----

----

Index

**UNITED      STATES**

**SECURITIES      AND EXCHANGE COMMISSION**

**FORM      10-QSB**

**[X]  QUARTERLY      REPORT UNDER SECTION 13 OR 15(d)**

**OF      THE SECURITIES EXCHANGE ACT OF 1934**

**[   ]  TRANSITION      REPORT UNDER SECTION 13 OR 15(d)**

**OF      THE EXCHANGE ACT**

| Oconee                Financial Corporation                                          |
|--------------------------------------------------------------------------------------|
| (Exact                name of registrant as specified in its                charter) |

| Georgia                                                                 |   | 58-2442250                                                        |
|-------------------------------------------------------------------------|--------|-------------------------------------------------------------------|
| (State                of Incorporation)                                 |   | (I.R.S.                EmployerIdentification                No.) |
|                                                                    |   |                                                              |
|                                                                    |   |                                                              |
| 35                North Main StreetWatkinsville,                Georgia |   |  30677                                                       |
| (Address                of principalexecutive                offices)   |   | (Zip                Code)                                         |

----

----

----

**OCONEE      FINANCIAL CORPORATION AND SUBSIDIARY**

**INDEX**

|                            |                                                                                                           | Page                No. |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------------------------------------------------------------|-------------------------|
| PART                I                                                                                                                                        | FINANCIAL                INFORMATION                                                                           |                    |
|                                                                                                                                                         |                                                                                                           |                    |
| Item                1.                                                                                                                                       | Financial                Statements                                                                            |                    |
|                                                                                                                                                         |                                                                                                           |                    |
|                                                                                                                                                         | Consolidated                Balance Sheet (unaudited) at March 31,                2007                         | 3                       |
|                                                                                                                                                         |                                                                                                           |                    |
|                                                                                                                                                         | Consolidated                Statements of Earnings (unaudited) for the Three                Months Ended       |                    |
|                                                                                                                                                         |        March                31, 2007 and 2006                               | 4                       |
|                                                                                                                                                         |                                                                                                           |                    |
|                                                                                                                                                         | Consolidated                Statements of Comprehensive Income (unaudited)                for the Three Months |                    |
|                                                                                                                                                         |        Ended                March 31, 2007 and 2006                         | 5                       |
|                                                                                                                                                         |                                                                                                           |                    |
|                                                                                                                                                         | Consolidated                Statements of Cash Flows (unaudited) for                the Three Months           |                    |
|                                                                                                                                                         |        Ended                March 31, 2007 and 2006                         | 6-7                     |
|                                                                                                                                                         |                                                                                                           |                    |
|                                                                                                                                                         | Notes                to Consolidated Financial Statements                (unaudited)                           | 8-9                     |
|                                                                                                                                                         |                                                                                                           |                    |
| Item                2.                                                                                                                                       | Management's                Discussion and Analysis or Plan of Operations                                      | 10-13                   |
|                                                                                                                                                         |                                                                                                           |                    |
| Item                3.                                                                                                                                       | Controls                and Procedures                                                                         | 14                      |
|                                                                                                                                                         |                                                                                                           |                    |
| PART                II                                                                                                                                       | OTHER                INFORMATION                                                                               |                    |
|                                                                                                                                                         |                                                                                                           |                    |
| Item                1.                                                                                                                                       | Legal                Proceedings                                                                               | 15                      |
|                                                                                                                                                         |                                                                                                           |                    |
| Item                2.                                                                                                                                       | Unregistered                Sales of Equity Securities and Use of                Proceeds                      | 15                      |
|                                                                                                                                                         |                                                                                                           |                    |
| Item                3.                                                                                                                                       | Defaults                Upon Senior Securities                                                                 | 15                      |
|                                                                                                                                                         |                                                                                                           |                    |
| Item                4.                                                                                                                                       | Submission                of Matters to a Vote of Security                Holders                              | 15                      |
|                                                                                                                                                         |                                                                                                           |                    |
| Item                5.                                                                                                                                       | Other                Information                                                                               | 15                      |
|                                                                                                                                                         |                                                                                                           |                    |
| Item                6.                                                                                                                                       | Exhibits                                                                                                       | 15                      |
|                                                                                                                                                         |                                                                                                           |                    |
|                                                                                                                                                         | Signatures                                                                                                     |                    |

