SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C. 20549

                               FORM 10-KSB

X         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
          EXCHANGE ACT OF 1934 [FEE REQUIRED].

               For the fiscal year ended December 31, 1997.

       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
          SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED].

                       Commission File No. 2-94292

                          FNB Banking Company
    -----------------------------------------------------------------
    (Exact name of Small Business Issuer as specified in its charter)

Georgia                                                        58-1479370
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(State or other jurisdiction                             (I.R.S. Employer
of incorporation or organization)                  Identification Number)

318 South Hill Street, P.O. Drawer F, Griffin, Georgia              30224
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(Address of principal executive offices)                       (Zip Code)

Issuer's telephone number:  (770) 227-2251

Securities registered pursuant to Section 12(b) of the Act:
None.

Securities registered pursuant to Section 12(g) of the Act:
None.

Check whether the Issuer (1) has 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___

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B not contained in this form, and no
disclosure will be contained, to the best of registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.  Not Applicable.  Registrant is
not required to be registered under the Securities Exchange Act
of 1934.

State the Issuer's revenue for its most recent fiscal year:
$18,806,678.

State the aggregate market value of the voting stock held by non-
affiliates:  as of March 15, 1998, 566,504 Shares of common
stock, $1.00 par value (the "Common Stock"), with an aggregate
value of $17,844,876 (based upon approximate market value of
$31.50/share) (the last sale price known to the Registrant for
the Common Stock, for which there is no established trading
market).

State the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date:  As of
March 15, 1998, there were 807,800 outstanding shares of the
Registrant's Common Stock.

                       FNB BANKING COMPANY


                           FORM 10-KSB


                              INDEX

                                                              PAGE

PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
     Item 1.   DESCRIPTION OF BUSINESS . . . . . . . . . . . . .
     Item 2.   DESCRIPTION OF PROPERTY . . . . . . . . . . . . .
     Item 3.   LEGAL PROCEEDINGS . . . . . . . . . . . . . . . .
     Item 4.   SUBMISSION OF MATTERS TO A VOTE OF
               SECURITY HOLDERS. . . . . . . . . . . . . . . . .
PART II  . . . . . . . . . . . . . . . . . . . . . . . . . . . .

     Item 5.   MARKET FOR COMMON EQUITY AND RELATED
               STOCKHOLDER MATTERS . . . . . . . . . . . . . . .
     Item 6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR
               A PLAN OF OPERATION . . . . . . . . . . . . . . .
     Item 7.   FINANCIAL STATEMENTS. . . . . . . . . . . . . . .
     Item 8.   CHANGES IN AND DISAGREEMENTS WITH
               ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
               DISCLOSURE  . . . . . . . . . . . . . . . . . . .
     Item 9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
               AND CONTROL PERSONS; COMPLIANCE WITH
               SECTION 16(a) OF THE EXCHANGE ACT . . . . . . . .
     Item 10.  EXECUTIVE COMPENSATION. . . . . . . . . . . . . .
     Item 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
               OWNERS AND MANAGEMENT . . . . . . . . . . . . . .
     Item 12.  CERTAIN RELATIONSHIPS AND RELATED
               TRANSACTIONS. . . . . . . . . . . . . . . . . . .
     Item 13.  EXHIBITS AND REPORTS ON FORM 8-K. . . . . . . . .

                                -i-

<PAGE>
                              PART I

ITEM 1.  DESCRIPTION OF BUSINESS

THE REGISTRANT

     FNB Banking Company, a Georgia corporation, (the "Company"
or "FNB") was organized on July 13, 1982.  Effective on March 1,
1983, FNB Banking Company acquired all of the 200,000 issued and
outstanding shares of common stock, $10.00 par value, of First
National Bank of Griffin (the "Bank").  As a result of this
transaction, the former shareholders of the Bank became the
shareholders of the Company, and the Bank became the wholly-owned
subsidiary of the Company.

     Certain statements included or incorporated by reference in
this Form 10-KSB are forward-looking (as such term is defined in
the Securities Exchange Act of 1934, as amended).  Such statements
may relate to the Company or the Bank's operations, performance and
financial condition.  These statements are based upon a number of
assumptions and estimates that are inherently subject to significant
uncertainties, many of which are beyond the control of the Company
and the Bank.  Actual results may differ materially from those
expressed or implied by such forward-looking statements.

     The Company operates a full-service commercial banking
business based in Griffin, Georgia, providing such customary
banking services as checking and savings accounts, various types
of time deposits, safe deposit facilities, money transfers and
individual retirement accounts.  The Company also finances
commercial transactions, makes secured and unsecured loans and
provides other financial services to its customers.  The Company
performs corporate, pension and personal trust services through
the Bank.  Through its subsidiary, Griffin Loans, Inc., a consumer
finance company, the Company engages in the business of small making
loans to individuals under the trade name "First Credit."


SERVICES

     The Bank is community oriented, with an emphasis on retail
banking, and offers such customary banking services as consumer
and commercial checking accounts, NOW accounts, savings accounts,
certificates of deposit, lines of credit, Mastercard and Visa
accounts and money transfers.  The Bank finances commercial and
consumer transactions, makes secured and unsecured loans, and
provides a variety of other banking services.

DEPOSITS

     The Bank offers a full range of depository accounts and
services to both consumers and businesses.  At December 31, 1997
the Bank's deposit base, totaling approximately $167 million,
consisted of approximately $27 million in non-interest bearing
demand deposits (16% of total deposits), approximately $41
million in interest bearing demand deposits (including money
market accounts) (24% of total deposits), approximately $15
million in savings deposits (9% of total deposits),
approximately $55 million in time deposits in amounts less than
$100,000 (34% of total deposits), and approximately $29 million
in time deposits of $100,000 or more (17% of total deposits).
Management of the Bank is of the opinion that its time deposits
of $100,000 or more are customer relationship-oriented and
represent a reasonably stable source of funds.

                                -1-

LOANS

     The Bank makes both secured and unsecured loans to
individuals, firms and corporations, and both its consumer and
commercial lending operations include various types of credit for
the Bank's customers.  Secured loans include first and second
real estate mortgage loans.  The Bank also makes direct
installment loans to consumers on both a secured and unsecured
basis.  At December 31, 1997, consumer, real estate (including
mortgage and construction loans) and commercial loans represented
approximately 18%, 37%, and 45%, respectively, of the Bank's
total loan portfolio.  On October 13, 1994, the Bank purchased
the assets of Griffin Loans, Inc., a consumer finance company,
and on January 17, 1996, Griffin Loans, Inc. purchased
substantially all of the assets of another consumer finance
company, Zebulon Finance Corporation.  Most loans made by the
finance company are for less than $1,000, but Griffin Loans, Inc.
also makes real estate loans for larger amounts.

LENDING POLICY

     The current lending strategy of the Bank is to make loans
only to persons who reside, work or own property in its primary
trade area which consists of Spalding and Henry County, Georgia.
On February 25, 1997 the Bank opened a branch in Henry County and
began to serve that market.  Unsecured loans normally are made
only to persons who maintain depository relationships with the
Bank.  Secured loans are made to persons who are well established
and have net worth, collateral and cash flow to support the loan.
Real estate loans are only made when such loans are secured by
real property located in the Bank's primary trade area.

     The Bank provides each lending officer with written
guidelines for lending activities.  Lending authority is
delegated by the Board of Directors of the Bank to loan officers,
each of whom is limited in the amount of secured and unsecured
loans which they can make to a single borrower or related group
of borrowers.  All unsecured loans in excess of $50,000 must have
the approval of the loan committee.

     Making loans to businesses to fund working capital is a
traditional function of commercial banks.  Such loans are
expected to be repaid out of the current earnings of the
commercial entity, and the ability of the borrower to service its
debt is dependent upon the success of the commercial enterprise.
It is the Bank's policy to secure these loans with collateral.
Many of the Bank's commercial loans are secured by real estate
collateral because such collateral is superior to other types of
collateral available to small businesses.  Loans secured by
commercial real estate, however, particularly if collateral
dependent, are subject to certain inherent risks.  Commercial
real estate may be substantially illiquid, and commercial real
estate values are difficult to ascertain and subject to wide
fluctuation depending upon economic conditions.

     On March 19, 1993, inter-agency guidelines adopted by
federal bank regulators, including the Office of the Comptroller
of the Currency (the "OCC"), went into effect and mandated that
financial institutions establish real estate lending policies and
establish certain minimum real estate loan-to-value standards.
The Bank has adopted these federal standards as its minimum
standards.  These standards require maximum loan-to-value ratios

                                -2-
for various types of real estate loans as set forth below.
However, the Bank may make exceptions to the minimum standards,
which exceptions must be accounted for and tracked.
<TABLE>
<CAPTION>
                                                   Loan-to-
                                                 Value Limit
      Loan category                                (percent)
      -------------                              ------------
      <S>                                             <C>
      Raw land                                         65
      Land development                                 75
      Construction:
        Commercial, multifamily <F1> and
          other nonresidential                         80
        1- to 4-family residential                     85
      Improved Property                                85
      Owner-occupied 1- to 4-family and
        home equity                                   <F2>

<FN>
<F1>  Multifamily construction includes condominiums and
      cooperatives.
<F2>  A loan-to-value limit has not been established for
      permanent mortgage or home equity loans on owner-occupied, 1-
      to 4-family residential property.  However, for any such
      loan with a loan-to-value ratio that equals or exceeds 90
      percent at origination, appropriate credit enhancement in
      the form of either mortgage insurance or readily marketable
      collateral is required.
</FN>
</TABLE>

LOAN REVIEW AND NON-PERFORMING ASSETS

     The loan review officer of the Company reviews the Bank's
loan portfolio to determine deficiencies and corrective action to
be taken.  The results of the reviews by the loan review officer
are presented to the President of the Bank and the Executive
Committee of the Bank.  On at least an annual basis, reviews are
conducted for all loans over $50,000.  Past due loans are
reviewed at least weekly by lending officers and by the chief
credit officer, and a summary report is reviewed monthly by the
Board of Directors.  The Board of Directors reviews all loans
over $25,000 whether current or past due each month.

ASSET/LIABILITY MANAGEMENT

     A committee composed of officers of the Bank is charged with
managing the Bank's assets and liabilities.  The committee
attempts to manage asset growth, liquidity and capital to maximize
income and reduce interest rate risk.  The committee directs the
Bank's overall acquisition and allocation of funds.  At monthly
meetings, the committee reviews and discusses the monthly asset and
liability funds budget in relation to the actual flow of funds, as
well as peer group comparisons; the ratio of the amount of rate-
sensitive assets to the amount of rate-sensitive liabilities; the
ratio of the allowance for loan losses to outstanding and non-
performing loans; and other variables, such as expected loan demand,
investment opportunities, core deposit growth within specified
categories, regulatory changes, monetary policy adjustments and the
overall state of the economy.

                                -3-

COMPETITION

     The banking business is highly competitive.  The Company's
primary market area consists of Spalding County, Georgia, with a
population of approximately 55,000.  On February 25, 1997 the
Company opened a branch in the town of Hampton, Henry County,
Georgia.  Henry County has a population of approximately 76,000.
The Company competes in Spalding County with four other
commercial banks and one thrift institution and in Henry County
with seven commercial banks and one thrift institution.  The
deposit range of its competitors in Spalding County is $36
million to $122 million and $1 million to $260 million in Henry
County.  The Bank is the largest bank in Spalding County in terms
of assets and deposit size, with assets and deposits at
December 31, 1997 of approximately $184 million and $160 million,
respectively, and the second smallest in Henry County in terms of
deposits located in that county.

     In addition to the Company's competitors in Spalding and
Henry County, the Company competes with commercial banks,
thrifts, various other financial institutions and brokerage
houses located outside the market area.  To a lesser extent, the
Company also competes for loans with insurance companies,
regulated small loan companies, credit unions and certain
governmental agencies.  In addition, the Company and any non-
banking subsidiaries it may establish in the future compete and
will compete with numerous other companies and financial
institutions engaged in similar lines of business, such as other
bank holding companies, leasing companies and insurance
companies.

YEAR 2000 COMPLIANCE

     The "year 2000 issue" arises from the widespread use of computer
programs that rely on two-digit codes to perform computations or
decision-making functions.  Many of these programs may fail due to
an inability to properly interpret date codes beginning January 1,
2000 ("Y2K").  For example, such programs may misinterpret "00" as the year
1900 rather than 2000.  In addition, some equipment, being controlled
by microprocessor chips, may not deal appropriately with the year "00".
The Company is evaluating its computer systems to determine which
modifications and expenditures will be necessary to make its systems
compatible with Y2K requirements.  The Company believes that their
systems will be Y2K-compliant upon implementation of such modifications.

    Management estimates that total costs of Y2K compliance will be
approximately $250,000.  The Company estimates that the direct costs
of such modifications will not be material to the consolidated results
of operations.  However, there can be no assurance that all necessary
modifications will be identified and corrected or that unforeseen
difficulties or costs will not arise.  In addition, there can be no
assurance that the systems of other companies on which the Company
depends will be modified on a timely basis, or that the failure by
another company to properly modify its systems will not negatively
impact the systems or operations of the Company.

EMPLOYEES

     As of December 31, 1997, the Company and the Bank had 108
full-time and 21 part-time employees.  The Company is not a party
to any collective bargaining agreement.  Management believes that the
Company enjoys satisfactory relations with its employees.

                                -4-
SUPERVISION AND REGULATION

     GENERAL.  The Company is a registered bank holding company
subject to regulation by the Board of Governors of the Federal
Reserve (the "Federal Reserve") under the Bank Holding Company
Act of 1956, as amended (the "Act").  The Company is required to
file financial information with the Federal Reserve periodically
and is subject to periodic examination by the Federal Reserve.

     The Act requires every bank holding company to obtain the
prior approval of the Federal Reserve before (i) it may acquire
direct or indirect ownership or control of more than 5% of the
voting shares of any bank that it does not already control; (ii)
it or any of its subsidiaries, other than a bank, may acquire all
or substantially all of the assets of a bank; and (iii) it may
merge or consolidate with any other bank holding company.  In
addition, a bank holding company is generally prohibited from
engaging in, or acquiring, direct or indirect control of the
voting shares of any company engaged in non-banking activities.
This prohibition does not apply to activities found by the
Federal Reserve, by order or regulation, to be so closely related
to banking or managing or controlling banks as to be a proper
incident thereto.  Some of the activities that the Federal
Reserve has determined by regulation or order to be closely
related to banking are:  making or servicing loans and certain
types of leases; performing certain data processing services;
acting as fiduciary or investment or financial advisor; providing
discount brokerage services; underwriting bank eligible
securities; underwriting debt and equity securities on a limited
basis through separately capitalized subsidiaries; and making
investments in corporations or projects designed primarily to
promote community welfare.

     The laws of Georgia require annual registration with the
Department of Banking and Finance (the "DBF") by all Georgia bank
holding companies.  Such registration includes information with
respect to the financial condition, operations, management and
intercompany relationships of a bank holding company and its
subsidiaries and related matters.  The DBF may also require such
other information as is necessary to keep itself informed as to
whether the provisions of Georgia law and the regulations and
orders issued thereunder by the DBF have been complied with.
The DBF may make examinations of each bank holding company and
each bank subsidiary thereof, other than a national bank.

     The Bank is a national bank chartered under the National
Bank Act and is subject to the supervision of, and is regularly
examined by, the OCC.  The OCC regulates or monitors all areas
of the Bank's operations and activities, including reserves,
loans, mergers, issuance of securities, payments of dividends,
interest rates and establishment of branches.  Interest and
certain other charges collected or contracted for by the Bank
are also subject to state usury laws or certain federal
laws concerning interest rates.

     The Bank is insured by the Federal Deposit Insurance
Corporation (the "FDIC").  The major functions of the FDIC with
respect to insured banks include paying depositors to the extent
provided by law if an insured bank is closed without adequate
provisions having been made to pay claims of depositors, acting
as a receiver of state banks placed in receivership when
appointed receiver by state authorities and preventing the

                                -5-
development or continuance of unsound and unsafe banking
practices.

