    Gain on sale of branch office                                  (100,000)             -              -
    Equity in earnings of unconsolidated subsidiary                       -       (590,370)      (562,979)
    Dividends received from unconsolidated subsidiary                     -        350,000        500,000
    Write down due to impairment in value of branch office          372,313              -              -
    Increase in cash value of bank-owned life insurance            (478,199)      (491,579)      (139,958)
    Increase in deferred compensation accrual                        88,063      1,156,175        176,877
    Increase (decrease) in retirement and severance accruals       (402,362)     1,436,388              -
    (Increase) decrease in interest receivable                    2,870,401        443,054       (969,909)
    Increase (decrease) in interest payable                      (1,981,829)        80,769        774,898
    (Increase) decrease in taxes receivable                         628,882        144,270       (892,703)
    Decrease in taxes payable                                             -              -       (340,497)
    Net change in other assets and other liabilities                513,982     (1,574,011)     1,679,617
                                                               -------------  -------------  -------------

      Net cash provided by operating activities                  14,465,246      9,452,078     11,279,352
                                                               -------------  -------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES
  (Increase) decrease in interest-bearing deposits
    in other banks                                               14,965,267     (2,526,095)    (1,477,548)
  (Increase) decrease in federal funds sold                      (6,579,000)    19,210,000    (11,935,000)
  Activities on securities available for sale:
    Purchases                                                   (76,717,640)   (72,833,848)    (4,003,944)
    Proceeds from sales and calls                                64,734,595     16,468,305        103,933
    Proceeds from maturities and paydowns                        27,114,382     30,620,307     11,707,704
  Purchase of restricted and other equity securities               (980,150)    (1,637,600)      (163,500)
  Proceeds from redemption of restricted and
    other equity securities                                       1,688,500         85,000        456,200
  Net (increase) decrease in loans                               63,295,276    (63,674,464)   (65,053,345)
  Purchase of premises and equipment                             (3,203,850)    (3,332,730)    (7,437,686)
  Proceeds from disposal of assets                                2,218,559      1,799,167        924,785
  Proceeds from sale of interest in unconsolidated subsidiary             -      1,800,000              -
  Net proceeds from sale of branch office                         7,748,200              -              -
  Purchase of bank-owned life insurance polices                           -              -     (6,265,261)
  Proceeds from redemption of life insurance policies                     -         60,998        511,031
  Net cash received in purchase acquisition                               -              -      1,526,565
                                                               -------------  -------------  -------------

      Net cash (used in) provided by investing activities        94,284,139    (73,960,960)   (81,106,066)
                                                               -------------  -------------  -------------
</TABLE>


                                       35
<PAGE>
<TABLE>
<CAPTION>
                                    PAB BANKSHARES, INC. AND SUBSIDIARIES
                                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

------------------------------------------------------------------------------------------------------------


                                                                     2002           2001           2000
                                                                --------------  -------------  -------------
<S>                                                             <C>             <C>            <C>
CASH FLOWS FROM FINANCING ACTIVITIES
  Net increase (decrease) in deposits                           $(109,503,044)  $ 83,217,921   $ 76,610,058
  Net increase (decrease) in federal funds purchased
    and securities sold under repurchase agreements                 1,811,621      3,543,030     (1,662,503)
  Advances from the Federal Home Loan Bank                            331,000        700,000     27,770,000
  Payments on Federal Home Loan Bank advances                      (2,414,568)   (21,172,804)   (29,180,958)
  Cash paid to former stockholders on acquisition                           -     (7,667,280)             -
  Proceeds on issuance of guaranteed preferred beneficial
    interests in debentures                                                 -     10,000,000              -
  Dividends paid                                                   (2,073,020)    (4,179,108)    (4,054,117)
  Proceeds from the exercise of stock options                         128,125        196,875         29,515
  Repurchase of preferred stock in REIT subsidiaries                  (19,000)             -              -
  Acquisition of stock under stock repurchase plans                         -     (1,293,808)    (1,512,152)
  Costs capitalized on issuance of guaranteed preferred
    beneficial interest in debentures                                       -       (344,500)             -
                                                                --------------  -------------  -------------

         Net cash (used in) provided by financing activities     (111,738,886)    63,000,326     67,999,843
                                                                --------------  -------------  -------------


Net decrease in cash and due from banks                            (2,989,501)    (1,508,556)    (1,826,871)

Cash and due from banks at beginning of period                     28,188,779     29,697,335     31,524,206
                                                                --------------  -------------  -------------

Cash and due from banks at end of period                        $  25,199,278   $ 28,188,779   $ 29,697,335
                                                                ==============  =============  =============


SUPPLEMENTAL DISCLOSURES OF CASH FLOW
  INFORMATION
  Cash paid during the period for:
    Interest                                                    $  21,970,490   $ 35,519,610   $ 27,899,433
                                                                ==============  =============  =============

    Taxes                                                       $   1,384,810   $  2,948,358   $  4,626,725
                                                                ==============  =============  =============

NONCASH INVESTING AND FINANCING TRANSACTIONS
  Increase (decrease) in unrealized gains on securities
    available for sale                                          $     688,114   $   (438,972)  $  1,597,178
                                                                ==============  =============  =============

  Purchase price and debt incurred on acquisition               $           -   $          -   $  7,667,280
                                                                ==============  =============  =============

See accompanying notes to consolidated financial statements.
</TABLE>


                                       36
<PAGE>
                      PAB BANKSHARES, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------

NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         NATURE  OF  BUSINESS

           PAB  Bankshares,  Inc,  (the Company) is a bank holding company whose
           business  is  primarily conducted by its wholly-owned commercial bank
           subsidiary,  The  Park  Avenue  Bank  (the  Bank).  The  Bank  is  a
           state-chartered,  member  bank of the Federal Reserve System that was
           originally  founded  in  1956  in  Valdosta, Lowndes County, Georgia.
           Through  the Bank, the Company offers a broad range of commercial and
           consumer  banking  products  and services to customers located in the
           local market areas listed below. The Company and the Bank are subject
           to  the  regulations  of  certain  federal and state agencies and are
           periodically  examined  by  those  regulatory  agencies.

<TABLE>
<CAPTION>
          BANKING LOCATION                                # OF OFFICES
          --------------------------------------  -----------------------------
<S>                                               <C>
          Valdosta, Lowndes County, Georgia       3 (including the main office)
          Lake Park, Lowndes County, Georgia      1
          Adel, Cook County, Georgia              1
          Bainbridge, Decatur County, Georgia     3
          Cairo, Grady County, Georgia            1
          Statesboro, Bulloch County, Georgia     2
          Baxley, Appling County, Georgia         1
          Hazlehurst, Jeff Davis County, Georgia  1
          McDonough, Henry County, Georgia        1
          Ocala, Marion County, Florida           2
          Oakwood, Hall County, Georgia           1
          Duluth, Gwinnett County, Georgia        1 (loan production office)
</TABLE>

           In  addition  to  the  banking products and services, the Bank offers
           brokerage,  insurance,  annuity,  and investment planning services to
           its  customers  from  its  office  in  Valdosta,  Georgia.

           The  Company  also  owns  PAB  Bankshares Capital Trust I, a Delaware
           statutory  business  trust. This non-operating subsidiary was created
           in  2001  for  the sole purpose of issuing trust preferred securities
           and  investing  the  proceeds  in  subordinated  debt  issued  by the
           Company,  all  of  which  is  described  more  fully  in  Note  10.

         BASIS  OF  PRESENTATION  AND  ACCOUNTING  ESTIMATES

           The  consolidated  financial  statements  include the accounts of the
           Company  and  its subsidiaries. Significant intercompany transactions
           and  balances  are  eliminated  in  consolidation.

           In  preparing  financial  statements  in  conformity  with accounting
           principles  generally  accepted  in  the  United  States  of America,
           management  is required to make estimates and assumptions that affect
           the  reported amounts of assets and liabilities and the disclosure of
           contingent  assets  and  liabilities as of the balance sheet date and
           the  reported  amounts  of revenues and expenses during the reporting
           period.  Actual  results  could differ from those estimates. Material
           estimates  that are particularly susceptible to significant change in
           the  near  term relate to the determination of the allowance for loan
           losses,  the  valuation  of  goodwill,  the  valuation  of foreclosed
           assets,  and  deferred  taxes.

         CASH,  DUE  FROM  BANKS  AND  CASH  FLOWS

           For  purposes  of  reporting  cash  flows,  cash  and  due from banks
           includes  cash  on  hand,  cash  items  in  process of collection and
           amounts  due  from  banks. Cash flows from loans, federal funds sold,
           federal  funds  purchased  and  securities  sold  under  repurchase
           agreements,  and  deposits  are  reported  net.


                                       37
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         INTEREST  BEARING  DEPOSITS  IN  OTHER  BANKS

           Interest-bearing  deposits  in  other  banks  are primarily overnight
           funds  or funds which mature within one year and are carried at cost.

         INVESTMENT  SECURITIES

           Debt  securities  that management has the positive intent and ability
           to  hold  to maturity are classified as held to maturity and recorded
           at  amortized  cost.  All debt securities are classified as available
           for  sale and recorded at fair value with unrealized gains and losses
           excluded  from  earnings  and reported in other comprehensive income,
           net  of  the related deferred tax effect. Restricted and other equity
           securities  without a readily determinable fair value are recorded at
           cost  and  periodically  evaluated  for  impairment.  Included  in
           restricted  equity  securities are the Bank's required investments in
           the Federal Reserve Bank of Atlanta and the Federal Home Loan Bank of
           Atlanta.

           Purchase  premiums  and  discounts  are recognized in interest income
           using the interest method based on the terms of the securities. Gains
           and  losses  on  the  sale  of  securities  are  determined using the
           specific  identification  method.  Declines  in  the  fair  value  of
           securities  below  their  cost  that  are  deemed  to  be  other than
           temporary  are  reflected  in  earnings  as  realized  losses.

         LOANS

           Loans  are  reported  at  their  outstanding  principal balances less
           unearned  income,  net  deferred  fees,  and  the  allowance for loan
           losses.  Interest  income is accrued on the unpaid principal balance.
           Loan  origination fees, net of certain direct loan origination costs,
           are  deferred  and  recognized  as  an adjustment of the related loan
           yield  over  the life of the loan using a method which approximates a
           level  yield.

           The  accrual  of  interest  on  loans  is  discontinued  when,  in
           management's  opinion, the borrower may be unable to meet payments as
           they  become  due,  unless  the  loan  is  well-secured. All interest
           accrued  but  not  collected  for loans that are placed on nonaccrual
           status  or  charged off is reversed against interest income. Interest
           income  on  nonaccrual  loans  is subsequently recognized only to the
           extent  cash  payments  are  received  until  the loan is returned to
           accrual  status.

