**As
      filed with the Securities and Exchange Commission on July 19,
      2007**




**Registration
      No.  333-____**




**UNITED
      STATES SECURITIES AND EXCHANGE COMMISSION**




**Washington,
      DC 20549**




**------------------**


**FORM
      S-3**


**REGISTRATION
      STATEMENT**


**under**


**THE
      SECURITIES ACT OF 1933**


**------------------**




**CITIZENS
      SOUTH BANKING CORPORATION**


(Exact
      name of registrant as specified in its charter)




Delaware
            54-2069979(State
                or other jurisdiction of
            (I.R.S.
                Employerincorporation
                or organization)
            Identification
                No.)





519
      South New Hope Road, Gastonia, North Carolina 28054-4040, (704)
      868-5200


(Address,
      including zip code, and telephone number, including area


code,
      of
      registrant’s principal executive office)





Kim
      S.
      Price


President
      and Chief Executive Officer


Citizens
      South Banking Corporation


519
      South New Hope Road, Gastonia, North Carolina 28054-4040, (704)
      868-5200


Name,
      address, including zip code, and telephone number, including area code, of
      agent
      for service)







Copies
      of
      all communications to:




Ned
      Quint, Esquire,


Luse
      Gorman Pomerenk & Schick, P.C.


5335
      Wisconsin Avenue, N.W., Suite 400


Washington,
      D.C. 20015





Approximate
      date of commencement of proposed sale to the public: From time to time after
      the
      effective date of this Registration Statement.




If
      the
      only securities being registered on this Form are being offered pursuant to
      dividend or interest reinvestment plans, please check the following box. ý




If
      any of
      the securities being registered on this Form are to be offered on a delayed
      or
      continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
      than securities offered only in connection with dividend or interest
      reinvestment plans, check the following box. o




If
      this
      Form is filed to register additional securities for an offering pursuant to
      Rule
      462(b) under the Securities Act, please check the following box and list the
      Securities Act registration statement number of the earlier effective
      registration statement for the same offering. o




If
      this
      Form is a post-effective amendment filed pursuant to Rule 462(c) under the
      Securities Act, check the following box and list the Securities Act registration
      statement number of the earlier effective registration statement for the same
      offering. o




If
      delivery of the prospectus is expected to be made pursuant to Rule 434, please
      check the following box. o












CALCULATION
                  OF REGISTRATION FEETitle
                  of Securities to be Registered
            
            Amount
                  to be
                Registered(1
            
            
            Proposed
                  Maximum
                Offering
                  Price Per
                Share(2)
            
            
            Proposed
                  Maximum
                Aggregate
                  Offering Price
            
            
            Amount
                  of
                Registration
                  Fee(2)Common
                  Stock, Par Value $0.01
                Per
                  Share
            
            
            2,000,000
            
            
            $
            12.77
            
            
            $
            25,540,000
            
            
            $
            785




(1)
            Pursuant
                to Rule 416(a), the number of shares being registered shall include
                an
                indeterminate number of additional shares of common stock or common
                stock
                that may become issuable as a result of stock splits, stock dividends,
                or
                similar transactions in accordance with anti-dilution provisions
                of the
                Dividend Reinvestment Plan.




(2)
            The
                registration fee with respect to these shares has been computed in
                accordance with Rule 457(c), based upon the average of the high and
                low
                prices for shares of the Common Stock on July 9,
                2007.










**PROSPECTUS**
 **-----------------**
  **CITIZENS
        SOUTH BANKING CORPORATION**
 **2,000,000
        Shares**
  **Common
        Stock, Par Value $0.01 Per Share**
  **DIVIDEND
        REINVESTMENT PLAN**
 **----------------------**
  This
        prospectus relates to shares of common stock, par value $0.01 per share,
        of
        Citizens South Banking Corporation, a Delaware corporation, which may be
        offered
        and sold from time to time pursuant to the terms of the Citizens South Banking
        Corporation Dividend Reinvestment Plan.
  The
        plan
        provides participants with a convenient and economical method for investing
        cash
        dividends paid on our common stock in additional shares of our common
        stock.  This prospectus contains a summary of the material provisions
        of the plan.
  Shares
        of
        common stock will be (i) purchased on the open market, (ii) purchased directly
        from Citizens South Banking Corporation from authorized but unissued shares
        or
        (iii) purchased directly from Citizens South Banking Corporation from treasury
        shares.
  Shares
        of
        our common stock are traded on the Nasdaq Global Market under the symbol
        “CSBC.”  The closing price for our common stock on July 16, 2007 was
        $12.76 per share.
  We
        have
        registered 2,000,000 shares of our common stock for sale under the
        plan.  You should keep this prospectus for future
        reference.
  __________________________________________
  THESE
        SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
        COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES AND
        EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
        OR ADEQUACY OF THIS PROSPECTUS.  ANY REPRESENTATION TO THE CONTRARY IS
        A CRIMINAL OFFENSE.
  THE
        SHARES OFFERED ARE OUR EQUITY SECURITIES AND ARE NOT SAVINGS ACCOUNTS, DEPOSITS
        OR OTHER OBLIGATIONS OF ANY BANK SUBSIDIARY OF OURS AND ARE NOT INSURED BY
        THE
        FEDERAL DEPOSIT INSURANCE CORPORATION, THE DEPOSIT INSURANCE FUND OR ANY
        OTHER
        GOVERNMENTAL AGENCY.
  The
        date
        of this prospectus is July 18, 2007
   
  **PROSPECTUS**
 **TABLE
        OF CONTENTS**
 **--------------------**
  ABOUT
                  THIS PROSPECTUS
              3WHERE
                  YOU CAN FIND MORE INFORMATION
              3CITIZENS
                  SOUTH BANKING CORPORATION
              4DESCRIPTION
                  OF THE PLAN
              5USE
                  OF PROCEEDS
              13LEGAL
                  MATTERS
              14EXPERTS
              14FORWARD-LOOKING
                  STATEMENTS
              14INDEMNIFICATION
              15
 
