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**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**Washington,      D.C. 20549**

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**FORM      10-Q**

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

**Securities      Exchange Act of 1934**

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**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 (Unaudited)                                                              |   |
|                             |                           | 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 | 13     |
| Item                3.           |                           | Quantitative                and Qualitative Disclosures About Market                Risk                                  | 21     |
| Item                4.           |                           | Controls                and Procedures                                                                                    | 23     |
|                             |                           |                                                                                                                      |   |
| PART                II           |                           | OTHER                INFORMATION                                                                                          |   |
|  Item                1.     |                           | Legal                Proceedings                                                                                          | 23     |
| Item                1A.          |                           | Risk                Factors                                                                                               | 23     |
|  Item                2.     |                           | Unregistered                Sales of Equity Securities and Use of                Proceeds                                 | 24     |
|  Item                3.     |                           | Defaults                Upon Senior Securities                                                                            | 24     |
| Item                4.           |                           | Submission                of Matters to a Vote of Security                Holders                                         | 24     |
|  Item                5.     |                           | Other                Information                                                                                          | 24     |
|  Item                6.     |                           | Exhibits                                                                                                                  | 24     |
|                             |                           |                                                                                                                      |   |
|                  SIGNATURES | 25                             |

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*Table            of Contents*

**PART      I.  FINANCIAL INFORMATION**

**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF CONDITION**

**AS      OF MARCH 31, 2006 AND DECEMBER 31, 2005**

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|                                                                                                                                                         |   | **March                31,****2006** |          | **December                31,****2005** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------|---------------|-----------------------------------------|--------|
|                                                                                                                                                         |   | **(Unaudited)**                      |          |                                    |   |
| **ASSETS**                                                                                                                                                   |   |                                 |          |                                    |   |
| Cash                and due from banks                                                                                                                       |   | $                                    | 23,574,939    |                                    | $      | 21,196,183 |   |
| Interest-bearing                deposits in other banks                                                                                                      |   |                                 | 676,463       |                                    |   | 3,077,900 |   |
| Federal                funds sold                                                                                                                            |   |                                 | 63,482,480    |                                    |   | 42,578,849 |   |
| Investment                securities                                                                                                                         |   |                                 | 167,835,580   |                                    |   | 157,454,725 |   |
|                                                                                                                                                         |   |                                 |          |                                    |   |   |   |
| Loans                                                                                                                                                        |   |                                 | 764,090,473   |                                    |   | 752,938,145 |   |
| Allowance                for loan losses                                                                                                                     |   |                                 | (11,185,616   | )                                       |   | (11,079,193 | ) |
| Net                loans                                                                                                                                     |   |                                 | 752,904,857   |                                    |   | 741,858,952 |   |
|                                                                                                                                                         |   |                                 |          |                                    |   |   |   |
| Premises                and equipment, net                                                                                                                   |   |                                 | 18,481,594    |                                    |   | 18,511,163 |   |
| Goodwill                                                                                                                                                     |   |                                 | 5,984,604     |                                    |   | 5,984,604 |   |
| Cash                value of bank-owned life insurance policies                                                                                              |   |                                 | 11,174,326    |                                    |   | 11,080,722 |   |
| Foreclosed                assets                                                                                                                             |   |                                 | 211,874       |                                    |   | 41,774 |   |
| Other                assets                                                                                                                                  |   |                                 | 14,840,138    |                                    |   | 15,541,495 |   |
|                                                                                                                                                         |   |                                 |          |                                    |   |   |   |
| Total                assets                                                                                                                                  |   | $                                    | 1,059,166,855 |                                    | $      | 1,017,326,367 |   |
|                                                                                                                                                         |   |                                 |          |                                    |   |   |   |
| **LIABILITIES                AND STOCKHOLDERS' EQUITY**                                                                                                      |   |                                 |          |                                    |   |   |   |
| Deposits:                                                                                                                                                    |   |                                 |          |                                    |   |   |   |
| Noninterest-bearing                demand                                                                                                                    |   | $                                    | 107,200,233   |                                    | $      | 107,917,453 |   |
| Interest-bearing                demand and savings                                                                                                           |   |                                 | 301,662,335   |                                    |   | 284,125,557 |   |
| Time                                                                                                                                                         |   |                                 | 446,360,982   |                                    |   | 423,637,732 |   |
| Total                deposits                                                                                                                                |   |                                 | 855,223,550   |                                    |   | 815,680,742 |   |
|                                                                                                                                                         |   |                                 |          |                                    |   |   |   |
| Federal                funds purchased and securities sold under agreements to                repurchase                                                     |   |                                 | 6,500,167     |                                    |   | 6,317,135 |   |
| Advances                from the Federal Home Loan Bank of Atlanta                                                                                           |   |                                 | 90,683,037    |                                    |   | 90,043,598 |   |
| Guaranteed                preferred beneficial interests in debentures (trust preferred                securities)                                           |   |                                 | 10,310,000    |                                    |   | 10,310,000 |   |
| Other                liabilities                                                                                                                             |   |                                 | 7,475,828     |                                    |   | 7,974,109 |   |
| Total                liabilities                                                                                                                             |   |                                 | 970,192,582   |                                    |   | 930,325,584 |   |
|                                                                                                                                                         |   |                                 |          |                                    |   |   |   |
| **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; 9,512,767 and                9,469,017                shares issued and outstanding |   |                                 | 1,217,065     |                                    |   | 1,217,065 |   |
| Additional                paid-in capital                                                                                                                    |   |                                 | 28,422,949    |                                    |   | 28,126,032 |   |
| Retained                earnings                                                                                                                             |   |                                 | 60,994,362    |                                    |   | 58,872,179 |   |
| Accumulated                other comprehensive loss                                                                                                          |   |                                 | (1,660,103    | )                                       |   | (1,214,493 | ) |
| Total                stockholders' equity                                                                                                                    |   |                                 | 88,974,273    |                                    |   | 87,000,783 |   |
|                                                                                                                                                         |   |                                 |          |                                    |   |   |   |
| Total                liabilities and stockholders' equity                                                                                                    |   | $                                    | 1,059,166,855 |                                    | $      | 1,017,326,367 |   |

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*Table            of Contents*