           The  allowance for loan losses is established through a provision for
           loan  losses  charged to expense. Loan losses are charged against the
           allowance  when  management  believes  the  collectibility  of  the
           principal  is  unlikely.  Subsequent  recoveries  are credited to the
           allowance.

           The  allowance is an amount that management believes will be adequate
           to  absorb  estimated losses in the loan portfolio. The allowance for
           loan  losses  is  evaluated  on  a regular basis by management and is
           based  upon management's periodic review of the collectibility of the
           loans in light of historical experience, the nature and volume of the
           loan  portfolio,  adverse  situations  that may affect the borrower's
           ability  to  repay,  estimated value of any underlying collateral and
           prevailing  economic  conditions.  This  evaluation  is  inherently
           subjective  as  it  requires  estimates  that  are  susceptible  to
           significant  revision  as  more  information becomes available. While
           management  uses  the  best  information  available  to  make  the
           evaluation,  future  adjustments to the allowance may be necessary if
           there  are  significant  changes in economic conditions. In addition,
           regulatory  agencies,  as  an  integral  part  of  their  examination
           process, periodically review the Company's allowance for loan losses,
           and  may require the Company to make additions to the allowance based
           on  their judgment about information available to them at the time of
           their  examinations.


                                       38
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         LOANS  (CONTINUED)

           A loan is considered impaired when it is probable the Company will be
           unable  to  collect  all  principal  and  interest  payments  due  in
           accordance with the contractual terms of the loan agreement. Impaired
           loans  are  measured  by  either the present value of expected future
           cash  flows  discounted  at  the  loan's effective interest rate, the
           loan's  obtainable  market price, or the fair value of the collateral
           if  the  loan  is  collateral dependent. The amount of impairment, if
           any,  and  any  subsequent  changes are included in the allowance for
           loan  losses.

         PREMISES AND EQUIPMENT

           Land  is  carried at cost. Buildings and equipment are stated at cost
           less  accumulated  depreciation  computed  principally  by  the
           straight-line  method  over the estimated useful lives of the assets.

         GOODWILL

           In  June 2001, the Financial Accounting Standards Board (FASB) issued
           SFAS  No.  141, Business Combinations, and SFAS No. 142, Goodwill and
           Other  Intangible  Assets.  SFAS  No.  142 requires that all business
           combinations  consummated after June 30, 200l be accounted for by the
           purchase  method  unless the combination was initiated on or prior to
           that  date  and  it  meets  the  conditions  to  be  accounted by the
           pooling-of-interests  method  in  accordance with APB Opinion No. 16,
           Business  Combinations.  Under  SFAS No. 141, goodwill and intangible
           assets that management concludes have indefinite useful lives will no
           longer  be  amortized,  but  will  be  subject  to  impairment  tests
           performed  at  least annually. SFAS No. 142 also required the Company
           to  perform  a  transitional  impairment  test  of  all  previously
           recognized  goodwill  and  to  assign  all  recognized  assets  and
           liabilities  to reporting units. Other identifiable intangible assets
           will  continue  to  be  amortized  over  their  useful  lives.

           During  2002,  the  Company  performed  the  initial and the required
           annual  impairment  tests of goodwill. As a result of these tests, no
           amount  was  charged  to  earnings  for  impairment  in  2002.

           In  October  2002,  the  FASB  issued  SFAS  No. 147, Acquisitions of
           Certain  Financial Institutions. SFAS No. 147 removed acquisitions of
           financial  institutions from the scope of SFAS No. 72, Accounting for
           Certain  Acquisitions  of  Banking  or  Thrift  Institutions,  which
           permitted  the  recognition and subsequent amortization of any excess
           of  the  fair  value  of  liabilities  assumed over the fair value of
           tangible  and  identifiable  intangible  assets  acquired  as  an
           unidentifiable intangible asset. For a transaction that is a business
           combination, SFAS No. 147 requires that the unidentifiable intangible
           asset acquired be recognized as goodwill and accounted for under SFAS
           No.  142.  SFAS No. 147 also amended SFAS No. 144, Accounting for the
           Impairment  or Disposal of Long-Lived Assets, to include in its scope
           long-term  borrower-relationship  intangible  assets  of  financial
           institutions  such  as depositor-and-borrower-relationship intangible
           assets  and  credit cardholder intangible assets. Consequently, those
           intangible  assets  are  subject  to  the same undiscounted cash flow
           recoverability  test  and impairment loss recognition and measurement
           provisions that SFAS No. 144 requires of other long-lived assets that
           are  held  and used. The application of SFAS No. 147 as of October 1,
           2002  had  no  effect  on  the  Company's  consolidated  financial
           statements.


                                       39
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         FORECLOSED ASSETS

           Foreclosed  assets  represent  other  real  estate  owned  and  other
           repossessions  acquired  through,  or in lieu of, loan foreclosure or
           other  proceedings.  Foreclosed  assets  are  held  for  sale and are
           carried  at  the  lower of cost or fair value less estimated disposal
           costs.  Any  write-down  to  fair  value  at  the time of transfer to
           foreclosed  assets  is  charged  to  the  allowance  for loan losses.
           Revenue  and  expenses  from  operations and changes in the valuation
           allowance  are  included  in  net  expenses  from  foreclosed assets.

         INCOME  TAXES

           Deferred  income  tax assets and liabilities are determined using the
           balance  sheet  method. Under this method, the net deferred tax asset
           or  liability is determined based on the tax effects of the temporary
           differences  between  the  book  and tax bases of the various balance
           sheet assets and liabilities and gives current recognition to changes
           in  tax  rates  and  laws.

         REAL  ESTATE  INVESTMENT  TRUSTS

           In  1999,  the  Company  formed  two  real  estate  investment trusts
           (REIT's)  and two intermediate REIT holding companies as subsidiaries
           of  the Bank. The REIT's were established to realize state income tax
           benefits and to provide the Bank with ready access to capital markets
           if  additional  capital  were needed. The REIT holding companies were
           established  to  provide  assistance  in  managing  the  Company's
           investment  in the REIT's. To comply with Federal tax law, a minority
           interest  in the non-voting, cumulative preferred stock of the REIT's
           was  issued  to  certain  directors,  officers  and  employees of the
           Company.  The  $500  par  value  preferred  stock  pays  an 8% annual
           dividend. The total minority interest of the REIT's included in other
           liabilities  was  $107,000  and  $126,000 as of December 31, 2002 and
           2001,  respectively.

         STOCK  COMPENSATION  PLANS

           At  December  31,  2002,  the  Company  had  two stock-based employee
           compensation  plans,  which  are described in more detail in Note 18.
           The  Company  accounts  for  those  plans  under  the recognition and
           measurement  principles  of Accounting Principles Board (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 those plans had
           an  exercise  price equal to the market value of the underlying stock
           on  the  date  of  grant.  In addition, the FASB issued SFAS No. 148,
           Accounting  for  Stock-Based Compensation - Transition and Disclosure
           in  December  2002.  SFAS No. 148 amends SFAS No. 123, Accounting for
           Stock-Based  Compensation,  to  provide  alternative  methods  of
           transition  for  an entity that voluntarily changes to the fair value
           based  method of accounting for stock-based employee compensation. It
           also  amends  the  disclosure  provisions  of SFAS No. 123 to require
           prominent  disclosure  about the effects on reported net income of an
           entity's  accounting  policy  decisions  with  respect to stock-based
           employee  compensation.  The  Company  has  not  elected to adopt the
           recognition  provisions  of  this  Statement for stock-based employee
           compensation  and has elected to continue with accounting methodology
           in  Opinion  No.  25  as  permitted  by  SFAS  No.  123.


                                       40
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE 1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

         STOCK  COMPENSATION  PLANS

           The following table illustrates the effect on net income and earnings
           per share for the years ended December 31, 2002, 2001 and 2000 if the
           Company  had  applied  the  fair  value  recognition  provisions  of
           Statement  of  Financial  Accounting  Standards  (SFAS)  No.  123,
           Accounting  for  Stock-Based  Compensation,  to  stock-based employee
           compensation.

<TABLE>
<CAPTION>
                                                                   2002         2001        2000
                                                                -----------  ----------  -----------
<S>                                                             <C>          <C>         <C>
          Net income, as reported                               $6,346,839   $ 147,160   $5,726,597
          Deduct:
            Total stock-based employee compensation
            expense determined under fair value based
            method for all awards, net of related tax effects     (347,587)   (324,816)    (287,254)
                                                                -----------  ----------  -----------
          Pro forma net income (loss)                           $5,999,252   $(177,656)  $5,439,343
                                                                ===========  ==========  ===========

          Earnings (loss) per share:
            Basic - as reported                                 $     0.67   $    0.02   $     0.60
                                                                ===========  ==========  ===========
            Basic - pro forma                                   $     0.64   $   (0.02)  $     0.57
                                                                ===========  ==========  ===========
            Diluted - as reported                               $     0.67   $    0.02   $     0.60
                                                                ===========  ==========  ===========
            Diluted - pro forma                                 $     0.63   $   (0.02)  $     0.57
                                                                ===========  ==========  ===========
</TABLE>

         EARNINGS PER SHARE

           Basic  earnings  per share are computed by dividing net income by the
           weighted-average  number  of  shares  of  common  stock  outstanding.
           Diluted earnings per share are computed by dividing net income by the
           sum  of  the  weighted-average  number  of  shares  of  common  stock
           outstanding  and  potential  common  shares.  Potential common shares
           consist  of  stock  options.

         COMPREHENSIVE  INCOME  (LOSS)

           Accounting  principles  generally  require  that  recognized revenue,
           expenses,  gains  and  losses  be  included  in  net income. Although
           certain  changes  in assets and liabilities, such as unrealized gains
           and  losses  on  available  for  sale  securities,  are reported as a
           separate  component  of the equity section of the balance sheet, such
           items, along with net income, are components of comprehensive income.


NOTE  2. RESTRICTIONS  ON  CASH  AND  DUE  FROM  BANKS

           The  Bank  is  required  to  maintain  reserve balances in cash or on
           deposit  with  the  Federal  Reserve  Bank,  based on a percentage of
           deposits.  The  total  of  those  reserve  balances was approximately
           $6,341,000  and  $6,812,000  at  December  31,  2002  and  2001,
           respectively.


                                       41
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  3. INVESTMENT  SECURITIES

           The  amortized  cost  and  approximate  fair  value of the investment
           portfolio  follows.

