UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB


[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934

       For the quarterly period ended   JUNE 30, 2004
                                      -----------------

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

       For the transition period from __________ to __________

                       COMMISSION FILE NUMBER:  000-30511

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

            GEORGIA                                             58-2432974
--------------------------------                            -------------------
(State or other jurisdiction of                                (IRS Employer
incorporation or organization)                               Identification No.)

                 1275 RIVERSTONE PARKWAY, CANTON, GEORGIA  30114
                 -----------------------------------------------
                    (Address of principal executive offices)

                                 (770) 479-3400
                                 --------------
                           (Issuer's telephone number)

                                       N/A
   ----------------------------------------------------------------------------
    (Former name, former address and former fiscal year, if changed since last
                                     report)

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
1,242,515 shares of common stock, no par value per share, issued and outstanding
as of August 12, 2004.

Transitional Small Business Disclosure Format       Yes      No  X
                                                        ---     ---


<PAGE>
<TABLE>
<CAPTION>
                                     CHEROKEE BANKING COMPANY

-------------------------------------------------------------------------------------------------
                                              INDEX
                                              -----

                                                                                         PAGE NO.
                                                                                         --------
<S>       <C>        <C>                                                                 <C>
PART I.              FINANCIAL INFORMATION

          ITEM 1 -   FINANCIAL STATEMENTS

                     CONSOLIDATED BALANCE SHEET (UNAUDITED) AT JUNE 30, 2004 . . . . . .        3

                     CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) FOR THE
                        THREE MONTHS AND THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003 . .        4

                     CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (UNAUDITED)
                        FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003. . . . . . . . .        5

                     CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE
                        SIX MONTHS ENDED JUNE 30, 2004 AND 2003. . . . . . . . . . . . .        6

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED). . . . . . .        7

          ITEM 2 -   MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . .       10

          ITEM 3 -   CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . .       17

PART II.             OTHER INFORMATION

          ITEM 1. -  LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . .       18

          ITEM 2. -  CHANGES IN SECURITIES . . . . . . . . . . . . . . . . . . . . . . .       18

          ITEM 3. -  DEFAULTS UPON SENIOR SECURITIES . . . . . . . . . . . . . . . . . .       18

          ITEM 4. -  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . .       18

          ITEM 5. -  OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . .       18

          ITEM 6. -  EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . . . . . . . . . . .       18

          SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .       19
</TABLE>


<PAGE>
<TABLE>
<CAPTION>
                         PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                            CHEROKEE BANKING COMPANY
                           CONSOLIDATED BALANCE SHEET
                                  JUNE 30, 2004
                                   (UNAUDITED)

                           ASSETS
                           ------
<S>                                                              <C>
Cash and due from banks                                          $  4,264,342
Federal funds sold                                                  3,942,000
                                                                 -------------

        Cash and cash equivalents                                   8,206,342

Interest-bearing deposits                                             100,000
Investment securities available-for-sale                           46,498,540
Other investments                                                     705,350
Loans, net                                                         72,559,871
Premises and equipment, net                                         5,251,688
Accrued interest receivable and other assets                        3,863,633
                                                                 -------------

                                                                 $137,185,424
                                                                 =============

            LIABILITIES AND STOCKHOLDERS' EQUITY
            ------------------------------------

Deposits:
    Demand                                                       $ 17,070,323
    Money market and NOW accounts                                  63,025,163
    Savings                                                         3,114,979
    Time                                                           21,154,705
    Time over $100,000                                             11,095,296
                                                                 -------------
        Total deposits                                            115,460,466

Advances from the Federal Home Loan Bank                            8,500,000
Accrued interest payable and other liabilities                        503,532
                                                                 -------------

        Total liabilities                                         124,463,998
                                                                 -------------

Commitments

Stockholders' equity:
    Preferred stock, no par value; 2,000,000 shares authorized;
        no shares issued and outstanding                                    -
    Common stock, no par value; 10,000,000 shares authorized;
        1,242,515 shares issued and outstanding                    13,737,886
    Retained earnings                                                 268,897
    Accumulated other comprehensive loss                           (1,285,357)
                                                                 -------------

        Total stockholders' equity                                 12,721,426
                                                                 -------------

                                                                 $137,185,424
                                                                 =============
</TABLE>

     SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.


                                        3
<PAGE>
<TABLE>
<CAPTION>
                                           CHEROKEE BANKING COMPANY

                                       CONSOLIDATED STATEMENTS OF INCOME
                     FOR THE THREE MONTHS AND THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
                                                  (UNAUDITED)

                                                                  THREE MONTHS              SIX MONTHS
                                                                 ENDED JUNE 30,            ENDED JUNE 30,
                                                             -----------------------  ------------------------
                                                                2004        2003         2004         2003
                                                             ----------  -----------  -----------  -----------
<S>                                                          <C>         <C>          <C>          <C>
Interest income:
    Interest and fees on loans                               $1,091,840  $   840,519  $ 2,069,737  $ 1,625,054
    Interest and dividends on investment securities             459,122      375,145      911,175      738,171
    Interest on federal funds sold                                3,072       14,746       15,584       23,689
    Interest on interest-bearing deposits                           240        2,759          868        5,489
                                                             ----------  -----------  -----------  -----------
        Total interest income                                 1,554,274    1,233,169    2,997,364    2,392,403

Interest expense:
    Interest on money market and NOW accounts                    99,180      114,930      205,175      230,414
    Interest on savings and time deposits                       191,865      218,123      396,944      450,189
    Interest on other borrowings                                 89,752       68,329      168,380      138,245
                                                             ----------  -----------  -----------  -----------
        Total interest expense                                  380,797      401,382      770,499      818,848