     The Company is an "affiliate" of the Bank under the Federal
Reserve Act, which imposes certain restrictions on (i) loans by
the Bank to the Company, (ii) investments in the stock or
securities of the Company by the Bank, (iii) the Bank's taking
the stock or securities of an "affiliate" as collateral for loans
by the Bank to a borrower and (iv) the purchase of assets from
the Company by the Bank.  Further, a bank holding company and its
subsidiaries are prohibited from engaging in certain tie-in
arrangements in connection with any extension of credit, lease or
sale of property or furnishing of services.

     PAYMENT OF DIVIDENDS.  The Company is a legal entity
separate and distinct from the Bank.  Most of the revenues of the
Company result from dividends paid to it by the Bank.  There are
statutory and regulatory requirements applicable to the payment
of dividends by the Bank, as well as by the Company to its
shareholders.

     As a national bank, the Bank is required by federal law to
obtain the prior approval of the OCC for payments of dividends if
the total of all dividends declared by the Board of Directors in
any year will exceed (i) the total of the Bank's net profits (as
defined and interpreted by regulation) for that year, plus (ii)
the Bank's retained net profits (as defined and interpreted by
regulation) of the preceding two years, less any required
transfers to surplus.

     The payment of dividends by the Company and the Bank may
also be affected or limited by other factors, such as the
requirement to maintain adequate capital above regulatory
guidelines.  In addition, if, in the opinion of the applicable
regulatory authority, a bank under its jurisdiction is engaged in
or is about to engage in an unsafe or unsound practice (which,
depending upon the financial condition of a bank, could include
the payment of dividends), such authority may require, after
notice and hearing, that such bank cease and desist from such
practice.  The FDIC and the OCC have issued policy statements
providing that insured banks should generally only pay dividends
out of current operating earnings.  At December 31, 1997,
the Bank's retained earnings from which dividends could be paid
totaled approximately $3,795,000.  For 1997, the Company's cash
dividend payout to stockholders was 31% of net income.

     MONETARY POLICY.  The results of operations of the Bank, and
therefore the Company, are affected by credit policies of
monetary authorities, particularly the Federal Reserve.  The
instruments of monetary policy employed by the Federal Reserve
include open market operations in U.S. government securities,
changes in the discount rate on bank borrowings and changes in
reserve requirements against bank deposits.  In view of changing
conditions in the national economy and in the money markets, as
well as the effect of actions by monetary and fiscal authorities,
including the Federal Reserve, no prediction can be made as to
possible future changes in interest rates, deposit levels, loan
demand or the business and earnings of the Bank.


                                -6-
     CAPITAL ADEQUACY.  The Federal Reserve and the OCC have
implemented substantially identical risk-based rules for
assessing bank and bank holding company capital adequacy.  These
regulations establish minimum capital standards in relation to
assets and off-balance sheet exposures as adjusted for credit
risk.  Banks and bank holding companies are required to have (1)
a minimum level of total capital (as defined) to risk-weighted
assets of eight percent (8%); (2) a minimum  Tier One Capital (as
defined) to risk-weighted assets of four percent (4%); and (3) a
Tier One Capital to average assets of four percent (4%).  In addition,
 the Federal Reserve and the OCC have established a minimum three
percent (3%) leverage ratio of Tier One Capital to total assets for
the most highly-rated banks and bank holding companies.  "Tier One
Capital" generally consists of common equity not including
unrecognized gains and losses on securities, minority interests in
equity accounts of consolidated subsidiaries and certain perpetual
preferred stock less certain intangibles.  The Federal Reserve and
the OCC will require a bank holding company and a bank, respectively,
to maintain a leverage ratio greater than three percent (3%) if
either is experiencing or anticipating significant growth or is
operating with less than well-diversified risks in the opinion of
the Federal Reserve.  The Federal Reserve and the OCC use the
leverage ratio in tandem with the risk-based ratio to assess the
capital adequacy of banks and bank holding companies.  The FDIC,
the OCC and the Federal Reserve amended effective January 1, 1997
the capital adequacy standards to provide for the consideration of
interest rate risk in the overall determination of a bank's capital
ratio, requiring banks with greater interest rate risk to maintain
adequate capital for the risk.  The revised standards have not
had and are not expected to have a significant effect on the
Company's capital requirements.

     In addition, effective December 19, 1992, a new Section 38
to the Federal Deposit Insurance Act implemented the prompt
corrective action provisions that Congress enacted as a part of
the Federal Deposit Insurance Corporation Improvement Act of 1991
(the "1991 Act").  The "prompt corrective action" provisions set
forth five regulatory zones in which all banks are placed largely
based on their capital positions.  Regulators are permitted to
take increasingly harsh action as a bank's financial condition
declines.  Regulators are also empowered to place in receivership
or require the sale of a bank to another depository institution
when a bank's capital leverage ratio reaches two percent.  Better
capitalized institutions are generally subject to less onerous
regulation and supervision than banks with lesser amounts of
capital.

     The OCC has adopted regulations implementing the prompt
corrective action provisions of the 1991 Act, which place
financial institutions in the following five categories based
upon capitalization ratios: (1) a "well capitalized" institution
has a total risk-based capital ratio of at least 10%, a Tier One
risk-based ratio of at least 6% and a leverage ratio of at least
5%; (2) an "adequately capitalized" institution has a total risk-
based capital ratio of at least 8%, a Tier One risk-based ratio
of at least 4% and a leverage ratio of at least 4%; (3) an
"undercapitalized" institution has a total risk-based capital
ratio of under 8%, a Tier One risk-based ratio of under 4% or a
leverage ratio of under 4%; (4) a "significantly
undercapitalized" institution has a total risk-based capital
ratio of under 6%, a Tier One risk-based ratio of under 3% or a


                                -7-

leverage ratio of under 3%; and (5) a "critically
undercapitalized" institution has a leverage ratio of 2% or less.
Institutions in any of the three undercapitalized categories
would be prohibited from declaring dividends or making capital
distributions.  The OCC regulations also establish procedures for
"downgrading" an institution to a lower capital category based on
supervisory factors other than capital.  Under the OCC's
regulations, the Bank was a "well capitalized" institution at
December 31, 1997.

CAPITAL ADEQUACY

     Set forth below are pertinent capital ratios for FNB and the
Bank as of December 31, 1997.
<TABLE>
<CAPTION>

Minimum Capital Requirements             FNB      Bank
-----------------------------            ---      ----
<S>                                     <C>        <C>
Tier 1 Capital to Risk-based            14.1%      13.9% <F1>
   Assets:  4.00%
Total Capital to Risk-based             15.4%      15.1% <F2>
   Assets:  8.00%

Leverage Ratio (Tier 1 Capital          11.3%      10.9% <F3>
   to Average Assets): 4.00%

<FN>
<F1>  Minimum for "Well Capitalized" Banks = 6%
<F2>  Minimum for "Well Capitalized" Banks = 10%
<F3>  Minimum for "Well Capitalized" Banks = 5%
</FN>

RECENT LEGISLATIVE AND REGULATORY ACTION.

     On April 19, 1995, the four federal bank regulatory agencies
adopted revisions to the regulations promulgated pursuant to the
Community Reinvestment Act (the "CRA"), which are intended to set
distinct assessment standards for financial institutions.  The
revised regulation contains three evaluation tests:  (i) a lending
test, which compares an institution's market share of loans in
low- and moderate-income areas to its market share of loans in its
entire service area and the percentage of a bank's outstanding
loans to low- and moderate-income areas or individuals, (ii) a
services test, which evaluates the provisions of services that
promote the availability of credit to low- and moderate-income
areas, and (iii) an investment test, which evaluates an
institution's record of investments in organizations designed to
foster community development, small- and minority-owned businesses
and affordable housing lending, including state and local
government housing or revenue bonds.  The regulations are designed
to reduce some paperwork requirements of the current regulations
and provide regulators, institutions and community groups with a
more objective and predictable manner with which to evaluate the CRA
performance of financial institutions.  The rule became effective
on January 1, 1996, at which time evaluation under streamlined
procedures began for institutions with assets of less than $250
million that are owned by a holding company with total assets of
less than $1 billion.  These regulations have not had any
appreciable impact upon the Company and the Bank.


                                -8-

<PAGE>
     Congress and various federal agencies (including, in
addition to the bank regulatory agencies, the Department of
Housing and Urban Development, the Federal Trade Commission and
the Department of Justice) (collectively the "Federal Agencies")
responsible for implementing the nation's fair lending laws have
been increasingly concerned that prospective home buyers and
other borrowers are experiencing discrimination in their efforts
to obtain loans.  In recent years, the Department of Justice has
filed suit against financial institutions, which it determined
had discriminated, seeking fines and restitution for borrowers
who allegedly suffered from discriminatory practices.  Most, if
not all, of these suits have been settled (some for substantial
sums) without a full adjudication on the merits.

     On March 8, 1994 the Federal Agencies, in an effort to
clarify what constitutes lending discrimination and specify the
factors the agencies will consider in determining if lending
discrimination exists, announced a joint policy statement
detailing specific discriminatory practices prohibited under the
Equal Credit Opportunity Act and the Fair Housing Act.  In the
policy statement, three methods of proving lending discrimination
were identified:  (1) overt evidence of discrimination, when a
lender blatantly discriminates on a prohibited basis, (2)
evidence of disparate treatment, when a lender treats applicants
differently based on a prohibited factor even where there is no
showing that the treatment was motivated by prejudice or a
conscious intention to discriminate against a person, and (3)
evidence of disparate impact, when a lender applies a practice
uniformly to all applicants, but the practice has a
discriminatory effect, even where such practices are neutral on
their face and are applied equally, unless the practice can be
justified on the basis of business necessity.

     On September 23, 1994, President Clinton signed the Reigle
Community Development and Regulatory Improvement Act of 1994 (the
"Regulatory Improvement Act").  The Regulatory Improvement Act
provides funding for community development projects through banks
and community development financial institutions and also
numerous regulatory relief provisions designed to eliminate
certain duplicative regulations and paperwork requirements.

     On September 29, 1994, President Clinton signed the Reigle-
Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"Federal Interstate Bill") which amends federal law to permit
bank holding companies to acquire existing banks in any state
effective September 29, 1995, and any interstate bank holding
company is permitted to merge its various bank subsidiaries into
a single bank with interstate branches after May 31, 1997.
States have the authority to authorize interstate branching
before June 1, 1997, or alternatively, to opt out of interstate
branching before that date.  The Georgia Financial Institutions
Code was amended in 1994 to permit the acquisition of a Georgia
bank or bank holding company by out-of-state bank holding
companies beginning July 1, 1995.  On September 29, 1995, the
interstate banking provisions of the Georgia Financial
Institutions Code were superseded by the Federal Interstate Bill.

     In 1996, the Georgia legislature adopted a bill (the
"Georgia Intrastate Bill") to permit, effective July 1, 1996, any
bank located in Georgia or group of affiliated banks under one
holding company to establish new or additional branch banks in up
to three additional counties anywhere within the State of Georgia


                                -9-

<PAGE>
where a bank does not currently have operations.  After July 1,
1998, all restrictions on state-wide branching will be removed.
Prior to adoption of the Georgia Intrastate Bill, Georgia only
permitted branching of banks within a county, via merger or
consolidation with an existing bank or in certain other limited
circumstances.

     FDIC Insurance Assessments for the Bank.  The Bank is
subject to FDIC deposit insurance assessments for the Bank
Insurance Fund (the "BIF").  In the first six months of 1995, the
Bank was assessed $.23 per $100 of deposits based upon a risk-
based system whereby banks are assessed on a sliding scale
depending upon their placement in nine separate supervisory
categories, from $.23 per $100 of deposits for the healthiest
banks (those with the highest capital, best management and best
overall condition) to as much as $.31 per $100 of deposits for
the less-healthy institutions, for an average $.259 per $100 of
deposits.

     On August 8, 1995, the FDIC lowered the BIF premium for
healthy banks 83% from $.23 per $100 in deposits to $.04 per $100
in deposits, while retaining the $.31 level for the riskiest
banks.  The average assessment rate was therefore reduced from
$.232 to $.044 per $100 of deposits.  The new rate took effect on
September 29, 1995.  On September 15, 1995, the FDIC refunded
$80,081 to the Bank for premium overpayments in the second and
third quarter of 1995.  On November 14, 1995, the FDIC again
lowered the BIF premium for healthy banks from $.04 per $100 of
deposits to zero for the highest rated institutions (92% of the
industry).  As a result, the Bank paid only the legally required
annual minimum payment of $2,000 per year for insurance beginning
in January 1996.  Had the current rates been in effect for all of
1995, the annual FDIC insurance premiums paid by the Bank would
have been reduced by approximately $284,000.

     On September 29, 1996, the Economic Growth and Regulatory
Paperwork Reduction Act of 1996 was enacted (the "1996 Act").
The 1996 Act's chief accomplishment was to provide for the
recapitalization of the Savings Association Insurance Fund
("SAIF") by levying a one-time special assessment on SAIF
deposits to bring the fund to a reserve ratio equal to $.25 per
$100 of insured deposits and to provide that beginning in 1997,
BIF assessments would be used to help pay off the $780 million in
annual interest payments on the $8 billion Financing Corporation
("FICO") bonds issued in the late 1980s as part of the government
rescue of the thrift industry.  The law provides that BIF
assessments for FICO bond payments must be set at a rate equal to
20% of the SAIF rates for such assessments in for 1997, 1998 and
1999.  After 1999, all FDIC insured institutions will pay the
same assessment rates.  For 1997, the assessment for the FICO
bond payments was $.0132 per $100 of deposits for BIF deposits
and $.0648 per $100 of deposits for SAIF deposits.  Currently, the
deposit insurance assessments range from zero to $.27 per $100 of
deposits with 94% of banks paying nothing for deposit insurance.  One of
the provisions of the 1996 Act was to eliminate the minimum
$2,000 per year charge for deposit insurance.  As a result, in 1997,
the Bank paid no premiums for deposit insurance and a FICO bond
assessment of $17,181.  The Bank will pay no premium for deposit
insurance in the first six months of 1998 and a first quarter FICO
bond assessment of $4,419.  The Bill also provided limited
regulatory relief and revised certain out-of-date regulations.


                                -10-
ITEM 2.  DESCRIPTION OF PROPERTY

     The Company's main office is located at 318 South Hill
Street, Griffin, Georgia, 30224, and its telephone number at that
office is (770) 227-2251.

     The Company distributes its services through four full-
service banking offices, and one limited-service banking office
as follows:

          Main Office
          -----------

          318 South Hill Street
          Griffin, Georgia 30224

          Northside Bank Branch
          ---------------------

          1475 West McIntosh Road
          Griffin, Georgia  30223

          Southside Bank Branch
          ---------------------
          1103 Zebulon Road
          Griffin, Georgia  30224

          Kroger Griffin Branch
          ---------------------
          Limited Service Office
          ----------------------
          100 Spalding Village
          Griffin, Georgia  30223

          Henry County Branch
          -------------------
          996 Bear Creek Boulevard
          Hampton, Georgia 30228

     The executive offices of the Company and the main office of
the Bank are located in a 33,000 square-foot facility, 318 South
Hill Street, Griffin, Georgia.  The Company's main office is
subject to a mortgage in the principal amount of $611,112 at
December 31, 1997.  None of the other properties of the Company
are subject to encumbrances.  The Company owns a building
adjacent to its main office in Griffin which is used for storage
of bulk supplies and to house the offices of Griffin Loans, Inc.
The Company or the Bank owns these properties, except the Kroger
Griffin Branch Limited Office, which is leased.  The Bank owns
the Henry County Branch property.  During 1990, the Bank acquired
property at 1453 West McIntosh Road, adjacent to its Northside
Branch.  The property was acquired for possible expansion purposes.


ITEM 3.  LEGAL PROCEEDINGS

     The Company is not aware of any material pending legal
proceedings to which the Company or the Bank is a party or to
which any of their property is subject.


                                -11-
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were submitted to a vote of security holders of
the Company during the fourth quarter of its fiscal year.