<TABLE>
<CAPTION>
                                                          GROSS         GROSS
                                           AMORTIZED    UNREALIZED    UNREALIZED       FAIR
                                              COST         GAINS        LOSSES        VALUE
                                          ------------  -----------  ------------  ------------
<S>                                       <C>           <C>          <C>           <C>
        December 31, 2002:
          U. S. Government and
            agency securities             $ 25,162,657  $   458,854  $         -   $ 25,621,511
          State and municipal securities     8,462,575      165,692      (13,791)     8,614,476
          Mortgage-backed securities        31,316,547      750,493       (1,411)    32,065,629
          Corporate debt securities         12,189,928      209,350       (2,719)    12,396,559
          Marketable equity securities      13,500,000            -            -     13,500,000
          Restricted and other equity
            securities                       5,827,429            -            -      5,827,429
                                          ------------  -----------  ------------  ------------
                                          $ 96,459,136  $ 1,584,389  $   (17,921)  $ 98,025,604
                                          ============  ===========  ============  ============
        December 31, 2001:
          U. S. Government and
             agency securities            $ 55,463,937  $ 1,062,488  $   (22,541)  $ 56,503,884
          State and municipal securities     4,994,307       61,087      (55,659)     4,999,735
          Mortgage-backed securities        32,270,575      222,102     (293,656)    32,199,021
          Corporate debt securities          8,398,990        2,399      (12,593)     8,388,796
          Marketable equity securities       4,912,193      121,763     (207,036)     4,826,920
          Restricted and other equity
            securities                       6,535,779            -            -      6,535,779
                                          ------------  -----------  ------------  ------------
                                          $112,575,781  $ 1,469,839  $  (591,485)  $113,454,135
                                          ============  ===========  ============  ============
</TABLE>

           Included  in  restricted  and  other equity securities are the Banks'
           combined  holdings  of  stock  in  the  Federal  Reserve Bank and the
           Federal  Home Loan Bank of $3,666,450 and $4,374,800, at December 31,
           2002  and  2001,  respectively.

           The  amortized  cost and fair value of debt securities as of December
           31,  2002  by  contractual  maturity  are shown below. Maturities may
           differ  from  contractual  maturities  in  mortgage-backed securities
           because  the  mortgages  underlying  the  securities may be called or
           repaid without any penalties. Equity securities have a perpetual life
           and  no  stated maturity. Therefore these securities are not included
           in  the  maturity  categories  in  the  following  maturity  summary.

<TABLE>
<CAPTION>
                                                   AMORTIZED      FAIR
                                                     COST         VALUE
                                                  -----------  -----------
<S>                                               <C>          <C>
          Due in one year or less                 $ 6,303,841  $ 6,319,698
          Due from one year to five years          27,982,918   28,628,706
          Due from five to ten years                8,223,854    8,327,103
          Due after ten years                       3,304,547    3,357,039
          Mortgage-backed securities               31,316,547   32,065,629
          Marketable equity securities             13,500,000   13,500,000
          Restricted and other equity securities    5,827,429    5,827,429
                                                  -----------  -----------
                                                  $96,459,136  $98,025,604
                                                  ===========  ===========
</TABLE>


                                       42
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  3.   INVESTMENT  SECURITIES  (CONTINUED)

           Securities  with  a  carrying  value of approximately $48,721,000 and
           $57,160,000 at December 31, 2002 and 2001, respectively, were pledged
           to  secure  public  deposits, certain borrowing arrangements, and for
           other  purposes.

           Gains  and losses on sales and calls of securities available for sale
           for  the  years ended December 31, 2002, 2001 and 2000 consist of the
           following:

<TABLE>
<CAPTION>
                                                             2002        2001        2000
                                                          ----------  -----------  ---------
<S>                                                       <C>         <C>          <C>
               Gross gains on securities transactions     $ 533,742   $1,740,846   $  2,886
               Gross losses on securities transactions     (272,564)        (126)   (26,516)
                                                          ----------  -----------  ---------
                   Net realized gain (loss) on
                       securities transactions            $ 261,178   $1,740,720   $(23,630)
                                                          ==========  ===========  =========
</TABLE>

NOTE  4.   LOANS  AND  ALLOWANCE  FOR  LOAN  LOSSES

           The  composition  of  the  loan portfolio as of December 31, 2002 and
           2001  follows.

<TABLE>
<CAPTION>
                                                                        2002           2001
                                                                    -------------  -------------
<S>                                                                 <C>            <C>
               Commercial and financial                             $ 55,839,684   $ 80,492,791
               Agricultural                                           22,177,617     26,428,296
               Real estate - construction                             75,075,858     63,486,438
               Real estate - mortgage (commercial and residential)   354,628,081    402,988,101
               Installment loans to individuals and other loans       47,489,134     64,212,067
               Overdrafts                                                250,764        593,604
                                                                    -------------  -------------
                                                                     555,461,138    638,201,297
               Unearned income, net                                     (222,896)      (375,726)
                                                                    -------------  -------------
                                                                     555,238,242    637,825,571
               Allowance for loan losses                             (12,096,988)   (15,765,373)
                                                                    -------------  -------------
                                                                    $543,141,254   $622,060,198
                                                                    =============  =============
</TABLE>

           Changes in the allowance for loan losses for the years ended December
           31,  2002,  2001  and  2000  follows.

<TABLE>
<CAPTION>
                                                      2002          2001          2000
                                                  ------------  ------------  ------------
<S>                                               <C>           <C>           <C>
               Balance, beginning of year         $15,765,373   $ 8,184,641   $ 5,037,074
                 Provision charged to operations    2,575,000    12,220,250     4,098,663
                 Loans charged-off                 (6,602,334)   (4,832,799)   (1,583,833)
                 Recoveries                           358,949       192,281       182,292
                 Purchase acquisition                       -             -       450,445
                                                  ------------  ------------  ------------
               Balance, end of year               $12,096,988   $15,765,373   $ 8,184,641
                                                  ============  ============  ============
</TABLE>


                                       43
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  4.   LOANS  AND  ALLOWANCE  FOR  LOAN  LOSSES  (CONTINUED)

           At  December  31,  2002  and  2001,  the total recorded investment in
           impaired loans amounted to approximately $10,378,000 and $10,581,000,
           respectively.  These loans had a related allowance for loan losses of
           approximately  $2,396,000  and  $4,819,000  at  December 31, 2002 and
           2001, respectively. The average recorded investment in impaired loans
           during  2002, 2001 and 2000 was approximately $13,207,000, $8,839,000
           and  $2,486,000, respectively. Interest income recognized on impaired
           loans  for  cash  payments  received  in  2002,  2001  and  2000  was
           approximately  $199,000,  $59,500  and  $115,000,  respectively.

           In  the ordinary course of business, the Company has granted loans to
           certain  related parties, including executive officers, directors and
           their  affiliates.  The  interest  rates  on  these  loans  were
           substantially  the  same  as  rates  prevailing  at  the  time of the
           transaction  and  repayment terms are customary for the type of loan.
           Changes  in  related party loans for the year ended December 31, 2002
           follows.

<TABLE>
<CAPTION>
<S>                                                              <C>
               Balance,  beginning  of  year                     $     12,922,794
                 Advances                                              10,302,641
                 Repayments                                            (9,454,832)
                 Transactions due to changes in related parties        (4,564,661)
                                                                 -----------------
               Balance,  end  of  year                           $      9,205,942
                                                                 =================
</TABLE>

NOTE  5.   PREMISES  AND  EQUIPMENT

           Premises and equipment as of December 31, 2002 and 2001 follows.

<TABLE>
<CAPTION>
                                                      2002           2001
                                                  -------------  ------------
<S>                                               <C>            <C>
               Land                               $  4,995,677   $ 4,572,447
               Buildings and improvements           16,483,250    16,636,114
               Furniture, fixtures and equipment    10,677,759    11,106,285
               Construction in progress                576,944       158,862
                                                  -------------  ------------
                                                    32,733,630    32,473,708
               Less accumulated depreciation       (10,178,396)   (8,965,625)
                                                  -------------  ------------
                                                  $ 22,555,234   $23,508,083
                                                  =============  ============
</TABLE>

           Depreciation  expense  amounted  to  $2,110,353,  $2,190,192  and
           $1,588,796,  for  the  years  ended December 31, 2002, 2001 and 2000,
           respectively. During 2002, the Company took a $372,000 write down for
           impairment  in  value  of  the  Ocala,  Florida  location.

           With the exception of two offices: one in Ocala, Florida, and another
           in  Duluth, Georgia, the Company owns and operates all of its banking
           offices.  The  leased  Ocala,  Florida  office  is  under a five-year
           agreement for a base amount plus an annual indexed adjustment. During
           2003, the Company will pay $41,686 to lease the property through May.
           The  agreement  will expire at the end of May 2003. The leased Duluth
           office  is under a three-year agreement. The lease expires at the end
           of  September 2005. The Company will pay $21,232, $22,634 and $17,437
           to  lease  the  property  during  2003,  2004 and 2005, respectively.

           At  December  31,  2002,  the  Company  had  a  branch building under
           construction  in  Oakwood,  Georgia.  The  Company  is  committed  to
           complete this during 2003 for a total cost of approximately $925,000.


                                       44
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  6.   GOODWILL

           There  were  no changes in the carrying amount of goodwill during the
           year  ended  December  31,  2002.

           A  summary  of net income and earnings per share that would have been
           reported  exclusive  of  amortization  expense  recognized related to
           goodwill  for  the  years  ended  December  31,  2002,  2001 and 2000
           follows.

<TABLE>
<CAPTION>
                                           2002       2001       2000
                                        ----------  --------  ----------
<S>                                     <C>         <C>       <C>
               Net income, as reported  $6,346,839  $147,160  $5,726,597
               Add back:
                 Goodwill amortization           -   351,635     131,520
                                        ----------  --------  ----------
               Pro forma net income     $6,346,839  $498,795  $5,858,117
                                        ==========  ========  ==========

               Earnings per share:
                 Basic - as reported    $     0.67  $   0.02  $     0.60
                                        ==========  ========  ==========
                 Basic - pro forma      $     0.67  $   0.05  $     0.61
                                        ==========  ========  ==========
                 Diluted - as reported  $     0.67  $   0.02  $     0.60
                                        ==========  ========  ==========
                 Diluted - pro forma    $     0.67  $   0.05  $     0.61
                                        ==========  ========  ==========
</TABLE>

NOTE  7.   DEPOSITS

           A  summary  of  interest-bearing deposits as of December 31, 2002 and
           2001 follows.

<TABLE>
<CAPTION>
                                            2002          2001
                                        ------------  ------------
<S>                                     <C>           <C>
               Interest-bearing demand  $176,781,620  $171,769,563
               Savings                    37,200,175    36,284,941
               Time, $100,000 and over    98,776,734   157,400,594
               Other time                206,304,649   273,449,044
                                        ------------  ------------
                                        $519,063,178  $638,904,142
                                        ============  ============
</TABLE>

           Interest  expense  on deposits for the years ended December 31, 2002,
           2001  and  2000  follows.