  **We
        have not authorized anyone to provide you with information that is different
        from what is contained in this prospectus.  The plan is not available
        to any person to whom we may not legally offer it.  The date of this
        prospectus is July 18, 2007.  You should not assume that the
        information in this prospectus is still accurate as of any later
        date.**
   2
 *Prospectus
            Table of
            Contents*
  **ABOUT
        THIS PROSPECTUS**
  This
        document is called a prospectus and is part of a registration statement that
        we
        filed with the Securities and Exchange Commission relating to the offer and
        sale
        of shares of our common stock.  This prospectus does not include all
        of the information in the registration statement and provides you with a
        general
        description of the securities offered and the plan.  The registration
        statement containing this prospectus, including exhibits to the registration
        statement, provides additional information about us, the plan and the securities
        offered.  The registration statement can be read at the Securities and
        Exchange Commission web site or at the Securities and Exchange Commission
        offices mentioned under the heading “Where You Can Find More
        Information.”
  When
        acquiring any securities discussed in this prospectus, you should rely only
        on
        the information provided in this prospectus, including the information
        incorporated by reference.  We have not authorized anyone to provide
        you with different information.  We are not offering the securities in
        any state or jurisdiction where the offer is prohibited.  You should
        not assume that the information in this prospectus or any document incorporated
        by reference is truthful or complete at any date other than the date mentioned
        on the cover page of these documents.
  Unless
        otherwise mentioned or unless the context requires otherwise, (i) all references
        in this prospectus to “we,” “us,” “our” or similar references mean Citizens
        South Banking Corporation and its subsidiaries; and (ii) all references in
        this
        prospectus to “stock,” “our stock” or “your stock” refer to our shares of common
        stock.
  **WHERE
        YOU CAN FIND MORE INFORMATION**
  We
        file
        annual, quarterly and current reports, proxy statements and other information
        with the Securities and Exchange Commission.  You may read and copy
        any document we file at the Securities and Exchange Commission’s public
        reference rooms in Washington, D.C., New York, New York, and Chicago, Illinois.
        Please call the Securities and Exchange Commission at 1-800-SEC-0330 for
        further
        information on the public reference rooms.  In addition, our
        Securities and Exchange Commission filings are available to the public at
        the
        Securities and Exchange Commission’s web site at
        http://www.sec.gov.  You also can inspect reports, proxy statements
        and other information about us at the offices of the National Association
        of
        Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
        20002.
  The
        Securities and Exchange Commission allows us to “incorporate by reference” into
        this prospectus the information in documents we file with it.  This
        means that we can disclose important information to you by referring you
        to
        those documents.  The information incorporated by reference is
        considered to be a part of this prospectus and should be read with the same
        care.  When we update the information contained in documents that have
        been incorporated by reference by making future filings with the Securities
        and
        Exchange Commission, the information incorporated by reference in this
        prospectus is considered to be updated automatically and
        superseded.  In other words, in the case of a conflict or
        inconsistency between information contained in this prospectus and information
        incorporated by reference into this prospectus, you should rely on the
        information contained in the document that was filed later.  We
        incorporate by reference the documents listed below and any documents we
        file
        with the
   3
 *Prospectus
            Table of Contents*
  Securities
        and Exchange Commission in the future under Sections 13(a), 13(c), 14 or
        15(d) of the Securities Exchange Act of 1934 until our offering is completed,
        except that we are not incorporating by reference any document or information
        that is only “furnished” to the Securities and Exchange Commission or that is
        otherwise not deemed to be filed with the Securities and Exchange Commission
        under those sections.
  The
        following documents, which provide certain information about us, are
        incorporated by reference in this prospectus:
  1.
              Annual
                  Report on Form 10-K for the year ended December 31, 2006;
                  and
  2.
              Quarterly
                  Report on Form 10-Q for the quarter ended March 31,
                  2007.
  All
        documents filed by us pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
        Securities Exchange Act of 1934 after the date of this prospectus and prior
        to
        termination of the offering shall be deemed to be incorporated by reference
        herein and to be a part hereof from the date of filing of such
        documents.  Any statement in this prospectus or in a document
        incorporated by reference or deemed to be incorporated by reference herein
        shall
        be deemed to be modified or superseded for purposes of this prospectus to
        the
        extent that the statement is modified or superseded by any other subsequently
        filed document which is incorporated or is deemed to be incorporated by
        reference herein.  Any statement so modified or superseded shall not
        be deemed, except as so modified or superseded, to constitute a part of this
        prospectus.
  This
        prospectus incorporates documents by reference that are not presented herein
        or
        delivered herewith.  Citizens South Banking Corporation hereby
        undertakes to provide without charge to each person, including any beneficial
        owner, to whom this prospectus has been delivered, on the written or oral
        request of such person, a copy of any or all of the documents referred to above
        which have been or may be incorporated into this prospectus and deemed to
        be
        part hereof, other than exhibits to such documents unless such exhibits are
        specifically incorporated by reference in such documents.  These
        documents are available upon request by contacting Registrar and Transfer
        Company, 10 Commerce Drive, P.O. Box 664, Cranford, New Jersey 07016, Attn:
        Dividend Reinvestment Plan Department or by calling (800) 368-5948.
  **CITIZENS
        SOUTH BANKING CORPORATION**
  We
        are a
        Delaware business corporation and a savings and loan holding company registered
        under the Home Owners’ Loan Act, as amended.  We were organized in
        June 2002 at the direction of the Board of Directors of Citizens South Bank
        for
        the purpose of acting as the stock holding company of Citizens South Bank
        in
        connection with the “second-step” conversion of Citizens South Holdings, MHC,
        the former mutual holding company for Citizens South Bank.  Our assets
        consist primarily of our investment in Citizens South Bank, and our principal
        business is overseeing, and directing the business of Citizens South
        Bank.
  Our
        office is located at 519 South New Hope Road, Gastonia, North Carolina
        28054-4040**,** and our telephone number is (704)
        868-5200.
   4
 *Prospectus
            Table of Contents*
  **DESCRIPTION
        OF THE PLAN**
  The
        following questions and answers constitute a summary description of the
        provisions of our Dividend Reinvestment Plan.  The full text of the
        plan is set forth as an exhibit to the registration statement of which this
        prospectus is a part and is incorporated by reference in this
        prospectus.
  **PURPOSE
        AND ADVANTAGES**
  **1.**
              **What
                  is the purpose of the
                  plan?**
 