                           PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

     Stock.  There is no established public trading market for
the Company's Stock.  As of March 15, 1998, the Company had [425]
shareholders of record.

     Dividends.  In 1996 and 1997, the Company declared cash
dividends of $807,800 ($1.00 per share) and $888,580 ($1.10 per
share), respectively.  The Company intends to continue paying
cash dividends on a semi-annual basis.  However, the amount and
frequency of dividends will be determined by the Company's Board
of Directors in light of earnings, capital requirements and the
financial condition of the Company, and no assurances can be
given that dividends will be paid in the future.  Information on
restrictions on the amount of dividends payable by the Company
appears in Note 10 to the Company's consolidated financial
statements for the three years ended December 31, 1997 set forth
in Item 7 hereof.


ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

     The Company is a one bank holding company organized in 1983.  The
Bank is the only subsidiary of the Company at December 31, 1997 and 1996.


YEAR 2000 CONSIDERATIONS

     The Company is aware of the issues associated with the programming
code in existing computer systems as the millennium (year 2000)
approaches.  The Y2K problem is pervasive and complex as virtually every
computer operation will be affected in some way by the rollover of the
two-digit value to 00.  The issue is whether computer systems will
properly recognize date-sensitive information when the year changes to
2000.  Systems that do not properly recognize such information could
generate erroneous data or cause a system to fail.

     The Company is utilizing both internal and external resources to
identify, correct or reprogram, and test the systems for the Y2K
compliance.  It is anticipated that all mainframe systems will be
Y2K certified no later than the third quarter of 1998, allowing
adequate time for testing during 1999.  To date, confirmation has
been received from the Company's primary processing vendors that
plans are being developed to address processing of transactions in
the year 2000.


     Management estimates expenditures associated with Y2K compliance
to be approximately $250,000.  Direct costs are not expected to be
material to the consolidated results of operations and will be expensed
as incurred.  Expenses in 1997 related to the Y2K issue were not material
to the financial results of operations.


                                -12-
FINANCIAL CONDITION - 1997 VS. 1996

     During 1997, average total assets increased $22,135,000 (14%) over
1996. Average deposits increased $17,872,000 (13%) in 1997 over
1996. Average loans increased $19,837,000 (16%) in 1997 over 1996.

     Total assets at December 31, 1997, were $192,819,000,
representing a $22,042,000 (13%) increase from December 31, 1996.
Total deposits increased $21,912,000 (15%) from 1996 to 1997 while
total gross loans increased $12,758,000 (10%) during 1997. Time
deposits increased $16,207,000 from 1996 to 1997 while all other
deposit accounts increased $5,705,000 in 1997.  As the local economy
remained strong, loan demand increased and the Bank showed increases in
each lending category at year end except consumer.  These loan increases
were funded partially by the proceeds of sales, calls, and paydowns
of investment securities along with borrowings from the FHLB.
Non-performing assets at December 31, 1997 were $2,813,000 compared
to $783,000 at December 31, 1996.  The majority of the increase is
attributable to a increase of non-accrual loans.  There were no
related party loans which were considered nonperforming at December 31,
1997.

     The Bank was most recently examined by its primary regulatory
authority in January of 1998. There were no recommendations by the
regulatory authority that, in management's opinion, will have material
effects on the Company's liquidity, capital resources or operations.

RESULTS OF OPERATIONS - 1997 VS. 1996

     The Company's operational results primarily depend on the earnings
of the Bank. Its earnings depend to a large degree on net interest
income, which is the difference between the interest income received
from its investments (such as loans, investment securities, federal
funds sold, etc.) and the interest expense which is paid on deposit
liabilities.

     Net interest income increased by $1,279,000 or 14% in 1997.  Net
interest income at December 31, 1997, was $10,678,000 compared to
$9,398,000 in 1996.  The increase is primarily attributable to the
increase in interest and fees on loans offset by increases in
interest expense on time deposits. Net yield (tax equivalent) on
interest earning assets (6.57% in 1997 and 6.48% in 1996) increased
approximately 1% in 1997 over 1996.

     The provision for loan losses in 1997 was $718,000 compared to
$365,000 in 1996. The significant increase in the provision for loan
losses was primarily attributable to the increase in the loan
portfolio and an increase in non-accrual loans as compared to 1996.
The provision for loan losses continues to reflect management's
estimate of potential loan losses inherent in the portfolio and the
creation of an allowance for loan losses adequate to absorb such
losses.  The allowance for loan losses represented approximately 1.4%
and 1.1% of total loans outstanding at December 31, 1997 and 1996,
respectively.  Net charge-offs were $128,000 and $216,000 during 1997
and 1996, respectively.  A dedicated loan review function is utilized
by the Bank.  All loans of $50,000 or more are reviewed annually and
placed into various loan grading categories which assists in
developing lists of potential problem loans.  These loans are
regularly monitored by the loan review process to ensure early
identification of repayment problems so that adequate allowances can

                                -13-

<PAGE>
be made through the provision for loan losses.  Management believes
that these levels of allowance are appropriate based upon the
Company's loan portfolio and the current economic conditions.

     Other operating income in 1997 of $2,259,000 increased  over 1996 by
$29,000 or 1%. Other operating expenses increased $704,000 (10 %) in
1997 over 1996 principally due to the increase in personnel and
occupancy expenses associated with opening of the Henry County
branch.

     Income taxes expressed as a percentage of earnings before income
taxes increased from 32% in 1996 to 34% in 1997. The increase
relates to a decrease in tax-exempt income as a percentage of
earnings before income taxes.

RESULTS OF OPERATIONS - 1996 VS. 1995

     Net interest income in 1996, which was $9,398,000, increased by
$1,003,000 or 12% over 1995. The increase is primarily attributable
to the increase in interest and fees on loans offset by increases in
interest expense on time deposits.  Net yield (tax equivalent) on
interest earning assets (6.48% in 1996 and 6.44% in 1995) increased
approximately 1% in 1996 over 1995.

     The provision for loan losses in 1996 was $365,000 compared to
$31,000 in 1995. The significant increase in the provision for loan
losses was primarily attributable to the increase in the loan
portfolio and an increase in net charge-offs of $213,000 as compared
to 1995. The allowance for loan losses represented approximately
1.1% and 1.2% of total loans outstanding at December 31, 1996 and
1995, respectively. Net charge-offs were $216,000 and $3,000 during
1996 and 1995, respectively.

     Other operating income in 1996 of $2,229,000 increased over 1995
levels by $39,000 or 2%. Other operating expenses in 1996 of
$7,242,000 increased by $343,000 or 5% over 1995 principally due to
increases in supplies, depreciation and repairs and maintenance
expenses.

     Income taxes expressed as a percentage of earnings before income
taxes increased from 30% in 1995 to 32% in 1996. The increase
related to the decrease in tax-exempt income as a percentage of
earnings before income taxes.

INVESTMENTS

     The investment portfolio consists of debt securities which provide
the Company with a source of liquidity and a long-term, relatively
stable source of income. Additionally, the investment portfolio
provides a balance to interest rate and credit risk in other
categories of the balance sheet while providing a vehicle for the
investment of available funds, furnishing liquidity, and supplying
securities to pledge as required collateral for certain deposits.

     During 1997, certain equity securities held by the Company which had
previously been included in other investments were transferred to
available for sale as these began being traded on a national
exchange.  The transfer of these securities to available for sale
resulted in an increase in stockholders' equity of $703,000 after
consideration for the tax effects of the unrealized gain on these
securities.

                                -14-

<PAGE>
LIQUIDITY

     The Bank must maintain, on a daily basis, sufficient funds to cover
the withdrawals from depositors' accounts and to supply new
borrowers with funds. To meet these obligations, the Bank keeps cash
on hand, maintains account balances with its correspondent banks,
and purchases and sells federal funds and other short term
investments. Asset and liability maturities are monitored in an
attempt to match these to meet liquidity needs. It is the policy of
the Bank to monitor its liquidity to meet regulatory requirements
and their local funding requirements.

     The Bank maintains relationships with correspondent banks that can
provide funds to it on short notice, if needed. Presently, the Bank
has arrangements with a commercial bank for short term unsecured
advances up to $5,000,000.

     Cash and cash equivalents increased $9,314,000 to a total
$21,775,000 at year end 1997 as cash flows increases generated from
deposit and operating activities outpaced amounts used by investing
activities. Cash inflows from operations totaled $4,148,000 in 1997,
while inflows from financing activities totaled $18,071,000, most of
which were net deposit increases during 1997 of $21,912,000 and FHLB
advances of $4,000,000. Included in financing activities were note
payable repayments of $167,000 and FHLB advance repayments of
$6,786,000.

     Investing activities used $12,906,000 of cash and cash equivalents,
principally composed of net advances of loans to customers of
$12,925,000 during 1997 and investment security purchases, net of
sales, calls, and paydowns.

CAPITAL RESOURCES

     The Company continues to maintain adequate capital ratios. The
following tables present the Company's regulatory capital position
at December 31, 1997.

</TABLE>
<TABLE>
<CAPTION>
                                                                                   Risk-Based Capital Ratios
                                                                                Actual as of December 31, 1997
                                                                                ------------------------------
        <S>                                                                                  <C>
        Tier 1 Capital                                                                        14.1%
        Tier 1 Capital minimum requirement                                                     4.0%
                                                                                              ----
        Excess                                                                                10.1%
                                                                                              ====

        Total Capital                                                                         15.4%
        Total Capital minimum requirement                                                      8.0%
                                                                                              ----
        Excess                                                                                 7.4%
                                                                                              ====

                                                                                        Leverage Ratio
                                                                                   As of December 31, 1997
                                                                                   -----------------------
        Tier 1 Capital to adjusted total assets
          ("Leverage Ratio")                                                                  11.3%
        Minimum leverage requirement                                                           4.0%
                                                                                              ----
        Excess                                                                                 7.3%
                                                                                              ====
</TABLE>
                                -15-
     For a more complete discussion of the actual and required ratios
of the Company and the Bank, see Note 15 to the consolidated financial
statements.

ASSET/LIABILITY MANAGEMENT

     It is the Company's objective to manage assets and liabilities to
provide a satisfactory, consistent level of profitability within
the framework of established cash, loan, investment, borrowing
and capital policies. Certain officers are charged with the
responsibility for monitoring policies and procedures that are
designed to ensure acceptable composition of the asset/liability
mix. It is the overall philosophy of management to support asset
growth primarily through growth of core deposits, which include
deposits of all categories made by local individuals,
partnerships and corporations. The objective of the policy is to
control interest sensitive assets and liabilities so as to
minimize the impact of substantial movements in interest rates on
earnings.

     The asset/liability mix is monitored on a regular basis. A report
reflecting the interest sensitive assets and interest sensitive
liabilities is prepared and presented to the Board of Directors
on a monthly basis.

     One method to measure a bank's interest rate exposure is through
its repricing gap. The gap is calculated by taking all assets
that reprice or mature within a given time frame and subtracting
all liabilities that reprice or mature within that time frame. The
difference between these two amounts is called the "gap", the
amount of either liabilities or assets that will reprice without
a corresponding asset or liability repricing.

     A negative gap (more liabilities repricing than assets) generally
indicates that the bank's net interest income will decrease if
interest rates rise and will increase if interest rates fall. A
positive gap generally indicates that the bank's net interest
income will decrease if rates fall and will increase if rates
rise.

     The following table summarizes the amounts of interest-earning
assets and interest-bearing liabilities outstanding at December
31, 1997 that are expected to mature, prepay or reprice in each
of the future time periods shown. Except as stated below, the
amount of assets or liabilities that mature or reprice during a
particular period was determined in accordance with the
contractual terms of the asset or liability. Adjustable rate
loans are included in the period in which interest rates are next
scheduled to adjust rather than in the period in which they are
due, and fixed rate loans and mortgage-backed securities are
included in the periods in which they are anticipated to be
repaid based on scheduled maturities. The Company's savings
accounts and interest-bearing demand accounts (NOW and money
market deposit accounts), which are generally subject to
immediate withdrawal, are included in the "Three Months or Less"
category, although historical experience has proven these
deposits to be more stable over the course of a year.


                                -16-

<PAGE>
<TABLE>
<CAPTION>
                                                             At December 31, 1997
                                                           MATURING OR REPRICING IN
                                                            (dollars in thousands)
                                             Three          Four
                                           Months or      Months to         1 to 5          Over 5
                                              Less        12 Months          Years           Years            Total
                                           --------       ---------         ------          ------            -----
<S>                                   <C>                   <C>              <C>            <C>              <C>
Interest-earning assets:
  Interest-bearing deposits with
    other banks                        $       500             -               -               -                 500
  Investment securities                         10            1,857          10,472           9,735           22,074
  Mortgage loans held for sale                 650             -               -               -                 650
  Loans                                     31,241           23,612          72,066          13,870          140,789
  Other investments                           -                -               -                826              826
                                       -----------           ------          ------          ------          -------
Total interest-bearing assets          $    32,401           25,469          82,538          24,431          164,839
                                       ===========           ======          ======          ======          =======
Interest-bearing liabilities:

  Deposits:
    Demand and savings                 $    56,590             -               -               -              56,590
    Time deposits                           20,040           33,547          16,639          13,583           83,809
  FHLB advances                               -                 286           1,143            -               1,429
  Notes payable                                611             -               -               -                 611
                                       -----------           ------          ------          ------          -------

Total interest-bearing liabilities     $    77,241           33,833          17,782          13,583          142,439
                                       ===========           ======          ======          ======          =======
Interest sensitive difference
  per period                               (44,840)          (8,364)         64,756          10,848           22,400
                                       ===========           ======          ======          ======          =======
Cumulative interest sensitivity
  difference                               (44,840)         (53,204)         11,552          22,400
                                       ===========           ======          ======          ======
Cumulative difference to total
  assets                                      (23%)            (28%)             6%             12%
                                       ===========           ======          ======          ======
</TABLE>

     At December 31, 1997, the difference between the Company's
liabilities and assets repricing or maturing within one year was
$53,204,000. Due to an excess of liabilities repricing or
maturing within one year, a rise in interest rates would cause
the Company's net interest income to decline.

     Certain shortcomings are inherent in the method of analysis
presented in the foregoing table. For example, although certain
assets and liabilities may have similar maturities or periods to
repricing, they may react in different degrees or at different
points in time to changes in market interest rates. Additionally,
certain assets, such as adjustable-rate mortgages, have features
that restrict changes in interest rates, both on a short-term
basis and over the life of the asset. Changes in interest rates,
prepayment rates, early withdrawal levels and the ability of
borrowers to service their debt, among other factors, may change
significantly from the assumptions made in the table.


                                -17-
INFLATION

     Inflation impacts the growth in total assets in the banking
industry and causes a need to increase equity capital at higher
than normal rates to meet capital adequacy requirements. The
Company copes with the effects of inflation through the
management of its interest rate sensitivity gap position, by
periodically reviewing and adjusting its pricing of services to
consider current costs, and through managing its level of net
income relative to its dividend payout policy.


SELECTED STATISTICAL INFORMATION


     The following section presents consolidated statistical
information for FNB Banking Company which supplements the
financial data discussed herein.


Index to Selected Statistical Information

Table 1   Average Balances and Interest Rates
Table 2   Volume-Rate Analysis
Table 3   Investment Portfolio
Table 4   Loan Portfolio
Table 5   Allowance for Loan Losses
Table 6   Deposits
Table 7   Selected Ratios


     Average balances contained in the following selected
statistical information generally represent average daily
balances for all periods.