<TABLE>
<CAPTION>
                                           2002         2001         2000
                                        -----------  -----------  -----------
<S>                                     <C>          <C>          <C>
               Interest-bearing demand  $ 2,223,595  $ 3,623,765  $ 3,357,422
               Savings                      536,610      732,517      724,968
               Time, $100,000 and over    4,730,549    8,875,059    6,872,195
               Other time                 9,578,148   18,137,237   13,255,374
                                        -----------  -----------  -----------
                                        $17,068,902  $31,368,578  $24,209,959
                                        ===========  ===========  ===========
</TABLE>

           The  scheduled  maturities  of  time  deposits  at  December 31, 2002
           follow.

<TABLE>
<CAPTION>
               YEAR                                    AMOUNT
               ----                                 ------------
<S>                                                 <C>
               2003                                 $222,432,135
               2004                                   42,829,872
               2005                                   24,877,262
               2006                                    7,771,830
               2007                                    6,416,250
               Thereafter                                754,034
                                                    ------------
                                                    $305,081,383
                                                    ============
</TABLE>


                                       45
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  8.   SECURITIES  SOLD  UNDER  REPURCHASE  AGREEMENTS

           Securities  sold  under  repurchase  agreements,  which  are  secured
           borrowings,  generally  mature  within  one  day  to  a week from the
           transaction  date.  Securities  sold  under repurchase agreements are
           reflected  at  the  amount  of  cash  received in connection with the
           transactions.  The  Company  may  be  required  to provide additional
           collateral  based on the fair value of the underlying securities. The
           Company  monitors  the  fair  value of the underlying securities on a
           weekly basis. Securities sold under repurchase agreements at December
           31,  2002  and  2001  were $17,520,242 and $15,708,621, respectively.


NOTE  9.   ADVANCES  FROM  THE  FEDERAL  HOME  LOAN  BANK

           Listed  below is a summary of the advances from the Federal Home Loan
           Bank  of  Atlanta  (FHLB)  as  of  December  31,  2002  and  2001.

<TABLE>
<CAPTION>
                                                                              2002         2001
                                                                           -----------  -----------
<S>                                                                        <C>          <C>
               Advances with interest at adjustable rates,
                 ranging from 1.40% to 1.62% at December 31, 2002,
                 due at various dates from May 2003 to
                 September 2009.                                           $ 5,541,580  $ 5,541,580
               Amortizing advances with interest at fixed rates,
                 ranging from 5.01% to 7.24% at December 31, 2002,
                 due in varying amounts and at various intervals through
                 November 2012.                                              2,503,330    3,536,898
               Advances with interest at fixed rates, ranging from 5.74%
                 to 5.92% at December 31, 2002, due at various dates
                 from March 2003 to February 2006.                           1,000,000    2,050,000
               Advances with interest at fixed rates, ranging from 5.46%
                 to 6.77% at December 31, 2002, convertible to
                 variable rates at the option of the FHLB, due at
                 various dates from March 2003 to March 2010.               27,100,000   27,100,000
                                                                           -----------  -----------

                                                                           $36,144,910  $38,228,478
                                                                           ===========  ===========
</TABLE>

           The  Banks  have  pledged qualifying residential real estate mortgage
           loans  as  collateral  on  the  advances  from  the  FHLB.

           Contractual  maturities of the advances from the FHLB at December 31,
           2002  follow.

<TABLE>
<CAPTION>
               YEAR                                       AMOUNT
               ----                                     -----------
<S>                                                     <C>
               2003                                     $12,655,934
               2004                                         404,998
               2005                                       2,930,761
               2006                                         939,805
               2007                                         150,830
               Thereafter                                19,062,582
                                                        -----------
                                                        $36,144,910
                                                        ===========
</TABLE>


                                       46
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  10.  GUARANTEED  PREFERRED  BENEFICIAL  INTERESTS  IN  DEBENTURES

           On  November  28,  2001,  PAB  Bankshares Capital Trust I (PAB Trust)
           issued  $10  million  of  Floating  Rate  Capital  Securities  (trust
           preferred  securities).  The  Company  formed  PAB Trust, a statutory
           business  trust  created under the laws of the State of Delaware, for
           the  sole  purpose  of  issuing  the  trust  preferred securities and
           investing  the  proceeds  in  Floating  Rate  Junior  Subordinated
           Debentures  (the Debentures) issued by the Company. The interest rate
           on  both  the  trust preferred securities and the Debentures is reset
           semi-annually  at  LIBOR plus 3.75% (currently 5.17%) with a rate cap
           of  11.0%  through  December  8,  2006.  The  Company  entered  into
           agreements  which,  taken  collectively,  fully,  irrevocably  and
           unconditionally  guarantee,  on  a  subordinated  basis,  all  of PAB
           Trust's obligations under the trust preferred securities. PAB Trust's
           sole  asset  is  the Debentures issued by the Company. The Debentures
           will  mature  on  December  8,  2031,  but are callable at par by the
           Company  in  whole  or  in  part  anytime after December 8, 2006. The
           proceeds  from  the  issuance  of  these  trust  preferred securities
           qualify  as  Tier  1  capital under the risk-based capital guidelines
           established  by  the  Federal  Reserve.


NOTE  11.  INCOME  TAXES

           The  components  of  income tax expense (benefit) for the years ended
           December  31,  2002,  2001  and  2000  follow.

<TABLE>
<CAPTION>
                                     2002         2001         2000
                                  ----------  ------------  -----------
<S>                               <C>         <C>           <C>
               Current            $1,632,006  $ 3,092,629   $3,876,935
               Deferred            1,180,948   (3,343,255)    (968,127)
                                  ----------  ------------  -----------
                                  $2,812,954  $  (250,626)  $2,908,808
                                  ==========  ============  ===========
</TABLE>

           The  Company's  income tax expense (benefit) differs from the amounts
           computed by applying the Federal income tax statutory rates to income
           before  income  taxes.  A  reconciliation  of the differences for the
           years  ended  December  31,  2002,  2001  and  2000  follows.

<TABLE>
<CAPTION>
                                                          2002         2001        2000
                                                       -----------  ----------  -----------
<S>                                                    <C>          <C>         <C>

               Tax (benefit) at statutory rate         $3,114,330   $ (35,178)  $2,936,038
                 Increase (decrease) resulting from:
                   State income tax, net of
                    Federal tax benefit                    37,894           -            -
                   Tax exempt interest and dividend
                     exclusion                           (163,775)   (229,875)    (270,909)
                 Amortization of goodwill                       -     118,681       43,755
                 Increase in cash value of bank-
                   owned life insurance policies         (162,053)   (162,369)     (46,177)
                 Deferred tax adjustment                  (20,897)    (36,847)     159,422
                 Prior year accrual differences           (13,723)     61,459      123,174
                 Other items, net                          21,178      33,503      (36,495)
                                                       -----------  ----------  -----------
                   Income tax expense (benefit)        $2,812,954   $(250,626)  $2,908,808
                                                       ===========  ==========  ===========
</TABLE>


                                       47
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  11.  INCOME  TAXES  (CONTINUED)

           The components of deferred income taxes at December 31, 2002 and 2001
           follow.

<TABLE>
<CAPTION>
                                                                      2002        2001
                                                                   ----------  ----------
<S>                                                                <C>         <C>
               Deferred tax assets:
                 Allowance for loan losses                         $4,112,975  $5,257,913
                 Deferred compensation                                650,381     620,439
                 Accrued severance payable                            302,269     505,372
                 Other                                                575,432     293,925
                                                                   ----------  ----------
                                                                    5,641,057   6,677,649
                                                                   ----------  ----------
               Deferred tax liabilities:
                 Premises and equipment                               884,474     740,118
                 Unrealized gain on securities available for sale     532,600     298,639
                                                                   ----------  ----------
                                                                    1,417,074   1,038,757
                                                                   ----------  ----------

                      Net deferred tax assets                      $4,223,983  $5,638,892
                                                                   ==========  ==========
</TABLE>

NOTE  12.  EMPLOYEE  BENEFIT  PLANS

           The Company provides an employee 401(k) plan for qualified employees.
           The  401(k)  plan  allows  a  participant  to  defer a portion of his
           compensation  and  provides  that the Company will match a portion of
           the deferred compensation. The plan also provides for nonelective and
           discretionary  profit  sharing  contributions  to be made at the sole
           discretion  of  the  Board  of  Directors.  Approximately 3.5% of the
           participants'  eligible compensation was accrued as the discretionary
           profit  sharing  contributions  for 2002, 2001 and 2000. The employer
           contributions  are on a five-year vesting schedule. All full-time and
           part-time  employees are eligible to participate in the plan provided
           they  have met the eligibility requirements. Generally, a participant
           must  have  completed  one  month employment to become eligible, with
           employer  contributions  beginning  after  six  months of employment.
           Aggregate  expense  under the plan charged to operations during 2002,
           2001  and  2000  amounted  to  approximately  $676,000,  $553,000 and
           $595,000,  respectively.


NOTE  13.  DEFERRED  COMPENSATION  AND  RETIREMENT  PLANS

           In  years  past,  the  Company  entered  into  separate  deferred
           compensation  arrangements  with  certain  officers.  The  agreements
           called  for  the  deferred  compensation  to  be  payable  over  a
           fifteen-year  period  beginning  at  the earlier of age 65, death, or
           disability  of  each  officer.  Annual  accruals  were  made based on
           actuarial  assumptions  for  the  present  value  of  the  future
           obligations.  In  2001,  the  Board of Directors elected to terminate
           these  plans.  At  that  time,  the  Company  incurred  an expense of
           approximately  $898,000  for the accrual for the net present value of
           the  liability  covering two executive officers that were retiring at
           the  end  of  2001.  The  total  accrued liability for these deferred
           compensation plans was $1,913,000 and $1,824,000 at December 31, 2002
           and  2001,  respectively.  Aggregate  expense  under  the  deferred
           compensation  plans charged to salaries and employee benefits expense
           were  approximately  $165,000,  $1,156,000  (including  the  $898,000
           expense  for the two retiring executive officers) and $177,000 during
           2002,  2001  and  2000,  respectively.


                                       48
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  13.  DEFERRED  COMPENSATION  AND  RETIREMENT  PLANS  (CONTINUED)

           In  2001, the Company entered into separate severance agreements with
           two  retiring  executive  officers  that effectively terminated their
           then existing employment agreements and committed to pay each officer
           a  3-year  severance  package  beginning in January 2002. The Company
           accrued  approximately  $1,291,000 representing the net present value
           of  the  severance payments with the expense included in salaries and
           employee benefits for the year ended December 31, 2001. The remaining
           liability  in the severance plans payable as of December 31, 2002 was
           $889,000.


NOTE  14.  OTHER  INCOME  AND  EXPENSES

           Other fee income for the years ended December 31, 2002, 2001 and 2000
           follows.