----

**PART      I. FINANCIAL INFORMATION**

Financial 

**OCONEE      FINANCIAL CORPORATION AND SUBSIDIARY**

Consolidated

| Assets                                                                                                                                                                            |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                              |   |   |   |
| Cash                and due from banks, including reserve requirements of                $25,000                                                                                  |   | $ | 6,628,931 |   |
| Federal                funds sold                                                                                                                                                 |   |   | 3,147,000 |   |
|                                                                                                                                                                              |   |   |   |   |
|                             Cash and cash equivalents                                                                 |   |   | 9,775,931 |   |
|                                                                                                                                                                              |   |   |   |   |
| Investment                securities available for sale                                                                                                                           |   |   | 92,038,966 |   |
| Other                investments                                                                                                                                                  |   |   | 706,729 |   |
| Mortgage                loans held for sale                                                                                                                                       |   |   | 1,930,850 |   |
|                                                                                                                                                                              |   |   |   |   |
| Loans,                net of allowance for loan losses of $3,158,052                                                                                                              |   |   | 215,899,675 |   |
|                                                                                                                                                                              |   |   |   |   |
| Premises                and equipment, net                                                                                                                                        |   |   | 6,949,290 |   |
| Accrued                interest receivable and other assets                                                                                                                       |   |   | 5,143,038 |   |
|                                                                                                                                                                              |   |   |   |   |
|                    Total                assets                                     |   | $ | 332,444,479 |   |
|                                                                                                                                                                              |   |   |  |   |
| Liabilities                and Stockholders’ Equity                                                                                                                         |
|                                                                                                                                                                              |   |   |  |   |
| Liabilities:                                                                                                                                                                      |   |   |  |   |
|        Deposits                                                                                                                                |   |   |  |   |
|             Noninterest-bearing                                                                                       |   | $ | 34,274,063 |   |
|             Interest-bearing                                                                                          |   |   | 266,306,025 |   |
|                                                                                                                                                                              |   |   |   |   |
|                    Total                deposits                                   |   |   | 300,580,088 |   |
|                                                                                                                                                                              |   |   |   |   |
|        Securities                sold under repurchase agreements                                                                              |   |   | 2,982,284 |   |
|        Accrued                interest payable and other liabilities                                                                           |   |   | 1,351,986 |   |
|                                                                                                                                                                              |   |   |   |   |
|                    Total                liabilities                                |   |   | 304,914,358 |   |
|                                                                                                                                                                              |   |   |   |   |
| Stockholders’                equity:                                                                                                                                        |   |   |   |   |
|        Common                stock, $2 par value;                                                                                              |   |   |   |   |
|              authorized                1,500,000 shares;                                                         |   |   |   |   |
|              issued                and outstanding 899,815 shares                                                |   |   | 1,799,630 |   |
|        Additional                paid-in capital                                                                                               |   |   | 4,243,332 |   |
|        Retained                earnings                                                                                                        |   |   | 21,483,024 |   |
|        Accumulated                other comprehensive income                                                                                   |   |   | 4,135 |   |
|                                                                                                                                                                              |   |   |   |   |
|                    Total                stockholders’ equity                 |   |   | 27,530,121 |   |
|                                                                                                                                                                              |   |   |  |   |
|                    Total                liabilities and stockholders’ equity |   | $ | 332,444,479 |   |