**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF INCOME**

**THREE      MONTHS ENDED MARCH 31, 2006 AND 2005**

**(Unaudited)**

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|                                                               |   | **Three                Months Ended March 31,** |       |
|--------------------------------------------------------------------|--------|-------------------------------------------------|------------|
|                                                               |   | **2006**                                        |       | **2005** |   |
|                                                               |   |                                            |       |   |   |
| **Interest                income:**                                |   |                                            |       |   |   |
| Interest                and fees on loans                          |   | $                                               | 15,400,623 |   | $ | 10,836,772 |   |
| Interest                and dividends on investment securities:    |   |                                            |       |   |   |   |   |
| Taxable                                                            |   |                                            | 1,769,979  |   |   | 1,296,825 |   |
| Nontaxable                                                         |   |                                            | 155,162    |   |   | 81,899 |   |
| Other                interest income                               |   |                                            | 521,825    |   |   | 251,847 |   |
| Total                interest income                               |   |                                            | 17,847,589 |   |   | 12,467,343 |   |
|                                                               |   |                                            |       |   |   |   |   |
| **Interest                expense:**                               |   |                                            |       |   |   |   |   |
| Interest                on deposits                                |   |                                            | 5,933,020  |   |   | 3,013,561 |   |
| Interest                on Federal Home Loan Bank advances         |   |                                            | 772,634    |   |   | 682,882 |   |
| Interest                on other borrowings                        |   |                                            | 250,359    |   |   | 197,850 |   |
| Total                interest expense                              |   |                                            | 6,956,013  |   |   | 3,894,293 |   |
|                                                               |   |                                            |       |   |   |   |   |
| Net                interest income                                 |   |                                            | 10,891,576 |   |   | 8,573,050 |   |
|                                                               |   |                                            |       |   |   |   |   |
| **Provision                for loan losses**                       |   |                                            | -          |   |   | 460,200 |   |
| Net                interest income after provision for loan losses |   |                                            | 10,891,576 |   |   | 8,112,850 |   |
|                                                               |   |                                            |       |   |   |   |   |
| **Other                income:**                                   |   |                                            |       |   |   |   |   |
| Service                charges on deposit accounts                 |   |                                            | 951,547    |   |   | 922,055 |   |
| Other                fee income                                    |   |                                            | 354,701    |   |   | 300,708 |   |
| Securities                transactions, net                        |   |                                            | (429,732   | ) |   | - |   |
| Other                noninterest income                            |   |                                            | 164,167    |   |   | 124,618 |   |
| Total                other income                                  |   |                                            | 1,040,683  |   |   | 1,347,381 |   |
|                                                               |   |                                            |       |   |   |   |   |
| **Other                expenses:**                                 |   |                                            |       |   |   |   |   |
| Salaries                and employee benefits                      |   |                                            | 4,299,456  |   |   | 3,490,325 |   |
| Occupancy                expense of premises                       |   |                                            | 471,338    |   |   | 469,207 |   |
| Furniture                and equipment expense                     |   |                                            | 508,643    |   |   | 503,152 |   |
| Other                noninterest expense                           |   |                                            | 1,476,294  |   |   | 1,302,640 |   |
| Total                other expenses                                |   |                                            | 6,755,731  |   |   | 5,765,324 |   |
|                                                               |   |                                            |       |   |   |   |   |
| Income                before income tax expense                    |   |                                            | 5,176,528  |   |   | 3,694,907 |   |
| **Income                tax expense**                              |   |                                            | 1,865,183  |   |   | 1,216,258 |   |
|                                                               |   |                                            |       |   |   |   |   |
| Net                income                                          |   | $                                               | 3,311,345  |   | $ | 2,478,649 |   |
|                                                               |   |                                            |       |   |   |   |   |
| **Earnings                per common share:**                      |   |                                            |       |   |   |   |   |
| Basic                                                              |   | $                                               | 0.35       |   | $ | 0.26 |   |
| Diluted                                                            |   | $                                               | 0.34       |   | $ | 0.26 |   |

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*Table            of Contents*

**PAB      BANKSHARES, INC. AND      SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF COMPREHENSIVE INCOME**

**THREE      MONTHS ENDED MARCH 31, 2006 AND 2005**

**(Unaudited)**

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|                                                                                                                                              |   | **Three                Months Ended March 31,** |      |
|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|-----------|
|                                                                                                                                              |   | **2006**                                        |      | **2005** |   |
|                                                                                                                                              |   |                                            |      |   |   |
| Net                income                                                                                                                         |   | $                                               | 3,311,345 |   | $ | 2,478,649 |   |
|                                                                                                                                              |   |                                            |      |   |   |   |   |
| Other                comprehensive income (loss):                                                                                                 |   |                                            |      |   |   |   |   |
| Unrealized                holding losses arising during the period, net of tax benefit of $390,350                and $471,625                    |   |                                            | (724,936  | ) |   | (915,506 | ) |
| Reclassification                adjustment for losses included in net income, net of tax benefit                of                $150,406 and $0 |   |                                            | 279,326   |   |   | - |   |
|                                                                                                                                              |   |                                            | (445,610  | ) |   | (915,506 | ) |
|                                                                                                                                              |   |                                            |      |   |   |   |   |
| Comprehensive                income                                                                                                               |   | $                                               | 2,865,735 |   | $ | 1,563,143 |   |

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*Table            of Contents*

**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF STOCKHOLDERS’ EQUITY**

**THREE      MONTHS ENDED MARCH 31, 2006 (Unaudited) AND YEAR ENDED DECEMBER 31,      2005**

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|                                                                        |   |                                  |      |                             |   |           |   |  Accumulated   |       |     |   |
|-----------------------------------------------------------------------------|--------|---------------------------------------|-----------|----------------------------------|--------|----------------|--------|---------------------|------------|----------|--------|
|                                                                        |   |                                  |      |  Additional                 |   |           |   |  Other         |       |     |   |
|                                                                        |   |  Common                    Stock |      |  Paid-in                    |   |  Retained |   |  Comprehensive |       |     |   |
|                                                                        |   | **Shares**                            |      | **Par                    Value** |   | **Capital**    |   | **Earnings**        |       | **Loss** |   | **Total** |   |
|                                                                        |   |                                  |      |                             |   |           |   |                |       |     |   |   |   |
| **Balance,                    December 31, 2004**                           |   |                                  | 9,495,320 |                             | $      | 1,217,065      |   | $                   | 29,143,017 |     | $      | 50,938,254 |   | $ | (298,452 | )  | $ | 80,999,884 |   |
| Net                    income                                               |   |                                  | -         |                             |   | -              |   |                | -          |     |   | 12,452,723 |   |   | - |   |   | 12,452,723 |   |
| Other                    comprehensive loss                                 |   |                                  | -         |                             |   | -              |   |                | -          |     |   | - |   |   | (916,041 | ) |   | (916,041 | ) |
| Cash                    dividends declared, $.475 per share                 |   |                                  | -         |                             |   | -              |   |                | -          |     |   | (4,518,798 | ) |   | - |   |   | (4,518,798 | ) |
| Stock                    acquired and cancelled under stock repurchase plan |   |                                  | (87,483   | )                                |   | -              |   |                | (1,468,714 | )   |   | - |   |   | - |   |   | (1,468,714 | ) |
| Stock                    options exercised                                  |   |                                  | 61,180    |                             |   | -              |   |                | 451,729    |     |   | - |   |   | - |   |   | 451,729 |   |
| **Balance,                    December 31, 2005**                           |   |                                  | 9,469,017 |                             |   | 1,217,065      |   |                | 28,126,032 |     |   | 58,872,179 |   |   | (1,214,493 | ) |   | 87,000,783 |   |
| Net                    income                                               |   |                                  | -         |                             |   | -              |   |                | -          |     |   | 3,311,345 |   |   | - |   |   | 3,311,345 |   |
| Other                    comprehensive loss                                 |   |                                  | -         |                             |   | -              |   |                | -          |     |   | - |   |   | (445,610 | ) |   | (445,610 | ) |
| Cash                    dividends declared, $.125 per share                 |   |                                  | -         |                             |   | -              |   |                | -          |     |   | (1,189,162 | )  |   | - |   |   | (1,189,162 | ) |
| Stock                    acquired and cancelled under stock repurchase plan |   |                                  | (27,676   | )                           |   | -              |   |                | (532,689   | )        |   | - |   |   | - |   |   | (532,689 | ) |
| Compensation                    expense for stock options                   |   |                                  | -         |                             |   | -              |   |                | 80,618     |     |   | - |   |   | - |   |   | 80,618 |   |
| Stock                    options exercised                                  |   |                                  | 71,426    |                             |   | -              |   |                | 748,988    |     |   | - |   |   | - |   |   | 748,988 |   |
| **Balance,                    March 31, 2006**                              |   |                                  | 9,512,767 |                             | $      | 1,217,065      |   | $                   | 28,422,949 |     | $      | 60,994,362 |   | $ | (1,660,103 | ) | $ | 88,974,273 |   |