<TABLE>
<CAPTION>
                                                  2002        2001        2000
                                               ----------  ----------  ----------
<S>                                            <C>         <C>         <C>
               Mortgage origination fees       $  838,044  $  702,329  $  439,327
               Brokerage commissions and fees     485,401     306,322     125,241
               ATM and debit card fee income      329,100     131,544     135,463
               Insurance premiums                   5,822     161,015     209,742
               Other fee income                   226,518     223,699     195,394
                                               ----------  ----------  ----------

                  Total other fee income       $1,884,885  $1,524,909  $1,105,167
                                               ==========  ==========  ==========
</TABLE>

           Other  noninterest income for the years ended December 31, 2002, 2001
           and  2000  follows.

<TABLE>
<CAPTION>
                                                              2002         2001         2000
                                                           -----------  -----------  -----------
<S>                                                        <C>          <C>          <C>
               Earnings on bank-owned life insurance       $  478,199   $  491,579   $  139,958
               Gain (loss) on disposal of assets                  404         (839)    (153,817)
               Gain on sale of branch office                  100,000            -            -
               Write-down due to impairment in value of
                 branch office                               (372,313)           -            -
               Gain on sale of interest in unconsolidated
                 subsidiary                                         -    1,461,739            -
               Other noninterest income                       366,051      539,711      245,149
                                                           -----------  -----------  -----------
                   Total other noninterest income          $  572,341   $2,492,190   $  231,290
                                                           ===========  ===========  ===========
</TABLE>

           Other noninterest expense for the years ended December 31, 2002, 2001
           and  2000  follows.

<TABLE>
<CAPTION>
                                                              2002         2001         2000
                                                           -----------  -----------  -----------
<S>                                                        <C>          <C>          <C>
               Advertising and business development        $  511,902   $  601,045   $  526,017
               Supplies and printing                          638,240      953,385      630,892
               Telephone and internet charges                 638,209      554,915      372,960
               Postage and courier                            644,332      613,213      459,059
               Legal and accounting fees                      882,765      447,038      518,841
               Conversion and consolidation costs                   -      312,933      833,139
               Other noninterest expenses                   3,060,686    3,532,664    3,761,258
                                                           -----------  -----------  -----------
                 Total other noninterest expense           $6,376,134   $7,015,193   $7,102,166
                                                           ===========  ===========  ===========
</TABLE>


                                       49
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  15.  EARNINGS  PER  COMMON  SHARE

           The components used to calculate basic and diluted earnings per share
           for  the  years  ended  December  31,  2002,  2001  and 2000 follows.

<TABLE>
<CAPTION>
                                                      2002        2001        2000
                                                   ----------  ----------  ----------
<S>                                                <C>         <C>         <C>
               Basic earnings per share:
                 Net income                        $6,346,839  $  147,160  $5,726,597
                                                   ----------  ----------  ----------
                 Weighted average common shares
                   outstanding                      9,426,761   9,482,709   9,528,387
                                                   ----------  ----------  ----------

                 Earnings per common share         $     0.67  $     0.02  $     0.60
                                                   ==========  ==========  ==========

               Diluted earnings per share:
                 Net income                        $6,346,839  $  147,160  $5,726,597
                                                   ----------  ----------  ----------
                 Weighted average common shares
                   outstanding                      9,426,761   9,482,709   9,528,387
                 Effect of dilutive stock options      33,007      67,371      70,403
                                                   ----------  ----------  ----------
                 Weighted average diluted common
                   shares outstanding               9,459,768   9,550,080   9,598,790
                                                   ----------  ----------  ----------

                 Earnings per common share         $     0.67  $     0.02  $     0.60
                                                   ==========  ==========  ==========
</TABLE>

NOTE  16.  EMPLOYEE  AND  DIRECTOR  STOCK  PURCHASE  PROGRAM

           On  July  1, 2002, the Board of Directors established an Employee and
           Director  Stock  Purchase  Program  to  enable  the  Company  and its
           participating  subsidiaries  to provide to their respective employees
           and  directors  a  convenient  means  of  purchasing  for  long  term
           investment,  and not for short term speculative gain, common stock of
           the  Company and thereby promote interest in the Company's continuing
           success,  growth  and development. The program allows for an employee
           or  director  to  purchase  up  to  a maximum of $2,000 a year of the
           Company's  stock  with  the  Company matching 50% of the purchase. In
           order to be eligible, an employee must be full-time and have worked a
           full  month.  During  the  year  ended December 31, 2002, the Company
           recorded  $51,700  of  expense  associated  with  this  program.


NOTE  17.  DIVIDEND  REINVESTMENT  AND  COMMON  STOCK  PURCHASE  PLAN

           In  1993, the Board of Directors approved a dividend reinvestment and
           common  stock  purchase  plan.  The  plan  is  designed  to  provide
           stockholders  with  a  simple  and  convenient means to reinvest cash
           dividends  and make additional cash purchases of the Company's common
           stock.  The  Company  acquires shares in the open market as needed to
           fill orders for dividend reinvestment and stock purchases in the plan
           rather  than  issuing  additional  shares  of  common  stock.


                                       50
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  18.  STOCK  OPTION  PLANS

           The  Company  has  two  fixed  stock  option plans under which it has
           granted  options  to  its  employees and directors to purchase common
           stock  at  the  fair  market  price  on the date of grant. Both plans
           provide  for  "incentive  stock  options"  and  "non-qualified  stock
           options".  The  incentive stock options are intended to qualify under
           Section 422 of the Internal Revenue Code for favorable tax treatment.
           Under the 1994 Employee Stock Option Plan, the Company's stockholders
           authorized  the  Board  of  Directors  to  grant  up to 339,717 stock
           options  to  employees of the Company as part of an incentive plan to
           attract and retain key personnel in the Company. Under the 1999 Stock
           Option  Plan,  the  Company's  stockholders  authorized  the Board of
           Directors  to  grant  up  to  600,000  stock  options  to  directors,
           employees,  consultants  and  advisors  of  the  Company.

           A  summary of the status of the two fixed plans at December 31, 2002,
           2001  and  2000  and  changes  during  the years ended on those dates
           follows.

<TABLE>
<CAPTION>
                                                     2002                    2001                2000
                                            -----------------------  ------------------  --------------------
                                                         WEIGHTED-           WEIGHTED-             WEIGHTED-
                                                           AVERAGE             AVERAGE               AVERAGE
                                                          EXERCISE            EXERCISE              EXERCISE
                                                NUMBER       PRICE     NUMBER    PRICE    NUMBER       PRICE
                                            -----------  ----------  ---------  -------  --------  ----------
<S>                                         <C>          <C>         <C>        <C>      <C>       <C>
               Under option, beginning
                 of year                       731,635   $    11.22   523,650   $ 11.58  440,157   $    11.19
                 Granted                       168,700         8.08   288,750     10.19   88,950        13.40
                 Exercised                     (20,500)        6.25   (31,500)     6.25   (4,157)        7.10
                 Forfeited                    (123,429)       11.41   (49,265)    12.25   (1,300)       16.09
                                            -----------  ----------  ---------  -------  --------  ----------
               Under option, end of year       756,406   $    10.63   731,635   $ 11.22  523,650   $    11.58
                                            ===========  ==========  =========  =======  ========  ==========

               Exercisable at end of year      366,546   $    11.41   355,290   $ 11.13  305,929   $    10.68
                                            ===========  ==========  =========  =======  ========  ==========

               Weighted-average fair value
                 per option of options
                 granted during year                     $     3.84            $   2.69            $     4.53
                                                         ==========             =======            ==========
</TABLE>

           A  further  summary  of  the options outstanding at December 31, 2002
           follows.

<TABLE>
<CAPTION>
                                         OPTIONS  OUTSTANDING           OPTIONS  EXERCISABLE
                                --------------------------------------  ---------------------
                                               WEIGHTED-    WEIGHTED-              WEIGHTED-
                                                AVERAGE      AVERAGE                AVERAGE
                  RANGE OF                    CONTRACTUAL   EXERCISE               EXERCISE
               EXERCISE PRICES    NUMBER     LIFE IN YEARS    PRICE      NUMBER      PRICE
               ---------------  -----------  -------------  ----------  ---------  ----------
<S>                             <C>          <C>            <C>         <C>        <C>
               $  6.25 -  7.70      195,000           7.08  $     7.13     76,000  $     6.25
                  8.00 - 10.06      206,100           6.50        9.67    106,880        9.96
                 10.16 - 10.80      143,506           8.72       10.60     30,357       10.60
                 10.94 - 14.88      106,750           6.48       12.85     59,599       12.77
                 15.88 - 21.63      105,050           6.58       16.76     93,710       16.64
                                -----------                             ---------
                                    756,406           7.08       10.63    366,546       11.41
                                ===========                             =========
</TABLE>


                                       51
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  18.  STOCK  OPTION  PLANS  (CONTINUED)

           The fair value of each option grant is estimated on the date of grant
           using  the  Black-Scholes  option-pricing  model  with  the following
           assumptions:

<TABLE>
<CAPTION>
                                                    2002       2001       2000
                                                  ---------  ---------  ---------
<S>                                               <C>        <C>        <C>
               Risk-free interest rate                3.81%      5.24%      5.39%
               Expected life of the options       10 years   10 years   10 years
               Expected dividends (as a percent
                 of the fair value of the stock)         -       4.69%      2.50%
               Expected volatility                   28.79%     45.62%     34.20%
</TABLE>

NOTE  19.  STOCK  REPURCHASE  PLAN

           In June 1999, the Board of Directors approved a stock repurchase plan
           whereby management was authorized to purchase and cancel up to 75,000
           shares  of  the Company's common stock from the open market. In March
           2000,  the  Board  approved  the  purchase and cancellation of 50,000
           shares  of  the  Company's  common  stock. In January 2001, the Board
           approved  the  purchase  and  cancellation  of  125,000 shares of the
           Company's  common  stock.  During  2000,  the  Company  acquired  and
           canceled  119,616  shares  of  common  stock  for  a  total  cost  of
           $1,512,152.  During  2001,  the Company acquired and canceled 123,534
           shares  of  common stock for a total cost of $1,293,808. A balance of
           6,850  shares  remained  available  from  the plans for repurchase at
           December  31, 2001. Those remaining 6,850 shares at December 31, 2001
           were  not  repurchased  and  the  plan  expired  January  31,  2002.


NOTE  20.  COMMITMENTS  AND  CONTINGENT  LIABILITIES

           The  Bank  is a party to financial instruments with off-balance-sheet
           risk  in the normal course of business to meet the financing needs of
           its  customers.  These  financial  instruments include commitments to
           extend credit, standby letters of credit and credit card commitments.
           Such commitments involve, to varying degrees, elements of credit risk
           and  interest  rate  risk  in  excess of the amount recognized in the
           balance  sheets.