        Net interest income                                   1,173,477      831,787    2,226,865    1,573,555

Provision for loan losses                                       152,673       43,687      259,263       94,488
                                                             ----------  -----------  -----------  -----------
        Net interest income after provision for loan losses   1,020,804      788,100    1,967,602    1,479,067
                                                             ----------  -----------  -----------  -----------

Other income:
    Service charges on deposit accounts                         140,264      105,745      252,669      205,304
    Mortgage origination fees                                    52,824       68,528      119,428      124,855
    Investment security gains, net                                   93            -        4,361       35,197
    Other income                                                 57,658       40,905      110,253       78,908
                                                             ----------  -----------  -----------  -----------
        Total other income                                      250,839      215,178      486,711      444,264
                                                             ----------  -----------  -----------  -----------

Other expenses:
    Salaries and employee benefits                              584,479      453,175    1,179,461      908,585
    Occupancy and equipment                                     127,659       85,496      251,225      169,589
    Other operating                                             437,322      286,564      846,010      580,601
                                                             ----------  -----------  -----------  -----------
        Total other expense                                   1,149,460      825,235    2,276,696    1,658,775
                                                             ----------  -----------  -----------  -----------

        Earnings before income taxes                            122,183      178,043      177,617      264,556

Income tax expense                                               44,570       59,590       64,401       90,951
                                                             ----------  -----------  -----------  -----------

        Net earnings                                         $   77,613  $   118,453  $   113,216  $   173,605
                                                             ==========  ===========  ===========  ===========

Basic earnings per share                                     $     0.06         0.15  $      0.10  $      0.21
                                                             ==========  ===========  ===========  ===========

Diluted earnings per share                                   $     0.06  $      0.13  $      0.09  $      0.19
                                                             ==========  ===========  ===========  ===========
</TABLE>

     SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.


                                        4
<PAGE>
<TABLE>
<CAPTION>
                              CHEROKEE BANKING COMPANY

               CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
                  FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
                                    (UNAUDITED)

                                                              2004         2003
                                                          ------------  -----------
<S>                                                       <C>           <C>

Net earnings                                              $   113,216   $  173,605
                                                          ------------  -----------

Other comprehensive (loss) income, net of tax (benefit):
    Unrealized holding (losses) gains on investment
        securities available-for-sale, net of income tax
        (benefit) of ($626,070) and $119,951               (1,021,483)     195,709
Reclassification adjustment for gains on sale of
        investment securities available-for-sale, net
        of income taxes of $1,657 and $13,375                  (2,704)     (21,822)
                                                          ------------  -----------
          Total other comprehensive (loss) income          (1,024,187)     173,887
                                                          ------------  -----------

          Comprehensive (loss) income                     $  (910,971)  $  347,492
                                                          ============  ===========
</TABLE>

     SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.


                                        5
<PAGE>
<TABLE>
<CAPTION>
                               CONSOLIDATED STATEMENTS OF CASH FLOWS
                          FOR THE SIX MONTHS ENDED JUNE 30, 2004 AND 2003
                                            (UNAUDITED)

                                                                          2004            2003
                                                                     ---------------  -------------
<S>                                                                  <C>              <C>
OPERATING ACTIVITIES
    Net earnings                                                     $      113,216   $    173,605
    Adjustments to reconcile net earnings to net
        cash provided by operating activities:
        Provision for loan losses                                           259,263         94,488
        Depreciation, amortization and accretion                            182,562        135,239
        Investment security gains, net                                       (4,361)       (35,197)
        Change in:
          Accrued interest receivable and other assets                     (226,742)      (247,866)
          Accrued interest payable and other liabilities                    203,422        199,603
                                                                     ---------------  -------------

             Net cash provided by operating activities                      527,360        319,872
                                                                     ---------------  -------------

INVESTING ACTIVITIES
    Proceeds from maturities and paydowns of
        of investment securities available-for-sale                       5,480,194      8,805,124
    Proceeds from sales of investment securities available-for-sale      11,135,799      3,485,066
    Purchases of investment securities available-for-sale               (16,696,214)   (24,502,511)
    Purchases of other investments                                          (30,000)             -
    Proceeds from sale of other real estate                                       -         62,000
    Net change in loans                                                 (16,036,537)    (5,821,702)
    Purchase of premises and equipment                                     (495,303)       (73,095)
                                                                     ---------------  -------------

          Net cash used in investing activities                         (16,642,061)   (18,045,118)
                                                                     ---------------  -------------

FINANCING ACTIVITIES
    Net change in deposits                                               20,824,853     22,230,079
    Net change in federal funds purchased                                (5,864,000)             -
    Repayment of other borrowings                                        (1,000,000)             -
    Proceeds from issuance of common stock                                6,020,000              -
    Stock issuance costs                                                    (31,795)             -
                                                                     ---------------  -------------

          Net cash provided by financing activities                      19,949,058     22,230,079
                                                                     ---------------  -------------

Net change in cash and cash equivalents                                   3,834,357      4,504,833

Cash and cash equivalents at beginning of period                          4,371,985     11,583,641
                                                                     ---------------  -------------

Cash and cash equivalents at end of period                           $    8,206,342   $ 16,088,474
                                                                     ===============  =============
</TABLE>
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.


                                        6
<PAGE>
                            CHEROKEE BANKING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)


NOTE 1.   BASIS OF PRESENTATION

          Cherokee  Banking  Company,  Inc.  (the  "Company"),  a  bank  holding
          company,  owns  100% of the outstanding common stock of Cherokee Bank,
          N.A.  (the  "Bank"),  which  operates in the Canton, Georgia area. The
          Bank  opened  for  business  on  July  26,  1999.