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*Table            of Contents*

**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**THREE      MONTHS ENDED MARCH 31, 2006 AND 2005**

**(Unaudited)**

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|                                                                                                                                            |   | **Three                Months Ended March 31,** |        |
|-------------------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------|-------------|
|                                                                                                                                            |   | **2006**                                        |        | **2005** |   |
|                                                                                                                                            |   |                                            |        |   |   |
| **CASH                FLOWS FROM OPERATING ACTIVITIES**                                                                                         |   |                                            |        |   |   |
| Net                income                                                                                                                       |   | $                                               | 3,311,345   |   | $ | 2,478,649 |   |
| Adjustments                to reconcile net income to net cash provided by operating                activities:                                 |   |                                            |        |   |   |   |   |
| Depreciation,                amortization and accretion, net                                                                                    |   |                                            | 472,611     |   |   | 545,317 |   |
| Provision                for loan losses                                                                                                        |   |                                            | -           |   |   | 460,200 |   |
| Net                realized loss on securities transactions                                                                                     |   |                                            | 429,732     |   |   | - |   |
| (Gain)                loss on disposal of assets                                                                                                |   |                                            | (4,799      | ) |   | 2,518 |   |
| Compensation                expense related to stock options                                                                                    |   |                                            | 80,618      |   |   | - |   |
| Increase                in cash value of bank-owned life insurance                                                                              |   |                                            | (93,604     | ) |   | (79,499 | ) |
| Decrease                in deferred compensation accrual                                                                                        |   |                                            | (3,988      | ) |   | (3,682 | ) |
| Decrease                in retirement accruals                                                                                                  |   |                                            | (56,979     | ) |   | (88,838 | ) |
| Net                change in taxes receivable and taxes payable                                                                                 |   |                                            | 1,865,183   |   |   | 1,216,258 |   |
| Increase                in interest receivable                                                                                                  |   |                                            | (477,175    | ) |   | (210,983 | ) |
| Increase                in interest payable                                                                                                     |   |                                            | 274,024     |   |   | 419,818 |   |
| Net                increase in prepaid expenses and other assets                                                                                |   |                                            | (512,531    | ) |   | (541,948 | ) |
| Net                decrease in accrued expenses and other liabilities                                                                           |   |                                            | (1,677,109  | ) |   | (877,489 | ) |
| Net                cash provided by operating activities                                                                                        |   |                                            | 3,607,328   |   |   | 3,320,321 |   |
|                                                                                                                                            |   |                                            |        |   |   |   |   |
| **CASH                FLOWS FROM INVESTING ACTIVITIES**                                                                                         |   |                                            |        |   |   |   |   |
| (Increase)                decrease in interest-bearing deposits in other banks                                                                  |   |                                            | 2,401,437   |   |   | (15,335,935 | ) |
| (Increase)                decrease in federal funds sold                                                                                        |   |                                            | (20,903,631 | ) |   | 904,267 |   |
| Purchase                of debt securities                                                                                                      |   |                                            | (25,837,385 | ) |   | (8,172,409 | ) |
| Proceeds                from sales and calls of debt securities                                                                                 |   |                                            | 12,672,706  |   |   | 6,800,000 |   |
| Proceeds                from maturities and paydowns of debt securities                                                                         |   |                                            | 2,891,538   |   |   | 3,604,600 |   |
| Purchase                of equity investments                                                                                                   |   |                                            | (657,902    | ) |   | (278,100 | ) |
| Redemption                of equity investments                                                                                                 |   |                                            | 338,600     |   |   | - |   |
| Net                increase in loans                                                                                                            |   |                                            | (11,222,593 | ) |   | (33,160,598 | ) |
| Purchase                of premises and equipment                                                                                               |   |                                            | (320,679    | ) |   | (117,944 | ) |
| Proceeds                from disposal of assets                                                                                                 |   |                                            | 11,387      |   |   | 72,723 |   |
| Net                cash used in investing activities                                                                                            |   |                                            | (40,626,522 | ) |   | (45,683,396 | ) |
|                                                                                                                                            |   |                                            |        |   |   |   |   |
| **CASH                FLOWS FROM FINANCING ACTIVITIES**                                                                                         |   |                                            |        |   |   |   |   |
| Net                increase in deposits                                                                                                         |   |                                            | 39,542,808  |   |   | 43,490,861 |   |
| Net                increase (decrease) in federal funds purchased and securities sold                under                repurchase agreements |   |                                            | 183,032     |   |   | (5,756,295 | ) |
| Advances                from the Federal Home Loan Bank                                                                                         |   |                                            | 8,000,000   |   |   | 1,470,000 |   |
| Payments                on Federal Home Loan Bank advances                                                                                      |   |                                            | (7,360,561  | ) |   | (1,733,431 | ) |
| Dividends                paid                                                                                                                   |   |                                            | (1,183,628  | ) |   | (949,532 | ) |
| Proceeds                from the exercise of stock options                                                                                      |   |                                            | 748,988     |   |   | 320,177 |   |
| Acquisition                of stock under stock repurchase plans                                                                                |   |                                            | (532,689    | ) |   | (249,988 | ) |
| Repurchase                of preferred stock in REIT subsidiaries                                                                               |   |                                            | -           |   |   | (6,000 | ) |
| Net                cash provided by financing activities                                                                                        |   |                                            | 39,397,950  |   |   | 36,585,792 |   |