           The  Bank's exposure to credit loss in the event of nonperformance by
           the other party to the financial instrument for commitments to extend
           credit,  standby  letters  of  credit  and credit card commitments is
           represented  by the contractual amount of those instruments. The Bank
           uses  the  same  credit policies in making commitments as it does for
           on-balance-sheet  instruments. A summary of the Bank's commitments as
           of  December  31,  2002  and  2001  follows.

<TABLE>
<CAPTION>
                                                2002         2001
                                             -----------  -----------
<S>                                          <C>          <C>
               Commitments to extend credit  $70,351,000  $61,674,000
               Standby letters of credit     $ 1,445,000  $ 4,189,000
</TABLE>

          Commitments  to  extend credit are agreements to lend to a customer as
          long  as  there  is  no  violation of any condition established in the
          contract. Since many of the commitments are expected to expire without
          being  drawn  upon,  the  total  commitment amounts do not necessarily
          represent future cash requirements. The amount of collateral obtained,
          if  deemed necessary by the Bank upon extension of credit, is based on
          management's  credit  evaluation  of  the  customer.


                                       52
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  20.  COMMITMENTS  AND  CONTINGENT  LIABILITIES  (CONTINUED)

           Standby  letters  of credit are conditional commitments issued by the
           Bank  to  guarantee  the  performance of a customer to a third party.
           Those  letters  of  credit are primarily issued to support public and
           private  borrowing  arrangements. The credit risk involved in issuing
           letters  of  credit  is  essentially  the  same  as  that involved in
           extending  loans  to  customers.  Collateral is required in instances
           which  the  Bank  deems  necessary.

           In  the  normal  course  of business, the Bank is involved in various
           legal  proceedings.  In  the  opinion  of  management,  any liability
           resulting  from  such proceedings would not have a material effect on
           the  Bank's  financial  statements.


NOTE  21.  CONCENTRATIONS  OF  CREDIT

           The  Bank  originates  commercial,  agricultural,  residential,  and
           consumer  loans to customers primarily in markets served by the Bank.
           The  ability  of  the majority of the Bank's customers to honor their
           contractual  obligations  is  dependent on the local economies in the
           geographical  areas  served  by  the  Bank.

           As  of  December  31,  2002,  approximately  77%  of  the Bank's loan
           portfolio  is  concentrated  in  loans  secured  by  real  estate.  A
           substantial  portion  of these loans are in the Bank's primary market
           areas.  In  addition,  a substantial portion of the other real estate
           owned  is  located  in  those same markets. Accordingly, the ultimate
           collectibility  of  the Bank's loan portfolio and the recovery of the
           carrying amount of other real estate owned are susceptible to changes
           in  market  conditions  in  the  Bank's  market  areas.  The  other
           significant concentrations of credit by type of loan are set forth in
           Note  4.


NOTE  22.  REGULATORY  MATTERS

           On  May  20,  2002,  the  Company's  Board  of  Directors  adopted  a
           Resolution  requested  by the Federal Reserve Bank of Atlanta, which,
           among  other things, restricts the Company from redeeming its capital
           stock,  paying  dividends,  modifying  existing  debt  agreements, or
           incurring  additional  debt without the prior approval of its banking
           regulators.  The  Resolution  was  the  result of an examination that
           found  the  Bank  to  be  in  less  than  satisfactory  condition due
           primarily  to  serious  weaknesses identified in the asset quality of
           the  Bank's  loan  portfolio.  This Resolution shall remain in effect
           until  removed  by  the  regulators.

           The  Bank  is  subject  to  certain  restrictions  on  the  amount of
           dividends that may be declared without prior regulatory approval. The
           Company  and  the  Bank  are  subject  to  various regulatory capital
           requirements administered by the federal banking agencies. Failure to
           meet minimum capital requirements can initiate certain mandatory, and
           possibly  additional  discretionary  actions  by  regulators that, if
           undertaken,  could  have  a  direct  material effect on the financial
           statements.  Under  capital  adequacy  guidelines  and the regulatory
           framework for prompt corrective action, the Company and the Bank must
           meet  specific  capital guidelines that involve quantitative measures
           of  the  assets,  liabilities, and certain off-balance sheet items as
           calculated under regulatory accounting practices. Capital amounts and
           classification  are  also  subject  to  qualitative  judgments by the
           regulators  about  components,  risk  weightings,  and other factors.
           Prompt  corrective  action  provisions  are  not  applicable  to bank
           holding  companies.


                                       53
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  22.  REGULATORY  MATTERS  (CONTINUED)

           Quantitative  measures  established  by  regulation to ensure capital
           adequacy require the Company and the Bank to maintain minimum amounts
           and  ratios  of  total and Tier I capital to risk-weighted assets, as
           defined,  and  of  Tier  I  capital  to  average  assets, as defined.
           Management  believes,  as  of December 31, 2002 and 2001, the Company
           and  the Bank met all capital adequacy requirements to which they are
           subject.

           As  of  December  31,  2002,  the  most  recent notification from the
           regulatory authorities categorized the Bank as well capitalized under
           the  regulatory  framework  for  prompt  corrective  action.  To  be
           categorized as well capitalized, the Bank must maintain minimum Total
           risk-based,  Tier  I  risk-based,  and  Tier I leverage ratios as set
           forth in the following table. There are no conditions or events since
           that  notification  that  management believes have changed the Bank's
           category.

           The  Company  and  the  Bank's  actual capital amounts and ratios are
           presented  in  the  following  table.  All  dollar  amounts have been
           rounded  to  the  nearest  thousand.

<TABLE>
<CAPTION>
                                                                                         TO BE WELL
                                                                                     CAPITALIZED UNDER
                                                                    FOR  CAPITAL     PROMPT  CORRECTIVE
                                                   ACTUAL       ADEQUACY  PURPOSES   ACTION  PROVISIONS
                                           -------------------  -------------------  -------------------
                                             AMOUNT     RATIO     AMOUNT     RATIO     AMOUNT     RATIO
                                           -----------  ------  -----------  ------  -----------  ------
<S>                                        <C>          <C>     <C>          <C>     <C>          <C>
As of December 31, 2002:
  Total Capital to Risk Weighted Assets:
    Consolidated                           $81,738,000   14.0%  $46,888,000    8.0%      - N/A -
    Bank                                   $76,814,000   13.2%  $46,710,000    8.0%  $58,388,000   10.0%
  Tier 1 Capital to Risk Weighted Assets:
    Consolidated                           $74,353,000   12.7%  $23,444,000    4.0%      - N/A -
    Bank                                   $69,456,000   11.9%  $23,355,000    4.0%  $35,033,000    6.0%
  Tier 1 Capital to Average Assets:
    Consolidated                           $74,353,000   10.0%  $29,729,000    4.0%      - N/A -
    Bank                                   $69,456,000    9.4%  $29,684,000    4.0%  $37,105,000    5.0%

As of December 31, 2001:
  Total Capital to Risk Weighted Assets:
    Consolidated                           $76,954,000   12.0%  $51,265,000    8.0%      - N/A -
    Bank                                   $34,247,000    9.2%  $29,853,000    8.0%  $37,316,000   10.0%
  Tier 1 Capital to Risk Weighted Assets:
    Consolidated                           $68,848,000   10.7%  $25,632,000    4.0%      - N/A -
    Bank                                   $29,493,000    7.9%  $14,927,000    4.0%  $22,390,000    6.0%
  Tier 1 Capital to Average Assets:
    Consolidated                           $68,848,000    8.0%  $34,453,000    4.0%      - N/A -
    Bank                                   $29,493,000    6.2%  $18,877,000    4.0%  $23,596,000    5.0%
</TABLE>


                                       54
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  23.  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS

           The  fair  value of a financial instrument is the current amount that
           would  be  exchanged  between willing parties, other than in a forced
           liquidation.  Fair  value is best determined based upon quoted market
           prices. However, in many instances, there are no quoted market prices
           for  the  Company's  various  financial  instruments.  In cases where
           quoted  market  prices  are  not  available, fair values are based on
           estimates  using  present  value or other valuation techniques. Those
           techniques  are  significantly  affected  by  the  assumptions  used,
           including  the  discount  rate  and  estimates  of future cash flows.
           Accordingly,  the  fair  value  estimates  may  not be realized in an
           immediate  settlement  of  the  instrument. SFAS No. 107, Disclosures
           about Fair Value of Financial Instruments, excludes certain financial
           instruments  and  all  nonfinancial  instruments  from its disclosure
           requirements. Accordingly, the aggregate fair value amounts presented
           may  not  necessarily  represent  the  underlying  fair  value of the
           Company.

           The  following  methods  and  assumptions were used by the Company in
           estimating  its  fair  value  disclosures  for financial instruments.

           CASH,  DUE  FROM  BANKS, INTEREST BEARING DEPOSITS, AND FEDERAL FUNDS
           SOLD
            The  carrying  amounts  of  cash,  due  from banks, interest-bearing
            deposits  in  other  banks, and federal funds sold approximate their
            fair  value.

           INVESTMENT  SECURITIES
            Fair  values  for  securities  are  based on available quoted market
            prices.  The  carrying  values  of equity securities with no readily
            determinable  fair  value  approximate  fair  values.

           LOANS
            For  variable-rate  loans  that  reprice  frequently  and  have  no
            significant change in credit risk, fair values are based on carrying
            values.  For  other  loans,  the  fair  values  are  estimated using
            discounted  cash flow analyses, using interest rates currently being
            offered  for loans with similar terms to borrowers of similar credit
            quality.  Fair  values  for  impaired  loans  are  estimated  using
            discounted cash flow analyses or underlying collateral values, where
            applicable.

           DEPOSITS
            The  carrying  amounts  of  demand  deposits  and  savings  deposits
            approximate  their  fair  values.  Fair  values  for  fixed-rate
            certificates  of  deposit are estimated using a discounted cash flow
            calculation  that  applies interest rates currently being offered on
            certificates to a schedule of aggregated expected monthly maturities
            on  time  deposits.

           FEDERAL  FUNDS  PURCHASED  AND  SECURITIES  SOLD  UNDER AGREEMENTS TO
           REPURCHASE
            The  carrying amounts of federal funds purchased and securities sold
            under  agreements  to  repurchase  approximate  their  fair  value.

           ADVANCES  FROM  THE  FHLB,  OTHER  BORROWINGS,  AND  DEBENTURES
            For  variable-rate  borrowings  that reprice frequently, fair values
            are  based  on  carrying values. For fixed-rate borrowings, the fair
            values  are  estimated  using  discounted  cash  flow  models, using
            interest  rates  currently being offered for borrowings with similar
            terms.