 The
        purpose of the Dividend Reinvestment Plan is to provide participants with
        a
        simple, convenient and economical method of investing cash dividends paid
        on
        shares of common stock of Citizens South Banking Corporation for the purchase
        of
        additional shares of Citizens South Banking Corporation common stock. The
        plan
        allows participants to have all or a portion of cash dividends paid on their
        shares of common stock automatically reinvested in shares of common stock
        of
        Citizens South Banking Corporation.
  **2.**
              **What
                  are the advantages of the
                  plan?**
  Participants
        may increase their holdings of shares of common stock with the reinvestment
        of
        cash dividends received on previously owned shares of common stock registered
        in
        their names without incurring any service charges and without the payment
        of
        brokerage commissions in connection with purchases under the plan. Regular
        account statements provide each participant in the plan with a record of
        each
        transaction.  Participation in the plan is entirely voluntary. You may
        join or terminate your participation at any time prior to a particular dividend
        record date by making timely written notice to the plan administrator, subject
        to your eligibility to participate and the payment of termination fees (see
        Questions 4 and 19).
  **PLAN
        ADMINISTRATION**
  **3.**
              **Who
                  administers the plan for
                  participants?**
  Registrar
        and Transfer Company, Cranford, New Jersey, Citizens South Banking Corporation’s
        stock transfer agent (hereinafter referred to as the “Plan Administrator”),
        administers the plan for participants by maintaining records, sending account
        statements to participants and performing other duties relating to the plan.
        Shares of common stock purchased under the plan are registered in the name
        of
        the Plan Administrator’s nominee and are credited to the accounts of the
        participants in the plan. The Plan Administrator acts in the capacity as
        agent
        for participants in the plan. Citizens South Banking Corporation may replace
        the
        Plan Administrator at any time within its sole discretion.
  **PARTICIPATION**
  **4.**
              **Who
                  is eligible to
                  participate?**
  All
        holders of record of at least 100 shares of common stock of Citizens South
        Banking Corporation are eligible to participate in the plan. Beneficial owners
        of shares of common stock
   5
 *Prospectus
            Table of Contents*
  whose
        shares are registered in names other than their own may participate by
        requesting their broker or nominee to transfer their shares into their own
        name
        or requesting that the broker or nominee enroll in the plan on their behalf.
        The
        right to participate in the plan is not transferable to another person apart
        from a transfer of a Participant’s shares of common stock of Citizens South
        Banking Corporation. Stockholders who reside in jurisdictions in which it
        is
        unlawful for a stockholder to participate in the plan are not eligible to
        participate in the plan.
  **5.**
              **How
                  does an eligible stockholder
                  participate?**
  To
        participate in the plan, a stockholder of record must complete an Authorization
        Form and return it to the Plan Administrator.  Copies of the
        Authorization Form may be obtained at any time by written request to the
        Registrar and Transfer Company, 10 Commerce Drive, P.O. Box 664, Cranford,
        New
        Jersey 07016, Attn: Dividend Reinvestment Department, online at www.rtco.com,
        or
        by calling (800) 368-5948.
  **6.**
              **When
                  may an eligible stockholder join the
                  plan?**
  A
        stockholder of record owning at least 100 shares of common stock of Citizens
        South Banking Corporation may enroll in the plan at any time. If the
        Authorization Form is received by the Plan Administrator no fewer than five
        (5)
        business days before the record date for a dividend payment, and the participant
        elects to reinvest the dividends in shares of Citizens South Banking Corporation
        common stock, such reinvestment of dividends will begin with that dividend
        payment. Please note that the plan does not represent any change in Citizens
        South Banking Corporation’s dividend policy or a guarantee of the payment of any
        future dividends.
  **7.**
              **What
                  does the Authorization Form
                  provide?**
  The
        Authorization Form directs Citizens South Banking Corporation to pay to the
        Plan
        Administrator for the account of the participating stockholder of record
        all
        dividends paid on the shares credited to the participant’s account under the
        plan. It also appoints the Plan Administrator (or such other plan administrator
        as Citizens South Banking Corporation may from time to time designate) as
        agent
        for the stockholder and directs such agent to apply all of such dividends
        for
        the purchase of additional shares of common stock in accordance with the
        terms
        and conditions of the plan.
  **8.**
              **May
                  a stockholder have dividends reinvested under the plan with respect
                  to
                  less than all of the shares of common stock registered in that
                  stockholder’s name?**
  Yes,
        provided that a participant elects to reinvest cash dividends on at least
        100
        shares of common stock.
  **OPTIONAL
        CASH PAYMENTS**
  **9.**
              **May
                  a participant elect to make additional cash payments under the
                  plan?**
  No.
        The
        plan does not permit optional, additional cash purchases.
   6
 *Prospectus
            Table of Contents*
  **PURCHASES**
  **10.**
              **How
                  will purchases be made?**
  Shares
        of
        common stock of Citizens South Banking Corporation needed to fund the plan
        may
        be:
  (i)           acquired
        by the Plan Administrator on the open market;
  (ii)           issued
        directly by Citizens South Banking Corporation from authorized but unissued
        shares;
  (iii)           issued
        directly by Citizens South Banking Corporation from treasury shares;
        or
  (iv)           through
        a combination of (i) through (iii), above.
  Open
        market purchases under the plan will be made during each calendar quarter
        on
        each “Investment Date,” which will be the first business day following a
        dividend payment date or as soon as practicable thereafter. Purchases of
        shares
        of common stock will be made at the direction of the Plan Administrator or
        its
        selected broker/dealer. Such purchases will be made in accordance with
        applicable state and federal securities laws and regulations. No interest
        or
        earnings will be paid by the Plan Administrator on dividend payments pending
        their investment in shares of Citizens South Banking Corporation common
        stock.
  To
        the
        extent Citizens South Banking Corporation funds the plan with shares of its
        common stock issued directly by Citizens South Banking Corporation from
        authorized but unissued shares or shares, or treasury shares, the dividends
        payable to participants will be retained by Citizens South Banking Corporation
        as consideration for such shares.
  In
        the
        event applicable law or the closing of the securities markets requires temporary
        curtailment or suspension of open market purchases of the shares of Citizens
        South Banking Corporation common stock, the Plan Administrator is not
        accountable for its inability to make purchases at such time.  If
        shares of Citizens South Banking Corporation common stock are not available
        for
        purchase for a period longer than 30 days from the prior dividend payment
        date,
        the Plan Administrator will promptly mail to each participant a check in
        the
        amount of any unapplied funds in the participant’s account.
  **11.**
              **How
                  many shares of common stock will be purchased for