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*Table            of Contents*

**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**CONSOLIDATED      STATEMENTS OF CASH FLOWS**

**THREE      MONTHS ENDED MARCH 31, 2006 AND 2005 (Continued)**

**(Unaudited)**

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|                                                                          |   | **Three                Months Ended March 31,** |       |
|-------------------------------------------------------------------------------|--------|-------------------------------------------------|------------|
|                                                                          |   | **2006**                                        |       | **2005** |   |
|                                                                          |   |                                            |       |   |   |
| Net                increase (decrease) in cash and due from banks             |   | $                                               | 2,378,756  |   | $ | (5,777,283 | ) |
|                                                                          |   |                                            |       |   |   |   |   |
| Cash                and due from banks at beginning of period                 |   |                                            | 21,196,183 |   |   | 22,976,924 |   |
|                                                                          |   |                                            |       |   |   |   |   |
| Cash                and due from banks at end of period                       |   | $                                               | 23,574,939 |   | $ | 17,199,641 |   |
|                                                                          |   |                                            |       |   |   |   |   |
|                                                                          |   |                                            |       |   |   |   |   |
| **SUPPLEMENTAL                DISCLOSURES OF CASH FLOW INFORMATION**          |   |                                            |       |   |   |   |   |
| Cash                paid during the period for:                               |   |                                            |       |   |   |   |   |
| Interest                                                                      |   | $                                               | 6,681,989  |   | $ | 3,474,475 |   |
| Taxes                                                                         |   | $                                               | -          |   | $ | - |   |
|                                                                          |   |                                            |       |   |   |   |   |
|                                                                          |   |                                            |       |   |   |   |   |
| **NONCASH                INVESTING AND FINANCING TRANSACTIONS**               |   |                                            |       |   |   |   |   |
| Increase                in unrealized losses on securities available for sale |   | $                                               | 685,554    |   | $ | 1,387,131 |   |

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*Table            of Contents*

**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

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**NOTE      1.  NATURE OF BUSINESS**

| **Banking                Locations**                    |  **Number                of 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) |
| Snellville,                Gwinnett 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*

----

*Table            of Contents*

**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 March 31,** |      |
|-------------------------------------------------------------------|--------|-------------------------------------------------|-----------|
|                                                              |   | **2006**                                        |      | **2005** |   |
| Basic                earnings per share:                          |   |                                            |      |   |   |
| Net                income                                         |   | $                                               | 3,311,345 |   | $ | 2,478,649 |   |
|                                                              |   |                                            |      |   |   |   |   |
| Weighted                average common shares outstanding         |   |                                            | 9,484,570 |   |   | 9,498,988 |   |
|                                                              |   |                                            |      |   |   |   |   |
| Earnings                per common share                          |   | $                                               | 0.35      |   | $ | 0.26 |   |
|                                                              |   |                                            |      |   |   |   |   |
| Diluted                earnings per share:                        |   |                                            |      |   |   |   |   |
| Net                income                                         |   | $                                               | 3,311,345 |   | $ | 2,478,649 |   |
|                                                              |   |                                            |      |   |   |   |   |
| Weighted                average common shares outstanding         |   |                                            | 9,484,570 |   |   | 9,498,988 |   |
| Effect                of dilutive stock options                   |   |                                            | 228,063   |   |   | 149,642 |   |
| Weighted                average diluted common shares outstanding |   |                                            | 9,712,633 |   |   | 9,648,630 |   |
|                                                              |   |                                            |      |   |   |   |   |
| Earnings                per common share                          |   | $                                               | 0.34      |   | $ | 0.26 |   |

----

*Table            of Contents*

**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

----

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

*Accounting      for Stock Issued to Employees, *
*Accounting      for Stock-Based *
*Compensation.*
*Share-Based Payment*

----

*Table            of Contents*

**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

----

**NOTE      4.  STOCK PLANS AND STOCK-BASED EMPLOYEE COMPENSATION      (Continued)**

|                                                                                                                                                              |   | **Three                Months****Ended****March                31, 2005** |      |
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------------------------------------------|-----------|
|                                                                                                                                                              |   | _______________                                                           |      |
| Net                income, as reported                                                                                                                            |   | $                                                                         | 2,478,649 |   |
| Deduct:                                                                                                                                                           |   |                                                                      |      |   |
| Total                stock-based employee compensation expense determined under fair value                based method for all awards, net of related tax effects |   |                                                                      | (42,964   | ) |
| Pro                forma net income                                                                                                                               |   | $                                                                         | 2,435,685 |   |
|                                                                                                                                                              |   |                                                                      |      |   |
| Earnings                per share:                                                                                                                                |   |                                                                      |      |   |
| Basic                - as reported                                                                                                                                |   | $                                                                         | 0.26      |   |
| Basic                - pro forma                                                                                                                                  |   | $                                                                         | 0.26      |   |
| Diluted                - as reported                                                                                                                              |   | $                                                                         | 0.26      |   |
| Diluted                - pro forma                                                                                                                                |   | $                                                                         | 0.25      |   |

----

*Table            of Contents*

**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

----

**NOTE      4.  STOCK PLANS AND STOCK-BASED EMPLOYEE COMPENSATION      (Continued)**

|                                                                                                                                 |   | **Quarter                ended****March                31, 2006** |    | **Year                ended****December                31, 2005** |   |
|--------------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|---------|-------------------------------------------------------------------|--------|
|                                                                                                                                 |   | **Number**                                                        |    | **Weighted-****Average****Exercise****Price**                     |   | **Number** |   | **Weighted-****Average****Exercise****Price** |   |
| Under                option, beginning of period                                                                                     |   |                                                              | 703,597 |                                                              | $      | 11.91 |   |   | 651,777 |   | $ | 11.03 |   |
| Granted                                                                                                                              |   |                                                              | 26,000  |                                                              |   | 18.50 |   |   | 122,500 |   |   | 14.57 |   |
| Exercised                                                                                                                            |   |                                                              | (71,426 | )                                                                 |   | 10.49 |   |   | (61,180 | ) |   | 7.38 |   |
| Forfeited                                                                                                                            |   |                                                              | (800    | )                                                                 |   | 13.94 |   |   | (9,500 | ) |   | 13.16 |   |
| Under                option, end of period                                                                                           |   |                                                              | 657,371 |                                                              | $      | 12.33 |   |   | 703,597 |   | $ | 11.91 |   |
|                                                                                                                                 |   |                                                              |    |                                                              |   |   |   |   |   |   |   |   |   |
| Exercisable                at end of period                                                                                          |   |                                                              | 446,599 |                                                              | $      | 11.95 |   |   | 477,295 |   | $ | 11.73 |   |
|                                                                                                                                 |   |                                                              |    |                                                              |   |   |   |   |   |   |   |   |   |
| Weighted-average                fair value per option of options granted during                the period                       |   |                                                              |    |                                                              | $      | 6.05 |   |   |   |   | $ | 4.41 |   |
| Total                intrinsic value of options exercised during the period                                                          |   |                                                              |    |                                                              | $      | 672,000 |   |   |   |   | $ | 439,000 |   |
| Weighted                average remaining contractual term of exercisable options at end                of the                period |   |                                                              |    |                                                              |   | 4.17                years |   |   |   |   |   | 4.16                years |   |
| Aggregate                intrinsic value of exercisable options at end of the                period                                  |   |                                                              |    |                                                              | $      | 3,339,000 |   |   |   |   | $ | 3,113,000 |   |

