U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549


                                   FORM 10-Q

(Mark One)

[X]  Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934

     For the quarterly period ended March 31, 1998


[ ]  Transition Report Pursuant to Section 13 or 15(d) of the Exchange Act

     For the transition period from ______ to ______

                       Commission File Number:

                         COMMUNITY FIRST BANKING COMPANY
------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)


                 GEORGIA                              58-2309605
   ---------------------------------            ---------------------
   (State or Other Jurisdiction of              (I.R.S. Employer
   Incorporation or Organization)               Identification No.)

                                110 Dixie Street
                            Carrollton, Georgia 30117
                                 (770) 834-1071

            -------------------------------------------------------
          (Address of Principal Executive Offices and Telephone Number)


     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes X No

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock,  as of the latest  practicable  date: As of April 30, 1998,  there
were  2,154,094   shares  issued  and  1,973,975   shares   outstanding  of  the
Registrant's Common Stock, par value $.01 per share.

CONTENTS

PART I.  FINANCIAL INFORMATION
         ---------------------
Item 1.  Financial Statements

     Consolidated  Balance Sheets as of March 31, 1998  (unaudited) and December
          31, 1997

     Consolidated  Statements  of Earnings  for the Three Months Ended March 31,
          1998 and 1997 (unaudited)

     Consolidated Statements of Comprehensive  Income for the Three Months Ended
          March 31, 1998 and 1997 (unaudited)

     Consolidated  Statements of Cash Flows for the Three Months Ended March 31,
          1998 and 1997 (unaudited)

     Notes to Consolidated Financial Statements

Item 2.  Management's Discussion and Analysis of Financial Condition
         and Results of Operations


PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

Item 2.  Changes in Securities

Item 3.  Defaults Upon Senior Securities

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

Item 5.  Other Information

Item 6.  Exhibits and Reports on Form 8-K

SIGNATURES


<PAGE>



                             COMMUNITY FIRST BANKING COMPANY
                               Consolidated Balance Sheets
                                (In thousands of dollars)
<TABLE>
<CAPTION>
                          ASSETS                                    Unaudited
                                                                     March 31   December 31
                                                                       1998        1997
                                                                       ----        ----
<S>                                                                <C>          <C> 
Cash and due from banks .........................................     10,138      10,766
Interest-bearing deposits in financial institutions .............      1,566       1,863
Federal funds sold and repurchase agreements ....................     19,025      17,655
                                                                      ------      ------
   Cash & cash equivalents ......................................     30,729      30,284

Securities available for sale ...................................     91,185      49,492
Securities held to maturity .....................................      5,954       6,006
Other investments ...............................................      2,328       2,269
Mortgage loans held for sale ....................................      2,407         789
Loans, net ......................................................    271,016     283,602
Premises & equipment net ........................................      9,077       9,095
Accrued interest receivable .....................................      3,196       3,169
Other real estate ...............................................      6,701       6,628
Other assets ....................................................      3,428       2,959
                                                                    ========    ========
   Total assets .................................................    426,021     394,293
                                                                    ========    ========
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
  Demand ........................................................     16,227      18,734
  Interest-bearing demand .......................................     55,833      51,198
  Savings .......................................................     39,691      38,273
  Time ..........................................................    160,219     161,431
  Time, over $100,000 ...........................................     44,545      45,895
                                                                    --------    --------
     Total deposits .............................................    316,515     315,531
Federal Home Loan Bank advances .................................     45,055       5,495
Subordinated debentures .........................................        900         900
Accrued interest payable & other liabilities ....................      4,126       3,329
                                                                    --------    --------
     Total liabilities ..........................................    366,596     325,255
                                                                    --------    --------
Stockholders' Equity:
Convertible preferred stock, par value $.01, 96,542 shares issued      2,064         --
Common stock, $.01 par, 10,000,000 authorized, 2,154,094 issued.          22          24
Additional paid in capital ......................................     36,121      47,040
Unearned ESOP shares and stock awards ...........................     (5,243)     (3,476)
Retained earnings ...............................................     25,137      24,725
Accumulated other comprehensive income ..........................      1,324         725
                                                                    --------    --------
     Total stockholders' equity .................................     59,425      69,038
                                                                    ========    ========
Total liabilities & stockholders' equity ........................    426,021     394,293
                                                                    ========    ========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>