          The  consolidated  financial  statements  include  the accounts of the
          Company  and the Bank. All intercompany accounts and transactions have
          been  eliminated  in  consolidation.

          The accompanying financial statements have been prepared in accordance
          with  the  requirements  for  interim  financial  statements  and,
          accordingly,  they  omit  disclosures,  which  would  substantially
          duplicate  those  contained  in  the  most  recent  annual  report  to
          shareholders  on  Form 10-KSB. The financial statements as of June 30,
          2004  and  for  the  interim  periods ended June 30, 2004 and 2003 are
          unaudited  and,  in the opinion of management, include all adjustments
          (consisting  of  normal recurring accruals) considered necessary for a
          fair  presentation.  For  further  information, refer to the financial
          statements and the notes included in the Company's Form 10-KSB for the
          period  ended  December  31,  2003,  as  filed with the Securities and
          Exchange  Commission.

NOTE 2.   CRITICAL ACCOUNTING POLICIES AND ESTIMATES

          The  Company has adopted various accounting policies, which govern the
          application  of accounting principles generally accepted in the United
          States  of America in the preparation of our financial statements. The
          Company's  significant  accounting  policies  are  described  in  the
          footnotes  to  the  consolidated  financial  statements for the period
          ended December 31, 2003 as filed with our most recent annual report on
          Form  10-KSB.

          Certain  accounting  policies  involve  significant  estimates  and
          assumptions  by  the  Company,  which  have  a  material impact on the
          carrying  value  of  certain  assets  and  liabilities.  The  Company
          considers  these  accounting  policies  to  be  critical  accounting
          policies.  The  estimates and assumptions used are based on historical
          experience  and  other  factors,  which  are believed to be reasonable
          under  the  circumstances.  Because of the nature of the estimates and
          assumptions made, actual results could differ from these estimates and
          assumptions  which  could have a material impact on carrying values of
          assets  and  liabilities  and  results  of  operations.

          The  Company believes that the allowance for loan losses is a critical
          accounting  policy  that  requires  the most significant judgments and
          estimates  used  in  preparation  of  its  consolidated  financial
          statements.  Management's  discussion  and  analysis  of  financial
          condition  and  results  of operations, as set forth in this report on
          From  10-QSB, provides further information regarding the allowance for
          loan  losses and includes a description of the Company's processes and
          methodology  for  determining  the  allowance  of  loan  losses.


                                        7
<PAGE>
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
                                   (UNAUDITED)


NOTE 3.   EARNINGS PER SHARE

          Basic  earnings  per share are based on the weighted average number of
          common  shares  outstanding  during  the  period  while the effects of
          potential shares outstanding during the period are included in diluted
          earnings  per  share.  The  reconciliation  of the amounts used in the
          computation  of  both "basic earnings per share" and "diluted earnings
          per share" for the quarter and six months ended June 30, 2004 and 2003
          presented  in  the  financial  statements  were calculated as follows:

<TABLE>
<CAPTION>
          FOR THE QUARTER ENDED JUNE 30, 2004:        NET      COMMON     PER SHARE
                                                   EARNINGS    SHARES      AMOUNT
                                                   ---------  ---------  -----------
<S>                                                <C>        <C>        <C>

          Basic earnings per share                 $  77,613  1,242,515  $      .06
          Effect of stock options and warrants             -     96,217           -
                                                   ---------  ---------  -----------
          Diluted earnings per share               $  77,613  1,338,732  $      .06
                                                   =========  =========  ===========

          FOR THE QUARTER ENDED JUNE 30, 2003:        NET      COMMON     PER SHARE
                                                   EARNINGS    SHARES      AMOUNT
                                                   ---------  ---------  -----------

          Basic earnings per share                 $ 118,453    812,515  $      .15
          Effect of stock options and warrants             -     83,257        (.02)
                                                   ---------  ---------  -----------
          Diluted earnings per share               $ 118,453    895,772  $      .13
                                                   =========  =========  ===========

          FOR THE SIX MONTHS ENDED JUNE 30, 2004:     NET      COMMON     PER SHARE
                                                   EARNINGS    SHARES      AMOUNT
                                                   ---------  ---------  -----------

          Basic earnings per share                 $ 113,216  1,090,274  $      .10
          Effect of stock options and warrants             -     96,217           -
                                                   ---------  ---------  -----------
          Diluted earnings per share               $ 113,216  1,186,491  $      .10
                                                   =========  =========  ===========

          FOR THE SIX MONTHS ENDED JUNE 30, 2003:     NET      COMMON     PER SHARE
                                                   EARNINGS    SHARES      AMOUNT
                                                   ---------  ---------  -----------

          Basic earnings per share                 $ 173,605    812,515  $      .21
          Effect of stock options and warrants             -     78,688        (.02)
                                                   ---------  ---------  -----------
          Diluted earnings per share               $ 173,605    891,203  $      .19
                                                   =========  =========  ===========
</TABLE>


                                        8
<PAGE>
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
                                   (UNAUDITED)

NOTE 4.   STOCK-BASED COMPENSATION

          The  Company  sponsors  stock-based  compensation  plans.  The Company
          accounts  for  these  plans  under  the  recognition  and  measurement
          principles  of  APB  Opinion  No.  25, "Accounting for Stock Issued to
          Employees",  and  related  interpretations.  No  stock-based  employee
          compensation cost is reflected in net earnings, as all options granted
          under  those  plans had an exercise price equal to the market value of
          the  underlying common stock on the date of grant. The following table
          illustrates  the  effect on net earnings and earnings per share if the
          Company had applied the fair value recognition provisions of Statement
          of  Financial  Accounting  Standards ("SFAS") No. 123, "Accounting for
          Stock-Based  Compensation",  to  stock-based employee compensation for
          the  three  and  six  months  ended  June  30,  2004  and  2003.