                                -18-

<PAGE>
TABLE 1
AVERAGE BALANCES AND INTEREST RATES

     The table below shows the month-end average balance outstanding for
each category of interest earning assets and interest-bearing liabilities
for the indicated periods, and the average rate of interest earned or
paid thereon.
<TABLE>
<CAPTION>
                                                                            For the Years Ended December 31,
                                                                          ------------------------------------
                                                                          (Amounts are presented in thousands)
                                                           1997                            1996
                                                 ---------------------------     -----------------------------
                                                 Average               Yield/     Average               Yield/
                                                 Balance   Interest     Rate      Balance   Interest     Rate
                                                 -------   --------   -------    ---------  --------  --------
<S>                                             <C>          <C>       <C>       <C>         <C>       <C>
Assets:
Interest earning assets:
  Loans (including loan fees)                   $ 140,193    14,904    10.63%    $ 120,356    12,543    10.42%
  Investment securities:
    Taxable                                        15,101     1,041     6.89%       15,957     1,101     6.90%
    Non-taxable                                     6,919       600     8.67%        7,822       692     8.85%
  Federal funds sold                                3,532       207     5.86%        4,505       258     5.73%
                                                  -------    ------                -------    ------
Total interest earning assets                     165,745    16,752    10.11%      148,640    14,594     9.82%
Other non-interest earnings assets                 15,686                           10,656
                                                  -------                          -------
         Total assets                           $ 181,431                        $ 159,296
                                                  =======                          =======
Liabilities and stockholders' equity:
Interest-bearing liabilities:
  Deposits:
    Interest-bearing demand and savings         $  53,653     1,361     2.54%    $  50,517     1,299     2.57%
    Time                                           72,852     4,118     5.65%       60,438     3,441     5.69%
  FHLB advances                                     5,153       332     6.44%        3,108       145     4.67%
  Long-term debt                                      688        50     7.27%          840        62     7.38%
  Federal funds purchased and securities
     sold under repurchase                            145         9     6.21%          212        13     6.13%
                                                  -------    ------    -----       -------    ------    -----
         Total interest-bearing liabilities       132,491     5,870     4.43%      115,115     4,960     4.31%
                                                  -------    ------    -----       -------    ------    -----
Other non-interest bearing liabilities             29,772                           26,977
Stockholders' equity                               19,168                           17,204
         Total liabilities and                    -------                          -------
            stockholders' equity                  181,431                        $ 159,296
                                                  =======                          =======
Excess of interest-earning assets over
  interest bearing liabilities                  $  33,254                        $  33,525
                                                  =======                          =======
Ratio of interest-earning assets to
  interest-bearing liabilities                     125.10%                          129.12%
Net interest income                                          10,822                             9,634
Net interest spread                                                     5.68%                             5.51%
Net interest yield on interest earning
   assets                                                               6.57%                             6.48%
</TABLE>


                                -19-

<PAGE>
<TABLE>
<CAPTION>
                                                             1995
                                               ------------------------------
                                                 Average              Yield/
                                                 Balance   Interest    Rate
                                               ----------  --------  --------
<S>                                             <C>         <C>       <C>
Assets:
Interest earning assets:
  Loans (including loan fees)                   $ 107,447    11,017    10.25%
  Investment securities:
    Taxable                                        16,399     1,118     6.82%
    Non-taxable                                     8,746       786     8.98%
  Federal funds sold                                2,013       120     5.96%
                                                  -------    ------     ----
Total interest earning assets                     134,605    13,041     9.69%
Other non-interest earnings assets                 12,106
                                                  -------
         Total assets                          $  146,711
                                                  =======
Liabilities and stockholders' equity:
Interest-bearing liabilities:
  Deposits:
    Interest-bearing demand and savings        $   49,623     1,329     2.68%
    Time                                           53,918     2,928     5.43%
  FHLB advances                                       380        26     6.84%
  Long-term debt                                    1,021        78     7.64%
  Federal funds purchased and securities
     sold under repurchase                            279        17     6.10%
                                                  -------     -----     ----
         Total interest-bearing liabilities       105,221     4,378     4.16%
                                                  -------     -----     ----
Other non-interest bearing liabilities             26,118
Stockholders' equity                               15,372
         Total liabilities and                    -------
            stockholders' equity               $  146,711
Excess of interest-earning assets over            =======
  interest bearing liabilities                 $   29,384
Ratio of interest-earning assets to               =======

  interest-bearing liabilities                       127.93%
Net interest income                                            8,663
Net interest spread                                                     5.53%
Net interest yield on interest earning
   assets                                                               6.44%


</TABLE>
Non-accrual loans and the interest income which was recorded on these loans,
if any, are included in the yield calculation for loans in all
periods reported.


Tax exempt income is calculated on a tax equivalent basis.


                                -20-

TABLE 2
VOLUME-RATE ANALYSIS


The following table shows a summary of the changes in interest
income and interest expense on a tax equivalent basis resulting
from changes in volume and changes in rates for each major
category of interest earning assets and interest-bearing
liabilities for 1997 over 1996, and 1996 over 1995.


<TABLE>
<CAPTION>
                                                                                1997 over 1996
                                                                                --------------
                                                                     Increase (decrease) due to changes in:
                                                                     --------------------------------------
                                                                      (Amounts are presented in thousands)

                                                                      Volume           Rate           Total
                                                                      ------           ----           -----
<S>                                                                 <C>               <C>             <C>
Interest income on:
  Loans (including loan fees)                                       $  2,072             289          2,361
  Investment securities:
    Taxable                                                              (59)            (1)           (60)
    Non-taxable                                                          (79)           (13)           (92)
  Federal funds sold                                                     (55)              4           (51)
                                                                       -----            ----          -----
       Total interest earning assets                                $  1,879             279          2,158
                                                                       =====            ====          =====
Interest expense on:
  Deposits:
    Interest-bearing demand and savings                             $     78            (16)             62
    Time                                                                 691            (14)            677
  FHLB                                                                   102             85             187
  Long-term debt                                                         (11)            (1)            (12)
  Federal funds purchased                                                 (3)            (1)             (4)
                                                                       -----            ----          -----
       Total interest-bearing liabilities                           $    857              53            910
                                                                       =====            ====          =====
</TABLE>
Note:  Rate/volume variances were allocated between rate variances and
volume variances using a weighted average allocation method.

                                -21-

<PAGE>
TABLE 2
VOLUME-RATE ANALYSIS (CONTINUED)

<TABLE>
<CAPTION>
                                                                                  1996 over 1995
                                                                                  --------------
                                                                     Increase (decrease) due to change in:
                                                                     -------------------------------------
                                                                      (Amounts are presented in thousands)

                                                                     Volume             Rate          Total
                                                                     ------             ----          -----
<S>                                                                 <C>                 <C>           <C>
Interest income on:
  Loans (including loan fees)                                       $ 1,325             201           1,526
  Investment securities:
    Taxable                                                             (29)             12             (17)
    Non-taxable                                                         (84)            (10)            (94)
  Federal funds sold                                                    149             (11)            138
                                                                      -----             ---           -----
       Total interest earning assets                                $ 1,361             192           1,553
                                                                      =====             ===           =====
Interest expense on:
  Deposits:
    Interest-bearing demand and savings                             $    21             (51)            (30)
    Time                                                                360             153             513
  FHLB                                                                  213             (94)            119
  Long-term debt                                                        (14)             (2)            (16)
  Federal funds purchased                                                (4)              -              (4)
                                                                      -----             ---           -----
       Total interest-bearing liabilities                           $   576               6             582
                                                                      =====             ===           =====
</TABLE>


Note:  Rate/volume variances were allocated between rate variances
       and volume variances using a weighted average allocation method.


TABLE 3
INVESTMENT PORTFOLIO

The following table presents the investments by category at
December 31, 1997 and 1996:
<TABLE>
<CAPTION>
                                                             (Amounts are presented in thousands)


                                                                      1997             1996
                                                                      ----             ----
<S>                                                                 <C>              <C>
HELD TO MATURITY (AT AMORTIZED COST)

United States treasury and agencies                                 $ 1,488            2,779
State, county and municipal                                           6,281            7,344
Mortgage-backed                                                       1,624            2,074
                                                                      -----           ------
      Totals                                                        $ 9,393           12,197
                                                                      =====           ======
</TABLE>

                                -22-

<PAGE>
<TABLE>
<CAPTION>
                                                            (Amounts are presented in thousands)

                                                               1997                             1996
                                                               ----                             ----
AVAILABLE FOR SALE                                 Amortized        Estimated        Amortized        Estimated
                                                      Cost          Fair Value          Cost          Fair Value
                                                   ---------        ----------       ---------        ----------
<S>                                              <C>                  <C>             <C>              <C>
United States treasury and agencies              $    3,128            3,156           4,540             4,530
Mortgage-backed                                       7,850            7,865           5,521             5,481
Equity securities                                       526            1,660             -                 -
                                                     ------           ------          ------            ------
                                                 $   11,504           12,681          10,061            10,011
                                                     ======           ======          ======            ======
</TABLE>
<TABLE>
<CAPTION>

                                                                                       1997            1996
                                                                                       ----            ----
<S>                                                                                   <C>              <C>
OTHER INVESTMENTS                                                                     $ 826            1,155
</TABLE>

The following table presents the maturities of all investment securities
at carrying value and the weighted average yields for each range of
maturities presented. (Amounts are presented in thousands)
<TABLE>
<CAPTION>
                                  United States        Mortgage-                             Weighted
Maturities at                     Treasury and          Backed            State, County      Average
December 31, 1997                   Agencies          Securities          and Municipal       Yields
-----------------                 -------------       ----------          -------------      --------
<S>                                  <C>                 <C>                  <C>              <C>
Within 1 year                        $   -                 396                  260            7.17%

After 1 through 5 years                4,048             3,218                1,644            6.28%

After 5 through 10 years                 596             3,910                3,870            6.35%

After 10 years                           -               1,965                  507            6.48%
                                      ------             -----                -----
         Totals                      $ 4,644             9,489                6,281
                                      ======             =====                =====
</TABLE>

Mortgage backed securities are included in the maturities categories in
which they are anticipated to be repaid based on scheduled maturities.
Other investments included Federal Reserve Bank stock, Federal Home
Loan Bank stock and for 1996 common stock in two companies for which
no readily determinable market value exists. These securities are not
included in the maturity analysis above.  During 1997, certain equity
securities previously included in other investments were transferred
to available for sale as these securities began being traded on a
national exchange.  Yields on tax exempt securities are calculated on
a tax equivalent basis.


                                -23-

<PAGE>
TABLE 4
LOAN PORTFOLIO


The following table presents loans by type at the end of each of the
last five years.
<TABLE>
<CAPTION>

                                                                               December 31,
                                                                               ------------
                                                       1997         1996        1995         1994       1993
                                                       ----         ----        ----         ----       ----
                                                                (Amounts are presented in thousands)
<S>                                                  <C>           <C>          <C>         <C>         <C>
Commercial, financial
  and agricultural                                   $  63,182      52,437       35,761      36,950     35,184
Real estate - construction                               5,634       3,604        2,334       2,136        734
Real estate-mortgage                                    45,794      44,688       45,273      40,692     43,054
Installment loans to
  individuals                                           26,179      27,302       24,887      21,507     19,303
                                                       -------     -------      -------     -------     ------
                                                       140,789     128,031      108,255     101,285     98,275

Less:  Unearned interest and fees                        (304)       (330)        (287)       (180)        (41)
       Allowance for loan losses                       (2,013)     (1,422)      (1,273)     (1,245)     (1,442)
                                                       -------     -------      -------     -------     ------
            Loans, net                               $ 138,472     126,279      106,695      99,860     96,792
                                                       =======     =======      =======     =======     ======
</TABLE>

As of December 31, 1997, maturities of loans in the indicated
classifications were as follows (amounts are presented in thousands):
<TABLE>
<CAPTION>
                                                    Commercial,               Real
                                                   Financial and             Estate
      Maturity                                      Agricultural          Construction          Total
      --------                                     -------------          ------------          -----
      <S>                                            <C>                      <C>               <C>
      Within 1 year                                  $   30,558               5,634             36,192
      1 to 5 years                                       32,624                 -               32,624
                                                         ------               -----             ------
           Totals                                    $   63,182               5,634             68,816
                                                         ======               =====             ======
</TABLE>


As of December 31, 1997, the interest terms of loans in the indicated
classifications for the indicated maturity ranges are as follows (amounts
are presented in thousands):
<TABLE>
<CAPTION>
                                                     Fixed          Variable
                                                   Interest         Interest
                                                     Rates           Rates           Total
                                                   --------         --------         -----
  <S>                                              <C>                <C>            <C>
  Commercial, financial and agricultural:
      1 to 5 years                                 $ 24,360           8,264          32,624
                                                     ======           =====          ======
</TABLE>


                                -24-

The following summarizes past due and non-accrual loans, other real
estate and repossessions, and income that would have been reported
on non-accrual loans as of December 31, 1997, 1996, 1995, 1994,
and 1993 (amounts are presented in thousands):
<TABLE>
<CAPTION>
                                                                         December 31,
                                                                         ------------
                                                    1997        1996         1995         1994        1993
                                                    ----        ----         ----         ----        ----
<S>                                             <C>             <C>          <C>        <C>         <C>
Other real estate and repossessions             $     -           90          -            -           524
Accruing loans 90 days or more
  past due                                           275         216          148          144         165
Non-accrual loans                                  2,538         477          677        1,640       2,502
Interest on non-accrual loans which
  would have been reported                           187          38           67          158         175
</TABLE>

Increases in the allowance for loan losses were deemed necessary
partially to provide for potential losses associated with the
increase in non-accrual loans.  After consideration for
collateral values securing the non-accrual loans and the
aforementioned additional loan loss provision, management
believes the level of the allowance for loan losses at December
31, 1997, is adequate to absorb potential losses inherent in
these and other loans in the portfolio.  While there may be
additional loans in the portfolio that may become classified as
conditions indicate, management is not aware of any potential
problem or restructured  loans that are not disclosed in the
above table.

A loan is placed on non-accrual status when, in management's
judgment, the collection of interest appears doubtful. As a
result of management's ongoing review of the loan portfolio,
loans are classified as non-accrual generally when they are past
due in principal or interest payments for more than 90 days or it
is otherwise not reasonable to expect collection of principal and
interest under the original terms. Exceptions are allowed for 90
day past due loans when such loans are well secured and in
process of collection. Generally, payments received on
non-accrual loans are applied directly to principal.


                                -25-

<PAGE>
TABLE 5
ALLOWANCE FOR LOAN LOSSES

The following table summarizes information concerning the
allowance for loan losses:
<TABLE>
<CAPTION>
                                                                        December 31,
                                                                        ------------
                                                   1997        1996         1995         1994        1993
                                                   ----        ----         ----         ----        ----
                                                           (Amounts are presented in thousands)
<S>                                            <C>             <C>          <C>          <C>         <C>
Balance at beginning of year                   $   1,422       1,273        1,245        1,442       1,756
Charge-offs:
  Commercial, financial and agricultural              55          67           62           81         760
  Real estate-construction                             -          -            -            -          -
  Real estate-mortgage                                 8          64           -            -          -
  Installment loans to individuals                   331         342          348          371         146
                                                   -----       -----        -----        -----       -----
                                                     394         473          410          452         906
                                                   -----       -----        -----        -----       -----
Recoveries:
  Commercial, financial and agricultural              78          96          223           97          17
  Real estate-construction                             -          -            -            -           -
  Real estate-mortgage                                 -           7           -            -           -
  Installment loans to individuals                   188         154          184           73          50
                                                   -----       -----        -----        -----       -----
                                                     266         257          407          170          67
                                                   -----       -----        -----        -----       -----
  Net charge-offs                                    128         216            3          282         839

  Additions charged to operations                    719         365           31           85         525
                                                   -----       -----        -----        -----       -----
  Balance at end of year                       $   2,013       1,422        1,273        1,245       1,442
                                                   =====       =====        =====        =====       =====
Ratio of net charge-offs during the period
  to average loans outstanding during
  the period                                        .09%        .18%         .00%         .28%        .92%
                                                    ===         ===          ===          ===         ===
</TABLE>

The Company has a dedicated loan review function. All loans
$50,000 or more are reviewed annually and placed into various
loan grading categories which assist in developing lists of
potential problem loans. These loans are constantly monitored by
the loan review function to ensure early identification of
deterioration. The formal allowance for loss adequacy test is
performed the month end before each calendar quarter end.
Specific amounts of loss are estimated on problem loans and
historical loss percentages are applied to the balance of the
portfolio using certain portfolio stratifications. Additionally,
the evaluation takes into consideration such factors as changes
in the nature and volume of the loan portfolio, current economic
conditions, regulatory examination results, and the existence of
loan concentrations.