                         COMMUNITY FIRST BANKING COMPANY
                       Consolidated Statements of Earnings
                                   (Unaudited)
                 (In thousands of dollars - except per share data)
<TABLE>
<CAPTION>
                                                                Three months ended
                                                                      March 31
                                                                   1998     1997
                                                                   -------------
<S>                                                               <C>     <C>
Interest income:
Interest and fees on loans .....................................   6,605   6,241
Interest-bearing deposits and federal funds sold ...............     364     152
Interest and dividends on investment securities:
   U.S. Treasury ...............................................      45       7
   U.S. Govt. agency and mortgage-backed .......................     867     798
   State, county & municipals ..................................      29      28
   Other .......................................................      78      47
                                                                   -----   -----
     Total interest income .....................................   7,988   7,273
                                                                   -----   -----
Interest Expense:
Interest on deposits:
   Demand ......................................................     353     361
   Savings .....................................................     300     253
   Time ........................................................   2,901   2,922
                                                                   -----   -----
                                                                   3,554   3,536
                                                                   -----   -----
Interest on  FHLB advances & subordinated debentures ...........     264     261
                                                                   -----   -----
     Total interest expense ....................................   3,818   3,797
                                                                   -----   -----
     Net interest income .......................................   4,170   3,476
                                                                   -----   -----
Provision for loan losses ......................................     154      95
                                                                   -----   -----
          Net interest inc. after provision for loan losses ....   4,016   3,381
                                                                   -----   -----
Noninterest income:
   Service charges on deposits .................................     697     605
   Gain on call of securities available for sale ...............      51     --
   Miscellaneous ...............................................     427     207
                                                                   -----   -----
          Total noninterest income .............................   1,175     812
                                                                   -----   -----
Noninterest expenses:
   Salaries and employee benefits ..............................   1,851   1,803
   ESOP & retirement expense ...................................     426     --
   Occupancy and equipment .....................................     559     544
   Deposit insurance premiums ..................................      46      12
   Other operating expense .....................................   1,267   1,278
                                                                   -----   -----
         Total noninterest expense .............................   4,149   3,637
                                                                   -----   -----
         Earnings before income tax expense ....................   1,042     556
Income tax expense .............................................     335     188
                                                                   -----   -----
               Net earnings ....................................     707     368
                                                                   =====   =====
Basic earnings per common share ................................    0.34     N/A
Diluted earnings per common share ..............................    0.34     N/A
Dividends per common share .....................................    0.15     N/A
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
                         COMMUNITY FIRST BANKING COMPANY
                 Consolidated Statements of Comprehensive Income
                      (Unaudited - in thousands of dollars)
<TABLE>
<CAPTION>
                                                                                    Three Months Ended
                                                                                         March 31,
                                                                                     1998        1997
                                                                                   --------------------
<S>                                                                                <C>         <C>     
Net earnings....................................................................      707         368
Other  comprehensive  income,  net of  income  taxes:  
  Unrealized  gains on securities available for sale:
    Unrealized gains arising during the period, net of tax 
      of $326 and $152, respectively............................................      633         295
  Less: Reclassification adjustment for gains included
    in net earnings, net of tax of $17..........................................      (34)         --
                                                                                      ---         ---   
Other comprehensive income......................................................      599         295
                                                                                      ---         ---
COMPREHENSIVE INCOME ...........................................................    1,306         663
                                                                                    =====       =====
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>