                  participants?**
  The
        number of shares that will be purchased for each participant on any dividend
        payment date will depend on the amount of the participant’s cash dividend and
        the purchase price of the shares of Citizens South Banking Corporation common
        stock. Each participant’s account will be credited with that number of shares
        (including fractional shares computed to four (4) decimal places) equal to
        the
        total amount to be invested, divided by the applicable purchase price (also
        computed to four (4) decimal places).
   7
 *Prospectus
            Table of Contents*
  **12.          What
        will be the price of shares of common stock purchased under the
        plan?**
  In
        making
        purchases of shares of Citizens South Banking Corporation common stock for
        a
        participant’s account associated with each Investment Date, the Plan
        Administrator will commingle the participant’s funds with those of other
        participants under the plan. With respect to shares purchased on the open
        market, the price of shares of Citizens South Banking Corporation common
        stock
        purchased for participants under the plan with reinvested dividends on their
        shares of common stock for each Investment Date will be equal to the average
        price of all shares of the common stock purchased on the Investment Date
        by the
        Plan Administrator on behalf of the plan. With respect to shares purchased
        directly from Citizens South Banking Corporation, the price of such shares
        will
        be the closing price of shares of common stock of Citizens South Banking
        Corporation as quoted on the Nasdaq Global Market as of the close of business
        on
        the business day immediately preceding the applicable Investment
        Date.  The Plan Administrator shall have no responsibility with
        respect to the market value of the shares of Citizens South Banking Corporation
        common stock acquired under the plan for Participant Accounts. Citizens South
        Banking Corporation will bear all costs of administering the plan, except
        as
        described under Question 14 below.
  **13.**
              **How
                  are dividends on shares purchased through the plan
                  applied?**
  The
        purpose of the plan is to provide the participant with a convenient method
        of
        purchasing shares of common stock and to have the dividends on those shares
        reinvested. Accordingly, dividends paid on shares held in the plan will be
        automatically reinvested in additional shares of common stock unless and
        until
        the participant elects in writing to terminate participation in the
        plan.
  **COSTS
        TO PARTICIPANTS**
  **14.**
              **Are
                  there any expenses to participants in connection with purchases
                  under the
                  plan?**
  No.
        Participants will make purchases of shares of common stock under the plan
        without the payment of brokerage commissions, and Citizens South Banking
        Corporation will pay all fees in connection with purchases of shares of Citizens
        South Banking Corporation common stock under the plan, except for costs
        associated with the actual purchase price of the shares of common stock
        purchased on the Investment Date. There are no service charges to participants
        in connection with purchases of shares of shares of common stock under the
        plan.
        All costs of administration of the plan are paid by Citizens South Banking
        Corporation.
  However,
        there will be a $10 fee if a participant requests to withdraw from the
        plan.  A certificate will be issued for all whole shares and a check
        will be issued for the cash payment to be made for any fraction of a
        share.  In addition, if a participant requests the Plan Administrator
        to sell his or her shares in the event of his or her withdrawal from the
        plan,
        the participant will pay the applicable brokerage commission associated with
        the
        sale of such shares, any required transfer tax, and applicable service charges.
        There is also a $15 fee to sell shares under the plan (see Question 20
        below).
   8
 *Prospectus
            Table of Contents*
  **REPORTS
        TO PARTICIPANTS**
  **15.**
              **How
                  will participants be advised of their purchases of shares of common
                  stock?**
  As
        soon
        as practicable after each purchase, each participant will receive an account
        statement from the Plan Administrator. These statements are the participant’s
        continuing record of the purchase price of the shares of Citizens South Banking
        Corporation common stock acquired and the number of shares acquired, and
        should
        be retained for tax purposes. Participants will also receive, from time to
        time,
        communications sent to all record holders of the shares of Citizens South
        Banking Corporation common stock.
  **DIVIDENDS**
  **16.**
              **Will
                  participants be credited with dividends on shares held in their
                  account
                  under the plan?**
  Yes.
        The
        participant’s account will be credited with dividends paid on whole shares and
        fractional shares credited to the participant’s account. The Plan Administrator
        will automatically reinvest the cash dividends received for the purchase
        of
        additional shares of Citizens South Banking Corporation common
        stock.
  **STOCK
        CERTIFICATES**
  **17.**
              **Will
                  stock certificates be issued for shares of common stock
                  purchased?**
  The
        Plan
        Administrator will hold all stock certificates representing the shares of
        common
        stock purchased under the plan in the name of its nominee. Normally,
        certificates for shares of Citizens South Banking Corporation common stock
        purchased under the plan will not be issued to participants. The number of
        shares credited to an account under the plan will be shown on the participant’s
        account statement.
  The
        Participant may receive certificates for whole shares accumulated in his
        or her
        account under the plan by sending a written request to the Plan Administrator.
        Participants may request periodic issuance of certificates for all full shares
        in the account. When certificates are issued to the participant, future
        dividends on such shares will be reinvested in additional shares of common
        stock. Any undistributed shares will continue to be reflected in the
        participant’s account. No certificates representing fractional shares will be
        issued.
  The
        Participant’s rights under the plan and shares credited to the account of the
        participant under the plan may not be pledged. A participant who wishes to
        pledge such shares must request that certificates for such shares be issued
        in
        his or her name.
  Accounts
        under the plan are maintained in the names in which the certificates of
        participants were registered at the time they entered the plan. Additional
        certificates for whole shares will be similarly registered when
        issued.
   9
 *Prospectus
            Table of Contents*
  **SALE
        OF SHARES FROM THE PLAN**
  **18.**
              **How
                  does a participant sell shares from the
                  plan?**
  A
        participant may request that any or all of the shares credited to his or
        her
        account be sold by the Plan Administrator. If such sale is requested, the
        sale
        will be made for the account of the participant by the Plan Administrator’s
        broker within ten business days after receipt of the request at the prevailing
        market price at the time of such sale. Within ten business days after the
        sale,
        the participant will receive from the Plan Administrator a check for the
        proceeds of the sale less the $15 liquidation fee, any applicable brokerage
        commission and any transfer tax.  The signature on any request for
        sales in excess of $10,000 or higher must be guaranteed by a firm that is
        a
        bank, broker, dealer, credit union, savings association or other entity which
        is
        a member in good standing of the Securities Transfer Agents’ Medallion
        Program.
 