<TABLE>
<CAPTION>
                                                    THREE MONTHS ENDED
                                                         JUNE 30,
                                                  ----------------------
                                                     2004        2003
                                                  ----------  ----------
<S>                                               <C>         <C>

Net earnings as reported                          $   77,613  $  118,453
Deduct:  Total stock-based employee compensation
   expense determined under fair-value based
   method for all awards, net of tax                       -       4,396
                                                  ----------  ----------
Pro forma net earnings                            $   77,613  $  114,057
                                                  ==========  ==========
Basic earnings per share:
   As reported                                    $      .07  $      .15
                                                  ==========  ==========
   Pro forma                                      $      .07  $      .14
                                                  ==========  ==========
Diluted earnings per share:
   As reported                                    $      .06  $      .13
                                                  ==========  ==========
   Pro forma                                      $      .06  $      .13
                                                  ==========  ==========


                                                     SIX MONTHS ENDED
                                                         JUNE 30,
                                                  ----------------------
                                                     2004        2003
                                                  ----------  ----------

Net earnings as reported                          $  113,216  $  173,605
Deduct:  Total stock-based employee compensation
   expense determined under fair-value based
   method for all awards, net of tax                       -       8,792
                                                  ----------  ----------
Pro forma net earnings                            $  113,216  $  164,813
                                                  ==========  ==========
Basic earnings per share:
   As reported                                    $      .10  $      .21
                                                  ==========  ==========
   Pro forma                                      $      .10  $      .20
                                                  ==========  ==========
Diluted earnings per share:
   As reported                                    $      .09  $      .19
                                                  ==========  ==========
   Pro forma                                      $      .09  $      .18
                                                  ==========  ==========
</TABLE>


                                        9
<PAGE>
ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
          AND RESULTS OF OPERATIONS

FORWARD LOOKING STATEMENTS

The  following  is  a  discussion of our financial condition as of June 30, 2004
compared  to  December  31, 2003 and our results of operations for the three and
six months ended June 30, 2004 compared to the three and six month periods ended
June  30,  2003.  These  comments  should  be  read  in  conjunction  with  our
consolidated  financial  statements and accompanying footnotes appearing in this
report.  This  report contains "forward-looking statements" relating to, without
limitation,  future economic performance, plans and objectives of management for
future operations, and projections of revenue and other financial items that are
based  on  the  beliefs  of  our  management, as well as assumptions made by and
information  currently  available  to  our  management.  The  words  "expect",
"estimate",  "anticipate",  and  "believe",  as well as similar expressions, are
intended  to identify forward-looking statements.  Our actual results may differ
materially from the results discussed in the forward-looking statements, and our
operating  performance  each  quarter  is  subject  to  various  risks  and
uncertainties.  Factors  that  could  cause  actual results to differ from those
discussed  in  the  forward-looking  statements include, but are not limited to:

1.   the  strength  of the U.S. economy in general and the strength of the local
     economies  in  which  operations  are  conducted;
2.   the effects of and changes in trade, monetary and fiscal policies and laws,
     including  interest  rate policies of the Board of Governors of the Federal
     Reserve  system;
3.   inflation,  interest  rate,  market  and  monetary  fluctuations;
4.   the  timely  development of and acceptance of new products and services and
     perceived  overall  value  of  these  products  and  services  by  users;
5.   changes  in  consumer  spending,  borrowing  and  saving  habits;
6.   technological  changes;
7.   acquisitions;
8.   the  ability  to  increase  market  share  and  control  expenses;
9.   the  effect  of  changes  in  laws  and  regulations  (including  laws  and
     regulations concerning taxes, banking, securities and insurance) with which
     the  Company  and  its  subsidiary  must  comply;
10.  the  effect  of  changes  in  accounting  policies and practices, as may be
     adopted  by  the  regulatory  agencies  as well as the Financial Accounting
     Standards  Board;
11.  changes  in  the  Company's  organization,  compensation and benefit plans;
12.  the costs and effects of litigation and of unexpected or adverse outcome in
     such  litigation;  and
13.  the  Company's  success  at  managing  the risks involved in the foregoing.

Forward-looking statements speak only as of the date on which they are made.  We
undertake  no  obligation  to  update  any  forward-looking statement to reflect
events or circumstances after the date on which the statement is made to reflect
the  occurrence  of  unanticipated  events.


                                       10
<PAGE>
RESULTS OF OPERATIONS

NET INTEREST INCOME

For  the  six months ended June 30, 2004, net interest income totaled $2,227,000
as  compared  to  $1,574,000  for the same period in 2003.  Interest income from
loans, including fees increased $445,000 or 27% to $2,070,000 for the six months
ended  June 30, 2004.  The increase in net interest income is due to the overall
growth  in  the volume of interest earning assets, partially offset by continued
decreases  in  overall weighted average interest rates.  The net interest margin
realized  on  earning  assets and the interest rate spread were 3.86% and 3.59%,
respectively,  for  the six months ended June 30, 2004.  The net interest margin
was  3.58%  and  the net interest spread was 3.35% for the six months ended June
30,  2003.