The Bank does not allocate the allowance for loan losses to
various loan categories.  The extra allowance is available to
absorb losses from any and all loans.  Management anticipates
gross charge-offs for 1998 to approximate $500,000, $200,000 of


                                -26-
which would be associated with loans classified as commercial and
the balance with consumer type loans.  Anticipated charge-offs
are an estimate based on historical experience and other
judgmental factors and may be more or less than those that
ultimately occur.


TABLE 6
DEPOSITS


The average balance of deposits and the average rates paid on
such deposits are summarized for the periods indicated in the
following table.
<TABLE>
<CAPTION>
                                                                    December 31,
                                                                    ------------
                                                       (Amounts are presented in thousands)

                                                     1997                1996               1995
                                                     ----                ----               ----

                                                Amount     Rate    Amount       Rate   Amount      Rate
                                                ------     ----    ------       ----   ------      ----
<S>                                           <C>          <C>     <C>          <C>    <C>         <C>
Demand deposits:
  Non-interest bearing                        $ 26,474       -      24,152        -     23,822      -
  Interest-bearing demand
      and savings                               53,653     2.54%    50,517      2.57%   49,623     2.68%
  Time deposits                                 72,852     5.65%    60,438      5.69%   53,918     5.43%
                                               -------             -------             -------
         Totals                               $152,979             135,107             127,363
                                               =======             =======             =======
</TABLE>

Maturities of time deposits of $100,000 or more outstanding at
December 31, 1997, are summarized as follows (amounts are presented in
thousands):

<TABLE>
<CAPTION>
      <S>                                                                            <C>
      Within 3 months                                                                $    6,909
      After 3 through 6 months                                                            6,147
      After 6 through 12 months                                                           7,396
      After 12 months                                                                     8,511
                                                                                         ------
            Total                                                                    $   28,963
                                                                                         ======
</TABLE>


TABLE 7
SELECTED RATIOS

The following table sets out certain ratios of the consolidated
entity for the years indicated.


                                -27-

<PAGE>
<TABLE>
<CAPTION>
                                                                         1997           1996             1995
                                                                         ----           ----             ----
  <S>                                                                   <C>            <C>              <C>
  Net income to:
      Average stockholders' equity                                      14.75%         15.87%           16.59%
      Average assets                                                     1.56%          1.72%            1.73%
  Dividends to net income                                               31.43%         29.59%           26.92%
  Average equity to average assets                                      10.56%         10.85%           10.47%
</TABLE>

ITEM 7.  FINANCIAL STATEMENTS

         The financial statements and the report of independent public
accountants are included in this report beginning at page F-1.


ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
         AND FINANCIAL DISCLOSURE

         For the year ended December 31, 1997, the accounting firm of Porter
Keadle Moore, LLP. was the principal accountant for the Company.

         The Company had no disagreements with its accountants on any matters
of accounting principle or practices or financial statement disclosure.

                              PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
         COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT

The Board of Directors

     The following table sets forth for each director of the Company as
of January 25, 1998 (a) the person's name, (b) his age at December 31,
1997, (c) the year he was first elected as a director of the Company
and (d) his positions with the Company and the Bank, other than as a
director, and his principal occupation and business experience for the
past five years.

<TABLE>
<CAPTION>
                                              Year First     Position with Company; Principal
     Name                        Age            Elected      Occupation; Business Experience
     ----                        ---          ----------     --------------------------------
<S>                              <C>            <C>          <C>
J. Henry Cheatham, III           47             1994         Private Investor

Ernest F. Carlisle, III          66             1997         Carlisle & Company

C. A. Knowles                    65             1982         President, Chief Executive Officer and Treasurer of the
                                                             Company and President of the Bank

James A. Mankin                  71             1982         Merchant and Real Estate Developer

David G. Newton                  50             1990         Real Estate Developer

John T. Newton, Jr.              51             1993         Interim Chairman of the Board of the Company;
                                                             Chairman of the Board of the Bank; Attorney,
                                                             Newton & Howell, P.C.

</TABLE>

                                -28-

<PAGE>
     Directors are elected at each annual meeting of shareholders and
hold office until the next annual meeting and until their successors are
elected and qualified.  John T. Newton, Jr. and David G. Newton are
brothers and are first cousins of J. Henry Cheatham, III.  There are no other
family relationships among directors and executive officers of the Company.

EXECUTIVE OFFICERS

     The following table sets forth for each executive officer of the
Company (a) the person's name, (b) his age at December 31, 1997, (c) the
year he was first elected as an executive officer of the Company and (d)
his positions with the Company and the Bank.

<TABLE>
<CAPTION>
                                  Year First     Principal Occupation;
     Name               Age         Elected      Business Experience
     ----               ---         -------      -------------------
<S>                     <C>          <C>         <S>
C. A. Knowles           65           1982        President, Chief Executive Officer and Treasurer of the Company and
                                                 President of the Bank.

William K. Holmes       47           1974        Assistant Treasurer since 1993, Senior Vice President of the Bank
                                                 since 1974, Principal Accounting and Financial Officer.
</TABLE>

ITEM 10.  EXECUTIVE COMPENSATION

     The following table sets forth the annual term compensation paid by
the Company and its subsidiary to C. A. Knowles, the Company's Chief
Executive Officer, the Company's only executive officer as of December
31, 1997 whose cash compensation, including salary and bonus, exceeded
$100,000.
<TABLE>
<CAPTION>
                         SUMMARY COMPENSATION TABLE

                                                     Annual Compensation
                                           --------------------------------------
Name and Principal Position                Year     Salary <F1>     Bonus   Other
                                           ----     -----------     -----   -----
<S>                                        <C>      <C>            <C>       <C>
C. A. Knowles                              1997     $193,793       $27,500   <F2>
   President, Chief Executive              1996     $193,043       $32,519   <F2>
   Officer and Treasurer                   1995     $195,700       $23,000   <F2>

<FN>
<F1>Includes Director's fees
<F2>Does not meet Securities and Exchange Commission threshold for
disclosure.
</FN>
</TABLE>

DIRECTOR COMPENSATION

     Each director of the Company receives a $1,600 annual retainer plus
$300 per meeting attended for their service as a director of the Company.
Each director of the Bank receives an annual retainer of $3,000 plus $300
per meeting attended for their service as a director of the Bank and $150
for each Board committee meeting they attend.

                                -29-

<PAGE>
ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
          MANAGEMENT

PRINCIPAL HOLDERS OF STOCK

     The following table provides for each person who, to the best
information and knowledge of the Company, beneficially owned 5% or more
of the outstanding shares of common stock of the Company, $1.00 par value
(the "Company Stock"), on January 25, 1998, the following information:
(a) the owner's name and address, (b) the number of shares of Company
Stock owned, and (c) the  percentage such number represents of the
outstanding shares of Company Stock.  Unless otherwise indicated, the
listed owners are the record owners of, and have sole voting and
investment powers over, their shares.


<TABLE>
<CAPTION>
                                 Number of Shares
Name and Address                 Beneficially Owned     Percentage of Total
----------------                 ------------------     -------------------
<S>                                  <C>                       <C>
Newton Family Partnership            171,904 <F1>              21.28%
1076 Maple Drive
Griffin, GA  30223

John T. Newton, Sr.                  192,529 <F2>              23.83%
1076 Maple Drive
Griffin, GA  30223

Harvey Cheatham                       71,920 <F3>               8.90%
P.O. Box 88185
Atlanta, GA  30338

John Henry Cheatham                   42,452 <F4>               5.26%
P.O. Box 1252
Griffin, GA  30224

EMC Investments Ltd. partnership      42,000                    5.20%
5101 North Casablanca Road, #6
Scottsdale, AZ  85253

James Gilliam Cheatham                47,952 <F5>               5.87%
P.O. Box 506
Griffin, GA  30224

Lelia Cheatham Von Stein              47,152 <F6>               5.84%
623 Probart Street
Brevard, NC  28712
______________________________
<FN>
<F1> John T. Newton, Sr. has sole voting and investment power over the
     shares owned of record by the partnership under the terms of the
     partnership agreement.

<F2> Of the indicated shares, 171,904 shares are owned of record by the
     Newton Family Partnership, and Mr. Newton has sole voting and
     investment power with respect to these shares.  Includes 7,932
     shares owned by the Estate of Virginia Cheatham Newton.


                                -30-

<PAGE>
<F3> Of the indicated shares, 16,000 shares are subject to voting and
     investment power by Mr. Cheatham as general partner for Club
     Associates, L.P., the record owner of such shares, and 49,920 are
     subject to voting and investment power by Mr. Cheatham as general
     partner of 435 Associates, LTD, the record owner of such shares.
     Does not include 6,000 shares which are held directly by his wife,
     Anne A. Cheatham, as to which shares Mr. Cheatham disclaims
     beneficial ownership.

<F4> Of the indicated shares, Mr. Cheatham owns 34,952 shares and 7,500
     shares are owned by his children.

<F5> Of the indicated shares, Mr. Cheatham owns 34,952 shares and 12,500
     shares are owned by his children.

<F6> Of the indicated shares, Ms. Von Stein owns 35,252 shares and 11,900
     shares are owned by her children.
</FN>
</TABLE>


STOCK OWNED BY MANAGEMENT

     The following table provides for each director of the Company,
the named executive officer, and for all directors and officers of the
Company as a group, as of January 25, 1998, the following information:
(a) the name of the director or the number of persons in the group; (b)
the number of shares of Company Stock beneficially owned by the
director or the group; and (c) the percentage such number represents of
the outstanding shares of Company Stock.  Unless otherwise indicated,
the listed person is the record owner of, and has sole voting and
investment powers over, his shares.
<TABLE>
<CAPTION>
                                              Number of Shares
Name and Address                             Beneficially Owned     Percentage of Total
----------------                             ------------------     -------------------
<S>                                                <C>                      <C>
Ernest F. Carlisle, III                               204                   *

J. Henry Cheatham, III                             42,452 <F1>              5.26%

C. A. Knowles                                         920                   *

James A. Mankin                                     3,555 <F2>              *

David G. Newton                                    10,117                   1.25%

John T. Newton, Jr.                                13,006 <F3>              1.61%

All directors and executive officers
as a group (7 persons)                             70,356 <F1><F2><F3>      8.70%

*     Indicates less than one percent.
<FN>
<F1>  Includes 7,500 shares held by Mr. Cheatham as custodian for his
      children.

<F2>  Includes 1,591 shares owned by Mr. Mankin's wife.

<F3>  Includes 6,773 shares held by Mr. Newton as Trustee for his niece
      and nephew.
</FN>
</TABLE>
                               -31-
ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The Company's directors and officers and certain companies and
individuals associated with them have been customers of, and have had
banking transactions with, the Bank and are expected to continue such
relationships in the future.  Pursuant to such transactions, the
Company's directors and officers from time to time have borrowed funds
from the Bank for various business and personal reasons.  In the opinion
of the management of the Company, the extensions of credit made by the
Bank to its directors and officers since January 1, 1997 (a) were made in
the ordinary course of business, (b) were made on substantially the same
terms, including interest rates and collateral, as those prevailing at
the time for comparable transactions with other persons and (c) did not
involve more than a normal risk of collectibility or present other
unfavorable features.  See note 12 under Notes to Consolidated Financial
Statements in Item 7 hereof.


ITEM 13.  EXHIBITS AND REPORTS ON FORM 8-K

          (a)  Exhibits:

               The Company submits herewith as exhibits to this report on
            Form 10-KSB the exhibits required by Item 601 of Regulation
            S-B, subject to Rule 12b-32 under the Securities Exchange Act
            of 1934.

          Exhibit No.    Document
          -----------    --------

             3.1         Articles of Incorporation of FNB Banking
                         Company, as amended.  (Included as Exhibit 3.1
                         to the Company's 1992 annual report on Form 10-
                         K.)

             3.2         Bylaws of FNB Banking Company, as amended.
                         (Included as Exhibit 3.2 to the Company's 1992
                         annual report on Form 10-K.)

             4.1         See Exhibits 3.1 and 3.2 for provisions of
                         Articles of Incorporation and Bylaws, as
                         amended, which define the rights of the holders
                         of Common Stock of FNB Banking Company.

             21.0        Subsidiaries of FNB Banking Company.

             24.0        A Power of Attorney is set forth on the
                         signature pages to this Form 10-KSB.

             27.0        Financial Data Schedule (for SEC use only)

          (b)  Reports on Form 8-K:

               None.



                                -32-



              FNB BANKING COMPANY AND SUBSIDIARY


               Consolidated Financial Statements

               December 31, 1997, 1996 and 1995

      (with Independent Accountants' Report thereon)


                                F-1


    REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS





To the Board of Directors and Stockholders
FNB Banking Company and Subsidiary


We have audited the accompanying consolidated balance sheets of
FNB Banking Company and subsidiary as of December 31, 1997 and
1996, and the related statements of earnings, changes in
stockholders' equity and cash flows for each of the three years
in the period ended December 31, 1997. These financial statements
are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of FNB Banking Company and subsidiary as of December 31,
1997 and 1996, and the results of their operations and their cash
flows for each of the three years in the period ended December
31, 1997, in conformity with generally accepted accounting
principles.





                               /s/ Porter Keadle Moore, LLP.
                               -----------------------------
                               PORTER KEADLE MOORE, LLP.



Atlanta, Georgia
January 15, 1998


                                F-2

<PAGE>
                FNB BANKING COMPANY AND SUBSIDIARY

                   Consolidated Balance Sheets

                    December 31, 1997 and 1996
<TABLE>
<CAPTION>
                              Assets
                              ------
                                                                                        1997              1996
                                                                                        ----              ----
<S>                                                                               <C>               <C>
Cash and due from banks, including reserve requirements of
  $1,340,000 and  $1,196,000                                                      $  13,578,133       12,461,860
Federal funds sold                                                                    8,197,365                -
                                                                                    -----------      -----------

           Cash and cash equivalents                                                 21,775,498       12,461,860
                                                                                    -----------      -----------

Interest-bearing deposits with other banks                                              500,000                -
Investment securities available for sale                                             12,681,186       10,010,949
Investment securities held to maturity (market value,
  $9,779,012 and  $12,679,015)                                                        9,392,953       12,197,132

Other investments                                                                       825,700        1,154,910
Mortgage loans held for sale                                                            650,350          972,276
Loans, net                                                                          138,472,205      126,278,521
Premises and equipment, net                                                           6,866,681        6,079,942
Accrued interest receivable and other assets                                          1,654,010        1,620,806
                                                                                    -----------      -----------
                                                                                  $ 192,818,583      170,776,396
                                                                                    ===========      ===========
                  Liabilities and Stockholders' Equity
                  ------------------------------------
Deposits:
  Demand                                                                          $  27,318,977       25,522,071
  Interest-bearing demand                                                            41,233,435       37,663,754
  Savings                                                                            15,356,322       15,017,853
  Time                                                                               83,808,834       67,601,606
                                                                                    -----------      -----------

     Total deposits                                                                 167,717,568      145,805,284

FHLB advances                                                                         1,428,571        4,214,286
Note payable                                                                            611,112          777,779
Accounts payable and accrued liabilities                                              1,681,760        1,300,617
                                                                                    -----------      -----------

     Total liabilities                                                              171,439,011      152,097,966
                                                                                    -----------      -----------

Commitments

Stockholders' equity:
  Common stock, par value $1; 5,000,000 shares authorized; 807,800 shares
    issued and outstanding                                                              807,800          807,800
  Retained earnings                                                                  19,842,089       17,903,934
  Net unrealized gain (loss) on investment securities available for sale,
    net of tax                                                                          729,683        (33,304)
                                                                                    -----------      -----------

     Total stockholders' equity                                                      21,379,572       18,678,430
                                                                                    -----------      -----------

                                                                                  $ 192,818,583      170,776,396
                                                                                    ===========      ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                F-3