                         COMMUNITY FIRST BANKING COMPANY
                      Consolidated Statements of Cash Flows
                       (Unaudited - in thousands of dollars)
<TABLE>
<CAPTION>
                                                                                                                  Three Months Ended
                                                                                                                       March 31
                                                                                                                    1998       1997
                                                                                                                   -----------------
<S>                                                                                                             <C>        <C> 
Net earnings .................................................................................................       707        368
 Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
  Depreciation, amortization and accretion ...................................................................       328        336
  Provision for loan losses ..................................................................................       153         95
  Gain on call of securities available for sale ..............................................................       (51)       --
  ESOP and stock award compensation expense ..................................................................       450        --
  Change in:
    Mortgage loans held for sale .............................................................................    (1,618)      (286)
    Accrued interest receivable ..............................................................................       (28)      (783)
    Other real estate owned ..................................................................................       (73)      (359)
    Other assets .............................................................................................      (482)      (177)
    Accrued interest payable .................................................................................       288        127
    Accrued expenses and other liabilities ...................................................................       525        503
                                                                                                                 -------    -------
       Net cash provided by (used in) operating activities ...................................................       199       (176)
                                                                                                                 -------    -------

Cash flows from investing activities:
  Proceeds from sales and calls of securities available for sale .............................................     8,051        534
  Proceeds from maturities of securities held to maturity ....................................................        51      1,126
  Purchases of other investments .............................................................................       (60)      --
  Proceeds from sales of other investments ...................................................................      --          219
  Purchases of securities available for sale .................................................................   (49,066)    (9,850)
  Net change in loans ........................................................................................    12,433     (7,340)
  Proceeds from sale of real estate ..........................................................................      --            9
  Purchases of premises and equipment ........................................................................      (336)      (833)
                                                                                                                 -------    -------
       Net cash used in investing activities .................................................................   (28,927)   (16,135)
                                                                                                                 -------    -------

Cash flows from financing activities:
  Net change in demand and savings deposits ..................................................................     3,545     10,873
  Net change in time deposits ................................................................................    (2,560)     1,520
  Payment of FHLB advances ...................................................................................      (440)       (65)
  Proceeds from borrowing of FHLB advances ...................................................................    40,000       --
  Treasury stock purchases ...................................................................................   (11,078)      --
  Cash dividend paid .........................................................................................      (294)      --
                                                                                                                 -------    -------
      Net cash provided by financing activities ..............................................................    29,173     12,328
                                                                                                                 -------    -------
      Net change in cash and cash equivalents ................................................................       445     (3,983)
                                                                                                                 -------    -------
Cash and cash equivalents at beginning of year ...............................................................    30,284     23,097
                                                                                                                 -------    -------
Cash and cash equivalents at quarter end .....................................................................    30,729     19,114
                                                                                                                 =======    =======

Supplemental disclosure of cash flow information:
  Cash paid for: 
     Interest ................................................................................................     3,530      3,671
     Income taxes ............................................................................................       350       --
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
COMMUNITY FIRST BANKING COMPANY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1.  NATURE OF BUSINESS

GENERAL

         Community First Banking Company (the "Company") was incorporated in the
State of  Georgia  on March 12,  1997,  for the  purpose  of  becoming a holding
company to own 100% of the outstanding capital stock of Carrollton Federal Bank,
FSB (the "Savings Bank").  The Savings Bank was organized on August 1, 1994 as a
federal  savings bank  subsidiary  of CF Mutual  Holdings  (the "Mutual  Holding
Company"), a federally chartered mutual holding company. Prior to that date, the
predecessor  of the Savings  Bank had  operated as a mutual  savings  bank since
1929.

         On  June  27,  1997,  a plan  of  conversion  and  reorganization  (the
"Conversion")  whereby the Company  became the unitary  holding  company for the
Savings Bank and the dissolution of the Mutual Holding Company was completed.

         On December 29, 1997, the Savings Bank converted from a federal savings
bank  regulated  by the Office of Thrift  Supervision  (the  "OTS") to a Georgia
chartered state  commercial bank regulated by the Georgia  Department of Banking
and Finance (the "Georgia  Department") and concurrently changed the name of the
institution to Community First Bank (the "Bank").