For  the  quarter  ended  June  30,  2004, interest income totaled $1,554,000 as
compared  to $1,233,000 for the same period in 2003.  Interest expense decreased
from  $401,000  for  the  quarter  ended  June 30, 2003 to $381,000 for the same
period  in  2004.  The  increase  in  net  interest income is due to the overall
growth in interest earning assets.  For the quarter ended June 30, 2004, the net
interest  margin  was  3.90%  and  the  interest rate spread was 3.58%.  The net
interest  margin was 3.54% and the net interest spread was 3.19% for the quarter
ended  June  30,  2003.

INTEREST RATE SENSITIVITY AND ASSET LIABILITY MANAGEMENT

Interest  rate sensitivity measures the timing and magnitude of the repricing of
assets  compared  with  the repricing of liabilities and is an important part of
asset/liability  management  of  a  financial  institution.  The  objective  of
interest  rate  sensitivity  management  is  to  generate  stable  growth in net
interest  income,  and  to  control  the  risks  associated  with  interest rate
movements.  Management  constantly  reviews  interest rate risk exposure and the
expected  interest  rate  environment  so  that  adjustments  in  interest  rate
sensitivity  can be made timely.  Since the assets and liabilities of a bank are
primarily  monetary  in  nature  (payable  in  fixed, determinable amounts), the
performance  of  a  bank  is  affected more by changes in interest rates than by
inflation.  Interest  rates  generally  increase  as  the  rate  of  inflation
increases,  but  the  magnitude  of the change in rates may not be proportional.

Net  interest  income  is  the  primary  component  of  net income for financial
institutions.  Net  interest  income  is affected by the timing and magnitude of
repricing of assets and liabilities as well as the mix of interest sensitive and
noninterest  sensitive assets and liabilities.  "Gap" is a static measurement of
the difference between the contractual maturities or repricing dates of interest
sensitive  assets and interest sensitive liabilities within the following twelve
months.  Gap  is  an  attempt to predict the behavior of the Bank's net interest
income  in  general  terms  during  periods  of  movement in interest rates.  In
general,  if  the Bank is asset sensitive, more of its interest sensitive assets
are  expected  to  reprice  within  twelve  months  than  its interest sensitive
liabilities over the same period.  In a rising interest rate environment, assets
repricing  more  quickly  is  expected  to  enhance  net  interest  income.
Alternatively,  decreasing interest rates would be expected to have the opposite
effect  on  net interest income since assets would theoretically be repricing at
lower interest rates more quickly than interest sensitive liabilities.  Although
it  can  be  used as a general predictor, Gap as a predictor of movements in net
interest  income  has limitations due to the static nature of its definition and
due  to  its  inherent  assumption  that all assets will reprice immediately and
fully  at  the  contractually  designated  time.  At June 30, 2004, the Bank, as
measured  by  Gap,  is  in  an  asset  sensitive  position.


                                       11
<PAGE>
The  Bank  also measures the actual effects that repricing opportunities have on
earnings  through  simulation  modeling,  referred  to as earnings at risk.  For
short-term  interest rate risk, the Bank's model simulates the impact of balance
sheet  strategies  on  net interest income, pre-tax income, and net income.  The
model  includes  interest  rate  ramps  to test the impact of rising and falling
interest  rates  on projected earnings.  Rates are ramped over a one-year period
and  include  a level rate scenario as the benchmark with rising and falling 200
basis  point scenarios for comparison.  The Bank determines the assumptions that
are  used  in  the  model.

In  addition to measuring the effect changes in rates will have on earnings, the
Bank  also measures the effect of interest rate changes on the economic value of
the Bank.  Economic Value of Equity is measured by calculating the present value
of  future cash flows for financial instruments on the balance sheet.  The model
utilizes  rate  shocks of rising and falling 200 basis points to compare against
the  level  benchmark  for best and worst case scenarios.  All rates are shocked
instantaneously  for  the  200  basis  point  movements.  The  purpose  of  this
measurement  is  to determine the long-term effect interest rate changes have on
the  economic  value  of  the  balance  sheet.

For  more  information  on  asset-liability  management,  see the Company's most
recent  annual  report on Form 10-KSB, as filed with the Securities and Exchange
Commission.

PROVISION AND ALLOWANCE FOR LOAN LOSSES

The provision for loan losses is a critical accounting policy that is subject to
the  judgments  and  estimates  of  the  Bank.  The  provision  for  loan losses
represents  the  charge  to  operating  earnings  that  management  believes  is
necessary  to  maintain  the  allowance  for possible loan losses at an adequate
level.  The  provision  charged to expense was $259,000 for the six months ended
June  30, 2004 as compared to $94,000 for the six months ended June 30, 2003 and
was  $153,000 for the quarter ended June 30, 2004 as compared to $44,000 for the
quarter  ended  June 30, 2003.  Net loans increased by approximately $15,777,000
during  the  six months ended June 30, 2004 as compared to $5,735,000 during the
six  months  ended  June  30,  2003.  The allowance for loan losses was 1.43% of
gross  loans  at  June  30, 2004 as compared to 1.42% of gross loans at June 30,
2003.  There  are  risks  inherent  in  making  all  loans, including risks with
respect  to  the  period of time over which loans may be repaid, risks resulting
from changes in economic and industry conditions, risks inherent in dealing with
individual borrowers, and, in the case of a collateralized loan, risks resulting
from  uncertainties  about  the  future  value of the collateral.  We anticipate
maintaining  an  allowance  for  loan  losses  based  on,  among  other  things,
historical experience, an evaluation of economic conditions, and regular reviews
of  delinquencies and loan portfolio quality.  We believe that the allowance for
loan  losses  is  adequate.  However,  our  judgment  about  the adequacy of the
allowance  is  based  upon a number of assumptions about future events, which we
believe  to  be reasonable, but which may not prove to be accurate.  Thus, there
is a risk that charge-offs in future periods could exceed the allowance for loan
losses or that substantial additional increases in the allowance for loan losses
could be required.  Additions to the allowance for loan losses would result in a
decrease  of  our  net  income  and,  possibly,  our  capital.

