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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

**FORM      10-Q**

**Quarterly      Report Pursuant to Section 13 or 15(d) of the**

**Securities      Exchange Act of 1934**

**PAB      BANKSHARES, INC.**

**3250      North Valdosta Road, Valdosta, Georgia 31602**

**Telephone      Number: (229) 241-2775**

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**TABLE      OF CONTENTS**

|                   |                                                                                                                      | Page   |
|------------------------|---------------------------------------------------------------------------------------------------------------------------|--------|
| PART                I  | FINANCIAL                INFORMATION                                                                                      |   |
| Item                1. | Consolidated                Financial Statements                                                                          |   |
|                   | Statements                of Condition                                                                                    | 1      |
|                   | Statements                of Income                                                                                       | 2      |
|                   | Statements                of Comprehensive Income                                                                         | 3      |
|                   | Statements                of Stockholders’ Equity                                                                   | 4      |
|                   | Statements                of Cash Flows                                                                                   | 5      |
|                   | Notes                to Consolidated Financial Statements                                                                 | 7      |
| Item                2. | Management’s                Discussion and Analysis of Financial Condition and Results of                Operations | 10     |
| Item                3. | Quantitative                and Qualitative Disclosures About Market Risk                                                 | 19     |
| Item                4. | Controls                and Procedures                                                                                    | 20     |
|                   |                                                                                                                      |   |
| PART                II | OTHER                INFORMATION                                                                                          |   |
| Item                1. | Legal                Proceedings                                                                                          | 20     |
| Item                2. | Unregistered                Sales of Equity Securities and Use of Proceeds                                                | 20     |
| Item                3. | Defaults                Upon Senior Securities                                                                            | 21     |
| Item                4. | Submissions                of Matters to a Vote of Security Holders                                                       | 21     |
| Item                5. | Other                Information                                                                                          | 21     |
| Item                6. | Exhibits                                                                                                                  | 21     |
|                   |                                                                                                                      |   |
| SIGNATURES        | 22                                                                                                                        |

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**PART      I. FINANCIAL INFORMATION**

**ITEM      1.  CONSOLIDATED FINANCIAL      STATEMENTS**

**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF CONDITION**

**AS      OF JUNE 30, 2005 AND DECEMBER 31, 2004**

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|                                                                                                                                                                                 |   | **June                30,****2005** |        | **December                31,****2004** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------|-------------|-----------------------------------------|--------|
|                                                                                                                                                                                 |   | **(UNAUDITED)**                     |        |                                    |   |
| **ASSETS**                                                                                                                                                                           |   |                                |        |                                    |   |
| Cash                and due from banks                                                                                                                                               |   | $                                   | 24,372,203  |                                    | $      | 22,976,924 |   |
| Interest-bearing                deposits in other banks                                                                                                                              |   |                                | 5,836,137   |                                    |   | 984,737 |   |
| Federal                funds sold                                                                                                                                                    |   |                                | 12,070,118  |                                    |   | 32,616,121 |   |
| Investment                securities                                                                                                                                                 |   |                                | 134,460,935 |                                    |   | 128,683,829 |   |
|                                                                                                                                                                                 |   |                                |        |                                    |   |   |   |
| Loans                                                                                                                                                                                |   |                                | 719,633,925 |                                    |   | 646,149,340 |   |
| Allowance                for loan losses                                                                                                                                             |   |                                | (10,460,004 | )                                       |   | (9,066,566 | ) |
| Net                loans                                                                                                                                                             |   |                                | 709,173,921 |                                    |   | 637,082,774 |   |
|                                                                                                                                                                                 |   |                                |        |                                    |   |   |   |
| Premises                and equipment, net                                                                                                                                           |   |                                | 18,379,995  |                                    |   | 18,812,209 |   |
| Goodwill                                                                                                                                                                             |   |                                | 5,984,604   |                                    |   | 5,984,604 |   |
| Cash                value of bank-owned life insurance policies                                                                                                                      |   |                                | 10,899,866  |                                    |   | 10,737,204 |   |
| Foreclosed                assets                                                                                                                                                     |   |                                | 1,500       |                                    |   | 30,216 |   |
| Other                assets                                                                                                                                                          |   |                                | 12,567,494  |                                    |   | 11,066,368 |   |
|                                                                                                                                                                                 |   |                                |        |                                    |   |   |   |
| Total                assets                                                                                                                                                          |   | $                                   | 933,746,773 |                                    | $      | 868,974,986 |   |
|                                                                                                                                                                                 |   |                                |        |                                    |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                                                                                                                              |   |                                |        |                                    |   |   |   |
| Deposits:                                                                                                                                                                            |   |                                |        |                                    |   |   |   |
| Noninterest-bearing                demand                                                                                                                                            |   | $                                   | 108,814,472 |                                    | $      | 99,627,825 |   |
| Interest-bearing                demand and savings                                                                                                                                   |   |                                | 234,815,247 |                                    |   | 224,836,339 |   |
| Time                                                                                                                                                                                 |   |                                | 383,290,838 |                                    |   | 333,086,272 |   |
| Total                deposits                                                                                                                                                        |   |                                | 726,920,557 |                                    |   | 657,550,436 |   |
|                                                                                                                                                                                 |   |                                |        |                                    |   |   |   |
| Federal                funds purchased and securities sold under agreements to                repurchase                                                                             |   |                                | 6,304,509   |                                    |   | 14,168,098 |   |
| Advances                from the Federal Home Loan Bank of Atlanta                                                                                                                   |   |                                | 98,391,244  |                                    |   | 99,001,125 |   |
| Guaranteed                preferred beneficial interests in debentures (trust preferred                securities)                                                                   |   |                                | 10,310,000  |                                    |   | 10,310,000 |   |
| Other                liabilities                                                                                                                                                     |   |                                | 7,260,055   |                                    |   | 6,945,443 |   |
| Total                liabilities                                                                                                                                                     |   |                                | 849,186,365 |                                    |   | 787,975,102 |   |
|                                                                                                                                                                                 |   |                                |        |                                    |   |   |   |
| **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; 9,528,508                        and 9,495,320                        shares issued and outstanding |   |                                | 1,217,065   |                                    |   | 1,217,065 |   |
| Additional                paid-in capital                                                                                                                                            |   |                                | 29,240,456  |                                    |   | 29,143,017 |   |
| Retained                earnings                                                                                                                                                     |   |                                | 54,352,918  |                                    |   | 50,938,254 |   |
| Accumulated                other comprehensive loss                                                                                                                                  |   |                                | (250,031    | )                                       |   | (298,452 | ) |
| Total                stockholders' equity                                                                                                                                            |   |                                | 84,560,408  |                                    |   | 80,999,884 |   |
|                                                                                                                                                                                 |   |                                |        |                                    |   |   |   |
| Total                liabilities and stockholders' equity                                                                                                                            |   | $                                   | 933,746,773 |                                    | $      | 868,974,986 |   |

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**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF INCOME**