NOTE 2.  BASIS OF PRESENTATION

Prior to June 27, 1997,  the Company had not issued any stock,  had no assets or
liabilities,  and had not engaged in any  business  activities  other than of an
organizational nature. Accordingly, the financial data for periods prior to June
27, 1997  included  herein  reflect the  operations of the  consolidated  Mutual
Holding Company.

The  accompanying   unaudited  consolidated  financial  statements  (except  for
statements of financial  condition on December 31, 1997, which are audited) have
been prepared in accordance with instructions to Form 10Q. Accordingly,  they do
not include all of the information and footnotes  required by generally accepted
accounting  principles  for  complete  financial  statements.  In the opinion of
management,  all  adjustments  (none of which were other than  normal  recurring
accruals)  necessary  for a fair  presentation  of the  financial  position  and
results  of  operations  for the  periods  presented  have  been  included.  The
accompanying  consolidated  financial  statements  include  the  accounts of the
Company and the Bank. All significant intercompany items have been eliminated.


The  results of  operations  for the three  months  ended March 31, 1998 are not
necessarily indicative of the results of operations that may be expected for the
year ended December 31, 1998. The accompanying consolidated financial statements
and related notes of Community  First Banking  Company and subsidiary  should be
read in  conjunction  with the audited  consolidated  financial  statements  and
related notes included in the Company's  Annual Report on Form 10-K for the year
ended December 31, 1997.


NOTE 3.  EARNINGS PER COMMON SHARE

Earnings  per common share  calculations  for the three month period ended March
31, 1998 are presented based on the net earnings for the three months divided by
the weighted  average number of shares  outstanding,  or 2,055,744  shares.  Net
earnings per common share are not presented for the three months ended March 31,
1997 since shares issued in  conjunction  with the  conversion and offering were
not  outstanding  for the period.  Diluted  earnings per common share takes into
account the effect of  dilution  from the  assumed  exercise of all  outstanding
stock options.  Diluted  earnings per common share is calculated by dividing net
earnings by the average  number of common  shares  outstanding  adjusted for the
incremental  shares  resulting from the exercise of dilutive  options during the
period, or 2,077,846 shares.


NOTE 4.  RECENTLY ISSUED ACCOUNTING STANDARDS

On January 1, 1998,  The Company  adopted  Statement  of  Financial  Accounting
Standard No. 130, "Reporting  Comprehensive  Income". This Statement establishes
standards  for  the  reporting  and  display  of  comprehensive  income  and its
components in the financial  statements.  Comprehensive income is defined as the
change in equity of a business  enterprise during a period from transactions and
other  events  and  circumstances  from  nonowner  sources.   For  the  Company,
comprehensive  income includes net income reported in the statements of earnings
and changes in the fair value of  securities  available  for sale  reported as a
component of stockholders' equity.

In February 1998, the Financial  Accounting Standards Board issued Statement No.
132, "Employer's Disclosures about Pensions and Other Postretirement  Benefits".
The new  statement  revises  employers'  disclosures  about  pension  and  other
postretirement  benefit plans but does not change the measurement or recognition
provisions of those plans.  Statement No. 132 provides additional information to
facilitate  financial analysis and eliminates  certain  disclosures which are no
longer  useful.  The  statement is effective  for fiscal years  beginning  after
December 15, 1997.  The  statement is not expected to have a material  impact on
the consolidated financial statements of the Company.


NOTE 5. DIVIDENDS DECLARED

On February  19, 1998,  the Board of  Directors  of the Company  approved a cash
dividend of $.15 per share payable April 1, 1998 for  stockholders  of record on
March 15, 1998.  The  dividends  are accrued in the March 31, 1998  consolidated
balance sheet.


ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
     OF OPERATIONS


COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 1998 AND DECEMBER 31, 1997

On March 31, 1998,  the Company had total assets of $426.0  million  compared to
$394.3  million at December 31, 1997.  This  increase of $31.7  million or 8% is
primarily due to the purchase of available for sale  securities  which increased
$41.7 million or 84.2% during the three month period.  Securities purchased were
government  agency bonds  issued by FHLMC and FNMA  totaling  $25.5  million and
Federal Home Loan Bank (FHLB) bonds totaling  $14.5 million.  These bonds have a
federal tax  equivalent  yield of 6.59% with an average  duration of 4.96 years.
The purchase of bonds was funded by  borrowing  $40 million from the FHLB on the
Bank's available line of credit.

Net loans  decreased  $12.6 million or 4.4% during the first quarter of 1998. Of
this  decrease,  $6.9 million were  mortgage  loans,  $2.5 million were consumer
loans,  $2.7 million were commercial loans and $.4 million of credit card loans.
Mortgage  loans held for sale  increased  $1.6  million  due to an  increase  in
refinancing  activity.  These  decreases  in  net  loans  can be  attributed  to
increased  reliance  on the  secondary  market  for  mortgage  loans,  increased
refinancing activity, more stringent underwriting criteria in regard to consumer
lending and normal seasonal fluctuation in commercial loan outstandings.

Other assets  increased $.5 million  primarily as a result of the purchase of an
interest rate cap on February 27, 1998.  This interest rate cap was purchased as
part of an arbitrage  transaction  where the Bank borrowed $40 million of FHLB 7
yr./2 yr. callable advances, and purchased $40 million in bonds.

Total deposit liabilities  increased $984 thousand or .3% from December 31, 1997
through March 31, 1998. Demand deposits  increased $2.1 million or 3.0%, savings
deposits increased $1.4 million or 3.7% and time deposits decreased $2.6 million
or 1.2%. FHLB advances  increased $39.6 million at March 31, 1998 as compared to
December 31, 1997,  primarily due to the aforementioned  arbitrage  transaction.
Accrued interest payable and other liabilities  increased $797 thousand or 23.9%
during the first quarter of 1998. This increase was primarily the result of: (i)
an increase of $288 thousand in accrued  interest  payable  primarily due to the
increase  in FHLB  advances  and (ii) an  increase  of $369  thousand  in escrow
accounts.

On January 8, 1998,  96,542 shares of  convertible  preferred  stock awards were
issued  under  the  Management  Recognition  Plan.  The stock  awards  are being
amortized as earned over a five year period.

On December 29, 1997 the Board of  Directors  of the Company  authorized a stock
repurchase  program whereby the Company intends to purchase up to 600,000 shares
of its common stock through open market purchases. In accordance with this plan,
259,468  shares of treasury  stock were  acquired  and retired  during the first
quarter 1998 at an average cost of $42.69 per share.


COMPARISON OF RESULTS OF  OPERATIONS  FOR THE THREE  MONTHS ENDED MARCH 31, 1998
     AND 1997


GENERAL. Net earnings totaled $707 thousand for the three months ended March 31,
1998, an increase of 92.1% from the $368 thousand earned in the same three-month
period in 1997. This increase in earnings is primarily the result of an increase
of 20.0% in net interest income and an increase of 44.7% in noninterest  income,
these  increases were partially  offset by an increase of 14.1% in  non-interest
expense  and an  increase  of 78.2% in  income  tax  expense.  These  and  other
significant fluctuations are discussed below.

NET INTEREST  INCOME.  Net interest  income for the three months ended March 31,
1998 increased $694 thousand or 20.0% over the same three-month  period in 1997.
Total interest income  increased $715 thousand or 9.8%,  while interest  expense
increased  $21 thousand or .6%.  This  increase in earnings on interest  bearing
assets was caused by the change in mix of the loan  portfolio,  higher levels of
loans,  higher  levels of federal  funds sold and  higher  levels of  investment
securities.  The loan portfolio is moving away from  residential  mortgage loans
and into higher yielding  commercial and consumer loans.  The average balance of
loans by type for the first quarters of 1998 and 1997 were as follows:

                                                     Average Balances
                                                      First Quarter
                                                   1998            1997
                                                   ----            ----
                                                      (In thousands)
Mortgage loans                                   120,065         142,559
Consumer loans                                    63,762          63,262
Credit card loans                                  4,079           4,705
Commercial loans                                  92,906          61,799
                                                  ------          ------
                                                 280,811         272,325
                                                 =======         =======