----

*Table            of Contents*

**PAB      BANKSHARES, INC. AND SUBSIDIARIES**

**NOTES      TO CONSOLIDATED FINANCIAL STATEMENTS**

**(Unaudited)**

----

**NOTE      4.  STOCK PLANS AND STOCK-BASED EMPLOYEE COMPENSATION      (Continued)**

|                                                            |   | **Quarter                ended****March                31, 2006** |    |
|-----------------------------------------------------------------|--------|-------------------------------------------------------------------|---------|
|                                                            |   | **Number**                                                        |    | **Weighted-****Average****Grant-Date****Fair                Value** |   |
| Nonvested,                beginning of period                   |   |                                                              | 226,302 |   | $ | 4.07 |   |
| Granted                                                         |   |                                                              | 26,000  |   |   | 6.05 |   |
| Vested                                                          |   |                                                              | (40,730 | ) |   | 3.90 |   |
| Forfeited                                                       |   |                                                              | (800    | ) |   | 4.26 |   |
| Nonvested,                end of period                         |   |                                                              | 210,772 |   | $ | 4.35 |   |
|                                                            |   |                                                              |    |   |   |   |   |
| Total                fair value of options vested during period |   |                                                              |    |   | $ | 159,000 |   |

|                                           |   | **Options                Outstanding** |    | **Options                Exercisable**                                  |   |
|------------------------------------------------|--------|----------------------------------------|---------|-------------------------------------------------------------------------|--------|
| **Range                of Exercise****Prices** |   | **Number**                             |    | **Weighted-****Average****Contractual****Life                in Years** |   | **Weighted-****Average****Exercise****Price** |   | **Number** |   | **Weighted-****Average****Exercise****Price** |   |
| $                7.70 -   9.38       |   |                                   | 145,999 |                                                                    |   | 5.78 |   | $ | 8.33 |   |   | 98,799 |   | $ | 8.58 |   |
|  10.01                - 10.60             |   |                                   | 170,372 |                                                                    |   | 3.80 |   |   | 10.32 |   |   | 145,300 |   |   | 10.29 |   |
|  10.71                - 13.94             |   |                                   | 136,100 |                                                                    |   | 5.58 |   |   | 12.99 |   |   | 90,900 |   |   | 12.77 |   |
|  14.00                - 16.99             |   |                                   | 140,000 |                                                                    |   | 6.07 |   |   | 15.60 |   |   | 87,200 |   |   | 15.99 |   |
|  17.67                - 21.63             |   |                                   | 64,900  |                                                                    |   | 7.03 |   |   | 18.13 |   |   | 24,400 |   |   | 17.97 |   |
|                                           |   |                                   | 657,371 |                                                                    |   | 5.41 |   |   | 12.33 |   |   | 446,599 |   |   | 11.95 |   |

|                                                                               |   | **Quarter                ended****March                31, 2006** |                    | **Year                ended****December                31, 2005** |   |
|------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------|-------------------------|-------------------------------------------------------------------|--------|
|                                                                               |   | __________________                                                |                    | __________________                                                |   |
| Risk-free                interest rate                                             |   |                                                              | 4.39%                   |                                                              |   | 3.95%                - 4.27% |   |
| Expected                life of the options                                        |   |                                                              | 10                years |                                                              |   | 7                - 10 years |  |
| Expected                dividends (as a percentage of the fair value of the stock) |   |                                                              | 2.74%                   |                                                              |   | 3.05%                - 3.08% |   |
| Expected                volatility                                                 |   |                                                              | 31.44%                  |                                                              |   | 32.68%                - 35.29% |   |

----

*Table            of Contents*

**CAUTIONARY      NOTICE REGARDING FORWARD-LOOKING STATEMENTS**

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

**ITEM2.  MANAGEMENT’S      DISCUSSION AND ANALYSIS OF      FINANCIAL CONDITION AND RESULTS OF OPERATION**

----

*Table            of Contents*

**FINANCIAL      CONDITION**

| As                of Quarter End                                  |   | Mar-06                                |    | Dec-05  |   | Sep-05  |    | Jun-05 |    | Mar-05  |   |
|-------------------------------------------------------------------|--------|---------------------------------------|---------|---------|--------|---------|---------|--------|---------|---------|--------|
|                                                              |   | (Dollars                In Thousands) |    |
| Commercial                and financial                           |   | $                                     | 47,164  |    | $      | 50,860  |    | $      | 55,536  |    | $      | 60,127 |   | $ | 54,512 |   |
| Agricultural                (including loans secured by farmland) |   |                                  | 53,368  |    |   | 55,830  |    |   | 45,759  |    |   | 32,475 |   |   | 27,237 |   |
| Real                estate - construction                         |   |                                  | 290,863 |    |   | 268,629 |    |   | 257,522 |    |   | 228,539 |   |   | 198,815 |   |
| Real                estate - commercial                           |   |                                  | 229,236 |    |   | 231,601 |    |   | 206,910 |    |   | 227,079 |   |   | 232,672 |   |
| Real                estate - residential                          |   |                                  | 123,902 |    |   | 127,326 |    |   | 145,395 |    |   | 151,033 |   |   | 147,508 |   |
| Installment                loans to individuals and other loans   |   |                                  | 20,836  |    |   | 20,380  |    |   | 22,239  |    |   | 22,663 |   |   | 20,585 |   |
|                                                              |   |                                  | 765,369 |    |   | 754,626 |    |   | 733,361 |    |   | 721,916 |   |   | 681,329 |   |
| Deferred                loan fees and unearned interest, net      |   |                                  | (1,279  | )  |   | (1,688  | )       |   | (1,816  | )       |   | (2,282 | )  |   | (1,721 | ) |
|                                                              |   |                                  | 764,090 |    |   | 752,938 |    |   | 731,545 |    |   | 719,634 |   |   | 679,608 |   |
| Allowance                for loan losses                          |   |                                  | (11,186 | )       |   | (11,079 | )  |   | (10,768 | )  |   | (10,460 | ) |   | (9,867 | ) |
|                                                              |   | $                                     | 752,904 |    | $      | 741,859 |    | $      | 720,777 |    | $      | 709,174 |   | $ | 669,741 |   |