OTHER INCOME

Other income for the six months ended June 30, 2004 totaled $487,000 as compared
to  $444,000  for  the  six  months  ended June 30, 2003.  The increase in other
income  was  primarily  due  to increases in service charges on deposit accounts
during  2004 as compared to the same period in 2003.  Service charges on deposit
accounts increased by $47,000 for the six months ended June 30, 2004 as compared
to  the  same  period  in  2003.

Other income for the quarter ended June 30, 2004 totaled $251,000 as compared to
$215,000  for  the quarter ended June 30, 2003.  This increase was due primarily
to an increase in service charges on deposit accounts of $35,000 for the quarter
ending  June  30,2004  as  compared  to  the  same  period  in  2003.


                                       12
<PAGE>
OTHER EXPENSES

Total  other  expenses  for the six months ended June 30, 2004 was $2,277,000 as
compared  to  $1,659,000  for the same period in 2003 and was $1,149,000 for the
quarter  ended June 30, 2004 compared to $825,000 for the quarter ended June 30,
2003.  Salaries  and  benefits,  the largest component of other expense, totaled
$1,179,000  for the six months ended June 30, 2004, compared to $909,000 for the
same  period a year ago.  Salaries and benefits totaled $584,000 for the quarter
ended  June  30,  2004 compared to $453,000 for the quarter ended June 30, 2003.
Other operating expenses were $846,000 for the six months ended June 30, 2004 as
compared  to  $581,000  for the six months ended June 30, 2003.  Other operating
expense  totaled  $437,000  for  the  quarter  ended  June  30, 2004 compared to
$287,000  for  the quarter ended June 30, 2003.  The increases in other expenses
for  the  three  and six month periods ending June 30, 2004 are due primarily to
the operation and staffing of a new branch facility that opened in January 2004,
as  well  as  the  continued  growth  of  the  Bank.

INCOME TAXES

Income  tax  expense for the six months ended June 30, 2004 and 2003 was $64,000
and  $91,000,  respectively.  Income tax expense for the quarters ended June 30,
2004 and 2003 was $45,000 and $60,000, respectively.  The effective tax rate was
36%  and  34% for the six months ended June 30, 2004 and 2003, respectively, and
36%  and  33%  for  the  quarters  ended  June  30, 2004 and 2003, respectively.

NET INCOME

The  combination of the above factors resulted in net income of $113,000 for the
six  months  ended  June  30, 2004 compared to $174,000 for the six months ended
June  30, 2003.  Basic earnings per share was $.10 for the six months ended June
30,  2004  compared to $.21 for the same period in 2003.  Net income was $78,000
for  the quarter ended June 30, 2004 compared to $118,000 for the same period in
2003.  Basic  earnings  per  share were $.06 for the quarter ended June 30, 2004
compared  to  $.15  for  the  same  period  in  2003.

Diluted  earnings  per  share  were  $.10 for the six months ended June 30, 2004
compared to diluted earnings per share of $.19 for the same period in 2003.  The
dilutive  effect  of the Company's outstanding options and warrants was $.00 and
$.02 per share during the six months ended June 30, 2004 and 2003, respectively.
Diluted  earnings  per  share  were  $.06  for  the  quarter ended June 30, 2004
compared to $.13 for the quarter ended June 30 2003.  The dilutive effect of the
Company's  outstanding  options  and warrants was $.00 and $.02 per share during
the  quarters  ended  June  30,  2004  and  2003,  respectively.

ASSETS AND LIABILITIES

During  the first six months of 2004, total assets increased $19,242,000 or 16%,
when  compared  to December 31, 2003.  The most significant growth in assets was
net  loans,  which  increased  $15,777,000, during the first six months of 2004.
Total deposits increased $20,825,000 or 22% from the December 31, 2003 amount of
$94,636,000  and comprised the majority of the growth in total liabilities.  The
growth  in  deposits  was  offset  by  a  decrease in federal funds purchased of
$5,864,000  and  other  borrowings  of  $1,000,000.

INVESTMENT SECURITIES

Investment  securities  available-for-sale decreased $1,597,000 from $48,096,000
at  December  31,  2003 to $46,499,000 at June 30, 2004 as the Bank continues to
invest  more  of  its funds in higher yielding assets such as loans.  All of the
Bank's marketable investment securities were designated as available-for-sale at
June  30,  2004.


                                       13
<PAGE>
PREMISES AND EQUIPMENT

Premises  and  equipment,  net  of  depreciation, totaled $5,252,000 at June 30,
2004.  The  increase of $343,000 from the December 31, 2003 amount of $4,909,000
was  due  to  additions  of  $495,000,  net of depreciation expense of $152,000.