----

**OCONEE      FINANCIAL CORPORATION AND SUBSIDIARY**

Consolidated

|                                                                                                                                                                                 |   | **2007** |      | **2006** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|-----------|----------|--------|
| Interest                Income:                                                                                                                                                      |   |     |      |     |   |   |   |
|                     Loans                                                                                                                                        |   | $        | 4,471,860 |     |   | 3,985,152 |   |
|                     Investment securities:                                                                                                                       |   |     |      |     |   |   |   |
|                          Tax exempt                                                                                                     |   |     | 254,278   |     |   | 218,644 |   |
|                          Taxable                                                                                                        |   |     | 931,429   |     |   | 370,782 |   |
|                     Federal funds sold and other                                                                                                                 |   |     | 81,958    |     |   | 186,610 |   |
|                             Total interest income                                                                        |   |     | 5,739,525 |     |   | 4,761,188 |   |
|                                                                                                                                                                                 |   |     |      |     |   |   |   |
| Interest                Expense:                                                                                                                                                     |   |     |      |     |   |   |   |
|                     Deposits                                                                                                                                     |   |     | 2,758,433 |     |   | 1,769,192 |   |
|                     Other                                                                                                                                        |   |     | 15,199    |     |   | 11,447 |   |
|                             Total interest expense                                                                       |   |     | 2,773,632 |     |   | 1,780,639 |   |
|                                                                                                                                                                                 |   |     |      |     |   |   |   |
|                             Net interest income                                                                          |   |     | 2,965,893 |     |   | 2,980,549 |   |
|                                                                                                                                                                                 |   |     |      |     |   |   |   |
| Provision                for loan losses                                                                                                                                             |   |     | 80,000    |     |   | 120,000 |   |
|                                                                                                                                                                                 |   |     |      |     |   |   |   |
|                    Net                interest income after provision for loan losses |   |     | 2,885,893 |     |   | 2,860,549 |   |
|                                                                                                                                                                                 |   |     |      |     |   |   |   |
| Other                Income:                                                                                                                                                         |   |     |      |     |   |   |   |
|                                                                                                                                                                                 |   |     |      |     |   |   |   |
|                     Service charges on deposit accounts                                                                                                          |   |     | 335,828   |     |   | 372,279 |   |
|      Mortgage                origination fee income                                                                                                         |   |     | 86,556    |     |   | 75,014 |   |
| Gains                on sales and disposal of premises and equipment                                                                                                                 |   |     | -         |     |   | 62,959 |   |
| Gains                on sales of other real estate owned                                                                                                                             |   |     | -         |     |   | 384,006 |   |
|                     Other operating income                                                                                                                       |   |     | 209,308   |     |   | 159,603 |   |
|                             Total other income                                                                           |   |     | 631,692   |     |   | 1,053,861 |   |
|                                                                                                                                                                                 |   |     |      |     |   |   |   |
|  Other                Expense:                                                                                                                                                  |   |     |      |     |   |   |   |
|                     Salaries and other personnel expense                                                                                                         |   |     | 1,509,847 |     |   | 1,408,921 |   |
|                     Net occupancy and equipment expense                                                                                                          |   |     | 373,577   |     |   | 327,925 |   |
|                     Other operating expense                                                                                                                      |   |     | 548,576   |     |   | 561,381 |   |
|                             Total other expense                                                                          |   |     | 2,432,000 |     |   | 2,298,227 |   |
|                                                                                                                                                                                 |   |     |      |     |   |   |   |
|                             Earnings before income taxes                                                                 |   |     | 1,085,585 |     |   | 1,616,183 |   |
|                                                                                                                                                                                 |   |     |      |     |   |   |   |
| Income                taxes                                                                                                                                                          |   |     | 296,009   |     |   | 528,148 |   |
|                                                                                                                                                                                 |   |     |      |     |   |   |   |
|                             Net earnings                                                                            |   | $        | 789,576   |     |   | 1,088,035 |   |
|                                                                                                                                                                                 |   |     |      |     |   |   |   |
| Earnings                per common share based on average outstanding                                                                                                                |   |     |      |     |   |   |   |
|                     shares of 899,815                                                                                                                            |   | $        | 0.88      |     |   | 1.21 |   |

----

**OCONEE      FINANCIAL CORPORATION AND SUBSIDIARY**

Consolidated

|                                                                                                               |   | **2007** |    | **2006** |   |
|--------------------------------------------------------------------------------------------------------------------|--------|----------|---------|----------|--------|
|                                                                                                               |   |     |    |     |   |
| Net                earnings                                                                                   |   | $        | 789,576 |     |   | 1,088,035 |   |
|                                                                                                               |   |     |    |     |   |   |   |
| Other                comprehensive income (loss), net of tax:                                                      |   |     |    |     |   |   |   |
|                     Unrealized gains (losses) on securities available for                sale: |   |     |    |     |   |   |   |
| Holding                gains (losses)arising during period, net of tax (benefit)                                   |   |     |    |     |   |   |   |
|                             of $16,747 and ($68,517)   |   |     | 27,369  |     |   | (111,978 | ) |
|                                                                                                               |   |     |    |     |   |   |   |
|                          Total other comprehensive income (loss)      |   |     | 27,369  |     |   | (111,978 | ) |
|                                                                                                               |   |     |    |     |   |   |   |
|                          Comprehensive income                         |   | $        | 816,945 |     |   | 976,057 |   |