 **Because
        the Administrator will sell the Shares on behalf of the Plan, neither Citizens
        South Banking Corporation nor any participant in the Plan has the authority
        or
        power to control the timing or pricing of shares sold or the selection of
        the
        broker making the sales. Therefore, you will not be able to precisely time
        your
        sales through the Plan, and you will bear the market risk associated with
        fluctuations in the price of Citizens South Banking Corporation common stock.
        Accordingly, if you send in a request to sell Shares, it is possible that
        the
        market price of Citizens South Banking Corporation common stock could go
        down or
        up before the broker sells your Shares. In addition, you will not earn interest
        on a sales transaction.**
  **WITHDRAWAL
        FROM THE PLAN**
  **19.**
              **How
                  does a participant withdraw from the
                  plan?**
  A
        participant may withdraw from the plan at any time by sending a written
        withdrawal notice to the Plan Administrator and including payment of the
        $10.00
        termination fee. Notice received after a particular dividend record date
        will be
        effective following the payment date of such dividend. (See Question 5 for
        the
        full name and address of the Plan Administrator). When a participant withdraws
        from the plan, or upon termination of the plan by Citizens South Banking
        Corporation, certificates for whole shares credited to the participant’s account
        under the plan will be issued and a cash payment will be made for any fraction
        of a share (see Question 19).
  Upon
        withdrawal from the plan, the participant may also request that all of the
        shares credited to his or her account be sold by the Plan Administrator.
        If such
        sale is requested, the sale will be made for the account of the participant
        by
        the Plan Administrator’s broker within ten business days after receipt of the
        request at the prevailing market price at the time of such sale. Within ten
        business days after the sale, the participant will receive from the Plan
        Administrator a check for the proceeds of the sale less the $15 liquidation
        fee,
        any applicable brokerage commission and any transfer tax.  The
        signature on any request for sales in excess of $10,000 or higher must be
        guaranteed by a firm that is a bank, broker, dealer, credit union, savings
        association or other entity which is a member in good standing of the Securities
        Transfer Agents’ Medallion Program.
   10
 *Prospectus
            Table of Contents*
  **20.          What
        happens to a fraction of a share when a participant withdraws from the
        plan?**
  When
        a
        participant withdraws from the plan, a cash adjustment representing the value
        of
        any fraction of a share then credited to the participant’s account will be
        mailed directly to the participant. The cash adjustment will be based on
        the
        closing price of the shares of common stock on the date on which the termination
        is processed by the Plan Administrator.  In no case will certificates
        representing a fractional share interest be issued.
  **OTHER
        INFORMATION**
  **21.**
              **What
                  happens when a participant’s record ownership of shares of common stock is
                  less than 100 shares as of a dividend record
                  date?**
  If
        a
        participant disposes of shares of common stock registered in his or her name
        (including shares credited to his or her account under the plan) so that
        the
        total number of shares held under the plan in the name of the participant
        is
        less than 100 shares, the Plan Administrator will discontinue the reinvestment
        of cash dividends on the shares credited to the participant’s account under the
        plan, or otherwise, until such participant’s record ownership of shares
        increases to at least 100 shares in the aggregate. All applicable dividends
        will
        be paid in the form of cash until such participant’s stock ownership under the
        plan increases to at least 100 shares. If following a disposition of stock,
        a
        participant’s aggregate record ownership of the shares of common stock contains
        less than 100 shares of common stock, then at Citizens South Banking
        Corporation’s election, a certificate will be issued for the full shares in the
        account, a cash payment will be made for any fractional shares, any uninvested
        cash balance in the account will be paid to the participant, and the account
        will be terminated.
  **22.**
              **What
                  happens if Citizens South Banking Corporation issues a stock dividend,
                  declares a stock split or makes a rights
                  offering?**
  Any
        shares representing stock dividends or stock splits distributed by Citizens
        South Banking Corporation on shares credited to the account of a participant
        under the plan will be added to the participant’s account. Shares representing
        stock dividends or split shares distributed on shares registered in the name
        of
        the participant will be mailed directly to such participant in the same manner
        as to stockholders who are not participating in the plan.
  In
        the
        event Citizens South Banking Corporation makes a rights offering of any of
        its
        securities to holders of common stock, participants in the plan will be notified
        by Citizens South Banking Corporation in advance of the commencement of the
        offering. Participants should instruct the Plan Administrator to transfer
        whole
        plan shares into their own names prior to the record date for such offering
        if
        they wish to exercise such rights. If no such instructions are received by
        the
        Plan Administrator prior to such record date, then such rights shall terminate
        with respect to both the participant and the Plan Administrator.
  **23.          How
        will a participant’s shares held under the plan be voted at meetings of
        stockholders?**
  Shares
        credited to the account of a participant under the plan (other than fractional
        shares) will be automatically added to the shares covered by the proxy sent
        to
        the stockholder
  11
 *Prospectus
              Table of Contents*
  with
        respect to his or her other shares in Citizens South Banking Corporation
        and may
        be voted by such holder pursuant to such proxy. The Plan Administrator will
        forward any proxy solicitation materials relating to the shares of common
        stock
        held by the plan to the participating stockholder.
  Where
        no
        instructions are received from a participant with respect to a participant’s
        shares held under the plan, or otherwise, such shares shall not be voted
        unless
        the participant votes such shares in person.
  **24.**
              **What
                  are the income tax consequences of participation in the
                  plan?**
  In
        general, a participant in the plan has the same Federal and state income
        tax
        obligations with respect to dividends credited to his or her account under
        the
        plan as other holders of shares of common stock who elect to receive cash
        dividends directly. A participant is treated for income tax purposes as having
        received, on the dividend payment date, a dividend in an amount equal to
        the
        fair market value of the shares of common stock credited to his or her account
        under the plan, even though that amount was not actually received by the
        participant in cash, but, instead, was applied to the purchase of additional
        shares for his or her account. In addition, any brokerage commissions and
        service charges paid by Citizens South Banking Corporation on behalf of the
        participant is deemed to constitute dividend income by the Internal Revenue
        Service. Such amounts, if any, will be included on any annual information
        return
        filed with the Internal Revenue Service, a copy of which will be sent to
        the
        participant.
  The
        cost
        basis of each share of common stock credited to a participant’s account pursuant
        to the dividend reinvestment aspect of the plan is the fair market value
        of the
        shares of Citizens South Banking Corporation common stock on the Investment
        Date, and the holding period for such shares begins on the day following
        the
        Investment Date.
  The
        receipt by a participant of certificates representing whole shares previously
        credited to his or her account under the plan upon withdrawal from the plan
        or
        pursuant to the request of the participant will not result in the recognition
        of
        taxable income. A participant will recognize a gain or loss when shares are
        sold
        on behalf of the participant upon withdrawal from the plan or when the
        participant sells shares after the participant’s withdrawal from the
        plan.
  All
        participants are advised to consult with their own tax advisors to determine
        the
        particular tax consequences that may result from their participation in the
        plan
        and the subsequent sale by them of shares purchased pursuant to the
        plan.
  **25.**
              **What
                  are the responsibilities of Citizens South Banking Corporation
                  under the
                  plan?**
  Citizens
        South Banking Corporation, and the Plan Administrator in administering the
        plan,
        will not be liable for any act done in good faith or for the good faith omission
        to act, including, without limitation, any claim of liability arising out
        of
        failure to terminate a participant’s account upon such participant’s death or
        judicially declared incompetency or with respect to the prices at which shares
        are purchased for the participant’s account, and the times when such purchases
        are made, with respect to any loss or fluctuation in the market value after
   12
 *Prospectus
            Table of Contents*
  purchase
        of shares, or with respect to any sales of shares of common stock made under
        the
        plan on behalf of the participant.
  Citizens
        South Banking Corporation shall interpret the plan; all such interpretations
        and
        determinations made by Citizens South Banking Corporation shall be conclusive.
        The terms and conditions of the plan, the Authorization Form, the plan’s
        operation, and a Participant’s Account will be governed by the laws of the State
        of North Carolina and the Rules and Regulations of the Securities and Exchange
        Commission. The terms of the plan and the Authorization Form cannot be changed
        by oral agreement.
  **26.**
              **Who
                  bears the risk of market price fluctuations in the shares of common
                  stock?**
  A
        participant’s investment in shares acquired under the plan is no different from
        direct investment in shares of common stock Citizens South Banking Corporation.
        The participant bears the risk of loss and realizes the benefits of any gain
        from market price changes with respect to all such shares held in the plan,
        or
        otherwise. Neither Citizens South Banking Corporation nor the Plan Administrator
        make any representations with respect to the future value of the shares of
        Citizens South Banking Corporation common stock purchased under the plan.
        The
        participant should recognize that Citizens South Banking Corporation, the
        Plan
        Administrator and related parties cannot assure the participant of realizing
        any
        profits or protect the participant against a loss related to investment in
        the
        shares of Citizens South Banking Corporation common stock purchased or sold
        under the plan. THE SHARES OF COMMON STOCK PURCHASED IN ACCORDANCE WITH THE
        PLAN
        DO NOT CONSTITUTE SAVINGS ACCOUNTS OR DEPOSITS ISSUED BY A SAVINGS INSTITUTION
        OR BANK AND ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
        OR ANY
        OTHER GOVERNMENTAL AGENCY.
  **27.**
              **May
                  the plan be changed or
                  discontinued?**
  The
        plan
        may be amended, suspended, modified or terminated at any time by the Board
        of
        Directors of Citizens South Banking Corporation without the approval of the
        participants.  Thirty (30) calendar days notice of any suspension,
        termination or amendment or modification that would have a material adverse
        effect on the participants’ rights under the plan will be sent to all
        participants, who shall at all times have the right to withdraw from the
        plan.
  Citizens
        South Banking Corporation or the Plan Administrator may terminate a
        stockholder’s individual participation in the plan at any time by written notice
        to the stockholder. In such event, the Plan Administrator will request
        instructions from the participant for disposition of the shares in the account.
        If the Plan Administrator does not receive instructions from the participant,
        it
        will send the participant a certificate for the number of full shares held
        for
        the participant under the plan and a check for any fractional
        share.
  **USE
        OF PROCEEDS**
  To
        the
        extent shares of common stock used to fund the Dividend Reinvestment Plan
        are
        purchased on the open market, there will be no proceeds from the issuance
        of
        shares to participants in the Dividend Reinvestment Plan.  The net
        proceeds from the sale of newly issued shares of common stock issued under
        the
        plan will be used for general corporate purposes, which
  13
 *Prospectus
              Table of Contents*
  may
        include investments at the holding company level, investments in or extensions
        of credit to our banking subsidiary and possible
        acquisitions.  Pending such use, the net proceeds may be temporarily
        invested.  The precise amounts and timing of the application of net
        proceeds will depend upon our funding requirements and availability of other
        funds.
  **LEGAL
        MATTERS**
  The
        legality of the issuance of the shares of common stock offered hereby will
        be
        passed upon for Citizens South Banking Corporation. by Luse Gorman Pomerenk
        & Schick, Washington, D.C.
  **EXPERTS**
  The
        consolidated financial statements included in the Citizens South Banking
        Corporation Annual Report on Form 10-K for the year ended December 31, 2006,
        incorporated by reference in this prospectus, have been audited by Cherry,
        Bekaert & Holland, L.L.P., independent registered public accounting firm, to
        the extent and for the periods set forth in their report incorporated herein
        by
        reference, and are incorporated herein in reliance upon such report given
        upon
        the authority of said firm as experts in auditing and accounting.
 
 **FORWARD-LOOKING
        STATEMENTS**
  Certain
        statements contained herein are not based on historical facts and are
“forward-looking statements” within the meaning of Section 27A of the Securities
        Act of 1933 and Section 21E of the Securities Exchange Act of
        1934.  Such forward-looking statements may be identified by reference
        to a future period or periods, or by the use of forward-looking terminology,
        such as “may,” “will,” “believe,” “expect,” “estimate,” “anticipate,”
“continue,” or similar terms or variations on those terms, or the negative of
        those terms.  Forward-looking statements are subject to numerous risks
        and uncertainties, including, but not limited to, those related to the economic
        environment, particularly in the market areas in which we operate, competitive
        products and pricing, fiscal and monetary policies of the U.S. Government,
        changes in government regulations affecting financial institutions, including
        regulatory fees and capital requirements, changes in prevailing interest
        rates,
        risks associated with the conduct of our business over the internet, credit
        risk
        management, asset-liability management, the financial and securities markets
        and
        the availability of and costs associated with sources of liquidity.
  We
        wish
        to caution you not to place undue reliance on any such forward-looking
        statements, which speak only as of the date made.  We wish to advise
        you that the factors listed above could affect our financial performance
        and
        could cause our actual results for future periods to differ materially from
        any
        opinions or statements expressed with respect to future periods in any current
        statements.  We do not undertake and specifically decline any
        obligation to publicly
   14
 *Prospectus
            Table of Contents*
  release
        the result of any revisions that may be made to any forward-looking statements
        to reflect events or circumstances after the date of such statements or to
        reflect the occurrence of anticipated or unanticipated events.
  **INDEMNIFICATION**
  Our
        directors and executive officers are entitled to indemnification as expressly
        permitted by the provisions of the Delaware Business Corporation Law, as
        amended, and our Certificate of Incorporation.  We also have
        directors’ and officers’ liability insurance, which provides, in general,
        insurance to our directors and officers against loss by reason of any of
        their
        wrongful acts, subject to the terms and conditions of the
        policy.  Insofar as indemnification for liabilities arising under the
        Securities Act of 1933, as amended, may be permitted to directors, officers
        or
        persons controlling us pursuant to the foregoing provisions, we have been
        informed that in the opinion of the Securities and Exchange Commission such
        indemnification is against public policy as expressed in the Securities Act
        and
        is therefore unenforceable.
  