**THREE      MONTHS AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004**

**(UNAUDITED)**

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|                                                               |   | **Three                Months Ended June 30,** |       | **Six                Months Ended June 30,** |   |
|--------------------------------------------------------------------|--------|------------------------------------------------|------------|----------------------------------------------|--------|
|                                                               |   | **2005**                                       |       | **2004**                                     |   | **2005** |   | **2004** |   |
| **Interest                income**                                 |   |                                           |       |                                         |   |   |   |   |   |
| Interest                and fees on loans                          |   | $                                              | 12,472,680 |                                         | $      | 8,360,603 |   | $ | 23,309,453 |   | $ | 16,611,801 |   |
| Interest                and dividends on investment securities:    |   |                                           |       |                                         |   |   |   |   |   |   |   |   |   |
| Taxable                                                            |   |                                           | 1,329,477  |                                         |   | 1,075,233 |   |   | 2,626,304 |   |   | 2,316,148 |   |
| Nontaxable                                                         |   |                                           | 93,421     |                                         |   | 84,147 |   |   | 175,320 |   |   | 171,530 |   |
| Other                interest income                               |   |                                           | 284,340    |                                         |   | 31,893 |   |   | 536,187 |   |   | 39,681 |   |
| Total                interest income                               |   |                                           | 14,179,918 |                                         |   | 9,551,876 |   |   | 26,647,264 |   |   | 19,139,160 |   |
|                                                               |   |                                           |       |                                         |   |   |   |   |   |   |   |   |   |
| **Interest                expense**                                |   |                                           |       |                                         |   |   |   |   |   |   |   |   |   |
| Interest                on deposits                                |   |                                           | 3,604,708  |                                         |   | 1,886,975 |   |   | 6,618,270 |   |   | 3,841,957 |   |
| Interest                on Federal Home Loan Bank advances         |   |                                           | 769,340    |                                         |   | 279,054 |   |   | 1,452,223 |   |   | 529,211 |   |
| Interest                on other borrowings                        |   |                                           | 206,421    |                                         |   | 214,949 |   |   | 404,272 |   |   | 439,861 |   |
| Total                interest expense                              |   |                                           | 4,580,469  |                                         |   | 2,380,978 |   |   | 8,474,765 |   |   | 4,811,029 |   |
|                                                               |   |                                           |       |                                         |   |   |   |   |   |   |   |   |   |
| Net                interest income                                 |   |                                           | 9,599,449  |                                         |   | 7,170,898 |   |   | 18,172,499 |   |   | 14,328,131 |   |
|                                                               |   |                                           |       |                                         |   |   |   |   |   |   |   |   |   |
| **Provision                for loan losses**                       |   |                                           | 153,400    |                                         |   | - |   |   | 613,600 |   |   | - |   |
| Net                interest income after provision for loan losses |   |                                           | 9,446,049  |                                         |   | 7,170,898 |   |   | 17,558,899 |   |   | 14,328,131 |   |
|                                                               |   |                                           |       |                                         |   |   |   |   |   |   |   |   |   |
| **Other                income**                                    |   |                                           |       |                                         |   |   |   |   |   |   |   |   |   |
| Service                charges on deposit accounts                 |   |                                           | 1,019,056  |                                         |   | 1,094,276 |   |   | 1,941,110 |   |   | 2,160,171 |   |
| Other                fee income                                    |   |                                           | 301,766    |                                         |   | 289,099 |   |   | 602,475 |   |   | 669,509 |   |
| Securities                transactions, net                        |   |                                           | (1,242     | )                                            |   | (1,020 | ) |   | (1,242 | ) |   | 576 |   |
| Other                noninterest income                            |   |                                           | 138,442    |                                         |   | 107,766 |   |   | 263,061 |   |   | 465,775 |   |
| Total                other income                                  |   |                                           | 1,458,022  |                                         |   | 1,490,121 |   |   | 2,805,404 |   |   | 3,296,031 |   |
|                                                               |   |                                           |       |                                         |   |   |   |   |   |   |   |   |   |
| **Other                expenses**                                  |   |                                           |       |                                         |   |   |   |   |   |   |   |   |   |
| Salaries                and employee benefits                      |   |                                           | 3,886,195  |                                         |   | 3,341,315 |   |   | 7,376,520 |   |   | 6,913,967 |   |
| Occupancy                expense of premises                       |   |                                           | 487,841    |                                         |   | 459,525 |   |   | 957,048 |   |   | 901,539 |   |
| Furniture                and equipment expense                     |   |                                           | 526,399    |                                         |   | 522,958 |   |   | 1,029,552 |   |   | 1,049,909 |   |
| Other                noninterest expense                           |   |                                           | 1,327,186  |                                         |   | 1,289,372 |   |   | 2,629,827 |   |   | 2,473,284 |   |
| Total                other expenses                                |   |                                           | 6,227,621  |                                         |   | 5,613,170 |   |   | 11,992,947 |   |   | 11,338,699 |   |
|                                                               |   |                                           |       |                                         |   |   |   |   |   |   |   |   |   |
| Income                before income tax expense                    |   |                                           | 4,676,450  |                                         |   | 3,047,849 |   |   | 8,371,356 |   |   | 6,285,463 |   |
| **Income                tax expense**                              |   |                                           | 1,549,392  |                                         |   | 928,060 |   |   | 2,765,650 |   |   | 2,039,393 |   |
|                                                               |   |                                           |       |                                         |   |   |   |   |   |   |   |   |   |
| Net                income                                          |   | $                                              | 3,127,058  |                                         | $      | 2,119,789 |   | $ | 5,605,706 |   | $ | 4,246,070 |   |
|                                                               |   |                                           |       |                                         |   |   |   |   |   |   |   |   |   |
| **Earnings                per common share**                       |   |                                           |       |                                         |   |   |   |   |   |   |   |   |   |
| Basic                                                              |   | $                                              | 0.33       |                                         | $      | 0.23 |   | $ | 0.59 |   | $ | 0.45 |   |
| Diluted                                                            |   | $                                              | 0.32       |                                         | $      | 0.22 |   | $ | 0.58 |   | $ | 0.44 |   |

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**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF COMPREHENSIVE INCOME**

**THREE      MONTHS AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004**

**(UNAUDITED)**

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|                                                                                                                                                                                                                            |   | **Three                Months Ended June 30,** |      | **Six                Months Ended June 30,** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|-----------|----------------------------------------------|--------|
|                                                                                                                                                                                                                            |   | **2005**                                       |      | **2004**                                     |   | **2005** |   | **2004** |   |
| Net                income                                                                                                                                                                                                       |   | $                                              | 3,127,058 |                                         | $      | 2,119,789 |   | $ | 5,605,706 |   | $ | 4,246,070 |   |
|                                                                                                                                                                                                                            |   |                                           |      |                                         |   |   |   |   |   |   |   |   |   |
| Other                comprehensive income (loss):                                                                                                                                                                               |   |                                           |      |                                         |   |   |   |   |   |   |   |   |   |
| Unrealized                holding gains (losses) arising during the period, net of tax                (benefit) of $496,147 and ($1,088,490) for the quarter and and                $24,522 and ($624,966) for the year to date |   |                                           | 963,105   |                                         |   | (2,112,949 | ) |   | 47,601 |   |   | (1,212,407 | ) |
| Reclassification                adjustment for (gains) losses included in net income,                net of tax (benefit) of ($422) and ($347) for the quarter and                ($422) and $196 for the year to date          |   |                                           | 820       |                                         |   | 673 |   |   | 820 |   |   | (380 | ) |
|                                                                                                                                                                                                                            |   |                                           | 963,925   |                                         |   | (2,112,276 | ) |   | 48,421 |   |   | (1,212,787 | ) |
|                                                                                                                                                                                                                            |   |                                           |      |                                         |   |   |   |   |   |   |   |   |   |
| Comprehensive                income                                                                                                                                                                                             |   | $                                              | 4,090,983 |                                         | $      | 7,513 |   | $ | 5,654,127 |   | $ | 3,033,283 |   |