Interest  income on loans  increased $364 thousand or 5.8% for the first quarter
1998 compared to the same quarter in 1997,  while the average balance  increased
$8.5 million or 3.1%. Interest income on federal funds sold and interest bearing
deposits  increased $212 thousand or 139.5% for the three months ended March 31,
1998 compared to the same three months ended March 31, 1997. The average balance
of federal  funds sold for the first quarter 1998 and 1997 was $25.2 million and
$11.7 million  respectively.  Interest income on investment securities increased
$139  thousand  or 15.8%  while the  average  balance of  investment  securities
increased $15.2 million or 30.1%.

The net interest rate spread  measures the difference  between the average yield
on earning  assets and the  average  rate paid on  interest  bearing  sources of
funds.  The net interest  rate spread for the quarters  ended March 31, 1998 and
1997 was 3.90% and 3.93% respectively. This decrease was primarily the result of
the increase in the amount of investment securities and the average rates earned
on these securities.  The average rate earned on investment securities decreased
by 79 basis  points for the quarter  ended  March 31, 1998  compared to the same
quarter in 1997.  This  decrease was the result of higher  yielding  investments
being called and lower yields on newly purchased investment  securities.  Yields
on interest  earning assets other than investment  securities  increased for the
three months  ended March 31, 1998  compared to the three months ended March 31,
1997.  Average yields paid on total funding sources  decreased by 6 basis points
for the quarter ended March 31, 1998 compared to the same quarter in 1997.

The following table presents  average  balances and associated  rates earned and
paid for all interest  earning assets and interest  bearing  liabilities for the
three months ended March 31, 1998 and 1997. (dollars in thousands)
<TABLE>
<CAPTION>
                                             Quarter ended March 31, 1998                 Quarter ended March 31, 1997
                                         ---------------------------------------   ---------------------------------------
                                             Average    Interest      Effective      Average      Interest      Effective
                                             Balance     Yield           Rate        Balance       Yield            Rate
<S>                                         <C>          <C>            <C>          <C>           <C>             <C>
Loans net                                    277,912       6,605          9.64%       270,241       6,241           9.37%
Interest Bearing Deposits & FF Sold           25,238         364          5.84%        11,682         152           5.27%
Securities                                    65,485       1,019          6.31%        50,325         880           7.10%
--------------------------------------------------------------------------------  ----------------------------------------
                                             368,635       7,988          8.79%       332,248       7,273           8.88%
--------------------------------------------------------------------------------  ----------------------------------------
Demand Deposits                               53,906         353          2.66%        47,304         361           3.09%
Savings                                       39,017         300          3.11%        35,395         253           2.90%
Certificates of Deposit                      205,145       2,901          5.73%       210,104       2,922           5.64%
Borrowings                                    18,745         264          5.72%        18,258         261           5.80%
--------------------------------------------------------------------------------  ----------------------------------------
                                             316,812       3,818          4.89%       311,062       3,797           4.95%
--------------------------------------------------------------------------------  ----------------------------------------
Net interest income & spread                               4,170          3.90%                     3,476           3.93%
</TABLE>
                                    

PROVISION  FOR LOAN LOSSES.  The provision for loan losses was $154 thousand for
the three  months  ended March 31, 1998  compared to $95  thousand for the three
months  ended March 31,  1997.  This  increase  has been deemed  appropriate  by
management  to  reflect  the  higher  risk  associated  with the  change in loan
portfolio mix as well as the increase in the size of the  portfolio.  Management
deemed the allowance for loan losses adequate at March 31, 1998

NONPERFORMING  ASSETS AND PAST DUE LOANS.  Nonperforming  assets,  comprised  of
nonaccrual  loans  (loans on which  payments are more than 90 days past due) and
other real estate  owned  totaled  $7.3 million or 1.7% of total assets at March
31,  1998,  and $7.1  million  or 1.9% of total  assets at March 31,  1997.  The
majority  of  nonperforming  assets or $4.9  million at March 31,  1998 were the
result of foreclosure  on five loans to one borrower  represented by two parcels
of  undeveloped  land.  These same loans were on nonaccrual  status at March 31,
1997.