----

*Table            of Contents*

| **As                of March 31, 2006**                           |   | **South****Georgia**                  |    | **North****Georgia** |   | **Florida** |   | **Treasury** |    | **Total** |   |
|-------------------------------------------------------------------|--------|---------------------------------------|---------|----------------------|--------|-------------|--------|--------------|---------|-----------|--------|
|                                                              |   | (Dollars                in Thousands) |    |
| **Loans**                                                         |   |                                  |    |                 |   |        |   |         |    |      |   |
| Commercial                and financial                           |   | $                                     | 30,267  |                 | $      | 16,339      |   | $            | 485     |      | $      | 73 |   | $ | 47,164 |   |
| Agricultural                (including loans secured by farmland) |   |                                  | 45,102  |                 |   | 6,389       |   |         | 1,877   |      |   | - |   |   | 53,368 |   |
| Real                estate - construction                         |   |                                  | 52,958  |                 |   | 197,207     |   |         | 40,566  |      |   | 132 |   |   | 290,863 |   |
| Real                estate - commercial                           |   |                                  | 87,055  |                 |   | 117,627     |   |         | 17,429  |      |   | 7,125 |   |   | 229,236 |   |
| Real                estate - residential                          |   |                                  | 91,943  |                 |   | 25,627      |   |         | 4,948   |      |   | 1,384 |   |   | 123,902 |   |
| Installment                loans to individuals and other loans   |   |                                  | 16,620  |                 |   | 1,336       |   |         | 125     |      |   | 2,755 |   |   | 20,836 |   |
|                                                              |   |                                  | 323,945 |                 |   | 364,525     |   |         | 65,430  |      |   | 11,469 |   |   | 765,369 |   |
| Deferred                loan fees and unearned interest, net      |   |                                  | (84     | )                    |   | (708        | )      |         | (498    | )         |   | 11 |   |   | (1,279 | ) |
| Total                loans                                        |   | $                                     | 323,861 |                 | $      | 363,817     |   | $            | 64,932  |      | $      | 11,480 |   | $ | 764,090 |   |
| Percent                of total                                   |   |                                  | 42.4    | %                    |   | 47.6        | %      |         | 8.5     | %         |   | 1.5 | % |   | 100.0 | % |
|                                                              |   |                                  |    |                 |   |        |   |         |    |      |   |   |   |   |   |   |
| **Deposits**                                                      |   |                                  |    |                 |   |        |   |         |    |      |   |   |   |   |   |   |
| Noninterest-bearing                demand                         |   | $                                     | 81,739  |                 | $      | 13,542      |   | $            | 6,457   |      | $      | 5,462 |   | $ | 107,200 |   |
| Interest-bearing                demand and savings                |   |                                  | 230,558 |                 |   | 44,806      |   |         | 25,205  |      |   | 1,094 |   |   | 301,663 |   |
| Time                                                              |   |                                  | 245,975 |                 |   | 59,541      |   |         | 98,180  |      |   | 42,665 |   |   | 446,361 |   |
| Total                deposits                                     |   | $                                     | 558,272 |                 | $      | 117,889     |   | $            | 129,842 |      | $      | 49,221 |   | $ | 855,224 |   |
| Percent                of total                                   |   |                                  | 65.3    | %                    |   | 13.8        | %      |         | 15.2    | %         |   | 5.7 | % |   | 100.0 | % |

**RESULTS      OF OPERATIONS**

*Net      Interest Income*

----

*Table            of Contents*

| For                the Three Months Ended March 31, |   |                                  |    | 2006                   |   |              |   |           |   | 2005                   |   |              |   |
|-----------------------------------------------------|--------|---------------------------------------|---------|------------------------|--------|-------------------|--------|----------------|--------|------------------------|--------|-------------------|--------|
|                                      |   | AverageBalance                        |    | InterestIncome/Expense |   | AverageYield/Rate |   | AverageBalance |   | InterestIncome/Expense |   | AverageYield/Rate |   |
| _______________________________________             |   | (Dollars                In Thousands) |    |
| Interest-earning                assets:             |   |                                  |    |                   |   |              |   |           |   |                   |   |              |   |
| Loans                                               |   | $                                     | 761,900 |                   | $      | 15,400            |   |           | 8.20   | %            | $      | 665,750           |   | $ | 10,836 |   |   | 6.60 | % |
| Investment                securities:               |   |                                  |    |                   |   |              |   |           |   |                   |   |              |   |   |   |   |   |   |   |
| Taxable                                             |   |                                  | 149,384 |                   |   | 1,770             |   |           | 4.81   | %                      |   | 117,117           |   |   | 1,297 |   |   | 4.49 | % |
| Nontaxable                                          |   |                                  | 16,592  |                   |   | 239               |   |           | 5.83   | %                      |   | 8,395             |   |   | 124 |   |   | 6.00 | % |
| Other                short-term investments         |   |                                  | 47,823  |                   |   | 522               |   |           | 4.43   | %                      |   | 42,189            |   |   | 252 |   |   | 2.42 | % |
| Total                interest-earning assets        |   | $                                     | 975,699 |                   | $      | 17,931            |   |           | 7.45   | %                      | $      | 833,451           |   | $ | 12,509 |   |   | 6.09 | % |
|                                                |   |                                  |    |                   |   |              |   |           |   |                   |   |              |   |   |   |   |   |   |   |
| Interest-bearing                liabilities:        |   |                                  |    |                   |   |              |   |           |   |                   |   |              |   |   |   |   |   |   |   |
| Demand                deposits                      |   | $                                     | 253,655 |                   | $      | 1,595             |   |           | 2.55   | %                      | $      | 193,108           |   | $ | 496 |   |   | 1.04 | % |
| Savings                deposits                     |   |                                  | 40,618  |                   |   | 112               |   |           | 1.12   | %                      |   | 42,453            |   |   | 63 |   |   | 0.60 | % |
| Time                deposits                        |   |                                  | 435,036 |                   |   | 4,226             |   |           | 3.94   | %                      |   | 343,035           |   |   | 2,454 |   |   | 2.90 | % |
| FHLB                advances                        |   |                                  | 89,139  |                   |   | 773               |   |           | 3.52   | %                      |   | 98,694            |   |   | 683 |   |   | 2.81 | % |
| Notes                payable                        |   |                                  | 10,310  |                   |   | 219               |   |           | 8.63   | %                      |   | 10,310            |   |   | 168 |   |   | 6.60 | % |
| Other                short-term borrowings          |   |                                  | 6,304   |                   |   | 31                |   |           | 1.99   | %                      |   | 9,711             |   |   | 30 |   |   | 1.25 | % |
| Total                interest-bearing liabilities   |   | $                                     | 835,062 |                   | $      | 6,956             |   |           | 3.38   | %                      | $      | 697,311           |   | $ | 3,894 |   |   | 2.26 | % |
|                                                |   |                                  |    |                   |   |              |   |           |   |                   |   |              |   |   |   |   |   |   |   |
| Interest                rate spread                 |   |                                  |    |                   |   |              |   |           | 4.07   | %                      |   |              |   |   |   |   |   | 3.83 | % |
|                                                |   |                                  |    |                   |   |              |   |           |   |                   |   |              |   |   |   |   |   |   |   |
| Net                interest income                  |   |                                  |    |                   | $      | 10,975            |   |           |   |                   |   |              |   | $ | 8,615 |   |   |   |   |
|                                                |   |                                  |    |                   |   |              |   |           |   |                   |   |              |   |   |   |   |   |   |   |
| Net                interest margin                  |   |                                  |    |                   |   |              |   |           | 4.56   | %                      |   |              |   |   |   |   |   | 4.19 | % |