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**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS’ EQUITY**

**SIX      MONTHS ENDED JUNE 30, 2005 (UNAUDITED) AND YEAR ENDED DECEMBER 31,      2004**

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|                                                                                              |   | **Common                Stock** |      |            |   |                                               |   |                                      |       |                                                                        |   |
|---------------------------------------------------------------------------------------------------|--------|---------------------------------|-----------|------------|--------|----------------------------------------------------|--------|--------------------------------------|------------|-----------------------------------------------------------------------------|--------|
|                                                                                              |   | **Shares**                      |      | **Amount** |   | **Additional                  Paid-in****Capital** |   | **Retained                Earnings** |       | **Accumulated                  Other****Comprehensive                Loss** |   | **Total** |   |
| **Balance,                December 31, 2003**                                                     |   |                            | 9,484,660 |       | $      | 1,217,065                                          |   | $                                    | 29,314,700 |                                                                        | $      | 45,651,500 |   | $ | (121,099 | ) | $ | 76,062,166 |   |
| Net                income                                                                         |   |                            | -         |       |   | -                                                  |   |                                 | -          |                                                                        |   | 8,518,085 |   |   | - |   |   | 8,518,085 |   |
| Other                comprehensive loss                                                           |   |                            | -         |       |   | -                                                  |   |                                 | -          |                                                                        |   | - |   |   | (177,353 | ) |   | (177,353 | ) |
| Cash                  dividends declared, $.34                  per share                         |   |                            | -         |       |   | -                                                  |   |                                 | -          |                                                                        |   | (3,231,331 | ) |   | - |   |   | (3,231,331 | ) |
| Stock                  acquired and cancelled under stock repurchase plan                         |   |                            | (46,300   | )          |   | -                                                  |   |                                 | (576,198   | )                                                                           |   | - |   |   | - |   |   | (576,198 | ) |
| Stock                options exercised                                                            |   |                            | 56,960    |       |   | -                                                  |   |                                 | 404,515    |                                                                        |   | - |   |   | - |   |   | 404,515 |   |
| **Balance,                December 31, 2004**                                                     |   |                            | 9,495,320 |       |   | 1,217,065                                          |   |                                 | 29,143,017 |                                                                        |   | 50,938,254 |   |   | (298,452 | ) |   | 80,999,884 |   |
| Net                income                                                                         |   |                            | -         |       |   | -                                                  |   |                                 | -          |                                                                        |   | 5,605,706 |   |   | - |   |   | 5,605,706 |   |
| Other                comprehensive income                                                         |   |                            | -         |       |   | -                                                  |   |                                 | -          |                                                                        |   | - |   |   | 48,421 |   |   | 48,421 |   |
| Cash                              dividends declared, $.23 per                              share |   |                            | -         |       |   | -                                                  |   |                                 | -          |                                                                        |   | (2,191,042 | ) |   | - |   |   | (2,191,042 | ) |
| Stock                  acquired and cancelled under stock repurchase plan                         |   |                            | (17,692   | )          |   | -                                                  |   |                                 | (249,988   | )                                                                           |   | - |   |   | - |   |   | (249,988 | ) |
| Stock                options exercised                                                            |   |                            | 50,880    |       |   | -                                                  |   |                                 | 347,427    |                                                                        |   | - |   |   | - |   |   | 347,427 |   |
| **Balance,                June 30, 2005**                                                         |   |                            | 9,528,508 |       | $      | 1,217,065                                          |   | $                                    | 29,240,456 |                                                                        | $      | 54,352,918 |   | $ | (250,031 | ) | $ | 84,560,408 |   |

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**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**SIX      MONTHS ENDED JUNE 30, 2005 AND 2004**

**(UNAUDITED)**

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|                                                                                                                  |   | **Six                Months Ended June 30,** |        |
|-----------------------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|-------------|
|                                                                                                                  |   | **2005**                                     |        | **2004** |   |
|                                                                                                                  |   |                                         |        |   |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES**                                                               |   |                                         |        |   |   |
| Net                income                                                                                             |   | $                                            | 5,605,706   |   | $ | 4,246,070 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities:       |   |                                         |        |   |   |   |   |
| Depreciation,                amortization and accretion, net                                                          |   |                                         | 1,101,065   |   |   | 1,329,073 |   |
| Provision                for loan losses                                                                              |   |                                         | 613,600     |   |   | - |   |
| Provision                for deferred taxes                                                                           |   |                                         | -           |   |   | 14,351 |   |
| Net                realized (gain) loss on securities transactions                                                    |   |                                         | 1,242       |   |   | (576 | ) |
| (Gain)                loss on disposal of assets                                                                      |   |                                         | 21,831      |   |   | (27,169 | ) |
| Increase                in cash value of bank-owned life insurance                                                    |   |                                         | (162,662    | ) |   | (144,030 | ) |
| Decrease                in deferred compensation accrual                                                              |   |                                         | (7,364      | ) |   | (13,486 | ) |
| Decrease                in retirement accruals                                                                        |   |                                         | (178,033    | ) |   | (196,541 | ) |
| Net                change in taxes receivable and taxes payable                                                       |   |                                         | (580,350    | ) |   | 243,948 |   |
| (Increase)                decrease in interest receivable                                                             |   |                                         | (666,657    | ) |   | 316,945 |   |
| Increase                (decrease) in interest payable                                                                |   |                                         | 429,761     |   |   | (111,053 | ) |
| Net                increase in prepaid expenses and other assets                                                      |   |                                         | (313,512    | ) |   | (329,955 | ) |
| Net                decrease in accrued expenses and other liabilities                                                 |   |                                         | (115,641    | ) |   | (526,604 | ) |
| Net                cash provided by operating activities                                                              |   |                                         | 5,748,986   |   |   | 4,800,973 |   |
|                                                                                                                  |   |                                         |        |   |   |   |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES**                                                               |   |                                         |        |   |   |   |   |
| Increase                in interest-bearing deposits in other banks                                                   |   |                                         | (4,851,400  | ) |   | (1,063,882 | ) |
| (Increase)                decrease in federal funds sold                                                              |   |                                         | 20,546,003  |   |   | (12,211,563 | ) |
| Purchase                of debt securities                                                                            |   |                                         | (22,424,049 | ) |   | (6,255,684 | ) |
| Proceeds                from sales and calls of debt securities                                                       |   |                                         | 8,861,857   |   |   | 12,362,355 |   |
| Proceeds                from maturities and paydowns of debt securities                                               |   |                                         | 7,949,931   |   |   | 10,660,983 |   |
| Purchase                of equity investments                                                                         |   |                                         | (302,300    | ) |   | (723,400 | ) |
| Redemption                of equity investments                                                                       |   |                                         | -           |   |   | 600 |   |
| Net                increase in loans                                                                                  |   |                                         | (72,798,775 | ) |   | (16,891,104 | ) |
| Purchase                of premises and equipment                                                                     |   |                                         | (453,576    | ) |   | (405,605 | ) |
| Proceeds                from disposal of assets                                                                       |   |                                         | 129,665     |   |   | 1,595,899 |   |
| Net                cash used in investing activities                                                                  |   |                                         | (63,342,644 | ) |   | (12,931,401 | ) |
|                                                                                                                  |   |                                         |        |   |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES**                                                               |   |                                         |        |   |   |   |   |
| Net                increase in deposits                                                                               |   |                                         | 69,370,121  |   |   | 8,696,713 |   |
| Net                decrease in federal funds purchased and securities sold under repurchase                agreements |   |                                         | (7,863,589  | ) |   | (15,945,538 | ) |
| Advances                from the Federal Home Loan Bank                                                               |   |                                         | 38,318,600  |   |   | 14,848,400 |   |
| Payments                on Federal Home Loan Bank advances                                                            |   |                                         | (38,928,481 | ) |   | (241,057 | ) |
| Dividends                paid                                                                                         |   |                                         | (1,997,153  | ) |   | (1,329,755 | ) |
| Proceeds                from the exercise of stock options                                                            |   |                                         | 347,427     |   |   | 212,065 |   |
| Acquisition                of stock under stock repurchase plans                                                      |   |                                         | (249,988    | ) |   | (241,288 | ) |
| Repurchase                of preferred stock in REIT subsidiaries                                                     |   |                                         | (8,000      | ) |   | - |   |
| Net                cash provided by financing activities                                                              |   |                                         | 58,988,937  |   |   | 5,999,540 |   |