                FNB BANKING COMPANY AND SUBSIDIARY
                Consolidated Statements of Earnings

        For the Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>

                                                                       1997             1996             1995
                                                                       ----             ----             ----
<S>                                                               <C>                <C>              <C>
Interest income:
  Interest and fees on loans                                      $ 14,904,480       12,543,160       11,016,657
  Interest on federal funds sold                                       206,824          257,845          119,788
  Interest-bearing deposits in other banks                              20,283            5,696            6,012
  Interest on investment securities:
    Tax-exempt                                                         395,958          457,159          518,758
    Taxable                                                            943,775        1,036,878        1,068,633
  Dividends on other investments                                        76,634           57,993           43,016
                                                                    ----------       ----------       ----------

           Total interest income                                    16,547,954       14,358,731       12,772,864
                                                                    ----------       ----------       ----------
  Interest expense:
    Deposits                                                         5,479,025        4,740,619        4,257,069
    Notes payable                                                       50,419           61,784           77,907
    Other                                                              340,882          157,958           43,004
                                                                    ----------       ----------       ----------

           Total interest expense                                    5,870,326        4,960,361        4,377,980
                                                                    ----------       ----------       ----------

           Net interest income                                      10,677,628        9,398,370        8,394,884

Provision for loan losses                                              718,450          365,240           31,000
                                                                    ----------       ----------       ----------

           Net interest income after provision for loan losses       9,959,178        9,033,130        8,363,884
                                                                    ----------       ----------       ----------
Other operating income:
  Service charges                                                    1,533,384        1,507,821        1,576,045
  Fees for trust services                                              180,000          180,000          180,000
  Securities gains, net                                                  8,171          104,183           65,550
  Other                                                                537,169          437,453          368,221
                                                                    ----------       ----------       ----------

           Total other operating income                              2,258,724        2,229,457        2,189,816
                                                                    ----------       ----------       ----------

Other operating expenses:
  Salaries and employee benefits                                     4,602,151        4,179,287        3,917,042
  Occupancy and equipment                                            1,297,615        1,128,910        1,009,844
  Miscellaneous                                                      2,045,722        1,933,462        1,972,181
                                                                    ----------       ----------       ----------

           Total other operating expenses                            7,945,488        7,241,659        6,899,067
                                                                    ----------       ----------       ----------

           Earnings before income taxes                              4,272,414        4,020,928        3,654,633

Income taxes                                                         1,445,679        1,290,761        1,103,782
                                                                    ----------       ----------       ----------

           Net earnings                                           $  2,826,735        2,730,167        2,550,851
                                                                     =========       ==========       ==========

           Net earnings per share                                 $       3.50             3.38             3.16
                                                                     =========       ==========       ==========
</TABLE>


See accompanying notes to consolidated financial statements.

                                F-4

<PAGE>
                FNB BANKING COMPANY AND SUBSIDIARY

     Consolidated Statements of Changes in Stockholders' Equity

          For the Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
                                                                                            Net
                                                                                        Unrealized
                                                                                           Gain
                                                                                        (Loss) On
                                                                                        Investment
                                                                                        Securities
                                                                                        Available
                                                         Common         Retained        for Sale,
                                                         Stock          Earnings        Net of Tax          Total
                                                         -----          --------       ------------         -----
<S>                                                 <C>               <C>                <C>             <C>
Balance, December 31, 1994                          $  807,800         14,117,346        (353,536)       14,571,610

Net earnings                                              -             2,550,851            -            2,550,851

Cash dividends declared of $.85 per share                 -              (686,630)           -             (686,630)

Change in unrealized loss on investment
 securities available for sale, net of tax                -                  -            338,225           338,225
                                                      --------        -----------       ----------       ----------

Balance, December 31, 1995                             807,800         15,981,567         (15,311)       16,774,056

Net earnings                                              -             2,730,167            -            2,730,167

Cash dividends declared of $1.00 per share                -              (807,800)           -             (807,800)

Change in unrealized loss on investment
 securities available for sale, net of tax                -                  -            (17,993)          (17,993)
                                                      --------        -----------       ----------       ----------

Balance, December 31, 1996                             807,800         17,903,934         (33,304)       18,678,430

Net earnings                                              -             2,826,735            -            2,826,735

Cash dividends declared of $1.10 per share                -              (888,580)           -             (888,580)

Change in unrealized gain (loss) on investment
 securities available for sale, net of tax                -                  -            762,987           762,987
                                                      --------        -----------       ---------        ----------

Balance, December 31, 1997                          $  807,800         19,842,089         729,683        21,379,572
                                                      ========        ===========       =========        ==========
</TABLE>


See accompanying notes to consolidated financial statements.

                                F-5

<PAGE>
                FNB BANKING COMPANY AND SUBSIDIARY

             Consolidated Statements of Cash Flows

      For the Years Ended December 31, 1997, 1996 and 1995
<TABLE>
<CAPTION>
                                                                             1997             1996           1995
                                                                             ----             ----           ----
<S>                                                                   <C>               <C>                <C>
Cash flows from operating activities:
   Net earnings                                                        $  2,826,735        2,730,167       2,550,851
   Adjustments to reconcile net earnings
     to net cash provided by operating activities:
      Depreciation, amortization and accretion                              441,298          345,094         368,991
      Provision for loan losses                                             718,450          365,240          31,000
      Provision for losses on sales of other real estate
         owned and repossessed collateral                                       193            3,798          11,986
      Provision for deferred income taxes                                  (282,482)         (47,032)         74,845
      Gains on investment securities                                         (8,171)        (104,183)        (65,550)
      (Gains) losses on disposals of premises and equipment                  10,800           (3,150)          1,574
      Gain on sale of other real estate and repossessed collateral          (15,925)               -               -
      Change in:
        Mortgage loans held for sale                                        321,926         (972,276)         42,638
        Interest receivable                                                 (32,297)         (69,901)        (69,619)
        Interest payable                                                    117,378              530          76,020
        Other, net                                                           49,958          230,870        (258,839)
                                                                          ---------        ---------       ----------
            Net cash provided by operating activities                     4,147,863        2,479,157       2,763,897
                                                                          ---------        ---------       ----------
Cash flows from investing activities:
   Change in interest-bearing deposits with other banks                    (500,000)               -               -
   Proceeds from sales of investment securities
     available for sale                                                   3,084,938          990,000          976,250
   Proceeds from sales of other investments                                       -                -            9,800
   Proceeds from calls and maturities of investment securities
     held to maturity                                                     2,837,125        3,597,249        3,967,100
   Proceeds from calls and maturities of investment securities
     available for sale                                                   2,054,715        1,561,897          173,766
   Purchase of investment securities held to maturity                             -                -         (698,370)
   Purchase of investment securities available for sale                  (6,088,269)      (5,543,379)      (1,000,000)
   Purchase of other investments                                           (196,800)         (34,400)               -
   Net change in loans                                                  (12,924,571)     (19,983,675)      (7,192,952)
   Proceeds from disposals of premises and equipment                          3,260            3,150            1,800
   Additions to premises and equipment                                   (1,235,115)        (605,205)        (624,289)
   Proceeds from sales of other real estate and
     repossessed collateral                                                  59,170                -          315,232
                                                                        -----------      -----------       ----------
            Net cash used by investing activities                      $(12,905,547)     (20,014,363)      (4,071,663)
                                                                        -----------      -----------       ----------
</TABLE>
                                F-6

<PAGE>
                                  FNB BANKING COMPANY AND SUBSIDIARY

                            Consolidated Statements of Cash Flows, continued

                          For the Years Ended December 31, 1997, 1996 and 1995

<TABLE>
<CAPTION>
                                                                             1997             1996           1995
                                                                             ----             ----           ----
<S>                                                                    <C>               <C>               <C>
Cash flows from financing activities:
   Net change in demand and savings deposits                           $  5,705,056        5,177,522       (3,911,166)
   Net change in time deposits                                           16,207,228       10,946,397        5,135,638
   Net change in federal funds purchased                                          -                -       (1,500,000)
   Proceeds from FHLB advances                                            4,000,000        2,500,000        2,000,000
   Repayments of FHLB advances                                           (6,785,715)        (285,714)               -
   Repayments of notes payable                                             (166,667)        (166,666)        (166,667)
   Payment of cash dividends                                               (888,580)        (807,800)        (686,630)
                                                                        -----------      -----------       ----------
      Net cash provided by financing activities                          18,071,322       17,363,739          871,175
                                                                        -----------      -----------       ----------
Net increase (decrease) in cash and cash equivalents                      9,313,638         (171,467)        (436,591)

Cash and cash equivalents at beginning of year                           12,461,860       12,633,327       13,069,918
                                                                        -----------      -----------       ----------
Cash and cash equivalents at end of year                               $ 21,775,498       12,461,860       12,633,327
                                                                        ===========      ===========       ==========
Supplemental disclosures of cash flow information:
   Cash paid during the year for:
     Interest                                                          $  5,752,948        4,959,831        4,301,960
     Income taxes                                                      $  1,645,000        1,222,500        1,141,000

Noncash investing and financing activities:
   Transfers of other investment securities at cost
     upon application of SFAS 115                                      $    526,010                -                -
   Change in net unrealized losses on
     investment securities available for sale,
     net of tax                                                        $   (762,987)          17,993         (338,225)
   Transfers of loans to other real estate                             $     12,437          128,176          348,597
   Financed sales of other real estate                                 $          -           93,378           21,379
</TABLE>



See accompanying notes to consolidated financial statements.

                                F-7

<PAGE>
                FNB BANKING COMPANY AND SUBSIDIARY

             Notes to Consolidated Financial Statements


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
    The accounting and reporting policies of FNB Banking Company
    (the "Company") and subsidiary, and the methods of applying
    those principles, conform with generally accepted accounting
    principles (GAAP) and with general practice within the banking
    industry. The following is a summary of the significant
    policies and procedures.

    BASIS OF PRESENTATION
    The consolidated financial statements include the accounts of
    the Company and its wholly-owned subsidiary, First National
    Bank of Griffin ("Bank"). All significant intercompany
    accounts and transactions have been eliminated in
    consolidation.

    The Bank commenced business in 1933 upon receipt of its
    charter from the Georgia Department of Banking and Finance.
    This state charter was converted to a national charter in
    1965. The Bank is primarily regulated by the Office of the
    Comptroller of the Currency ("OCC") and the Company is
    regulated by the Federal Reserve System and both undergo
    periodic examinations by these regulatory authorities. The
    Bank provides a full range of customary banking services
    throughout Spalding and other surrounding counties in Georgia.


    In preparing financial statements in conformity with GAAP,
    management is required to make estimates and assumptions that
    affect the reported amounts in the financial statements.
    Actual results could differ significantly from these
    estimates. Material estimates common to the banking industry
    that are particularly susceptible to significant change in the
    near term include, but are not limited to, the determination
    of the allowance for loan losses, the valuation of real estate
    acquired in connection with or in lieu of foreclosure on
    loans, and valuation allowances associated with the
    realization of deferred tax assets which are based on future
    taxable income.

    INVESTMENT SECURITIES
    The Company classifies its securities in one of three
    categories: trading, available for sale, or held to maturity.
    Trading securities are bought and held principally for the
    purpose of selling them in the near term. Held to maturity
    securities are those securities for which the Company has the
    ability and intent to hold the security until maturity. All
    other securities not included in trading or held to maturity
    are classified as available for sale. At December 31, 1997 and
    1996 the Company had no trading securities.

    Available for sale securities are recorded at fair value. Held
    to maturity securities are recorded at cost, adjusted for the
    amortization or accretion of premiums or discounts. Unrealized
    holding gains and losses, net of the related tax effect, on
    securities available for sale are excluded from earnings and
    are reported as a separate component of stockholders' equity
    until realized. Transfers of securities between categories are
    recorded at fair value at the date of transfer. Unrealized

                                F-8

<PAGE>
    holding gains or losses associated with transfers of
    securities from held to maturity to available for sale are
    recorded as a separate component of stockholders' equity. The
    unrealized holding gains or losses included in the separate
    component of stockholders' equity for securities transferred
    from available for sale to held to maturity are maintained and
    amortized into earnings over the remaining life of the
    security as an adjustment to yield in a manner consistent with
    the amortization or accretion of premium or discount on the
    associated security.

    A decline in the market value of any available for sale or
    held to maturity investment below cost that is deemed other
    than temporary is charged to earnings and establishes a new
    cost basis for the security.

    Premiums and discounts are amortized or accreted over the life
    of the related security as an adjustment to the yield.
    Realized gains and losses for securities classified as
    available for sale and held to maturity are included in
    earnings and are derived using the specific identification
    method for determining the cost of securities sold.

    OTHER INVESTMENTS
    Other investments include equity securities with no readily
    determinable fair value. These investment securities are
    carried at cost. During 1997 certain equity securities
    previously included in other investments were transferred to
    available for sale as these securities began being traded on a
    national exchange.

    MORTGAGE LOANS HELD FOR SALE
    Mortgage loans held for sale are carried at the lower of
    aggregate cost or market value. The amount by which cost
    exceeds market value is accounted for as a valuation
    allowance. Changes in the valuation allowance are included in
    the determination of net earnings of the period in which the
    change occurs.

    LOANS, LOAN FEES AND INTEREST INCOME
    Loans are stated at principal amount outstanding, net of the
    allowance for loan losses. Interest on loans is calculated by
    using the simple interest method on daily balances of the
    principal amount outstanding.

    Accrual of interest is discontinued on a loan when management
    believes, after considering economic and business conditions
    and collection efforts, that the borrower's financial
    condition is such that collection of interest is doubtful.
    When a loan is placed on nonaccrual status, previously accrued
    and uncollected interest is charged to interest income on
    loans. Generally, payments on nonaccrual loans are applied to
    principal.

    Loan fees, net of certain origination costs, have been
    deferred and are being amortized over the lives of the
    respective loans.

    ALLOWANCE FOR LOAN LOSSES
    The allowance for loan losses is established through a
    provision for loan losses charged to expense. Loans are
    charged against the allowance for loan losses when management
    believes that the collectibility of the principal is unlikely.

                                F-9

<PAGE>
    The allowance represents an amount which, in management's
    judgment, will be adequate to absorb probable losses on
    existing loans that may become uncollectible.

    Management's judgment in determining the adequacy of the
    allowance is based on evaluations of the collectibility of
    loans. These evaluations take into consideration such factors
    as changes in the nature and volume of the loan portfolio,
    current economic conditions that may affect the borrower's
    ability to pay, overall portfolio quality, and review of
    specific problem loans.

    Management believes that the allowance for loan losses is
    adequate. While management uses available information to
    recognize losses on loans, future additions to the allowance
    may be necessary based on changes in economic conditions. In
    addition, regulators, as an integral part of their examination
    process, periodically review the Company's allowance for loan
    losses. Such regulators may require the Company to recognize
    additions to the allowance based on their judgments of
    information available to them at the time of their
    examination.

    Impaired loans are measured based on the present value of
    expected future cash flows discounted at the loan's effective
    interest rate, or at the loan's observable market price, or at
    the fair value of the collateral of the loan if the loan is
    collateral dependent. A loan is impaired when, based on
    current information and events, it is probable that all
    amounts due according to the contractual terms of the loan
    agreement will not be collected. The Bank has no material
    amounts of impaired loans at December 31, 1997 and 1996.

    PREMISES AND EQUIPMENT
    Premises and equipment are stated at cost less accumulated
    depreciation. Depreciation is computed using the straight-line
    method over the estimated useful lives of the assets. When
    assets are retired or otherwise disposed of, the cost and
    related accumulated depreciation are removed from the
    accounts, and any gain or loss is reflected in income for the
    period. Costs incurred for maintenance and repairs are
    expensed currently. The range of estimated useful lives for
    premises and equipment are:

          Buildings and improvements      10 - 40 Years
          Furniture and equipment          3 - 10 Years

     INCOME TAXES
     The Company accounts for income taxes using the asset and
     liability method and recognizes deferred tax assets and
     liabilities for the future tax consequences attributable to
     differences between the financial statement carrying amounts
     of existing assets and liabilities and their respective tax
     basis. Additionally, future tax benefits, such as net
     operating loss carryforwards, are recognized to the extent
     that realization of such benefits is more likely than not.
     Deferred tax assets and liabilities are measured using enacted
     tax rates expected to apply to taxable income in the years in
     which the assets and liabilities are expected to be recovered
     or settled. The effect on deferred tax assets and liabilities
     of a change in tax rates is recognized in income tax expense
     in the period that includes the enactment date.