OTHER INCOME.  Total noninterest  income increased $363 thousand,  or 44.7%, for
the three  months  ended March 31,  1998  versus the same three  months in 1997.
Miscellaneous  income for the three months ended March 31, 1998  includes a $169
thousand  commission  rebate on  insurance  sales.  Gain on calls of  securities
available  for sale  includes a $51  thousand  dollar gain on the call of a FNMA
bond in the first  quarter  of 1998.  There  were no sales or calls in the first
quarter of 1997. Service charges on deposits increased $92 thousand or 15.2% for
the first quarter of 1998 verses the same period in 1997 because of the increase
in the number of transaction  accounts and the fee structure on these  accounts.
The number of customer  demand  deposit  accounts of the Bank increased by 1,597
accounts  or 8.4% as of March  31,  1998  compared  to March 31,  1997.  Fees on
transaction  accounts were increased during the first quarter 1998 as the result
of an  independent  review of the Bank's fee structure that was performed in the
fourth quarter of 1997.


OTHER EXPENSES.  Total noninterest expenses increased $512 thousand or 14.1% for
the three  months  ended March 31, 1998 as compared to the same three  months in
1997. This increase is primarily the result of  compensation  expense related to
the ESOP and  Management  Recognition  Plan which  totaled $426 thousand for the
three months ended March 31, 1998.  These  benefits were not in place during the
same three months in 1997.  Salaries and related benefits increased $48 thousand
or 2.6%, as a result of annual salary  adjustments.  Deposit insurance  premiums
increased $34 thousand for the three months ended March 31, 1998 compared to the
same  three  months in 1997.  This is the  result of a credit  for $34  thousand
received  in  the  first  quarter  1997  for  overpayment  of the  special  SAIF
assessment paid in the fourth quarter 1996.  Occupancy expense has increased $15
thousand,  or 2.8%, and other operating expenses,  decreased $11 thousand or .9%
for the quarter ended March 31, 1998 versus the same three months in 1997.

INCOME  TAXES.  Income tax expense for the quarter ended March 31, 1998 was $335
thousand  which  reflects an effective tax rate of 32.1 percent.  The same three
months in 1997 had income tax expense of $188 thousand or 33.8%.  The difference
in these rates and the statutory rate is primarily the result of interest income
on tax exempt securities.

LIQUIDITY AND CAPITAL RESOURCES.  The Company's  liquidity,  represented by cash
and cash  equivalents,  is a product of its  operating,  investing and financing
activities.  The Company's primary sources of funds are deposits,  amortization,
prepayments  and  maturities  of  outstanding  loans,  maturities  of investment
securities,  mortgage-backed  securities and other  short-term  investments  and
funds provided from operations.  While scheduled loan  amortization and maturing
investment securities, mortgage-backed securities and short-term investments are
relatively  predictable sources of funds, deposit flows and loan prepayments are
greatly   influenced  by  general  interest  rates,   economic   conditions  and
competition.  The  Company  manages  the  pricing of its  deposits to maintain a
steady  deposit  balance.  In  addition,  the Company  invests  excess  funds in
overnight  deposits and other short-term  interest-earning  assets which provide
liquidity to meet lending  requirements.  The Company has generally been able to
generate enough cash through the retail deposit market, its traditional  funding
source,  to offset the cash utilized in investing  activities.  As an additional
source of funds,  the Bank may  borrow  from the FHLB of  Atlanta.  At March 31,
1998, the Bank had  outstanding  advances from the FHLB of Atlanta in the amount
of $45.1  million.  Such advances were used in the Bank's normal  operations and
investing activities.