LOANS

Gross  loans totaled $73,615,000 at June 30, 2004, an increase of $16,030,000 or
28% since December 31, 2003.  The largest increase in loans was in real estate -
construction loans, which increased $9,109,000 or 56% to $25,263,000 at June 30,
2004.  Balances within the major loans receivable categories as of June 30, 2004
and  December  31,  2003  are  as  follows:

<TABLE>
<CAPTION>
                                  JUNE 30,    DECEMBER 31,
                                    2004          2003
                                 -----------  -------------
<S>                              <C>          <C>

     Real estate - construction  $25,263,014  $  16,154,111
     Real estate - mortgage        9,286,772      8,423,916
     Commercial and industrial    36,019,841     30,017,333
     Consumer and other            3,045,023      2,989,302
                                 -----------  -------------
                                 $73,614,650  $  57,584,662
                                 ===========  =============
</TABLE>


RISK ELEMENTS IN THE LOAN PORTFOLIO

The following is a summary of risk elements in the loan portfolio:

<TABLE>
<CAPTION>
                                                JUNE 30,   DECEMBER 31,
                                                  2004         2003
                                                ---------  -------------
<S>                                             <C>        <C>

     Loans:  Nonaccrual loans                   $  19,000  $           -
     Accruing loans more than 90 days past due  $       -  $           -
</TABLE>

Activity in the allowance for loan losses for the period from January 1, 2004 to
June  30,  2004  is  as  follows:

<TABLE>
<CAPTION>
<S>                                                        <C>
     Balance, January 1,                                   $   802,065
     Provision for loan losses for the period                  259,263
     Net loans (charged off) recovered for the period           (6,550)
                                                           ------------
     Balance, end of period                                $ 1,054,778
                                                           ============
     Gross loans outstanding, end of period                $73,614,650
                                                           ============
     Allowance for loan losses to gross loans outstanding         1.43%
                                                           ============
</TABLE>


                                       14
<PAGE>
DEPOSITS

At  June  30, 2004 total deposits increased by $20,825,000, or 22% from December
31,  2003.  Noninterest-bearing  demand deposits increased $3,728,000 or 28% and
interest-bearing  deposits  increased $17,097,000 or 21% from December 31, 2003.

Balances  within  the  major deposit categories as of June 30, 2004 and December
31,  2003  are  as  follows:

<TABLE>
<CAPTION>
                                                  JUNE 30,    DECEMBER 31,
                                                    2004          2003
                                                ------------  -------------
<S>                                             <C>           <C>

     Noninterest-bearing demand deposits        $ 17,070,323  $  13,342,450
     Interest-bearing demand deposits             63,025,163     52,394,310
     Savings deposits                              3,114,979      2,438,973
     Certificates of deposit $100,000 and over    11,095,296      6,351,371
     Other time deposits                          21,154,705     20,108,509
                                                ------------  -------------
                                                $115,460,466  $  94,635,613
                                                ============  =============
</TABLE>

LIQUIDITY

The  Company's  liquidity  needs  include  the  funding  of  loans, purchases of
operating  assets,  and repayment of liabilities.  Liquidity needs are met by us
through  scheduled  maturities  of  loans  and investments on the asset side and
through  pricing  policies  on  the  liability side for interest-bearing deposit
accounts.  The  level  of  liquidity  is  measured by the loan-to-total borrowed
funds  ratio,  which  was  at 59% at June 30, 2004 and 53% at December 31, 2003.

We  have  also  obtained  lines  of credit available with correspondent banks to
purchase  federal  funds.  At  June  30,  2004,  unused  lines of credit totaled
$14,400,000.

OFF-BALANCE SHEET RISK

The  Company  is a party to financial instruments with off-balance-sheet risk in
the  normal  course  of  business  to meet the financing needs of its customers.
These  financial instruments consist of commitments to extend credit and standby
letters  of  credit.  Commitments  to  extend credit are agreements to lend to a
customer  as  long  as there is no violation of any condition established in the
contract.  Standby  letters  of  credit  are  commitments generally having fixed
expiration  dates or other termination clauses and may require payment of a fee.
A  commitment involves, to varying degrees, elements of credit and interest rate
risk  in  excess  of the amount recognized in the balance sheets.  The Company's
exposure  to  credit  loss in the event of non-performance by the other party to
the  instrument  is  represented  by  the  contractual  notional  amount  of the
instrument.

Since  certain  commitments are expected to expire without being drawn upon, the
total  commitment amounts do not necessarily represent future cash requirements.
The Company uses the same credit policies in making commitments to extend credit
as  it  does  for  on-balance-sheet  instruments.

Collateral held for commitments to extend credit varies but may include accounts
receivable,  inventory,  property,  plant,  equipment,  and  income-producing
commercial  properties.


                                       15
<PAGE>
The  following  table  summarizes  the  Company's  off-balance-sheet  financial
instruments  whose  contract  amounts represent credit risk as of June 30, 2004:

<TABLE>
<CAPTION>
<S>                                     <C>
     Commitments to extend credit       $  22,118,000
     Standby letters of credit          $     373,000
</TABLE>

CAPITAL RESOURCES

Total  shareholders'  equity  increased  from $7,644,000 at December 31, 2003 to
$12,776,000  at  June  30,  2004.  This  increase  of  $5,132,000 was due to net
earnings  for the period of $113,000 and proceeds from our common stock offering
of  $6,020,000,  net  of  stock  issue  costs  of $32,000, partially offset by a
decrease  of  $1,024,000 in the fair value of securities available-for-sale, net
of tax.  The Company closed its intrastate offering of common stock on March 23,
2004  having sold 430,000 shares for total proceeds of $6,020,000.  The proceeds
of the offering will primarily be used to provide additional working capital for
the  Bank.

Bank  holding companies, such as us, and their banking subsidiaries are required
by  banking regulators to meet certain minimum levels of capital adequacy, which
are  expressed  in the form of certain ratios.  Capital is separated into Tier 1
capital  (essentially  common  shareholders'  equity less intangible assets) and
Tier  2  capital  (essentially the allowance for loan losses limited to 1.25% of
risk-weighted  assets).  The  first two ratios, which are based on the degree of
credit  risk  in  our  assets, provide the weighting of assets based on assigned
risk  factors  and  include off-balance sheet items such as loan commitments and
stand-by letters of credit.  The ratio of Tier 1 capital to risk-weighted assets
must be at least 4.0% and the ratio of total capital (Tier 1 capital plus Tier 2
capital)  to  risk-weighted  assets must be at least 8.0%.  The capital leverage
ratio  supplements  the  risk-based  capital  guidelines.