                                F-10

<PAGE>
                FNB BANKING COMPANY AND SUBSIDIARY

      Notes to Consolidated Financial Statements, continued

(1)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED

     In the event the future tax consequences of differences
     between the financial reporting bases and the tax bases of the
     Company's assets and liabilities results in deferred tax
     assets, an evaluation of the probability of being able to
     realize the future benefits indicated by such asset is
     required. A valuation allowance is provided for the portion of
     the deferred tax asset when it is more likely than not that
     some portion or all of the deferred tax asset will not be
     realized. In assessing the realizability of the deferred tax
     assets, management considers the scheduled reversals of
     deferred tax liabilities, projected future taxable income, and
     tax planning strategies.

     NET EARNINGS PER COMMON SHARE
     Statement of Financial Accounting Standards (SFAS) No. 128
     "Earnings Per Share" became effective for the Company for the
     year ended December 31, 1997. This new standard specifies the
     computation, presentation and disclosure requirements for
     earnings per share and is designed to simplify previous
     earnings per share standards and to make domestic and
     international practices more compatible. Earnings per common
     share are based on the weighted average number of common
     shares outstanding during the period while the effects of
     potential common shares outstanding during the period such as
     options, convertible securities and warrants are included in
     diluted earnings per share. The Company has no potential
     common shares and correspondingly earnings per share amounts
     for all years presented are based on 807,800 shares, the
     weighted average number of common shares outstanding.

     OTHER
     Property (other than cash deposits) held by the Bank in a
     fiduciary or agency capacity for customers is not included in
     the balance sheets since such items are not assets of the
     Bank.

     RECENT ACCOUNTING PRONOUNCEMENTS
     In 1997, the Financial Accounting Standards Board issued
     Statement of Financial Accounting Standards No. 127 "Deferral
     of the Effective Date of Certain Provisions of SFAS No. 125"
     ("SFAS 127"), Statement of Financial Accounting Standards No.
     130, "Reporting Comprehensive Income" ("SFAS 130") and
     Statement of Financial Accounting Standards No. 131,
     "Disclosures about Segments of an Enterprise and Related
     Information" ("SFAS 131").  SFAS 127 simply defers, until
     January 1, 1998, the effective date of selected provisions of
     a previously issued accounting and disclosure standard. SFAS
     130 establishes standards for the reporting and display of
     comprehensive income and its components in a full set of
     general-purpose financial statements. SFAS 131 specifies the
     presentation and disclosure of operating segment information
     reported in the annual report and interim reports issued to
     stockholders.  The provisions of SFAS 130 and 131 are
     effective for fiscal years beginning after December 15, 1997.
     The management of the Company believes that the adoption of
     these statements will not have a material impact on the
     Company's financial position, results of operations, or
     liquidity.

                                F-11
                FNB BANKING COMPANY AND SUBSIDIARY

      Notes to Consolidated Financial Statements, continued

(2)  INVESTMENT SECURITIES
     Investment securities at December 31, 1997 and 1996 are as
     follows:
<TABLE>
<CAPTION>
                                                                                 December 31, 1997
                                                                                 -----------------
     SECURITIES HELD TO MATURITY:
                                                                               Gross           Gross     Estimated
                                                           Amortized         Unrealized     Unrealized      Fair
                                                             Cost              Gains          Losses       Value
                                                             ----              -----          ------       -----
      <S>                                               <C>                   <C>               <C>      <C>
      U.S. Government agencies                          $  1,487,968           15,787            -       1,503,755
      State, county and municipal                          6,281,208          332,250           442      6,613,016
      Mortgage-backed securities                           1,623,777           38,464            -       1,662,241
                                                           ---------          -------           ---      ---------
            Total                                       $  9,392,953          386,501           442      9,779,012
                                                           =========          =======           ===      =========

                                                                                 December 31, 1996
                                                                                 -----------------
                                                                              Gross           Gross     Estimated
                                                           Amortized         Unrealized     Unrealized      Fair
                                                             Cost              Gains          Losses       Value
                                                             ----              -----          ------       -----

      U.S. Government agencies                          $  2,778,965           25,873            -       2,804,838
      State, county and municipal                          7,343,954          414,621           920      7,757,655
      Mortgage-backed securities                           2,074,213           43,935         1,626      2,116,522
                                                          ----------          -------         -----     ----------
            Total                                       $ 12,197,132          484,429         2,546     12,679,015
                                                          ==========          =======         =====     ==========

                                                                                 December 31, 1997
                                                                                 -----------------

      SECURITIES AVAILABLE FOR SALE:                                           Gross           Gross     Estimated
                                                           Amortized         Unrealized     Unrealized      Fair
                                                             Cost              Gains          Losses       Value
                                                             ----              -----          ------       -----

      U.S. Government agencies                          $  3,128,304           28,204           452      3,156,056
      Equity securities                                      526,010        1,133,812             -      1,659,822
      Mortgage-backed securities                           7,849,965           41,904        26,561      7,865,308
                                                          ----------        ---------        ------     ----------

            Total                                       $ 11,504,279        1,203,920        27,013     12,681,186
                                                          ==========        =========        ======     ==========

                                                                                 December 31, 1996
                                                                                 -----------------
                                                                              Gross           Gross     Estimated
                                                           Amortized         Unrealized     Unrealized      Fair
                                                             Cost              Gains          Losses       Value
                                                             ----              -----          ------       -----

      U.S. Government agencies                          $  4,540,165            3,623        13,788      4,530,000
      Mortgage-backed securities                           5,521,245           20,537        60,833      5,480,949
                                                          ----------        ---------       -------     ----------
            Total                                       $ 10,061,410           24,160        74,621     10,010,949
                                                          ==========        =========       =======     ==========
</TABLE>

                                F-12

                FNB BANKING COMPANY AND SUBSIDIARY

      Notes to Consolidated Financial Statements, continued

(2)  INVESTMENT SECURITIES, CONTINUED

     The amortized cost and fair value of investment securities at
     December 31, 1997, by contractual maturity, are shown below.
     Expected maturities will differ from contractual maturities
     because borrowers have the right to call or prepay obligations
     with or without call or prepayment penalties.
<TABLE>
<CAPTION>
                                                                          Securities Held            Securities Available
                                                                            to Maturity                     for Sale
                                                                     ------------------------      -------------------------
                                                                     Amortized      Estimated      Amortized       Estimated
                                                                        Cost       Fair Value         Cost         Fair Value
                                                                     ------------------------      --------------------------
         <S>                                                      <C>              <C>             <C>             <C>
         U.S. Government agencies:
             1 to 5 years                                         $  1,487,968     1,503,755       2,542,012       2,559,620
             5 to 10 years                                                -             -            586,292         596,436
                                                                     ---------     ---------       ---------       ---------
                                                                     1,487,968     1,503,755       3,128,304       3,156,056
                                                                     =========     =========       =========       =========
         State, county and municipal:
             Within 1 year                                             260,000       263,348            -               -
             1 to 5 years                                            1,644,108     1,681,847            -               -
             5 to 10 years                                           3,869,835     4,136,242            -               -
             More than 10 years                                        507,265       531,579            -               -
                                                                     ---------     ---------       ---------       ---------
                                                                     6,281,208     6,613,016            -               -
                                                                     =========     =========       =========       ==========
         Total securities other than mortgage-
             backed securities:
              Within 1 year                                            260,000       263,348            -               -
              1 to 5 years                                           3,132,076     3,185,602       2,542,012       2,559,620
              5 to 10 years                                          3,869,835     4,136,242         586,292         596,436
              More than 10 years                                       507,265       531,579            -               -

         Mortgage-backed securities                                  1,623,777     1,662,241       7,849,965       7,865,308

         Equity securities                                                -             -            526,010       1,659,822
                                                                     ---------     ---------      ----------      ----------
                                                                  $  9,392,953     9,779,012      11,504,279      12,681,186
                                                                     =========     =========      ==========      ==========
</TABLE>

    Call premiums amounting to $2,200 were received on two called
    securities during 1995 and are included with securities gains
    in the 1995 statement of earnings. There were no sales of
    investment securities held to maturity during 1997, 1996 and
    1995.

    Proceeds from sales of securities available for sale during
    1997, 1996 and 1995 were $3,084,938, $990,000 and $976,250,
    respectively.  Gross losses of $13,729, $3,317 and  $23,750
    for 1997, 1996 and 1995, respectively, were realized on those
    sales.

                                F-13

<PAGE>
    Certain investment securities were written down to their
    estimated realizable values because, in the opinion of
    management, the decline in value was considered other than
    temporary. During 1997, 1996 and 1995, the Company received
    $21,900, $17,500 and $87,100, respectively, on an investment
    security that was in default and written down prior to 1992.
    The amounts received in excess of the remaining cost basis
    resulted in recoveries of $21,900, $17,500 and $87,100 in
    1997, 1996 and 1995, respectively. During 1996, the Company
    received $250,000 on another investment security that was
    written down in 1993 which resulted in a recovery of $90,000.
    These recoveries are included with securities gains in the
    statements of earnings.

    Securities with a carrying value of $17,414,000 and
    $12,772,000 at December 31, 1997 and 1996, respectively, were
    pledged to secure public deposits as required by law.

(3) LOANS
    Major classifications of loans at December 31, 1997 and 1996
    are summarized as follows:

<TABLE>
<CAPTION>
                                                                                 1997             1996
                                                                                 ----             ----
         <S>                                                            <C>                   <C>
         Commercial, financial and agricultural                         $     63,182,064       52,437,173
         Real estate - construction                                            5,633,712        3,604,322
         Real estate - mortgage                                               45,793,633       44,687,988
         Consumer                                                             26,179,196       27,301,406
                                                                             -----------      -----------
              Total loans                                                    140,788,605      128,030,889

              Less:  Allowance for loan losses                                 2,012,795        1,422,603
                        Unearned interest and fees                               303,605          329,765
                                                                             -----------      -----------
              Net loans                                                 $    138,472,205      126,278,521
                                                                             ===========      ===========
</TABLE>

    The Company grants loans and extensions of credit to
    individuals and a variety of firms and corporations located in
    its trade area, primarily Spalding County, Georgia and
    surrounding counties. Although the Company has a diversified
    loan portfolio, a substantial portion of the loan portfolio is
    collateralized by improved and unimproved real estate and is
    dependent upon the real estate market in this geographical
    area.


                                F-14

<PAGE>
    Changes in the allowance for loan losses are summarized as
    follows:
<TABLE>
<CAPTION>
                                                                      1997             1996             1995
                                                                      ----             ----             ----
         <S>                                                    <C>                 <C>              <C>
         Balance at beginning of year                           $  1,422,603        1,273,267        1,245,314
         Amounts charged off                                        (394,245)        (473,420)        (409,863)
         Recoveries on amounts previously charged off                265,987          257,516          406,816
         Provision charged to operating expenses                     718,450          365,240           31,000
                                                                   ---------        ---------        ---------
         Balance at end of year                                 $  2,012,795        1,422,603        1,273,267
                                                                   =========        =========        =========
</TABLE>

    The Company was servicing approximately $26,600,000 and
    $30,900,000 of mortgage loans for the Federal Home Loan
    Mortgage Corporation at December 31, 1997 and 1996,
    respectively.


(4) PREMISES AND EQUIPMENT
    Premises and equipment at December 31, 1997 and 1996, are
    summarized as follows:
<TABLE>
<CAPTION>
                                                       1997           1996
                                                       ----           ----
      <S>                                         <C>             <C>
      Land and improvements                       $  1,606,563     1,390,125
      Buildings and improvements                     5,595,195     5,447,340
      Furniture and equipment                        3,364,070     3,191,228
      Construction in progress                         706,594        28,955
                                                     ---------     ---------
                                                    11,272,422    10,057,648
      Less:  Accumulated depreciation                4,405,741     3,977,706
                                                    ----------     ---------
                                                   $ 6,866,681     6,079,942
                                                    ==========     =========
</TABLE>
    Depreciation expense was $434,316, $397,020 and $321,560 for
    the years ended December 31, 1997, 1996 and 1995,
    respectively.

(5) DEPOSITS
    The aggregate amount of time deposit accounts with a minimum
    denomination of $100,000 was approximately $28,962,600 and
    $19,709,500 at December 31, 1997 and 1996, respectively.
    Deposits from related parties totaled approximately $2,600,000
    and $2,900,000 at December 31, 1997 and 1996, respectively.


                                F-15

<PAGE>
                FNB BANKING COMPANY AND SUBSIDIARY

      Notes to Consolidated Financial Statements, continued


    At December 31, 1997, the scheduled maturities of time
    deposits are as follows:


                 1998                                      $ 64,077,094
                 1999                                        12,258,176
                 2000                                         3,668,653
                 2001                                         1,165,443
                 2002 and thereafter                          2,639,468
                                                             ----------
                                                           $ 83,808,834
                                                             ==========

(6) NOTE PAYABLE
    Note payable at December 31, 1997 and 1996 consisted of the following:

<TABLE>
<CAPTION>
                                                                                         1997          1996
                                                                                         ----          ----
          <S>                                                                       <C>              <C>
          Note payable, due in monthly installments of $13,889
          plus interest at 70% of the prime interest rate
          through August 1, 2001, collateralized by certain
          land and buildings.                                                        $ 611,112        777,779
</TABLE>

     Aggregate maturities required on the note payable at December 31, 1997
     are as follows:


               1998                                               $  166,668
               1999                                                  166,668
               2000                                                  166,668
               2001                                                  111,108
                                                                     -------
                                                                   $ 611,112
                                                                     =======
(7) FEDERAL HOME LOAN BANK ADVANCES
    The Bank has an agreement with the Federal Home Loan Bank
    (FHLB) whereby the FHLB agreed to provide the Bank credit
    facilities under the Agreement for Advances and Security
    Agreement. Any amounts advanced by the FHLB are secured under
    a Blanket Floating Lien covered by all of the Bank's 1-4
    family first mortgage loans. The Bank may draw advances up to
    75% of the outstanding balance of these loans based on the
    agreement with the FHLB.

    At December 31, 1997, the Bank has an advance payable of
    $1,428,571 with a fixed interest rate of 6.72% and interest
    payable monthly with equal principal payments due semi-
    annually until maturity in 2002.


                                F-16

<PAGE>
                FNB BANKING COMPANY AND SUBSIDIARY

      Notes to Consolidated Financial Statements, continued

(8) EMPLOYEE BENEFIT PLANS
    The Company has a noncontributory defined benefit plan
    covering substantially all of its employees who have completed
    one year of service. Effective September 1, 1997 the plan was
    terminated. All participants as of September 1, 1997 became
    fully vested and no new participants will be admitted to the
    plan. No further contribution will be made to the plan except
    payments necessary to attain full funding of the liabilities
    under the plan. As a result of the curtailment of benefits,
    the Company recognized a curtailment gain of $76,700.