   
  15


**PART
      II**




**INFORMATION
      NOT REQUIRED IN THE PROSPECTUS**




**Item
      14.  Other Expenses of Issuance and
      Distribution.**




Set
      forth
      below is an estimate of the approximate amount of fees and expenses which may
      be
      incurred by the Company in connection with the issuance and distribution of
      shares of Common Stock pursuant to the Prospectus contained in this Registration
      Statement and which will be paid by the Company.




Securities
                and Exchange Commission registration fee
            
            $
            784Accounting
                fees and expenses
            
            
            5,000Legal
                fees and expenses
            
            
            10,000Printing
            
            
            5,000Transfer
                agent fees and expenses
            
            
            2,500Miscellaneous
                expenses
            
            
            2,000Total
            
            $
            25,284





**Item
      15.  Indemnification of Directors and Officers.**




Articles
      TENTH and ELEVENTH of the Certificate of Incorporation of Citizens South Banking
      Corporation (the “Corporation”) sets forth circumstances under which directors,
      officers, employees and agents of the Corporation may be insured or indemnified
      against liability which they incur in their capacities as such:





**TENTH:**




A.           Each
      person who was or is made a party or is threatened to be made a party to or
      is
      otherwise involved in any action, suit or proceeding, whether civil, criminal,
      administrative or investigative (hereinafter a “proceeding”), by reason of the
      fact that he or she is or was a Director or an Officer of the Corporation or
      is
      or was serving at the request of the Corporation as a Director, Officer,
      employee or agent of another corporation or of a partnership, joint venture,
      trust or other enterprise, including service with respect to an employee benefit
      plan (hereinafter an “indemnitee”), whether the basis of such proceeding is
      alleged action in an official capacity as a Director, Officer, employee or
      agent
      or in any other capacity while serving as a Director, Officer, employee or
      agent, shall be indemnified and held harmless by the Corporation to the fullest
      extent authorized by the Delaware General Corporation Law, as the same exists
      or
      may hereafter be amended (but, in the case of any such amendment, only to the
      extent that such amendment permits the Corporation to provide broader
      indemnification rights than such law permitted the Corporation to provide prior
      to such amendment), against all expense, liability and loss (including
      attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts
      paid in settlement) reasonably incurred or suffered by such indemnitee in
      connection therewith; provided, however, that, except as provided in Section
      C
      hereof with respect to proceedings to enforce rights to indemnification, the
      Corporation shall indemnify any such indemnitee in connection with a proceeding
      (or part thereof) initiated by such indemnitee only if such proceeding (or
      part
      thereof) was authorized by the Board of Directors of the
      Corporation.




II-1


B.           The
      right to indemnification conferred in Section A of this Article TENTH shall
      include the right to be paid by the Corporation the expenses incurred in
      defending any such proceeding in advance of its final disposition (hereinafter
      an “advancement of expenses”); provided, however, that, if the Delaware General
      Corporation Law requires, an advancement of expenses incurred by an indemnitee
      in his or her capacity as a Director of Officer (and not in any other capacity
      in which service was or is rendered by such indemnitee, including, without
      limitation, service to an employee benefit plan) shall be made only upon
      delivery to the Corporation of an undertaking (hereinafter an “undertaking”), by
      or on behalf of such indemnitee, to repay all amounts so advanced if it shall
      ultimately be determined by final judicial decision from which there is no
      further right to appeal (hereinafter a “final adjudication”) that such
      indemnitee is not entitled to be indemnified for such expenses under this
      Section or otherwise.  The rights to indemnification and to the
      advancement of expenses conferred in Sections A and B of this Article TENTH
      shall be contract rights and such rights shall continue as to an indemnitee
      who
      has ceased to be a Director, Officer, employee or agent and shall inure to
      the
      benefit of the indemnitee’s heirs, executors and administrators.




C.           If
      a claim under Section A or B of this Article TENTH is not paid in full by the
      Corporation within sixty days after a written claim has been received by the
      Corporation, except in the case of a claim for an advancement of expenses,
      in
      which case the applicable period shall be twenty days, the indemnitee may at
      any
      time thereafter bring suit against the Corporation to recover the unpaid amount
      of the claim.  If successful in whole or in part in any such suit, or
      in a suit brought by the Corporation to recover an advancement of expenses
      pursuant to the terms of an undertaking, the indemnitee shall be entitled to
      be
      paid also the expense of prosecuting or defending such suit.  In
      (i) any suit brought by the indemnitee to enforce a right to
      indemnification hereunder (but not in a suit brought by the indemnitee to
      enforce a right to an advancement of expenses) it shall be a defense that,
      and
      (ii) in any suit by the Corporation to recover an advancement of expenses
      pursuant to the terms of an undertaking the Corporation shall be entitled to
      recover such expenses upon a final adjudication that, the indemnitee has not
      met
      any applicable standard for indemnification set forth in the Delaware General
      Corporation Law.  Neither the failure of the Corporation (including
      its Board of Directors, independent legal counsel, or its stockholders) to
      have
      made a determination prior to the commencement of such suit that indemnification
      of the indemnitee is proper in the circumstances because the indemnitee has
      met
      the applicable standard of conduct set forth in the Delaware General Corporation
      Law, nor an actual determination by the Corporation (including its Board of
      Directors, independent legal counsel, or its stockholders) that the indemnitee
      has not met such applicable standard of conduct, shall create a presumption
      that
      the indemnitee has not met the applicable standard of conduct or, in the case
      of
      such a suit brought by the indemnitee, be a defense to such suit. In any suit
      brought by the indemnitee to enforce a right to indemnification or to an
      advancement of expenses hereunder, or by the Corporation to recover an
      advancement of expenses pursuant to the terms of an undertaking, the burden
      of
      proving that the indemnitee is not entitled to be indemnified, or to such
      advancement of expenses, under this Article TENTH or otherwise shall be on
      the
      Corporation.




D.           The
      rights to indemnification and to the advancement of expenses conferred in this
      Article TENTH shall not be exclusive of any other right which any person may
      have or hereafter acquire under any statute, the Corporation’s Certificate of
      Incorporation, Bylaws, agreement, vote of stockholders or disinterested
      Directors or otherwise.




II-2




E.           The
      Corporation may maintain insurance, at its expense, to protect itself and any
      Director, Officer, employee or agent of the Corporation or another corporation,
      partnership, joint venture, trust or other enterprise against any expense,
      liability or loss, whether or not the Corporation
      would have the power to indemnify such person against such expense, liability
      or
      loss under the Delaware General Corporation Law.




F.           The
      Corporation may, to the extent authorized from time to time by the Board of
      Directors, grant rights to indemnification and to the advancement of expenses
      to
      any employee or agent of the Corporation to the fullest extent of the provisions
      of this Article TENTH with respect to the indemnification and advancement of
      expenses of Directors and Officers of the Corporation.