*Provision      for Loan Losses*

----

*Table            of Contents*

| As                of Quarter End                                        |   | Mar-06                                |   | Dec-05        |   | Sep-05 |          | Jun-05 |   | Mar-05        |   |
|-------------------------------------------------------------------------|--------|---------------------------------------|--------|---------------|--------|--------|---------------|--------|--------|---------------|--------|
| _______________________________________________                         |   | (Dollars                In Thousands) |   |
| Loans                accounted for on a nonaccrual basis                |   | $                                     | 7,760  |          | $      | 7,856  |          | $      | 7,446  |          | $      | 7,534 |   | $ | 6,531 |   |
| Accruing                loans which are contractually past due          |   |                                  |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| 90                days or more as to principal or interest payments     |   |                                  | 17     |          |   | 2      |          |   | 20     |          |   | 9 |   |   | 6 |   |
| Troubled                debt restructurings not included above          |   |                                  | -      |          |   | -      |          |   | -      |          |   | - |   |   | - |   |
| Other                impaired loans                                     |   |                                  | -      |          |   | -      |          |   | -      |          |   | - |   |   | - |   |
| Total                nonperforming loans                                |   | $                                     | 7,777  |          | $      | 7,858  |          | $      | 7,466  |          | $      | 7,543 |   | $ | 6,537 |   |
|                                                                    |   |                                  |   |          |   |   |          |   |   |          |   |   |   |   |   |   |
| Total                nonperforming loans as a percentage of total loans |   |                                  | 1.02   | %   |   | 1.04   | %   |   | 1.02   | %   |   | 0.91 | %   |   | 0.96 | % |

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

----

*Table            of Contents*

*Other      Income*

| For                the Three Months Ended March 31,                              |   | 2006                                  |   | 2005          |   |          |          |
|----------------------------------------------------------------------------------|--------|---------------------------------------|--------|---------------|--------|---------------|---------------|
|                                                              |   | Amount                                |   | Amount        |   | PercentChange |          |
|                                                                             |   | (Dollars                In Thousands) |   |
| Noninterest                income:                                               |   |                                  |   |          |   |          |          |
| Service                charges on deposit accounts                               |   | $                                     | 951    |          | $      | 922           |          |   | 3.1 | % |
| Mortgage                origination fees                                         |   |                                  | 116    |          |   | 105           |          |   | 10.5 | % |
| Securities                transactions, net                                      |   |                                  | (430   | )             |   | -             |          |   | 100.0 | % |
| Earnings                on bank-owned life insurance                             |   |                                  | 94     |          |   | 79            |          |   | 19.0 | % |
| Gain                (loss) on disposal of assets                                 |   |                                  | 2      |          |   | (3            | )             |   | -166.7 | % |
| Other                noninterest income                                          |   |                                  | 308    |          |   | 244           |          |   | 26.2 | % |
| Total                noninterest income                                          |   | $                                     | 1,041  |          | $      | 1,347         |          |   | -22.7 | % |
|                                                                             |   |                                  |   |          |   |          |          |   |   |   |
| Noninterest                income (annualized) as a percentage of average assets |   |                                  | 0.40   | %   |   | 0.60          | %   |   |   |   |

*Other      Expenses*

| For                the Three Months Ended March 31,                               |   | 2006                                  |   | 2005          |   |          |          |
|-----------------------------------------------------------------------------------|--------|---------------------------------------|--------|---------------|--------|---------------|---------------|
|                                                                    |   | Amount                                |   | Amount        |   | PercentChange |          |
|                                                                              |   | (Dollars                In Thousands) |   |
| Noninterest                expenses:                                              |   |                                  |   |          |   |          |          |
| Salaries                and wages                                                 |   | $                                     | 3,723  |          | $      | 3,125         |          |   | 19.1 | % |
| Deferred                loan costs                                                |   |                                  | (430   | )             |   | (391          | )             |   | 10.0 | % |
| Employee                benefits                                                  |   |                                  | 1,006  |          |   | 756           |          |   | 33.1 | % |
| Net                occupancy expense of premises                                  |   |                                  | 471    |          |   | 469           |          |   | 0.4 | % |
| Furniture                and equipment expense                                    |   |                                  | 509    |          |   | 503           |          |   | 1.2 | % |
| Advertising                and business development                               |   |                                  | 176    |          |   | 127           |          |   | 38.6 | % |
| Supplies                and printing                                              |   |                                  | 152    |          |   | 115           |          |   | 32.2 | % |
| Telephone                and internet charges                                     |   |                                  | 104    |          |   | 85            |          |   | 22.4 | % |
| Postage                and courier                                                |   |                                  | 150    |          |   | 175           |          |   | -14.3 | % |
| Legal                and accounting fees                                          |   |                                  | 106    |          |   | 107           |          |   | -0.9 | % |
| Director                fees and expenses                                         |   |                                  | 136    |          |   | 96            |          |   | 41.7 | % |
| Service                charges and fees                                           |   |                                  | 120    |          |   | 127           |          |   | -5.5 | % |
| Other                noninterest expense                                          |   |                                  | 533    |          |   | 471           |          |   | 13.2 | % |
| Total                noninterest expense                                          |   | $                                     | 6,756  |          | $      | 5,765         |          |   | 17.2 | % |
|                                                                              |   |                                  |   |          |   |          |          |   |   |   |
| Noninterest                expense (annualized) as a percentage of average assets |   |                                  | 2.61   | %   |   | 2.58          | %   |   |   |   |

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*Table            of Contents*