At March 31, 1998, total  stockholders'  equity was $59.4 million,  or 13.94% of
total assets compared to $69.0 million, or 17.5% of total assets at December 31,
1997.  This decrease is primarily  due to treasury  stock  purchases  during the
first quarter of 1998 in accordance with the Company's  planned stock repurchase
program.

As of March  31,  1998,  the  Bank's  regulatory  capital  was in  excess of all
applicable  regulatory   requirements.   At  March  31,1998,  the  Bank's  total
risk-based  capital,  tier 1  risk-based  capital  and  tier 1  leverage  ratios
amounted  to 14.8%,  13.8%  and  10.1%,  respectively,  compared  to  regulatory
requirements of 8.0%, 4.0% and 4.0%, respectively.

YEAR 2000 ISSUES. The Company is currently addressing the many areas affected by
the Year 2000 computer issue. A Year 2000 plan has been approved by the Board of
Directors  which includes  contacting all of the software  vendors that maintain
the computer  programs that the Company relies upon. This plan provides that the
Company will obtain  assurances  from these software  vendors that their product
will be Year 2000 compliant. All systems potentially affected will be evaluated.
The plan also includes  contacting  large commercial loan customers to determine
their  readiness for this issue.  At this time, it is anticipated  that many, if
not all of these  changes,  should be ready for  testing by December  31,  1998.
Since many of the programs used by the Company are  "off-the-shelf"  as compared
to "highly  customized,"  the cost to address  these  matters is not expected to
have a material impact on future operating results or financial condition.  This
area is changing  very  rapidly and the actual  results may differ from what has
been anticipated.

The Company has  identified  all hardware and software that need  date-sensitive
testing to comply with the Year 2000  issue.  Vendors  and  suppliers  have been
contacted for information  concerning their products and company's readiness for
the Year 2000 issue. The Company is utilizing both inside and outside  resources
for testing of all hardware and software.  The  Company's  main supplier of core
processing  software and our core processing service provider will begin testing
of their  products  during the second and third  quarters  of 1998.  The Company
internally  has completed  testing  hardware and should have  internal  software
testing  starting  during the second quarter of 1998. All testing and corrective
processes for Year 2000 problems should be completed by December 31, 1998.

The total  budget for the Year 2000  efforts  has not been  completed.  To date,
$252,000 has been set aside to address  hardware  replacement and upgrades.  All
expenses  associated  with year 2000  corrections  will be  expensed in the year
incurred and will be funded through normal operating cash flow.

The costs and completion dates for testing and corrections of Year 2000 problems
are based on management's best estimates,  which were derived utilizing numerous
assumptions  of future events  including the continued  availability  of certain
resources,  third party modification plans and other factors. However, there can
be no guarantee  that these  estimates will be achieved and actual results could
differ  materially  from those  plans.  Specific  factors  that might cause such
material  differences include, but are not limited to, the availability and cost
of  personnel  trained in this area,  the  ability  to locate  and  correct  all
relevant computer programs, and similar uncertainties.


PART II.  OTHER INFORMATION

      ITEM 1.  LEGAL PROCEEDINGS

            None.

      ITEM 2.  CHANGES IN SECURITIES

            None.

      ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

            None.

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

            No matter was  submitted to a vote of security  holders  through the
               solicitation  of proxies or  otherwise  during the quarter  ended
               March 31,  1998.  

      ITEM 5.  OTHER INFORMATION

           None.

      ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

          (a) The following exhibit is filed herewith:

               Exhibit 27 Financial Data Schedule

          (b) No reports on Form 8-K were filed  during the quarter  ended March
          31, 1998.


<PAGE>

                                   SIGNATURES

          Pursuant to the  requirements of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                        COMMUNITY FIRST BANKING COMPANY


Date:  May 12, 1998       /s/ Gary D. Dorminey
                         ----------------------
                              Gary D. Dorminey
                                 President
                       (Principal Executive Officer)



Date:  May 12, 1998      /s/ C. Lynn Gable
                        -------------------
                             C. Lynn Gable
                        Chief Financial Officer
                     (Principal Financial Officer)