           OFF-BALANCE-SHEET  INSTRUMENTS
            Fair values of the Company's off-balance-sheet financial instruments
            are  based  on  fees  currently  charged  to  enter  into  similar
            agreements.  Since  the  majority of the Company's off-balance-sheet
            instruments  consist of nonfee-producing, variable-rate commitments,
            the  Company  has determined they do not have a distinguishable fair
            value.


                                       55
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  23.  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS  (CONTINUED)

           The  carrying  amounts  and  estimated  fair  value  of the Company's
           financial instruments as of December 31, 2002 and 2001 are summarized
           below.  All dollar amounts have been rounded to the nearest thousand.

<TABLE>
<CAPTION>
                                                      2002                        2001
                                           --------------------------  --------------------------
                                             CARRYING        FAIR        CARRYING        FAIR
                                              AMOUNT        VALUE         AMOUNT        VALUE
                                           ------------  ------------  ------------  ------------
<S>                                        <C>           <C>           <C>           <C>
     Cash and due from banks, interest-
       bearing deposits with other banks,
       and federal funds sold              $ 56,958,000  $ 56,958,000  $ 68,334,000  $ 68,334,000
     Investment securities                   98,026,000    98,026,000   113,454,000   113,454,000
     Loans, net                             543,141,000   549,290,000   622,060,000   638,321,000
     Deposits                               606,730,000   609,484,000   720,398,000   727,185,000
     Federal funds purchased and
       securities sold under agreements
       to repurchase                         17,520,000    17,520,000    15,709,000    15,709,000
     Advances from the FHLB                  36,145,000    38,780,362    38,228,000    38,879,000
     Beneficial interest in debentures       10,000,000    10,000,000    10,000,000    10,000,000
</TABLE>

NOTE  24.  CONDENSED  FINANCIAL  INFORMATION  OF  PAB  BANKSHARES,  INC.
           (PARENT  COMPANY  ONLY)

           The following information presents the condensed financial statements
           for  PAB  Bankshares,  Inc.

<TABLE>
<CAPTION>
                                       PAB BANKSHARES, INC.
                                CONDENDSED STATEMENTS OF CONDITION
                                    DECEMBER 31, 2002 AND 2001

                                                                             2002         2001
                                                                          -----------  -----------
<S>                                                                       <C>          <C>
               Assets:
                 Cash on deposit with subsidiary banks                    $ 5,521,741  $ 2,826,599
                 Investment securities                                      1,349,945    1,349,945
                 Investment in subsidiaries                                76,331,003   70,218,251
                 Premises and equipment                                             -    4,399,715
                 Other assets                                               1,271,218    1,632,549
                                                                          -----------  -----------
                    Total assets                                          $84,473,907  $80,427,059
                                                                          ===========  ===========

                Liabilities and stockholders' equity:
                  Guaranteed preferred beneficial
                    interests in debentures (trust preferred securities)  $10,000,000  $10,000,000
                 Dividends payable                                                  -    1,035,090
                 Other liabilities                                          3,209,169    4,020,086
                                                                          -----------  -----------
                   Total liabilities                                       13,209,169   15,055,176
                                                                          -----------  -----------

                 Stockholders' equity                                      71,264,738   65,371,883
                                                                          -----------  -----------

                   Total liabilities and stockholders' equity             $84,473,907  $80,427,059
                                                                          ===========  ===========
</TABLE>


                                       56
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  24.  CONDENSED  FINANCIAL  INFORMATION  OF  PAB  BANKSHARES,  INC.
           (PARENT  COMPANY  ONLY)  (CONTINUED)

<TABLE>
<CAPTION>
                                       PAB BANKSHARES, INC.
                                  CONDENDSED STATEMENTS OF INCOME
                           YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                                                                2002          2001         2000
                                                             -----------  ------------  ----------
<S>                                                          <C>          <C>           <C>
               Income:
                 Dividends from subsidiaries                 $1,677,950   $ 3,914,630   $4,930,706
                 Interest income                                 90,000        60,747      103,820
                 Management and service fees                  1,171,316     1,866,933    1,279,967
                 Other income                                       122       179,389       92,504
                                                             -----------  ------------  ----------
                     Total income                             2,939,388     6,021,699    6,406,997
                                                             -----------  ------------  ----------

                 Expenses                                     2,988,293     8,591,404    4,800,038
                                                             -----------  ------------  ----------
                   Income (loss) before income tax benefit
                     and equity in undistributed earnings
                     of subsidiaries                            (48,905)   (2,569,705)   1,606,959
                 Income tax benefit                             745,316     2,196,385    1,258,615
                                                             -----------  ------------  ----------
                   Income (loss) before equity in
                     undistributed earnings of subsidiaries     696,411      (373,320)   2,865,574
                 Equity in undistributed earnings
                   of subsidiaries                            5,650,428       520,480    2,861,023
                                                             -----------  ------------  ----------
                       Net income                            $6,346,839   $   147,160   $5,726,597
                                                             ===========  ============  ==========
</TABLE>


                                       57
<PAGE>
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

--------------------------------------------------------------------------------


NOTE  24.  CONDENSED  FINANCIAL  INFORMATION  OF  PAB  BANKSHARES,  INC.
           (PARENT  COMPANY  ONLY)  (CONTINUED)

<TABLE>
<CAPTION>
                                           PAB BANKSHARES, INC.
                                    CONDENDSED STATEMENTS OF CASH FLOWS
                               YEARS ENDED DECEMBER 31, 2002, 2001 AND 2000

                                                                      2002          2001          2000
                                                                  ------------  ------------  ------------
<S>                                                               <C>           <C>           <C>
               Cash flows from operating activities:
                 Net income                                       $ 6,346,839   $   147,160   $ 5,726,597
                 Adjustments to reconcile net income to
                     net cash provided by operating activities:
                     Depreciation and amortization                    376,322       874,739       422,579
                     Deferred tax provision                          (242,454)      788,607        78,065
                     Gain on disposal of assets                             -       (10,590)       (3,634)
                     Undistributed earnings of subsidiaries        (5,650,428)     (520,480)   (2,861,023)
                     Increase in cash value of life insurance               -        (6,859)      (66,159)
                     Increase in deferred compensation accrual        141,009     1,113,578       133,703
                     Increase (decrease) in retirement accrual       (402,362)    1,291,388             -
                     Net change in other assets and liabilities       162,271       748,918      (898,101)
                                                                  ------------  ------------  ------------
                       Net cash provided by operating activities      731,197     4,426,461     2,532,027
                                                                  ------------  ------------  ------------

               Cash flows from investing activities:
                 Purchase of securities available for sale                  -    (1,000,000)            -
                 Purchase of premises and equipment                  (118,106)     (969,592)   (3,501,165)
                 Proceeds from disposal of assets                   4,025,426       609,467         9,494
                 Redemption of life insurance policies                      -        60,998             -
                 Investment in subsidiary                                   -    (3,516,874)      (50,000)
                                                                  ------------  ------------  ------------
                   Net cash used in investing activities            3,907,320    (4,816,001)   (3,541,671)
                                                                  ------------  ------------  ------------

               Cash flows from financing activities:
                 Cash paid to former stockholders on
                   acquisition                                              -    (7,667,280)            -
                 Proceeds on issuance of guaranteed preferred
                    beneficial interests in debentures                      -    10,000,000             -
                 Dividends paid                                    (2,071,500)   (4,179,018)   (4,054,117)
                 Proceeds from the exercise of stock options          128,125       196,875        29,515
                 Acquisition of stock under the stock repurchase
                   plans                                                    -    (1,293,808)   (1,512,152)
                 Costs capitalized on issuance of guaranteed
                   preferred beneficial interests in debentures             -      (344,500)            -
                                                                  ------------  ------------  ------------
                     Net cash used in financing activities         (1,943,375)   (3,287,821)   (5,536,754)
                                                                  ------------  ------------  ------------

               Net increase (decrease) in cash                      2,695,142    (3,677,361)   (6,546,398)

               Cash at beginning of year                            2,826,599     6,503,960    13,050,358
                                                                  ------------  ------------  ------------

               Cash at end of year                                $ 5,521,741   $ 2,826,599   $ 6,503,960
                                                                  ============  ============  ============
</TABLE>


                                       58
<PAGE>
ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
             ACCOUNTING AND FINANCIAL DISCLOSURE

On May 29, 2001, our board of directors voted to engage Mauldin & Jenkins, LLC
as PAB's independent auditors for the year ending December 31, 2001. On May 30,
2001, we notified Fowler, Holley, Rambo, Haynes & Stalvey, PC (formerly Stewart,
Fowler & Stalvey, PC), our previous independent auditors (the "Fowler firm"),
that they would not be engaged for the audit of fiscal year 2001. The
determination to engage Mauldin & Jenkins, LLC was the result of a competitive
bid process.

As required by securities laws, we filed a Current Report on Form 8-K, dated May
29, 2001 and filed with the Securities and Exchange Commission on May 31, 2001,
announcing our change in accountants. In that Form 8-K, we disclosed that the
report of the Fowler firm on the Company's consolidated financial statements for
the fiscal years ended December 31, 1999 and 2000 contained no adverse opinion
or disclaimer of opinion and was not qualified or modified as to uncertainty,
audit scope or accounting principles. We also disclosed that during the years
ended December 31, 1999 and 2000 and for the interim period from December 31,
2000 to May 29, 2001, there were no disagreements between us and the Fowler firm
as to accounting principles or practices, financial statement disclosure, or
audit scope or procedure. A letter from the Fowler firm, dated May 30, 2001,
stating that they agreed with the disclosures we made in our Form 8-K regarding
the changes of auditors was filed as Exhibit 16 to that Form 8-K.


PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information appearing under the headings "Proposal One: Election of
Directors," "Executive Officers" and "Section 16(a) Beneficial Ownership
Reporting Compliance" in the definitive Proxy Statement (the "2003 Proxy
Statement") relating to the annual meeting of shareholders of PAB, is
incorporated herein by reference.


ITEM 11.  EXECUTIVE COMPENSATION

The information appearing under the heading "Executive Compensation" in the 2003
Proxy Statement is incorporated herein by reference.


ITEM  12.  SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL  OWNERS
             AND MANAGEMENT

The information appearing under the heading "Principal Shareholders" in the 2003
Proxy Statement is incorporated herein by reference.  Also see "Equity
Compensation Plan Information" in Part II, Item 5 of this filing.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information appearing under the headings "Executive Compensation -
Compensation Committee Interlocks and Insider Participation" and "Certain
Relationships and Related Transactions" in the 2003 Proxy Statement is
incorporated herein by reference.