----

**OCONEE      FINANCIAL CORPORATION AND SUBSIDIARY**

Consolidated

|                                                                                                                                                                                                                                  |   | **2007** |       | **2006** |   |
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|----------|------------|----------|--------|
| Cash                flows from operating activities:                                                                                                                                                                                  |   |     |       |     |   |   |   |
|      Net                earnings                                                                                                                                                                             |   | $        | 789,576    |     |   | 1,088,035 |   |
|          Adjustments                to reconcile net earnings to net                                                                                                                     |   |     |       |     |   |   |   |
|             cash                provided by (used in) operating activities:                                                                                               |   |     |       |     |   |   |   |
|                 Provision                for loan losses                                                                                              |   |     | 80,000     |     |   | 120,000 |   |
| Provision                for deferred taxes                                                                                                                                                                                           |   |     | -          |     |   | 170,611 |   |
|                 Depreciation,                amortization and accretion                                                                               |   |     | 131,006    |     |   | 149,257 |   |
|                 Gain                on sales and disposals of fixed assets                                                                            |   |     | -          |     |   | (62,959 | ) |
|                 Gain                on sale of other real estate owned                                                                                |   |     | -          |     |   | (384,006 | ) |
|                 Change                in assets and liabilities:                                                                                      |   |     |       |     |   |   |   |
|                     Increase                in interest receivable and other assets                                               |   |     | (13,545    | )        |   | (199,450 | ) |
|                     Decrease                in interest payable and other liabilities                                             |   |     | (163,621   | )        |   | (133,417 | ) |
|                     (Increase)                decrease in mortgage loans held for sale                                            |   |     | 45,150     |     |   | (1,149,200 | ) |
|                                                                                                                                                                                                                                  |   |     |       |     |   |   |   |
|                            Net                cash provided by (used in) operating activities  |   |     | 868,566    |     |   | (401,129 | ) |
|                                                                                                                                                                                                                                  |   |     |       |     |   |   |   |
| Cash                flows from investing activities:                                                                                                                                                                                  |   |     |       |     |   |   |   |
|      Proceeds                from calls, maturities, and paydowns of                                                                                                                                         |   |     |       |     |   |   |   |
|          investment                securities available for sale                                                                                                                         |   |     | 1,038,905  |     |   | 1,646,631 |   |
|      Purchases                of investment securities available for sale                                                                                                                                    |   |     | (627,707   | )        |   | (700,000 | ) |
|                     Purchases of other securities                                                                                                                                                                 |   |     | (36,400    | )        |   | (55,900 | ) |
|      Net                change in loans                                                                                                                                                                      |   |     | (1,172,927 | )        |   | 7,350,115 |   |
|      Purchases                of premises and equipment                                                                                                                                                      |   |     | (655,571   | )        |   | (972,781 | ) |
|                     Proceeds from sale of premises and equipment                                                                                                                                                  |   |     | -          |     |   | 139,184 |   |
|                     Proceeds from sale of other real estate owned                                                                                                                                                 |   |     | -          |     |   | 665,497 |   |
|                                                                                                                                                                                                                                  |   |     |       |     |   |   |   |
|                                            Net cash (used in) provided by investing activities |   |     | (1,453,700 | )        |   | 8,072,746 |   |
|                                                                                                                                                                                                                                  |   |     |       |     |   |   |   |
| Cash                flows from financing activities:                                                                                                                                                                                  |   |     |       |     |   |   |   |
|      Net                change in deposits                                                                                                                                                                   |   |     | (3,414,863 | )        |   | 1,298,409 |   |
|      Net                change in securities sold under repurchase agreements                                                                                                                                |   |     | (177,291   | )        |   | 438,326 |   |
|      Dividends                paid                                                                                                                                                                           |   |     | (1,124,769 | )        |   | (989,797 | ) |
|                                                                                                                                                                                                                                  |   |     |       |     |   |   |   |
|                            Net                cash (used in) provided by financing activities  |   |     | (4,716,923 | )        |   | 746,938 |   |
|                                                                                                                                                                                                                                  |   |     |       |     |   |   |   |
| Net                (decrease) increase in cash and cash equivalents                                                                                                                                                                   |   |     | (5,302,057 | )        |   | 8,418,555 |   |
|                                                                                                                                                                                                                                  |   |     |       |     |   |   |   |
| Cash                and cash equivalents at beginning of period                                                                                                                                                                       |   |     | 15,077,988 |     |   | 19,064,659 |   |
|                                                                                                                                                                                                                                  |   |     |       |     |   |   |   |
| Cash                and cash equivalents at end of period                                                                                                                                                                             |   | $        | 9,775,931  |     |   | 27,483,214 |   |

----

**OCONEE      FINANCIAL CORPORATION AND SUBSIDIARY**

|                                                                                                       |   | **2007** |      | **2006** |   |
|------------------------------------------------------------------------------------------------------------|--------|----------|-----------|----------|--------|
|                                                                                                       |   |     |      |     |   |
|                                                                                                       |   |     |      |     |   |
| Supplemental                cash flow information:                                                         |   |     |      |     |   |  |   |
|      Cash                paid for interest                                        |   | $        | 2,709,396 |     | $      | 1,620,612 |   |
|      Cash                paid for taxes                                           |   | $        | -         |     | $      | 222,000 |   |
|                                                                                                       |   |     |      |     |   |   |   |
| Noncash                investing and financing activities:                                                 |   |     |      |     |   |   |   |
|      Change                in net unrealized gain (loss) on investment securities |   |     |      |     |   |   |   |
|         available                for sale, net of tax              |   | $        | 27,369    |     | $      | (111,978 | ) |
|                                                                                                       |   |     |      |     |   |   |   |
|                                                                                                       |   |     |      |     |   |   |   |
|                                                                                                       |   |     |      |     |   |   |   |