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**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**SIX      MONTHS ENDED JUNE 30, 2005 AND 2004**

**(UNAUDITED)**

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|                                                                                                   |   | **Six                Months Ended June 30,** |       |
|--------------------------------------------------------------------------------------------------------|--------|----------------------------------------------|------------|
|                                                                                                   |   | **2005**                                     |       | **2004** |   |
|                                                                                                   |   |                                         |       |   |   |
| Net                increase (decrease) in cash and due from banks                                      |   | $                                            | 1,395,279  |   | $ | (2,130,888 | ) |
|                                                                                                   |   |                                         |       |   |   |   |   |
| Cash                and due from banks at beginning of period                                          |   |                                         | 22,976,924 |   |   | 22,920,218 |   |
|                                                                                                   |   |                                         |       |   |   |   |   |
| Cash                and due from banks at end of period                                                |   | $                                            | 24,372,203 |   | $ | 20,789,330 |   |
|                                                                                                   |   |                                         |       |   |   |   |   |
|                                                                                                   |   |                                         |       |   |   |   |   |
| **SUPPLEMENTAL                DISCLOSURES OF CASH FLOW INFORMATION**                                   |   |                                         |       |   |   |   |   |
| Cash                paid during the period for:                                                        |   |                                         |       |   |   |   |   |
| Interest                                                                                               |   | $                                            | 8,045,004  |   | $ | 4,922,082 |   |
| Taxes                                                                                                  |   | $                                            | 3,346,000  |   | $ | 1,781,094 |   |
|                                                                                                   |   |                                         |       |   |   |   |   |
|                                                                                                   |   |                                         |       |   |   |   |   |
| **NONCASH                INVESTING AND FINANCING TRANSACTIONS**                                        |   |                                         |       |   |   |   |   |
| Increase                (decrease) in unrealized gains on securities available for                sale |   | $                                            | 73,364     |   | $ | (1,837,556 | ) |

----

**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

----

**NOTE      1. NATURE OF BUSINESS**

| **Banking                Locations**                    |   | **Number                of Banking Offices** |
|---------------------------------------------------------|--------|----------------------------------------------|
| **South                Georgia Market:**                |   |                                         |
| 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                                            |
| **North                Georgia Market:**                |   |                                         |
| McDonough,                Henry County, Georgia         |   | 1                                            |
| Stockbridge,                Henry County, Georgia       |   | 1                                            |
| Oakwood,                Hall County, Georgia            |   | 1                                            |
| Athens,                Clarke County, Georgia           |   | 1                (loan production office)    |
| Atlanta,                Cobb County, Georgia            |   | 1                (loan production office)    |
| **Florida                Market:**                      |   |                                         |
| Ocala,                Marion County, Florida            |   | 1                                            |
| St.                Augustine, St. Johns County, Florida |   | 1                (loan production office)    |

*Consolidation      of Variable Interest Entities*

----

**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

----

**NOTE      2. BASIS OF PRESENTATION**

**NOTE      3. EARNINGS PER COMMON SHARE**

|                                                              |   | **Three                Months Ended June 30,** |      | **Six                Months Ended June 30,** |   |
|-------------------------------------------------------------------|--------|------------------------------------------------|-----------|----------------------------------------------|--------|
|                                                              |   | **2005**                                       |      | **2004**                                     |   | **2005** |   | **2004** |   |
| Basic                earnings per share:                          |   |                                           |      |                                         |   |   |   |   |   |
| Net                income                                         |   | $                                              | 3,127,058 |                                         | $      | 2,119,789 |   | $ | 5,605,706 |   | $ | 4,246,070 |   |
|                                                              |   |                                           |      |                                         |   |   |   |   |   |   |   |   |   |
| Weighted                average common shares outstanding         |   |                                           | 9,526,343 |                                         |   | 9,515,438 |   |   | 9,512,741 |   |   | 9,507,735 |   |
|                                                              |   |                                           |      |                                         |   |   |   |   |   |   |   |   |   |
| Earnings                per common share                          |   | $                                              | 0.33      |                                         | $      | 0.23 |   | $ | 0.59 |   | $ | 0.45 |   |
|                                                              |   |                                           |      |                                         |   |   |   |   |   |   |   |   |   |
| Diluted                earnings per share:                        |   |                                           |      |                                         |   |   |   |   |   |   |   |   |   |
| Net                income                                         |   | $                                              | 3,127,058 |                                         | $      | 2,119,789 |   | $ | 5,605,706 |   | $ | 4,246,070 |   |
|                                                              |   |                                           |      |                                         |   |   |   |   |   |   |   |   |   |
| Weighted                average common shares outstanding         |   |                                           | 9,526,343 |                                         |   | 9,515,438 |   |   | 9,512,741 |   |   | 9,507,735 |   |
| Effect                of dilutive stock options                   |   |                                           | 145,602   |                                         |   | 125,399 |   |   | 147,871 |   |   | 158,022 |   |
| Weighted                average diluted common shares outstanding |   |                                           | 9,671,945 |                                         |   | 9,640,837 |   |   | 9,660,612 |   |   | 9,665,757 |   |
|                                                              |   |                                           |      |                                         |   |   |   |   |   |   |   |   |   |
| Earnings                per common share                          |   | $                                              | 0.32      |                                         | $      | 0.22 |   | $ | 0.58 |   | $ | 0.44 |   |

----

**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**(UNAUDITED)**

----

**NOTE      4. STOCK-BASED EMPLOYEE COMPENSATION**

*Accounting      for Stock Issued to Employees*
*Accounting      for Stock-Based Compensation*

|                                                                                                                                                              |   | **Three                Months Ended June 30,** |      | **Six                Months Ended June 30,** |   |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------|-----------|----------------------------------------------|--------|
|                                                                                                                                                              |   | **2005**                                       |      | **2004**                                     |   | **2005** |   | **2004** |   |
|                                                                                                                                                              |   |                                           |      |                                         |   |   |   |   |   |
| Net                income, as reported                                                                                                                            |   | $                                              | 3,127,058 |                                         | $      | 2,119,789 |   | $ | 5,605,706 |   | $ | 4,246,070 |   |
| Deduct:                                                                                                                                                           |   |                                           |      |                                         |   |   |   |   |   |   |   |   |   |
| Total                stock-based employee compensation expense determined under fair value                based method for all awards, net of related tax effects |   |                                           | (65,560   | )                                            |   | (54,269 | ) |   | (124,022 | ) |   | (108,689 | ) |
| Pro                forma net income                                                                                                                               |   | $                                              | 3,061,498 |                                         | $      | 2,065,520 |   | $ | 5,481,685 |   | $ | 4,137,381 |   |
|                                                                                                                                                              |   |                                           |      |                                         |   |   |   |   |   |   |   |   |   |
| Earnings                per share:                                                                                                                                |   |                                           |      |                                         |   |   |   |   |   |   |   |   |   |
| Basic                - as reported                                                                                                                                |   | $                                              | 0.33      |                                         | $      | 0.23 |   | $ | 0.59 |   | $ | 0.45 |   |
| Basic                - pro forma                                                                                                                                  |   | $                                              | 0.32      |                                         | $      | 0.22 |   | $ | 0.58 |   | $ | 0.44 |   |
| Diluted                - as reported                                                                                                                              |   | $                                              | 0.32      |                                         | $      | 0.22 |   | $ | 0.58 |   | $ | 0.44 |   |
| Diluted                - pro forma                                                                                                                                |   | $                                              | 0.32      |                                         | $      | 0.21 |   | $ | 0.57 |   | $ | 0.43 |   |

----

**CAUTIONARY      NOTICE REGARDING FORWARD-LOOKING STATEMENTS**

*Management’s      Discussion and Analysis of Financial Condition and Results of      Operation*

**ITEM      2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATION**

----

**FINANCIAL      CONDITION**

| As                  of Quarter End                                   |   | Jun-05                                                                                                   |    | Mar-05 |   | Dec-04  |   | Sep-04 |    | Jun-04 |   |
|----------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|---------|--------|--------|---------|--------|--------|---------|--------|--------|
|                                                                 |   | (Dollars                  In                  Thousands)         |    |
| Commercial                  and financial                            |   | $                                                                                                        | 60,127  |   | $      | 54,512  |   | $      | 59,703  |   | $      | 54,472 |   | $ | 50,151 |   |
| Agricultural                  (including loans secured by farmland)  |   |                                                                                                     | 32,475  |   |   | 27,237  |   |   | 26,704  |   |   | 30,076 |   |   | 27,005 |   |
| Real                  estate - construction                          |   |                                                                                                     | 228,539 |   |   | 198,815 |   |   | 166,854 |   |   | 142,744 |   |   | 114,794 |   |
| Real                  estate - mortgage (commercial and residential) |   |                                                                                                     | 378,112 |   |   | 380,180 |   |   | 375,222 |   |   | 351,547 |   |   | 340,081 |   |
| Installment                  loans to individuals and other loans    |   |                                                                                                     | 22,663  |   |   | 20,585  |   |   | 19,552  |   |   | 22,366 |   |   | 23,193 |   |
|                                                                 |   |                                                                                                     | 721,916 |   |   | 681,329 |   |   | 648,035 |   |   | 601,205 |   |   | 555,224 |   |
| Deferred                  loan fees and unearned interest, net       |   |                                                                                                     | (2,282  | )      |   | (1,721  | )      |   | (1,886  | )      |   | (755 | ) |   | (700 | ) |
|                                                                 |   |                                                                                                     | 719,634 |   |   | 679,608 |   |   | 646,149 |   |   | 600,450 |   |   | 554,524 |   |
| Allowance                  for loan losses                           |   |                                                                                                     | (10,460 | )      |   | (9,867  | )      |   | (9,066  | )      |   | (9,562 | ) |   | (9,609 | ) |
|                                                                 |   | $                                                                                                        | 709,174 |   | $      | 669,741 |   | $      | 637,083 |   | $      | 590,888 |   | $ | 544,915 |   |

**RESULTS      OF OPERATIONS**

----

*Net      Interest Income*

----

| For                the Three Months Ended June 30, |   | 2005                                                                                                             |    |                                   |   |                              |   | 2004                           |   |                                   |   |
|----------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------|--------------|----------------------------------------|--------|-----------------------------------|--------|--------------------------------|--------|----------------------------------------|--------|
|                                               |   | Average                Balance                                                                                   |         | Interest                Income/Expense |   | Average                Yield/Rate |   | Average                Balance |   | Interest                Income/Expense |   | Average                Yield/Rate |   |
|                                               |   | (Dollars                In                Thousands)           |         |
| Interest-earning                assets:            |   |                                                                                                             |         |                                   |   |                              |   |                           |   |                                   |   |   |   |
| Loans                                              |   | $                                                                                                                | 693,433      |                                   | $      | 12,473                            |   |                           | 7.21   | %                                      | $      | 551,675 |   | $ | 8,361 |   |   | 6.10 | % |
| Investment                securities:              |   |                                                                                                             |         |                                   |   |                              |   |                           |   |                                   |   |   |   |   |   |   |   |   |   |
| Taxable                                            |   |                                                                                                             | 120,741      |                                   |   | 1,329                             |   |                           | 4.42   | %                                      |   | 103,222 |   |   | 1,075 |   |   | 4.19 | % |
| Nontaxable                                         |   |                                                                                                             | 9,603        |                                   |   | 142                               |   |                           | 5.91   | %                                      |   | 8,611 |   |   | 127 |   |   | 5.96 | % |
| Other                short-term investments        |   |                                                                                                             | 37,685       |                                   |   | 284                               |   |                           | 3.03   | %                                      |   | 14,019 |   |   | 32 |   |   | 0.92 | % |
| Total                interest-earning assets       |   | $                                                                                                                | 861,462      |                                   | $      | 14,228                            |   |                           | 6.62   | %                                      | $      | 677,527 |   | $ | 9,595 |   |   | 5.70 | % |
| Interest-bearing                liabilities:       |   |                                                                                                             |         |                                   |   |                              |   |                           |   |                                   |   |   |   |   |   |   |   |   |   |
| Demand                deposits                     |   | $                                                                                                                | 198,141      |                                   | $      | 690                               |   |                           | 1.40   | %                                      | $      | 169,654 |   | $ | 256 |   |   | 0.61 | % |
| Savings                deposits                    |   |                                                                                                             | 43,559       |                                   |   | 74                                |   |                           | 0.68   | %                                      |   | 42,448 |   |   | 56 |   |   | 0.53 | % |
| Time                deposits                       |   |                                                                                                             | 364,083      |                                   |   | 2,841                             |   |                           | 3.13   | %                                      |   | 253,012 |   |   | 1,575 |   |   | 2.50 | % |
| FHLB                advances                       |   |                                                                                                             | 98,926       |                                   |   | 769                               |   |                           | 3.12   | %                                      |   | 55,614 |   |   | 279 |   |   | 2.02 | % |
| Notes                payable                       |   |                                                                                                             | 10,310       |                                   |   | 176                               |   |                           | 6.86   | %                                      |   | 10,310 |   |   | 140 |   |   | 5.45 | % |
| Other                short-term borrowings         |   |                                                                                                             | 6,924        |                                   |   | 30                                |   |                           | 1.75   | %                                      |   | 26,483 |   |   | 75 |   |   | 1.14 | % |
| Total                interest-bearing liabilities  |   | $                                                                                                                | 721,943      |                                   | $      | 4,580                             |   |                           | 2.54   | %                                      | $      | 557,521 |   | $ | 2,381 |   |   | 1.72 | % |
| Interest                rate spread                |   |                                                                                                             |         |                                   |   |                              |   |                           | 4.08   | %                                      |   |   |   |   |   |   |   | 3.98 | % |
| Net                interest income                 |   |                                                                                                             |         |                                   | $      | 9,648                             |   |                           |   |                                   |   |   |   | $ | 7,214 |   |   |   |   |
| Net                interest margin                 |   |                                                                                                             |         |                                   |   |                              |   |                           | 4.49   | %                                      |   |   |   |   |   |   |   | 4.28 | % |

| For                the Six Months Ended June 30,  |   | 2005                                                                                                             |    |                                   |   |                              |   | 2004                           |   |                                   |   |
|---------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------|---------|----------------------------------------|--------|-----------------------------------|--------|--------------------------------|--------|----------------------------------------|--------|
|                                              |   | Average                Balance                                                                                   |    | Interest                Income/Expense |   | Average                Yield/Rate |   | Average                Balance |   | Interest                Income/Expense |   | AverageYield/Rate |   |
|                                              |   | (Dollars                In                Thousands)           |    |
| Interest-earning                assets:           |   |                                                                                                             |    |                                   |   |                              |   |                           |   |                                   |   |   |   |
| Loans                                             |   | $                                                                                                                | 679,668 |                                   | $      | 23,310                            |   |                           | 6.92   | %                                      | $      | 546,612 |   | $ | 16,612 |   |   | 6.11 | % |
| Investment                securities:             |   |                                                                                                             |    |                                   |   |                              |   |                           |   |                                   |   |   |   |   |   |   |   |   |   |
| Taxable                                           |   |                                                                                                             | 118,939 |                                   |   | 2,626                             |   |                           | 4.45   | %                                      |   | 108,340 |   |   | 2,316 |   |   | 4.30 | % |
| Nontaxable                                        |   |                                                                                                             | 9,002   |                                   |   | 266                               |   |                           | 5.95   | %                                      |   | 8,706 |   |   | 260 |   |   | 6.00 | % |
| Other                short-term investments       |   |                                                                                                             | 39,925  |                                   |   | 536                               |   |                           | 2.71   | %                                      |   | 8,863 |   |   | 39 |   |   | 0.90 | % |
| Total                interest-earning assets      |   | $                                                                                                                | 847,534 |                                   | $      | 26,738                            |   |                           | 6.36   | %                                      | $      | 672,521 |   | $ | 19,227 |   |   | 5.75 | % |
| Interest-bearing                liabilities:      |   |                                                                                                             |    |                                   |   |                              |   |                           |   |                                   |   |   |   |   |   |   |   |   |   |
| Demand                deposits                    |   | $                                                                                                                | 195,638 |                                   | $      | 1,186                             |   |                           | 1.22   | %                                      | $      | 167,453 |   | $ | 510 |   |   | 0.61 | % |
| Savings                deposits                   |   |                                                                                                             | 43,009  |                                   |   | 137                               |   |                           | 0.64   | %                                      |   | 41,561 |   |   | 112 |   |   | 0.54 | % |
| Time                deposits                      |   |                                                                                                             | 353,617 |                                   |   | 5,296                             |   |                           | 3.02   | %                                      |   | 254,102 |   |   | 3,220 |   |   | 2.55 | % |
| FHLB                advances                      |   |                                                                                                             | 98,811  |                                   |   | 1,452                             |   |                           | 2.96   | %                                      |   | 50,743 |   |   | 529 |   |   | 2.10 | % |
| Notes                payable                      |   |                                                                                                             | 10,310  |                                   |   | 344                               |   |                           | 6.73   | %                                      |   | 10,310 |   |   | 266 |   |   | 5.19 | % |
| Other                short-term borrowings        |   |                                                                                                             | 8,310   |                                   |   | 60                                |   |                           | 1.46   | %                                      |   | 30,516 |   |   | 174 |   |   | 1.14 | % |
| Total                interest-bearing liabilities |   | $                                                                                                                | 709,695 |                                   | $      | 8,475                             |   |                           | 2.41   | %                                      | $      | 554,685 |   | $ | 4,811 |   |   | 1.74 | % |
|                                              |   |                                                                                                             |    |                                   |   |                              |   |                           |   |                                   |   |   |   |   |   |   |   |   |   |
| Interest                rate spread               |   |                                                                                                             |    |                                   |   |                              |   |                           | 3.95   | %                                      |   |   |   |   |   |   |   | 4.01 | % |
| Net                interest income                |   |                                                                                                             |    |                                   | $      | 18,263                            |   |                           |   |                                   |   |   |   | $ | 14,416 |   |   |   |   |
| Net                interest margin                |   |                                                                                                             |    |                                   |   |                              |   |                           | 4.35   | %                                      |   |   |   |   |   |   |   | 4.31 | % |

----

*Provision      for Loan Losses*

|   | · | 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. |
|--------|--------|----------------------------------------------------------------------------|

| As                of Quarter End                                                                                                   |   | Jun-05                                                                                               |   | Mar-05 |   | Dec-04 |   | Sep-04 |    | Jun-04 |   |
|------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|--------|--------|--------------|--------|--------|
|                                                                                                                               |   | (Dollars                In                Thousands)         |   |
| Loans                accounted for on a nonaccrual basis                                                                           |   | $                                                                                                    | 7,534  |   | $      | 6,531  |   | $      | 1,417        |   | $      | 3,857 |   | $ | 4,484 |   |
| Accruing                loans which are contractually past due 90                days or more as to principal or interest payments |   |                                                                                                 | 9      |   |   | 6      |   |   | 11           |   |   | 10 |   |   | 9 |   |
| Troubled                debt restructurings not included above                                                                     |   |                                                                                                 | -      |   |   | -      |   |   | 2,045        |   |   | 2,170 |   |   | 2,179 |   |
| Total                nonperforming loans                                                                                           |   | $                                                                                                    | 7,543  |   | $      | 6,537  |   | $      | 3,473        |   | $      | 6,037 |   | $ | 6,672 |   |
|                                                                                                                               |   |                                                                                                 |   |   |   |   |   |   |         |   |   |   |   |   |   |   |
| Total                nonperforming loans as a percentage of total loans                                                            |   |                                                                                                 | 0.91   | %      |   | 0.96   | %      |   | 0.54         | %      |   | 1.00 | % |   | 1.20 | % |