Banks  and  bank  holding  companies are required to maintain a minimum ratio of
Tier  1  capital  to  adjusted  quarterly  average  total  assets  of  3.0%.

The  following table summarizes the Bank's risk-based capital ratios at June 30,
2004:

<TABLE>
<CAPTION>
<S>                                            <C>
     Tier 1 capital (to risk-weighted assets)  13.20%
     Total capital (to risk-weighted assets)   14.31%
     Tier 1 capital (to total average assets)   9.56%
</TABLE>

As  of  June  30, 2004, the Company had approximately $1,484,000 in unencumbered
cash  that  could  be  contributed to the Bank if necessary.  The Bank's capital
ratios listed above would improve if these funds were contributed to the Bank by
the  Company.

REGULATORY MATTERS

From  time  to  time, various bills are introduced in the United States Congress
with  respect  to  the  regulation  of financial institutions.  Certain of these
proposals,  if  adopted,  could significantly change the regulation of banks and
the  financial  services  industry.  We  cannot  predict  whether  any  of these
proposals  will  be adopted or, if adopted, how these proposals would affect us.
Information  regarding  laws  and  regulations  that  may  materially impact the
Company  and  the  Bank  are  incorporated herein by reference to the subsection
entitled  "Supervision  and  Regulation"  of the Company's annual report on Form
10-KSB  for  the  year  ended  December  31,  2003.


                                       16
<PAGE>
RECENT ACCOUNTING PRONOUNCEMENTS

Accounting  standards  that  have  been  issued  or  proposed  by  the Financial
Accounting  Standards Board that do not require adoption until a future date are
not  expected to have a material impact on the consolidated financial statements
upon  adoption.

ITEM 3. CONTROLS AND PROCEDURES

At  June  30,  2004, an evaluation was performed, under the supervision and with
the  participation  of  the  Company's management, including the Chief Executive
Officer  and  Chief  Financial  Officer,  of the effectiveness of the design and
operation  of  the  Company's disclosure controls and procedures.  Based on that
evaluation,  the Company's management, including the Chief Executive Officer and
Chief  Financial  Officer,  concluded that the Company's disclosure controls and
procedures  were  effective  at  timely  alerting  them  to material information
relating to the Company (including its consolidated subsidiary) that is required
to  be  included  in  the  Company's  periodic  filings  with the Securities and
Exchange  Commission.  There  have  been  no  changes  in the Company's internal
control  over  financial  reporting  during the Company's quarter ended June 30,
2004  that  have  materially  affected,  or  are reasonably likely to materially
affect,  the  Company's  internal  control  over  financial  reporting.


                                       17
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS

          There are no material, pending legal proceedings to which the Company
          or  any  of  its  subsidiaries  is  a  party  or of which any of their
          property  is  the  subject.

ITEM 2.   CHANGES IN SECURITIES

          (a)  Not applicable.
          (b)  Not applicable.
          (c)  Not applicable.
          (d)  Not applicable.
          (e)  Not applicable.

ITEM 3.   DEFAULTS UPON SENIOR SECURITIES

          Not applicable.

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

          (a)  The 2004 Annual Meeting of Shareholders was held on May 24, 2004.
          (b)  Election of Directors

          The  following  directors  will serve until the 2005 Annual Meeting of
          Shareholders:  Wanda P. Roach, A.R. (Rick) Roberts, III, and Donald F.
          Stevens.  The  following  directors  will  serve until the 2006 Annual
          Meeting  of  Shareholders:  Dennis  W. Burnette, William L. Early, and
          Albert  L.  Evans.

          The  following  are  the  results  of  the  votes cast by shareholders
          present  at  the  2004  Annual Meeting of Shareholders, by proxy or in
          person,  for  the  proposal  to elect the following directors to serve
          until  the  2007  Annual  Meeting  of  Shareholders:

<TABLE>
<CAPTION>
                  Name                For         Withhold
          -------------------       -------       --------
<S>                                 <C>           <C>
          J. Calvin Hill, Jr.       911,647          2,445
          Roger M. Johnson          912,867          1,225
          J. David Keller           912,647          1,445
</TABLE>

ITEM 5.   OTHER INFORMATION

          None.

ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits:
               31.1 -    Certification of Chief Executive Officer Pursuant to
                         Rule 13a-14 under the Securities Exchange Act of 1934,
                         as amended
               31.2 -    Certification of Chief Financial Officer Pursuant to
                         Rule 13a-14 under the Securities Exchange Act of 1934,
                         as amended
               32.1 -    Certification pursuant to 18 U.S.C. Section 1350, as
                         adopted pursuant to Section 906 of the Sarbanes-Oxley
                         Act of 2002

          (b)  Reports on Form 8-K:
               None.


                                       18
<PAGE>
                                   SIGNATURES


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


                                        CHEROKEE BANKING COMPANY
                                        (Registrant)


DATE:  August 12, 2004                  BY:  /S/ DENNIS W. BURNETTE
       ---------------                       -----------------------------------
                                        Dennis W. Burnette
                                        President, Chief Executive Officer and
                                        Director


DATE:  August 12, 2004                  BY: /S/ A.R. ROBERTS, III
       ---------------                      ------------------------------------
                                        A.R. Roberts, III
                                        Chief Financial Officer,
                                        Chief Operations Officer and Director


                                       19
<PAGE>