----

**OCONEE      FINANCIAL CORPORATION AND SUBSIDIARY**

Notes

| (1) | Basis                of Presentation |
|-----|--------------------------------------|

| (2) | Net                Earnings Per Common Share |
|-----|----------------------------------------------|

----

**OCONEE      FINANCIAL CORPORATION AND SUBSIDIARY**

| (3) | Allowance                for Loan Losses |
|-----|------------------------------------------|

|                                                        |   | **2007** |      | **2006** |   |
|-------------------------------------------------------------|--------|----------|-----------|----------|--------|
|                                                        |   |     |      |     |   |
| Balance                at beginning of year                 |   | $        | 3,080,661 |     |   | 2,945,256 |   |
| Amounts                charged off                          |   |     | (12,590   | )        |   | (18,914 | ) |
| Recoveries                on amounts previously charged off |   |     | 9,981     |     |   | 20,001 |   |
| Provision                for loan losses                    |   |     | 80,000    |     |   | 120,000 |   |
|                                                        |   |     |      |     |   |   |   |
| Balance                at March 31                          |   | $        | 3,158,052 |     |   | 3,066,343 |   |

----

**MANAGEMENT’SDISCUSSION      AND ANALYSIS OF      FINANCIAL**

**CONDITION      OR PLAN OF OPERATIONS**

**Forward-Looking      Statements**

**Financial      Condition**

----

**Results      of Operations**

** **

**Interest      rate sensitivity **

----

**Liquidity**

----

**Contractual      Obligations and Commitments**

**Capital**

| Risk-Based                Capital Ratios               |
|--------------------------------------------------------|
|                                                   |
| Tier                1 Capital, Actual                  |   | 11.5% |
| Tier                1 Capital minimum requirement      |   | 4.0% |
|                                                   |   |   |
| Excess                                                 |   | 7.5% |
|                                                   |   |   |
| Total                Capital, Actual                   |   | 12.7% |
| Total                Capital minimum requirement       |   | 8.0% |
|                                                   |   |   |
| Excess                                                 |   | 4.7% |
|                                                   |   |   |
| Leverage                Ratio                          |   |   |
|                                                   |   |   |
| Tier                1 Capital to adjusted total assets |   | 8.2% |
| Minimum                leverage requirement            |   |  3.0% |
|                                                   |   |   |
| Excess                                                 |   | 5.2% |

----

**CONTROLSAND      PROCEDURES**

----

**PART      II. OTHER INFORMATION**

**OCONEE      FINANCIAL CORPORATION AND SUBSIDIARY**

Legal

Unregistered

Defaults

Submission

Other

Exhibits

| (a)   | Exhibits |                                                                                                                                                                                                                                               |
|-----------------|----------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|            | 31.1     | Certification                by B. Amrey Harden, CEO and President of the Corporation, as adopted                pursuant to Section 302 of the Sarbanes-Oxley Act of                2002.                                                         |
|            | 31.2     | Certification                by Jerry K. Wages, Senior Executive Vice President and Chief Financial                Officer of the Corporation, as adopted pursuant to Section 302 of                the                Sarbanes-Oxley Act of 2002. |
|            | 32       | Certification                of the Chief Executive Officer and the Chief Financial Officer pursuant                to                Section 906 of the Sarbanes-Oxley Act of 2002.                                                               |
|            |     |                                                                                                                                                                                                                                               |

----

**OCONEE      FINANCIAL CORPORATION AND SUBSIDIARY**

**SIGNATURES**

|   |           OCONEE                FINANCIAL CORPORATION  By:                  /s/                B. Amrey                Harden                                                                                                                   B. Amrey Harden, President and CEO                        (Principal Executive Officer)  Date:                     May                14, 2007                                                                                             By:   /s/                Jerry K.                Wages                                                                                           Jerry                K. Wages, Sr. Executive Vice President and CFO        Date:                     May                14, 2007                                                                                    By:                  /s/                Steven A.                Rogers                                                                                           Steven                A. Rogers       Vice                President and Controller       (Principal                Accounting Officer)  Date:                     May                14, 2007                                                                                   |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |