UNITED
STATES
 SECURITIES
AND EXCHANGE COMMISSION
 Washington,
D.C. 20549
  _____________
  FORM
10-Q/A
 (Amendment
No. 1)
 
 Quarterly
Report Pursuant to Section 13 or 15(d) of the
 Securities
Exchange Act of 1934
 
 For the
Quarterly Period Ended September 30, 2008 – Commission File Number
000-25422
 _____________
 
  
   PAB
BANKSHARES, INC.
 (A
Georgia Corporation)
 IRS
Employer Identification Number: 58-1473302
 
 3250
North Valdosta Road, Valdosta, Georgia 31602
 Telephone
Number: (229) 241-2775
 
 
 Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
 Yes xNo o
 Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company.  See definition of “accelerated filer”, “large accelerated
filer” and “smaller reporting company” in Rule 12b-2 of the Exchange
Act.
 Large
accelerated filer oAccelerated filer xNon-accelerated filer oSmaller reporting
company o
 
 Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
 Yes oNo x
 
 The
number of shares outstanding of the registrant’s common stock at October 31,
2008 was 9,324,407 shares.
  
 
  Explanatory
Note
 
 This
Amendment No. 1 to the Quarterly Report on Form 10-Q/A for the period ended
September 30, 2008 (the “Report”) is being filed to correct disclosures of net
interest income projections in ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET RISKof the Quarterly Report on Form 10-Q for
the quarter ended September 30, 2008 (the “Original Report”) that was filed by
PAB Bankshares, Inc. (the “Company”) on November 10, 2008.  This
amendment corrects disclosures of certain projections of changes in net interest
income resulting from potential changes in market interest rates.
 
 In
addition, pursuant to the rules of the Securities and Exchange Commission, Item
6 of Part II to the Original Report has been updated to include currently dated
certifications from our Principal Executive Officer and Principal Financial
Officer, as required by Sections 302 and 906 of the Sarbanes-Oxley Act of
2002.  The certifications of our Principal Executive Officer and
Principal Financial Officer are attached to this Form 10-Q/A as Exhibits 31.1,
31.2, 32.1 and 32.2, respectively.
 
 Except as
described above, the Form 10-Q/A does not amend, update or change any other
items or disclosures included in the Original Report.
 
 
 PART
I  FINANCIAL INFORMATION
 
 ITEM
3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
 
 We are
subject to exposure to U.S. dollar interest rate changes and accordingly, we
manage our exposure by considering the possible changes in the net interest
margin.  We do not engage in trading activity nor do we classify any
portion of the investment portfolio as held for trading.  Finally, we
have no material direct exposure to foreign currency exchange rate risk,
commodity price risk and other market risks.
 
 Interest
rates play a major part in the net interest income of a financial
institution.  The sensitivity to rate changes is known as “interest
rate risk.”  The repricing of interest-earning assets and
interest-bearing liabilities can influence the changes in net interest
income.  As part of our asset/liability management program, the timing
of repriced assets and liabilities is referred to as gap
management.  It is our policy to maintain a gap ratio in the one-year
time horizon between 0.80 and 1.20.  At September 30, 2008, our
one-year management-adjusted gap ratio of 0.97 was within our policy
guidelines.  Although we are now showing a slightly
liability-sensitive balance sheet gap position in the one-year time horizon, we
still consider ourselves asset-sensitive relative to the impact on our earnings
in a changing rate environment as evidenced by our three-month gap ratio of 1.37
at September 30, 2008.
 
 We have
reduced the level of asset-sensitivity on the Company’s balance sheet in an
effort to better mitigate our interest rate risk in an interest rate
decline.  We have accomplished this by conscientiously lengthening the
duration of our earning assets and shortening the duration of our deposits and
other borrowings.  Also, in June 2006, we entered into a $50 million
3-year 8.25% Prime rate floor contract in an additional effort to hedge our
interest rate risk in a declining interest rate environment.  In
January 2008, we entered into a $25 million notional amount, 3-year 5.75%/6.50%
Prime rate collar contract and a $25 million notional amount, 5-year 6.00%/7.25%
Prime rate collar contract and in April 2008, we entered into a $25 million
notional amount, 3-year 2.975% 1-month LIBOR cap contract to further hedge
against interest rate risk in a declining rate environment.
  2
  The table
below has two gap ratio measurements: regulatory and
management-adjusted.  The regulatory gap ratio considers only
contractual maturities or repricings.  The management-adjusted gap
ratio includes assumptions regarding prepayment speeds on certain rate sensitive
assets, the repricing frequency of interest-bearing demand and savings accounts,
and the stability of core deposit levels, all of which are adjusted periodically
as market conditions change.  The management-adjusted gap ratio
indicates we are highly asset sensitive in relation to changes in market
interest rates in the short-term.  Being asset sensitive would result
in net interest income increasing in a rising rate environment and decreasing in
a declining rate environment.
 
 3-Month
                                      
                                      
                                      6-Month
                                      
                                      
                                      1-Year(Dollars
      In Thousands)Regulatory DefinedRate
      Sensitive Assets (RSA)
                                      
                                      $
                                      585,614
                                      
                                      
                                      $
                                      623,943
                                      
                                      
                                      $
                                      710,846Rate Sensitive Liabilities
      (RSL)
                                      
                                      
                                      431,766
                                      
                                      
                                      
                                      546,858
                                      
                                      
                                      
                                      756,025RSA
      minus RSL (Gap)
                                      
                                      $
                                      153,848
                                      
                                      
                                      $
                                      77,085
                                      
                                      
                                      $
                                      (45,179
                                      )Gap
      Ratio (RSA/RSL)
                                      
                                      
                                      1.36
                                      
                                      
                                      
                                      1.14
                                      
                                      
                                      
                                      0.94Management-AdjustedRate
      Sensitive Assets (RSA)
                                      
                                      $
                                      601,422
                                      
                                      
                                      $
                                      652,235
                                      
                                      
                                      $
                                      762,990Rate Sensitive Liabilities
      (RSL)
                                      
                                      
                                      439,909
                                      
                                      
                                      
                                      562,439
                                      
                                      
                                      
                                      784,608RSA
      minus RSL (Gap)
                                      
                                      $
                                      161,513
                                      
                                      
                                      $
                                      89,796
                                      
                                      
                                      $
                                      (21,618
                                      )Gap
      Ratio (RSA/RSL)
                                      
                                      
                                      1.37
                                      
                                      
                                      
                                      1.16
                                      
                                      
                                      
                                      0.97
 
 We use
simulation analysis to monitor changes in net interest income due to the impact
that changes in market interest rates have on our financial
instruments.  The simulation of rising, declining, and flat interest
rate scenarios allows us to monitor and adjust interest rate sensitivity to
minimize the impact of market interest rate swings.  The analysis of
the impact on net interest income over a twelve-month period is subjected to
increases or decreases in market rates on net interest income and is monitored
on a quarterly basis.  Our policy states that net interest income
cannot be reduced by more than 10% using this analysis.  As of
September 30, 2008, the simulation model projected net interest income would
increase 5.07% over the next year if market rates immediately rose by 100 basis
points and the model projected net interest income would decrease 4.93% over the
next year if market rates immediately fell by 50 basis points.  If
market rates immediately fell by 100 basis points, the model projects net
interest income would decrease 10.92% over the next year.  The model
projects net interest income would decrease 21.96% over the next year if market
rates immediately fell by 200 basis points, but we believe this scenario is
highly unlikely, given the current interest rate levels, and this scenario is
included in the table for illustrative purposes only.  Over the past
two years, we have seen lower volatility in our results due to our efforts to
neutralize our asset-sensitive balance sheet mix, to improve our asset/liability
modeling with updated behavioral assumptions for repricing and prepayment speeds
and to implement an off-balance sheet derivative hedging
program.
  3
  The
following table shows the results of these projections for net interest income
expressed as a percentage change over net interest income in a flat rate
scenario for both a gradual change in market interest rates over a twelve-month
period and an immediate change, or “shock”, in market interest
rates.
 
 Market
                        Effect
      on Net Interest IncomeRate
      Change
                        Gradual
                        Immediate+300
      bps
                        9.96%
                        13.13%+200
      bps
                        8.48%
                        9.55%+150
      bps
                        7.10%
                        7.57%+100
      bps
                        4.87%
                        5.07%+50
      bps
                        2.43%
                        2.42%-50
      bps
                        -4.80%
                        -4.93%-100
      bps
                        -9.25%
                        -10.92%-150
      bps
                        -11.98%
                        -15.04%-200
      bps
                        -15.39%
                        -21.96%
 
  PART
II  OTHER INFORMATION
  ITEM
6.  EXHIBITS
 
 3.1
              Amended
      and Restated Articles of Incorporation (incorporated by reference to
      Exhibit 3.1 to the Registrant’s Form 10-Q filed with the Commission on
      November 10, 2008).
 
 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
 
 Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
 
 PAB BANKSHARES, INC.RegistrantDate:
                          November 25, 2008
                          
                          By:
                          /s/ M. Burke Welsh, Jr.M.
      Burke Welsh, Jr.President
      and Chief Executive Officer(principal
      executive officer of the registrant)Date:
                          November 25, 2008
                          
                          By:
                          /s/ Donald J. Torbert, Jr.Donald
      J. Torbert, Jr.Executive
      Vice President and Chief Financial Officer(principal
      financial officer of the registrant)


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