----

*Other      Income*

|                                                                             |   | Three                Months Ended June 30,                                                                       |   |   |   | Six                Months Ended June 30, |   |   |   |
|----------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------|--------|--------|--------|------------------------------------------|--------|--------|--------|
|                                                                             |   | 2005                                                                                                             |   | 2004   |   | Pct.                Chg.                 |   | 2005   |   | 2004 |   | Pct.                Chg. |   |
|                                                                             |   | (Dollars                in                Thousands)           |   |
| Noninterest                income:                                               |   |                                                                                                             |   |   |   |                                     |   |   |   |   |   |   |   |
| Service                charges on deposit accounts                               |   | $                                                                                                                | 1,019  |   | $      | 1,094                                    |   |   | -6.9   | % | $ | 1,941 |   | $ | 2,160 |   |   | -10.1 | % |
| Mortgage                origination fees                                         |   |                                                                                                             | 130    |   |   | 133                                      |   |   | -2.3   | % |   | 235 |   |   | 236 |   |   | -0.4 | % |
| Securities                transactions, net                                      |   |                                                                                                             | (1     | )      |   | (1                                       | )      |   | 0.0    | % |   | (1 | ) |   | 1 |   |   | -200.0 | % |
| Gain                on sale of financial services operation                      |   |                                                                                                             | -      |   |   | -                                        |   |   | 0.0    | % |   | - |   |   | 200 |   |   | -100.0 | % |
| Earnings                on bank-owned life insurance                             |   |                                                                                                             | 83     |   |   | 46                                       |   |   | 80.4   | % |   | 162 |   |   | 144 |   |   | 12.5 | % |
| Gain                (loss) on disposal of assets                                 |   |                                                                                                             | (19    | )      |   | 10                                       |   |   | -290.0 | % |   | (22 | ) |   | 20 |   |   | -210.0 | % |
| Other                noninterest income                                          |   |                                                                                                             | 246    |   |   | 208                                      |   |   | 18.3   | % |   | 490 |   |   | 535 |   |   | -8.4 | % |
| Total                noninterest income                                          |   | $                                                                                                                | 1,458  |   | $      | 1,490                                    |   |   | -2.1   | % | $ | 2,805 |   | $ | 3,296 |   |   | -14.9 | % |
|                                                                             |   |                                                                                                             |   |   |   |                                     |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Noninterest                income as a percentage of average assets (annualized) |   |                                                                                                             | 0.63   | %      |   | 0.81                                     | %      |   |   |   |   | 0.61 | % |   | 0.89 | % |   |   |   |

*Other      Expenses*

|                                                                                   |   | Three                Months Ended June 30,                                                                       |   |   |   | Six                Months Ended June 30, |   |   |         |
|----------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------|--------|--------|--------|------------------------------------------|--------|--------|--------------|
|                                                                                   |   | 2005                                                                                                             |   | 2004   |   | Pct.                Chg.                 |   | 2005   |         | 2004 |   | Pct.                Chg. |   |
|                                                                                   |   | (Dollars                in                Thousands)           |   |
| Noninterest                expenses:                                                   |   |                                                                                                             |   |   |   |                                     |   |   |         |   |   |   |   |
| Salaries                and wages                                                      |   | $                                                                                                                | 3,441  |   | $      | 2,821                                    |   |   | 22.0         | % | $ | 6,565 |   | $ | 5,709 |   |   | 15.0 | % |
| Deferred                loan cost                                                      |   |                                                                                                             | (377   | )      |   | (185                                     | )      |   | 103.8        | % |   | (767 | ) |   | (355 | ) |   | 116.1 | % |
| Employee                benefits                                                       |   |                                                                                                             | 823    |   |   | 705                                      |   |   | 16.7         | % |   | 1,579 |   |   | 1,560 |   |   | 1.2 | % |
| Net                occupancy expense of premises                                       |   |                                                                                                             | 488    |   |   | 460                                      |   |   | 6.1          | % |   | 957 |   |   | 902 |   |   | 6.1 | % |
| Furniture                and equipment expense                                         |   |                                                                                                             | 526    |   |   | 523                                      |   |   | 0.6          | % |   | 1,030 |   |   | 1,050 |   |   | -1.9 | % |
| Advertising                and business development                                    |   |                                                                                                             | 131    |   |   | 104                                      |   |   | 26.0         | % |   | 258 |   |   | 212 |   |   | 21.7 | % |
| Supplies                and printing                                                   |   |                                                                                                             | 124    |   |   | 99                                       |   |   | 25.3         | % |   | 239 |   |   | 220 |   |   | 8.6 | % |
| Telephone                and internet charges                                          |   |                                                                                                             | 88     |   |   | 89                                       |   |   | -1.1         | % |   | 174 |   |   | 167 |   |   | 4.2 | % |
| Postage                and courier                                                     |   |                                                                                                             | 135    |   |   | 140                                      |   |   | -3.6         | % |   | 311 |   |   | 282 |   |   | 10.3 | % |
| Legal                and accounting fees                                               |   |                                                                                                             | 103    |   |   | 105                                      |   |   | -1.9         | % |   | 209 |   |   | 165 |   |   | 26.7 | % |
| Other                noninterest expense                                               |   |                                                                                                             | 746    |   |   | 752                                      |   |   | -0.8         | % |   | 1,438 |   |   | 1,427 |   |   | 0.8 | % |
| Total                noninterest expense                                               |   | $                                                                                                                | 6,228  |   | $      | 5,613                                    |   |   | 11.0         | % | $ | 11,993 |   | $ | 11,339 |   |   | 5.8 | % |
|                                                                                   |   |                                                                                                             |   |   |   |                                     |   |   |         |   |   |   |   |   |   |   |   |   |   |
| Noninterest expense                as a percentage of average assets (annualized) |   |                                                                                                             | 2.71   | %      |   | 3.05                                     | %      |   |    |    |   | 2.61 | % |   | 3.08 | % |   |   |   |

----

*Income      Tax Expense*

**LIQUIDITY      AND CAPITAL RESOURCES**

*Contractual      Obligations*

| Contractual                Obligations                                 |    | Total                                                                                                |    | Less                  than 1 year |   | 1                  to 3 years |   | 3                  to 5 years |   | More                  than 5 years |   |
|------------------------------------------------------------------------|--------------|------------------------------------------------------------------------------------------------------|---------|-----------------------------------|--------|-------------------------------|--------|-------------------------------|--------|------------------------------------|--------|
|                                                                   |         | (Dollars                In                Thousands)         |    |
| Federal                Home Loan Bank of Atlanta Advances              |         | $                                                                                                    | 98,391  |                              | $      | 15,906                        |   | $                             | 6,204  |                               | $      | 5,470 |   | $ | 70,811 |   |
| Operating                Lease Obligations                             |         |                                                                                                 | 652     |                              |   | 207                           |   |                          | 363    |                               |   | 82 |   |   | - |   |
| Guaranteed                Preferred Beneficial Interests in Debentures |         |                                                                                                 | 10,310  |                              |   | -                             |   |                          | -      |                               |   | - |   |   | 10,310 |   |
|                                                                   |         | $                                                                                                    | 109,353 |                              | $      | 16,113                        |   | $                             | 6,567  |                               | $      | 5,552 |   | $ | 81,121 |   |

----

*Off      Balance Sheet Arrangements*

|                                        |   | Jun-05 |        | Dec-04 |   |
|---------------------------------------------|--------|--------|-------------|--------|--------|
| Commitments                to extend credit |   | $      | 141,238,000 |   | $      | 118,155,000 |   |
| Standby                letters of credit    |   | $      | 10,880,000  |   | $      | 5,735,000 |   |