*Income      Tax Expense*

**LIQUIDITY      AND CAPITAL RESOURCES**

*Contractual      Obligations*

| Contractual                Obligations                                 |   | Total                                 |    | Less                than1                year |   | 1                to 3years |   | 3                to 5years |   | More                than5                years |   |
|------------------------------------------------------------------------|--------|---------------------------------------|---------|-----------------------------------------------|--------|----------------------------|--------|----------------------------|--------|------------------------------------------------|--------|
|                                                                   |   | (Dollars                In Thousands) |    |
| Federal                Home Loan Bank of Atlanta Advances              |   | $                                     | 90,683  |                                          | $      | 5,652                      |   | $                          | 1,217  |                                           | $      | 5,498 |   | $ | 78,316 |   |
| Operating                Lease Obligations                             |   |                                  | 512     |                                          |   | 205                        |   |                       | 303    |                                           |   | 4 |   |   | - |   |
| Guaranteed                Preferred Beneficial Interests in Debentures |   |                                  | 10,310  |                                          |   | -                          |   |                       | -      |                                           |   | - |   |   | 10,310 |   |
|                                                                   |   | $                                     | 101,505 |                                          | $      | 5,857                      |   | $                          | 1,520  |                                           | $      | 5,502 |   | $ | 88,626 |   |

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*Table            of Contents*

*Off      Balance Sheet Arrangements*

|                                        |   | Mar-06 |        | Dec-05 |   |
|---------------------------------------------|--------|--------|-------------|--------|--------|
| Commitments                to extend credit |   | $      | 154,171,000 |   | $      | 144,717,000 |   |
| Standby                letters of credit    |   | $      | 7,401,000   |   | $      | 9,787,000 |   |

*Stockholders’      Equity*

|                                                        |   | CompanyConsolidated |   | Bank    |   | MinimumRegulatoryRequirement |          |
|------------------------------------------------------------------|--------|---------------------|--------|---------|--------|------------------------------|---------------|
| Total                Capital to Risk Weighted Assets             |   |                | 12.4   | %  |   | 12.3                         | %   |   | 8.0 | % |
| Tier                1 Capital to Risk Weighted Assets            |   |                | 11.1   | %       |   | 11.0                         | %             |   | 4.0 | % |
| Tier                1 Capital to Average Assets (Leverage Ratio) |   |                | 9.2    | %       |   | 9.2                          | %             |   | 4.0 | % |

**CRITICAL      ACCOUNTING ESTIMATES**

*Allowance      for Loan Losses *

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*Table            of Contents*

*Estimates      of Fair Value *

**Recent      Accounting Pronouncements**

**ITEM3.  QUANTITATIVE      AND QUALITATIVE DISCLOSURES      ABOUT MARKET RISK**

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*Table            of Contents*

|                                            |   | 3-Month                               |    | 6-Month |   | 1-Year  |   |
|-------------------------------------------------|--------|---------------------------------------|---------|---------|--------|---------|--------|
|                                            |   | (Dollars                In Thousands) |    |
| *Regulatory                Defined*             |   |                                  |    |    |   |    |   |   |   |   |
| Rate                Sensitive Assets (RSA)      |   | $                                     | 614,725 |    | $      | 642,973 |   | $ | 683,779 |   |
| Rate                Sensitive Liabilities (RSL) |   |                                  | 441,616 |    |   | 516,093 |   |   | 650,036 |   |
| RSA                minus RSL (Gap)              |   | $                                     | 173,109 |    | $      | 126,880 |   | $ | 33,743 |   |
|                                            |   |                                  |    |    |   |    |   |   |   |   |
| Gap                Ratio (RSA/RSL)              |   |                                  | 1.39    |    |   | 1.25    |   |   | 1.05 |   |
|                                            |   |                                  |    |    |   |    |   |   |   |   |
| *Management-Adjusted*                           |   |                                  |    |    |   |    |   |   |   |   |
| Rate                Sensitive Assets (RSA)      |   | $                                     | 619,156 |    | $      | 651,146 |   | $ | 698,106 |   |
| Rate                Sensitive Liabilities (RSL) |   |                                  | 294,480 |    |   | 368,957 |   |   | 558,801 |   |
| RSA                minus RSL (Gap)              |   | $                                     | 324,676 |    | $      | 282,189 |   | $ | 139,305 |   |
|                                            |   |                                  |    |    |   |    |   |   |   |   |
| Gap                Ratio (RSA/RSL)              |   |                                  | 2.10    |    |   | 1.76    |   |   | 1.25 |   |

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*Table            of Contents*

| MarketRate                Change | Effect                on Net Interest Income |
|----------------------------------|----------------------------------------------|
| Gradual                          | Immediate                                    |
| +300                bps          | 13.56%                                       | 23.52% |
| +200                bps          | 11.53%                                       | 14.74% |
| +100                bps          | 6.26%                                        | 6.70% |
| -100                bps          | -4.61%                                       | -4.91% |
| -200                bps          | -8.93%                                       | -12.09% |
| -300                bps          | -10.79%                                      | -18.92% |

**ITEM4.  CONTROLS      AND      PROCEDURES**

**PARTII.**
**OTHER      INFORMATION**

**ITEM1.**
**LEGAL      PROCEEDINGS**

**ITEM1A.**
**RISK      FACTORS**

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*Table            of Contents*

**ITEM2.**
**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 programs 1 |   |
| January      |   |                                                           | 8,100  |                                                            | $      | 18.69                                                                                                                                  |   |                                                                                                                          | 8,100  |   |   | 322,109 |   |
| February     |   |                                                           | 16,913 |                                                                      |   | 19.49                                                                                                                                  |   |                                                                                                                          | 16,913 |   |   | 305,196 |   |
| March        |   |                                                           | 2,663  |                                                                      |   | 19.42                                                                                                                                  |   |                                                                                                                          | 2,663  |   |   | 302,533 |   |
| Total        |   |                                                           | 27,676 |                                                                      | $      | 19.25                                                                                                                                  |   |                                                                                                                          | 27,676 |   |   | 302,533 |   |

| 1 | On                May 24, 2005, the Board of Directors renewed its annual plan to repurchase                up to 400,000 shares of the Company's common stock over the next                twelve                month period. The plan will expire May 24, 2006. |
|---|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

**ITEM3.**
**  DEFAULTS      UPON SENIOR SECURITIES**

**ITEM4.**
**  SUBMISSION      OF MATTERS TO A VOTE OF SECURITY HOLDERS**

**ITEM5.**
**OTHER      INFORMATION**

**ITEM6.**
**  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 |
|--------|------|----------------------------------------------------|

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*Table            of Contents*

**SIGNATURES**

| **PAB                BANKSHARES, INC.** |          |                              |   |       |
|-----------------------------------------|---------------|-----------------------------------|--------|------------|
| Registrant                              |          |                              |   |       |
| __________                              | _______  | ____________                      |   | __________ |   |   |
|                                    | Date:         | ***May                10, 2006*** |   | By:        | ***/s/                M. Burke Welsh, Jr.*** |   |
|                                    |          |                              |   |       | M.                Burke Welsh, Jr. |
|                                    |          |                              |   |       | President                and Chief Executive Officer |
|                                    |          |                              |   |       | (principal                executive officer of the registrant) |
|                                    |          |                              |   |       |   |   |
|                                    |          |                              |   |       |   |  ______________ |
|                                    | Date:         | ***May                10, 2006*** |   | 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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