**ELEVENTH****:**  A
      Director of this Corporation shall not be personally liable to the Corporation
      or its stockholders for monetary damages for breach of fiduciary duty as a
      Director, except for liability (i) for any breach of the Director’s duty of
      loyalty to the Corporation or its stockholders, (ii) for acts or omissions
      not
      in good faith or which involve intentional misconduct or a knowing violation
      of
      law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
      for any transaction from which the Director derived an improper personal
      benefit.  If the Delaware General Corporation Law is amended to
      authorize corporate action further eliminating or limiting the personal
      liability of Directors, then the liability of a Director of the Corporation
      shall be eliminated or limited to the fullest extent permitted by the Delaware
      General Corporation Law, as so amended.




Any
      repeal or modification of the foregoing paragraph by the stockholders of the
      Corporation shall not adversely affect any right or protection of a Director
      of
      the Corporation existing at the time of such repeal or
      modification.




In
      addition, the Company has entered into an Employment Agreement with Kim S.
      Price
      pursuant to which the Company has undertaken contractually to provide
      indemnification in the manner described above.





**Item
      16.  Exhibits.**




The
      following is a list of exhibits filed as part of the Registration
      Statement:




5.1
            Opinion
                of Luse Gorman Pomerenk & Schick,
                P.C.


10.1
            Citizens
                South Banking Corporation Dividend Reinvestment
                Plan


23.1
            Consent
                of Cherry, Bekaert & Holland,
                L.L.P.


23.2
            Consent
                of Luse Gorman Pomerenk & Schick, P.C. (included in Exhibit
                5.1)


24.1
            Power
                of Attorney (contained on signature page of this
                filing)




II-3





**Item
      17.  Undertakings.**




a.
            The
                undersigned Registrant hereby
                undertakes:




(1)
            to
                file, during any period in which offers or sales of securities are
                made, a
                post-effective amendment to this registration
                statement:




i.
            To
                include any prospectus required by Section 10(a)(3) of the Securities
                Act
                of 1933;




ii.
            To
                reflect in the prospectus any facts or events arising after the effective
                date of the registration statement (or the most recent post-effective
                amendment thereof) which, individually or in the aggregate, represent
                a
                fundamental change in the information set forth in the registration
                statement.  Notwithstanding the foregoing, any increase or
                decrease in volume of securities offered (if the total dollar value
                of
                securities offered would not exceed that which was registered) and
                any
                deviation from the low or high end of the estimated maximum offering
                range
                may be reflected in the form of prospectus filed with the Commission
                pursuant to Rule 424(b), if, in the aggregate, the changes in volume
                and
                price represent no more than 20 percent change in the maximum aggregate
                offering price set forth in the “Calculation of Registration Fee” table in
                the effective registration
                statement.




iii.
            To
                include any material information with respect to the plan of distribution
                not previously disclosed in the registration statement or any material
                change to such information in the registration
                statement;




(2)
            That,
                for the purpose of determining liability under the Securities Act
                of 1933,
                each such post-effective amendment shall be deemed to be a new
                registration statement relating to the securities offered therein,
                and the
                offering of such securities at that time shall be deemed to be the
                initial
                *bona fide* offering
                thereof.




(3)
            To
                remove from registration by means of a post-effective amendment any
                of the
                securities being registered which remain unsold at the termination
                of the
                offering.




b.
            The
                undersigned Registrant hereby undertakes that, for purposes of determining
                any liability under the Securities Act of 1933, each filing of the
                Registrant’s annual report pursuant to Section 13(a) or Section 15(d)
                of the Securities Exchange Act of 1934 that is incorporated by reference
                in the registration statement shall be deemed to be a new registration
                statement relating to the securities offered therein, and the offering
                of
                such securities at that time shall be deemed to be the initial bona
                fide
                offering thereof.








II-4


**SIGNATURES**




Pursuant
      to the requirements of the Securities Act of 1933, the Registrant certifies
      that
      it has reasonable grounds to believe that it meets all of the requirements
      for
      filing on Form S-3 and has duly caused this Registration Statement to be signed
      on its behalf by the undersigned, thereunto duly authorized, in the City of
      Gastonia, State of North Carolina, on July 16, 2007.




**CITIZENS
                SOUTH BANKING****CORPORATION**\s\
                Kim S. PriceKim
                S. PricePresident
                and Chief Executive Officer





**POWER
      OF ATTORNEY**




We,
      the
      undersigned directors and officers of Citizens South Banking Corporation (the
      “Company”) hereby severally constitute and appoint Kim S. Price as our true and
      lawful attorney and agent, to do any and all things in our names in the
      capacities indicated below which said Kim S. Price may deem necessary or
      advisable to enable the Company to comply with the Securities Act of 1933,
      and
      any rules, regulations and requirements of the Securities and Exchange
      Commission, in connection with the registration statement on Form S-3 relating
      to the offering of the Company’s Common Stock, including specifically, but not
      limited to, power and authority to sign for us in our names in the capacities
      indicated below the registration statement and any and all amendments (including
      post-effective amendments) thereto; and we hereby approve, ratify and confirm
      all that said Kim S. Price shall do or cause to be done by virtue
      thereof.





In
      accordance with the requirements of the Securities Act of 1933, this
      registration statement has been signed below by the following persons in the
      capacities and on the dates stated.




Signatures
            
            Title
            
            Date\s\
                Kim S. Price
            
            President,
                Chief Executive Officer
            
            July
                16, 2007Kim
                S. Price
            
            and
                Director (Principal ExecutiveOfficer)\s\
                Gary F. Hoskins
            
            Executive
                Vice President, Treasurer
            
            July
                16, 2007Gary
                F. Hoskins
            
            and
                Chief Financial Officer (PrincipalFinancial
                and Accounting Officer)











\s\
                David W. Hoyle
            
            Chairman
                of the Board
            
            July
                16, 2007David
                W. Hoyle\s\
                Ben R. Rudisill, II
            
            Vice
                Chairman
            
            July
                16, 2007Ben
                R. Rudisill, IIEugene
                R. Matthews, II
            
            Director
            
            July
                16, 2007Eugene
                R. Matthews, II\s\
                Charles D. Massey
            
            Director
            
            July
                16, 2007Charles
                D. MasseyDirectorJames
                J. FullerDirectorDavid
                C. McGuirt

















**EXHIBIT
      INDEX**


**Exhibit
                No.**
            **Exhibit**5.1
            Opinion
                of Luse Gorman Pomerenk & Schick, P.C.10.1
            Citizens
                South Banking Corporation Dividend Reinvestment Plan23.1
            Consent
                of Cherry, Bekaert & Holland, L.L.P.23.2
            Consent
                of Luse Gorman Pomerenk & Schick, P.C. (included in Exhibit
                5.1)24.1
            Power
                of Attorney (contained on signature page of
                filing)