*Stockholders’      Equity*

|                                                             |   | Company                Consolidated |   | Bank |   | Minimum                Regulatory Requirement |   |
|------------------------------------------------------------------|--------|-------------------------------------|--------|------|--------|-----------------------------------------------|--------|
| Total                Capital to Risk Weighted Assets             |   |                                | 12.7   | %    |   | 12.5                                          | %      |   | 8.0 | % |
| Tier                1 Capital to Risk Weighted Assets            |   |                                | 11.4   | %    |   | 11.2                                          | %      |   | 4.0 | % |
| Tier                1 Capital to Average Assets (Leverage Ratio) |   |                                | 9.8    | %    |   | 9.6                                           | %      |   | 4.0 | % |

----

**CRITICAL      ACCOUNTING ESTIMATES**

*Allowance      for Loan Losses *

*Estimates      of Fair Value *

**Recent      Accounting Pronouncements**

----

**ITEM      3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET      RISK**

|                                            |   | 3-Month                                                       |    | 6-Month |   | 1-Year  |   |
|-------------------------------------------------|--------|---------------------------------------------------------------|---------|---------|--------|---------|--------|
|                                            |   | (Dollars                In Thousands)     |    |
| *Regulatory                Defined*             |   |                                                          |    |    |   |    |   |
| Rate                Sensitive Assets (RSA)      |   | $                                                             | 541,443 |    | $      | 572,468 |   | $ | 636,195 |   |
| Rate                Sensitive Liabilities (RSL) |   |                                                          | 333,879 |    |   | 408,206 |   |   | 531,261 |   |
| RSA                minus RSL (Gap)              |   | $                                                             | 207,564 |    | $      | 164,262 |   | $ | 104,934 |   |
|                                            |   |                                                          |    |    |   |    |   |   |   |   |
| Gap                Ratio (RSA/RSL)              |   |                                                          | 1.62    |    |   | 1.40    |   |   | 1.20 |   |
|                                            |   |                                                          |    |    |   |    |   |   |   |   |
| *Management-Adjusted*                           |   |                                                          |    |    |   |    |   |   |   |   |
| Rate                Sensitive Assets (RSA)      |   | $                                                             | 555,017 |    | $      | 599,614 |   | $ | 685,968 |   |
| Rate                Sensitive Liabilities (RSL) |   |                                                          | 159,127 |    |   | 233,453 |   |   | 412,762 |   |
| RSA                minus RSL (Gap)              |   | $                                                             | 395,890 |    | $      | 366,161 |   | $ | 273,206 |   |
|                                            |   |                                                          |    |    |   |    |   |   |   |   |
| Gap                Ratio (RSA/RSL)              |   |                                                          | 3.49    |    |   | 2.57    |   |   | 1.66 |   |

----

| Market                Rate Change | Effect                on Net Interest Income |
|-----------------------------------|----------------------------------------------|
| Gradual                           | Immediate                                    |
| +300                bps           | 15.41%                                       | 21.73% |
| +200                bps           | 12.93%                                       | 15.38% |
| +100                bps           | 7.36%                                        | 7.82% |
| -100                bps           | -7.39%                                       | -7.96% |
| -200                bps           | -13.94%                                      | -18.91% |

**ITEM      4. CONTROLS AND PROCEDURES**

**PART      II. OTHER INFORMATION**

**ITEM      1. LEGAL PROCEEDINGS**

**ITEM      2. UNREGISTERED SALE OF EQUITY SECURITIES, USE OF PROCEEDS AND ISSUER PURCHASES      OF EQUITY SECURITIES**

|   |   | Total                number of shares purchased |   | Average                price paid per share |   | Number                of shares purchased as part of publicly announced plans or                programs |   | Maximum                number of shares that may yet be purchased under the plans or                programs1 |   |
|--------|--------|-------------------------------------------------|--------|---------------------------------------------|--------|----------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------------------------------------------|--------|
| April  |   |                                            | -      |                                        |   | -                                                                                                        |   |                                                                                                          | -      |   |   | - |   |
| May    |   |                                            | -      |                                        |   | -                                                                                                        |   |                                                                                                          | -      |   |   | - |   |
| June   |   |                                            | -      |                                        |   | -                                                                                                        |   |                                                                                                          | -      |   |   | - |   |
| Total  |   |                                            | -      |                                        | $      | -                                                                                                        |   |                                                                                                          | -      |   |   | 400,000 |   |

| 1 | On                May 24, 2005, the Company renewed its annual plan to repurchase up                to                400,000 shares of the Company's common stock over the next twelve                month                period. No shares were purchased under this plan during the second                quarter. |
|---|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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**ITEM      3. DEFAULTS UPON SENIOR SECURITIES**

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

| Name                                       |   | Votes                For |      | Votes                Against |   | Votes                Withheld |   |
|--------------------------------------------|--------|--------------------------|-----------|------------------------------|--------|-------------------------------|--------|
|                                       |   |                     |      |                         |   |                          |   |
| R.                Bradford Burnette (2008) |   |                     | 6,797,550 |                         |   | 0                             |   |   | 842,775 |   |
| Michael                H. Godwin (2008)    |   |                     | 7,446,122 |                         |   | 0                             |   |   | 194,203 |   |
| Kennith                D. McLeod (2008)    |   |                     | 7,448,424 |                         |   | 0                             |   |   | 191,901 |   |
| Paul                E. Parker (2008)       |   |                     | 7,448,424 |                         |   | 0                             |   |   | 191,901 |   |
| M.                Burke Welsh, Jr. (2008)  |   |                     | 7,447,394 |                         |   | 0                             |   |   | 192,931 |   |
| Douglas                W. McNeill (2007)   |   |                     | 7,447,424 |                         |   | 0                             |   |   | 192,901 |   |

| Votes                For |   | Votes                Against |   | Votes                Abstained |   | Broker                Non-Vote |
|--------------------------|--------|------------------------------|--------|--------------------------------|--------|--------------------------------|
| 7,555,497                |   | 17,308                       |   | 67,520                         |   | 0                              |

**ITEM      5. OTHER INFORMATION**

**ITEM      6. EXHIBITS**

| 31.1   | Rule                13a-14(a) Certification of CEO |
|--------|----------------------------------------------------|
|   |                                               |
| 31.2   | Rule                13a-14(a) Certification of CFO |
|   |                                               |
| 32.1   | Section                1350 Certification of CEO   |
|   |                                               |
| 32.2   | Section                1350 Certification of CFO   |

----

**SIGNATURES**

| **PAB                    BANKSHARES, INC.** |   |   |   |   |   |
|---------------------------------------------|--------|--------|--------|--------|--------|
| Registrant                             |   |   |   |   |   |

| Date:  | ***August                    9, 2005*** |   | By:    |   | ***/s/                    M. Burke Welsh, Jr.***                                            |   |
|--------|-----------------------------------------|--------|--------|--------|---------------------------------------------------------------------------------------------|--------|
|   |                                    |   |   |   | M.                    Burke Welsh, Jr.                                                 |
|   |                                    |   |   |   | President                    and Chief Executive Officer                               |
|   |                                    |   |   |   | (principal                    executive officer of the registrant)                     |
|   |                                    |   |   |   |                                                                                        |   |
|   |                                    |   |   |   |                                                                                        |   |
| Date:  | ***August                    9, 2005*** |   | By:    |   | ***/s/                    Donald J. Torbert, Jr.***                                         |   |
|   |                                    |   |   |   | Donald                    J. Torbert, Jr.                                              |
|   |                                    |   |   |   | Executive                    Vice President and Chief Financial Officer                |
|   |                                    |   |   |   | (principal                    financial officer of the                    registrant)  |

----