ITEM 14.  CONTROLS AND PROCEDURES

Based on an evaluation completed within 90 days of the filing of this Annual
Report on Form 10-K, our principal executive and financial officers have
concluded that our disclosure controls and procedures (as defined in Exchange
Act Rules 13a-14 and 15d-14) are effective to ensure that information required
to be disclosed in our filings under the Securities Exchange Act of 1934 is
processed, recorded, summarized and reported within the time periods specified
in the forms and rules promulgated by the SEC.  There have been no significant
changes in our internal controls, or other factors that could significantly
affect these internal controls, subsequent to the date of their evaluation.


                                       59
<PAGE>
PART IV

ITEM 15.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
            REPORTS ON FORM 8-K

   (a)   1. FINANCIAL STATEMENTS.

              The consolidated financial statements, notes thereto and
              auditor's report thereon, filed as part hereof, are listed in the
              Index to Item 8 of this Report.

         2. FINANCIAL STATEMENT SCHEDULES.

              All schedules are omitted as the required information is
              inapplicable or the information is presented in the financial
              statements or related notes.

         3. EXHIBITS.

Exhibit  No.   Description
------------   -----------

     2.1       Purchase and Assumption Agreement, dated as of October 15, 2001,
               by and between Southeastern Bank and the Bank regarding the sale
               of the Bank's Richmond Hill branch office on January 31, 2002.

     3.1       Amended and Restated Articles of Incorporation (incorporated by
               reference to Exhibit 3(a) to the Registrant's Registration
               Statement on Form S-4 (No. 333-83907) filed with the Commission
               on October 14, 1999).

     3.2       Amended and Restated Bylaws (incorporated by reference to Exhibit
               4.2 to the Registrant's Registration Statement on Form S-8 (No.
               333-74819) filed with the Commission on March 22, 1999).

     4.1       Indenture Agreement, dated November 28, 2001, by and between the
               Registrant and Wilmington Trust Company for the issuance of
               Floating Rate Junior Subordinated Debt Securities due 2031
               (incorporated by reference to Exhibit 4.1 to the Registrant's
               Annual Report on Form 10-K for the fiscal year ended December 31,
               2001).

     10.1.1    PAB Bankshares, Inc. First Amendment to First Restated and
               Amended Dividend Reinvestment and Common Stock Purchase Plan
               (incorporated by reference to Exhibit 28.2 to the Registrant's
               Registration Statement on Form S-3 (No. 33-74080) filed with the
               Commission on April 8, 1997).

     10.1.2    PAB Bankshares, Inc. Third Amended and Restated Dividend
               Reinvestment and Common Stock Purchase Plan (incorporated by
               reference to Exhibit 28.1 to the Registrant's Registration
               Statement on Form S-3 (No. 33-74080) filed with the Commission on
               September 1, 1998).

     10.2      PAB Bankshares, Inc. 1994 Employee Stock Option Plan, as amended
               (incorporated by reference to Exhibit 10.3 to the Registrant's
               Annual Report on Form 10-K for the fiscal year ended December 31,
               1998).

     10.3      Form of Executive Salary Continuation Agreement, with attached
               Schedule of Terms (incorporated by reference to Exhibit 10.5 to
               the Registrant's Annual Report on Form 10-K for the fiscal year
               ended December 31, 1998).

     10.4      PAB Bankshares, Inc. 1999 Stock Option Plan (incorporated by
               reference to Exhibit 99 to the Registrant's Registration
               Statement on Form S-8 (No. 333-89527) filed with the Commission
               on March 22, 1999).

     10.5      Employee Contract Termination Agreement, dated September 1, 2001,
               by and between C. Larry Wilkinson and the Registrant
               (incorporated by reference to Exhibit 10.7 to the Registrant's
               Annual Report on Form 10-K for the fiscal year ended December 31,
               2001).


                                       60
<PAGE>
     10.6      Employment Agreement, dated October 24, 2001, by and between Jay
               Torbert, the Registrant, and The Park Avenue Bank (incorporated
               by reference to Exhibit 10.8 to the Registrant's Annual Report on
               Form 10-K for the fiscal year ended December 31, 2001).

     10.7      Employment Agreement, dated August 30, 2000, by and between M.
               Burke Welsh, Jr. and the Registrant (incorporated by reference to
               Exhibit 10.9 to the Registrant's Annual Report on Form 10-K for
               the fiscal year ended December 31, 2001).

     10.8      Rescission Agreement, dated December 31, 2001, by and between R.
               Bradford Burnette and the Registrant (incorporated by reference
               to Exhibit 10.10 to the Registrant's Annual Report on Form 10-K
               for the fiscal year ended December 31, 2001).

     10.9      PAB Bankshares, Inc. Employee and Director Stock Purchase
               Program, dated July 1, 2002 and amended March 25, 2003.

     10.10     Employment Agreement, dated January 1, 2003, by and between
               Michael E. Ricketson, the Registrant, and the Bank.

     10.11     Employment Agreement, dated January 1, 2003, by and between
               Milton Burke Welsh and the Bank.

     10.12     Employment Agreement, dated January 1, 2003, by and between R.
               Wesley Fuller and the Bank.

     10.13     Employment Agreement, dated January 1, 2003, by and between
               Donald J. Torbert, Jr. and the Bank.

     16.1      Letter re: change in certifying accountant (incorporated by
               reference to Exhibit 16 to the Registrant's Current Report on
               Form 8-K dated May 29, 2001).

     21.1      Subsidiaries of the Registrant.

     23.1      Consent of Mauldin & Jenkins, LLC.

     23.2      Consent of Fowler, Holley, Rambo, Haynes & Stalvey, PC (formerly
               Stewart, Fowler & Stalvey, PC).


     (b)  REPORTS ON FORM 8-K.

          None.


                                       61
<PAGE>
SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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.

                                  PAB BANKSHARES, INC.

Date: March 25, 2003
      --------------
                                  By:  /s/ Michael E. Ricketson
                                      ---------------------------------------
                                      Michael E. Ricketson,
                                      President and Chief Executive Officer


Signature                         Title                      Date
---------                         -----                      ----

/s/ R. Bradford Burnette          Director, Chairman         March 25, 2003
--------------------------------                             --------------
R. Bradford Burnette

/s/ Walter W. Carroll II          Director                   March 25, 2003
--------------------------------                             --------------
Walter W. Carroll II

/s/ James L. Dewar, Jr.           Director                   March 25, 2003
--------------------------------                             --------------
James L. Dewar, Jr.

/s/ Michael H. Godwin             Director                   March 25, 2003
--------------------------------                             --------------
Michael H. Godwin

/s/ Bill J. Jones                 Director                   March 25, 2003
--------------------------------                             --------------
Bill J. Jones

/s/ James B. Lanier, Jr.          Director                   March 25, 2003
--------------------------------                             --------------
James B. Lanier, Jr.

/s/ Kennith D. McLeod             Director                   March 25, 2003
--------------------------------                             --------------
Kennith D. McLeod, CPA

/s/ Paul E. Parker                Director                   March 25, 2003
--------------------------------                             --------------
Paul E. Parker

/s/ Michael E. Ricketson          Director, President and    March 25, 2003
--------------------------------  Chief Executive Officer    --------------
Michael E. Ricketson

/s/ F. Ferrell Scruggs, Sr.       Director                   March 25, 2003
--------------------------------                             --------------
F. Ferrell Scruggs, Sr.

/s/ John M. Simmons               Director                   March 25, 2003
--------------------------------                             --------------
John M. Simmons

/s/ Joe P. Singletary, Jr.        Director                   March 25, 2003
--------------------------------                             --------------
Joe P. Singletary, Jr.

/s/ Donald J. Torbert, Jr.        Senior Vice President and  March 25, 2003
--------------------------------  Chief Financial Officer    --------------
Donald J. Torbert, Jr., CPA       (Principal Accounting Officer)


                                       62
<PAGE>
CERTIFICATION

I, Michael E. Ricketson, certify that:

1.   I have reviewed this annual report on Form 10-K of PAB Bankshares, Inc.;

2.   Based on my knowledge, this annual 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 annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual 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 annual report;

4.   The registrant's other certifying officer and I am responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and 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 annual 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 annual report; and

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

5.   The registrant's other certifying officer 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:

     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 officer and I have indicated in this
     annual 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: March 25, 2003                       /s/ Michael E. Ricketson
      ---------------                      -------------------------------------
                                           Michael E. Ricketson
                                           President and Chief Executive Officer
                                           (Principal Executive Officer)


                                       63
<PAGE>
CERTIFICATION

I, Donald J. Torbert, Jr., certify that:

1.   I have reviewed this annual report on Form 10-K of PAB Bankshares, Inc.;

2.   Based on my knowledge, this annual 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 annual report;

3.   Based on my knowledge, the financial statements, and other financial
     information included in this annual 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 annual report;

4.   The registrant's other certifying officer and I am responsible for
     establishing and maintaining disclosure controls and procedures (as defined
     in Exchange Act Rules 13a-14 and 15d-14) for the registrant and 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 annual 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 annual report; and

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

5.   The registrant's other certifying officer 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:

     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 officer and I have indicated in this
     annual 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: March 25, 2003                /s/ Donald J. Torbert, Jr.
     ---------------                --------------------------------------------
                                    Donald J. Torbert, Jr., CPA
                                    Chief Financial Officer
                                    (Principal Financial and Accounting Officer)


                                       64
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT INDEX
-------------

Exhibit No.  Description                                                           Page
-----------  -----------                                                           ----
<S>          <C>                                                                   <C>
   2.1       Purchase and Assumption Agreement, dated as of October 15, 2001,
             by and between Southeastern Bank and the Bank regarding the sale of
             the Bank's Richmond Hill branch office on January 31, 2002. . . . . . . 66

   10.9      PAB Bankshares, Inc. Employee and Director Stock Purchase Program,
             dated July 1, 2002 and amended March 25, 2003 . . . . . . . . . . . . . 84

   10.10     Employment Agreement, dated January 1, 2003, by and between
             Michael E. Ricketson, the Registrant, and the Bank . . . . . . . . . . .92

   10.11     Employment Agreement, dated January 1, 2003, by and between
             Milton Burke Welsh and the Bank . . . . . . . . . . . . . . . . . . . .102

   10.12     Employment Agreement, dated January 1, 2003, by and between
             R. Wesley Fuller and the Bank . . . . . . . . . . . . . . . . . . . . .111

   10.13     Employment Agreement, dated January 1, 2003, by and between
             Donald J. Torbert, Jr. and the Bank . . . . . . . . . . . . . . . . . .120

   21.1      Subsidiaries of the Registrant. . . . . . . . . . . . . . . . . . . . .129

   23.1      Consent of Mauldin & Jenkins, LLC . . . . . . . . . . . . . . . . . . .130

   23.2      Consent of Fowler, Holley, Rambo, Haynes & Stalvey, PC
             (formerly Stewart, Fowler & Stalvey, PC). . . . . . . . . . . . . . . .131
</TABLE>


                                       65
<PAGE>