    The following table sets forth the Plan's status and amounts
    recognized in the balance sheets at December 31, 1997 and
    1996. Plan assets are stated at fair value and consist of
    cash, certificates of deposit, equity securities and
    government securities.
<TABLE>
<CAPTION>
                                                                                1997            1996
                                                                                ----            ----
       <S>                                                               <C>                 <C>
       Actuarial present value of benefit obligations:
          Vested                                                         $    3,447,488      2,222,769
          Nonvested                                                              -              29,284
                                                                              ---------      ---------
             Total accumulated benefit obligations                       $    3,447,488      2,252,053
                                                                              =========      =========
       Projected benefit obligations for services
          rendered to date                                               $    3,447,488      3,330,530
       Plan assets at fair value                                              3,397,500      3,188,262
                                                                              ---------      ---------
             Assets less than projected benefit obligation                      (49,988)      (142,268)

       Unamortized net asset existing
          at date of adoption of SFAS 87                                              -        206,739
       Unamortized net gain from past experience different
          from that assumed and effects of changes in assumptions               (74,936)      (102,592)
                                                                              ---------       --------
             Prepaid (accrued) pension cost included in other
                liabilities                                              $     (124,924)       (38,121)
                                                                             ==========       ========
</TABLE>

    The components of net pension cost for the years ended December 31,
    1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
                                                                    1997             1996             1995
                                                                    ----             ----             ----
     <S>                                                     <C>                  <C>              <C>
     Service cost for benefits earned                        $     177,324          143,364          115,323
     Interest cost on projected benefit
       obligations                                                 239,764          222,170          200,887
     Actual return on plan assets                                 (379,899)        (282,114)        (493,582)
     Net amortization and deferral                                 126,335           42,580          305,372
                                                                 ---------         --------         --------
     Net pension cost                                        $     163,524          126,000          128,000
                                                                 =========         ========         ========
</TABLE>

                                F-17

<PAGE>
    The following assumptions were used in determining the actuarial
    present value of the projected benefit obligations at December 31,
    1997 and 1996:

<TABLE>
<CAPTION>
                                                                         1997       1996
                                                                         ----       ----
     <S>                                                                 <C>        <C>
     Discount rate                                                       7.0%       7.0%
     Rate of increase in future compensation levels                       -         5.0%
     Expected long-term rate of return on assets                         8.25%      8.25%
</TABLE>

     The Company has a profit sharing plan covering substantially all
     employees. Effective January 1, 1995, the Company amended the
     plan to comply with the requirements of Section 401(k) of the
     Internal Revenue Code. The plan covers substantially all
     employees, subject to certain minimum service requirements. The
     Company will match up to 6% of the participants' before tax
     contributions. The Company's matching contributions amounted to
     $205,000, $130,000 and $131,000 in 1997, 1996 and 1995,
     respectively.

(9)  COMMITMENTS
     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 include commitments to extend credit, standby
     letters of credit and financial guarantees. Those instruments
     involve, to varying degrees, elements of credit risk in excess
     of the amount recognized in the balance sheet. The contract
     amounts of those instruments reflect the extent of involvement
     the Company has in particular classes of financial
     instruments.

     The Company's exposure to credit loss in the event of
     nonperformance by the other party for commitments to extend
     credit, standby letters of credit and financial guarantees
     written is represented by the contractual amount of those
     instruments. The Company uses the same credit policies in
     making commitments and conditional obligations as it does for
     on-balance-sheet instruments.

     In some cases, the Company does require collateral or other
     security to support financial instruments with credit risk.
<TABLE>
<CAPTION>
                                                                          Approximate
                                                                          Contractual
                                                                             Amount
                                                                             ------
                                                                       1997          1996
                                                                       ----          ----
          <S>                                                   <C>               <C>
          Financial instruments whose contract
             amounts represent credit risk:
          Commitments to extend credit                          $    16,650,000   24,787,000
          Standby letters of credit and
             financial guarantees written                       $       467,000      932,000
</TABLE>
                                F-18

     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. Commitments generally have fixed expiration dates or other
     termination clauses and may require payment of a fee. Since many of
     the commitments may expire without being drawn upon, the total
     commitment amounts do not necessarily represent future cash
     requirements. The Company evaluates each customer's credit worthiness
     on a case-by-case basis. The amount of collateral obtained, if deemed
     necessary by the Company, upon extension of credit is based on
     management's credit evaluation. Collateral held varies but may
     include unimproved and improved real estate, certificates of deposit,
     or personal property.

     Standby letters of credit and financial guarantees written are
     conditional commitments issued by the Company to guarantee the
     performance of a customer to a third party. The credit risk involved
     in issuing letters of credit is essentially the same as that involved
     in extending loan facilities to customers. Letters of credit at
     December 31, 1997 are approximately 71% collateralized.

(10) DIVIDEND LIMITATIONS
     Dividends paid by the Bank are the primary source of funds available
     to the Company. Banking regulations limit the amount of dividends that
     may be paid without prior approval of the regulatory authorities. The
     amount of dividends the Bank may pay in 1998 without prior approval is
     approximately $3,795,000 plus 1998 earnings of the Bank.

(11) INCOME TAXES
     The components of income tax expense for the years ended December 31,
     1997, 1996 and 1995 are as follows:
<TABLE>
<CAPTION>
                                                  1997           1996             1995
                                                  ----           ----             ----
        <S>                                 <C>               <C>               <C>
        Current                             $   1,728,161     1,337,793         1,028,937
        Deferred                                 (282,482)      (47,032)           74,845
                                                ---------     ---------         ---------
                                            $   1,445,679     1,290,761         1,103,782
                                                =========     =========         =========
</TABLE>

     The differences between the provision for income taxes and the amount
     computed by applying the statutory federal income tax rate to earnings
     before taxes are as follows:
<TABLE>
<CAPTION>
                                                                           1997            1996                 1995
                                                                           ----            ----                 ----
         <S>                                                        <C>                  <C>                  <C>
         Pretax income at statutory rates                           $   1,452,620        1,367,116            1,242,575
         Add (deduct):
             Tax-exempt interest income                                  (139,939)        (155,070)             (174,663)
             Nondeductible interest expense                                15,024           16,273               17,215
             Other                                                        117,974           62,442               18,655
                                                                        ---------        ---------            ---------
                                                                    $   1,445,679        1,290,761            1,103,782
                                                                        =========        =========            =========
</TABLE>


                                F-19

<PAGE>
                    FNB BANKING COMPANY AND SUBSIDIARY

          Notes to Consolidated Financial Statements, continued

    The following summarizes the sources and expected tax consequences of
    future taxable deductions (income) which comprise the net deferred tax
    asset (liability). At December 31, 1997 and 1996, the Company's net
    deferred tax liability is included as a component of other
    liabilities.
<TABLE>
<CAPTION>
                                                                           1997             1996
                                                                           ----             ----
         <S>                                                        <C>                  <C>
         Deferred income tax assets:
             Net unrealized loss in investment securities           $        -              17,157
             Allowance for loan losses                                    572,074          310,348
             Reserve for pension contributions                             47,420           14,470
             Other                                                         86,676           64,801
                                                                        ---------         --------
                     Total gross deferred income tax assets               706,170          406,776
                                                                        ---------         --------
         Deferred income tax liabilities:
         Net unrealized gain on investment securities                    (447,225)           -
         Premises and equipment                                          (558,457)        (524,386)
                                                                      -----------        ----------
                     Total gross deferred income tax liabilities       (1,005,682)        (524,386)
                                                                      -----------        ---------
               Net deferred income tax liability                    $    (299,512)        (117,610)
                                                                      ===========        =========
</TABLE>

(12) RELATED PARTY TRANSACTIONS
     The Company conducts transactions with directors and officers,
     including companies in which they have beneficial interest, in
     the normal course of business. It is the policy of the Company
     that loan transactions with directors and officers be made on
     substantially the same terms as those prevailing at the time
     for comparable loans to other persons. The following is a
     summary of activity for related party loans for 1997:
<TABLE>
<CAPTION>
         <S>                                                       <C>
         Beginning balance                                         $   5,109,450
             Loans advanced                                            2,336,070
             Repayments                                               (1,723,890)
                                                                     -----------
         Ending balance                                            $   5,721,630
                                                                     ===========
</TABLE>

                                F-20

<PAGE>
                    FNB BANKING COMPANY AND SUBSIDIARY

          Notes to Consolidated Financial Statements, continued

(13) MISCELLANEOUS OPERATING EXPENSES
     Components of other operating expenses which are greater than 1% of
     interest income and other operating income are as follows:
<TABLE>
<CAPTION>
                                                                  1997           1996             1995
                                                                  ----           ----             ----
         <S>                                               <C>                 <C>               <C>
         Deposit insurance premiums                        $      17,181          2,020          146,729
         Stationery and supplies                           $     257,523        279,814          209,038
         Postage                                           $     186,379        179,591          164,678
         Directors fees                                    $     163,575        154,400          153,100
         Data processing                                   $     337,270        321,540          192,397
</TABLE>

(14) FAIR VALUE OF FINANCIAL INSTRUMENTS
     SFAS No. 107, "Disclosures about Fair Value of Financial
     Instruments", requires disclosure of fair value information
     about financial instruments, whether or not recognized on the
     face of the balance sheet, for which it is practicable to
     estimate that value. The assumptions used in the estimation
     of the fair value of the Company's financial instruments are
     detailed below. Where quoted prices are not available, fair
     values are based on estimates using discounted cash flows and
     other valuation techniques. The use of discounted cash flows
     can be significantly affected by the assumptions used,
     including the discount rate and estimates of future cash
     flows. The following disclosures should not be considered a
     surrogate of the liquidation value of the Company, but rather
     a good-faith estimate of the increase or decrease in value of
     financial instruments held by the Company since purchase,
     origination, or issuance.

     CASH AND CASH EQUIVALENTS
     For cash and due from banks and federal funds sold, the
     carrying amount is a reasonable estimate of fair value.

     INTEREST-BEARING DEPOSITS WITH OTHER BANKS
     The carrying value of interest-bearing deposits with other
     banks is a reasonable estimate of fair value.

     INVESTMENT SECURITIES
     Fair values for investment securities are based on quoted
     market prices.

     OTHER INVESTMENTS
     The carrying value of other investments approximates fair
     value.

     LOANS AND MORTGAGE LOANS HELD FOR SALE
     The fair value of fixed rate loans is estimated by
     discounting the future cash flows using the current rates at
     which similar loans would be made to borrowers with similar
     credit ratings. For variable rate loans, the carrying amount
     is a reasonable estimate of fair value.


                                F-21

<PAGE>
                    FNB BANKING COMPANY AND SUBSIDIARY

          Notes to Consolidated Financial Statements, continued


     DEPOSITS
     The fair value of demand deposits, savings accounts, NOW
     accounts and certain money market deposits is the amount
     payable on demand at the reporting date. The fair value of
     fixed maturity certificates of deposit is estimated by
     discounting the future cash flows.

     FHLB ADVANCES
     The fair value of the FHLB fixed rate borrowings are
     estimated using discounted cash flows, based on the current
     incremental borrowing rates for similar types of borrowing
     arrangements.

     NOTE PAYABLE
     The Company's note payable bears interest based on a
     percentage of the prime rate and as such, the carrying
     amount approximates the fair value.

     COMMITMENTS TO EXTEND CREDIT, STANDBY LETTERS OF CREDIT AND
     FINANCIAL GUARANTEES WRITTEN
     Because commitments to extend credit and standby letters of
     credit are made using variable rates, the contract value is
     a reasonable estimate of fair value.

(14) FAIR VALUE OF FINANCIAL INSTRUMENTS, CONTINUED
     LIMITATIONS
     Fair value estimates are made at a specific point in time,
     based on relevant market information and information about
     the financial instrument. These estimates do not reflect any
     premium or discount that could result from offering for sale
     at one time the Company's entire holdings of a particular
     financial instrument. Because no market exists for a
     significant portion of the Company's financial instruments,
     fair value estimates are based on many judgments. These
     estimates are subjective in nature and involve uncertainties
     and matters of significant judgment and therefore cannot be
     determined with precision. Changes in assumptions could
     significantly affect the estimates.

     Fair value estimates are based on existing on and off-balance
     sheet financial instruments without attempting to estimate
     the value of anticipated future business and the value of
     assets and liabilities that are not considered financial
     instruments. Significant assets and liabilities that are not
     considered financial instruments include the mortgage banking
     operation, deferred income taxes and premises and equipment.
     In addition, the tax ramifications related to the realization
     of the unrealized gains and losses can have a significant
     effect on fair value estimates and have not been considered
     in the estimates.


                                F-22

<PAGE>
                FNB BANKING COMPANY AND SUBSIDIARY

      Notes to Consolidated Financial Statements, continued


     The carrying amount and estimated fair values of the
     Company's financial instruments at December 31, 1997 and 1996
     are as follows:
<TABLE>
<CAPTION>
                                                            1997                              1996
                                                            ----                              ----
                                                 Carrying         Estimated         Carrying          Estimated
                                                  Amount          Fair Value         Amount          Fair Value
                                                 --------         ----------        --------         ----------
      <S>                                   <C>                   <C>            <C>                <C>
      Assets:
          Cash and cash equivalents         $    21,775,498        21,775,498      12,461,860         12,461,860
          Interest -bearing deposits with
            other banks                             500,000           500,000               -                  -
          Investment securities                  22,074,139        22,460,198      22,208,081         22,689,964
          Other investments                         825,700           825,700       1,154,910          1,154,910
          Loans and mortgage loans held
            for sale                            139,022,555       137,402,363     127,250,797        126,499,785
      Liabilities:
          Deposits                              167,717,568       168,104,529     145,805,284        146,032,337
          FHLB advances                           1,428,571         1,446,785       4,214,286          4,216,204
          Notes payable                             611,112           611,112         777,779            777,779

      Unrecognized financial
      instruments:
          Commitments to extend credit           16,650,000        16,650,000      24,787,000         24,787,000
          Standby letters of credit         $       467,000           467,000         932,000            932,000
</TABLE>


(15) REGULATORY MATTERS
     The Bank is subject to various regulatory capital
     requirements administered by the federal banking agencies.
     Failure to meet minimum capital requirements can initiate
     certain mandatory-and possibly additional discretionary-
     action by regulators that, if undertaken, could have a direct
     material effect on the Bank's financial statements.  Under
     capital adequacy guidelines and the regulatory framework for
     prompt corrective action, the Bank must meet specific capital
     guidelines that involve quantitative measures of the Bank's
     assets, liabilities, and certain off-balance sheet items as
     calculated under regulatory accounting practices. The Bank's
     capital amounts and classification are also subject to
     qualitative judgments by the regulators about components,
     risk weightings, and other factors.

                                F-23

<PAGE>
                FNB BANKING COMPANY AND SUBSIDIARY

      Notes to Consolidated Financial Statements, continued


(15) REGULATORY MATTERS, CONTINUED
     Quantitative measures established by regulation to ensure
     capital adequacy require the Bank to maintain minimum amounts
     and ratios (set forth in the table below) of total and Tier I
     capital (as defined) to average risk-weighted assets (as
     defined) and of Tier I capital (as defined) to average assets
     (as defined).  Management believes, as of December 31, 1997,
     that the Bank meets all capital adequacy requirements to
     which it is subject.

     As of December 31, 1997 and 1996, the most recent
     notification from the Office of the Comptroller of the
     Currency categorized the Bank as well capitalized under the
     regulatory framework for prompt corrective action. To be
     categorized as well capitalized the Bank must maintain
     minimum total risk-based, Tier I risk-based, and Tier I
     leverage ratios as set forth in the table.  There are no
     conditions or events since that notification that management
     believes have changed the institution's category.

     The consolidated and bank only actual capital amounts and
     ratios for 1997 and 1996 are also presented in the table.

<TABLE>
<CAPTION>
                                                                                                               To Be Well
                                                                                                             Capitalized Under
                                                                                       For Capital           Prompt Corrective
                                                             Actual                Adequacy Purposes         Action Provisions
                                                     --------------------         -------------------        -----------------
                                                     Amount         Ratio         Amount        Ratio        Amount      Ratio
                                                     --------------------         -------------------        -----------------
 <S>                                            <C>                 <C>        <C>              <C>         <C>        <C>
 AS OF DECEMBER 31, 1997
  Total Risk-Based Capital (to Risk
    Weighted Assets):
      Consolidated                              $   22,448,925       15.4%      11,661,779      >8.0%           N/A      N/A
                                                                                                -
      FNB Griffin                               $   21,545,269       15.1%      11,414,712      >8.0%       14,268,390  >10.0%
                                                                                                -                       -
  Tier I Capital (to Risk Weighted Assets):
      Consolidated                              $   20,625,527       14.1%       5,851,213      >4.0%            N/A     N/A
                                                                                                -
      FNB Griffin                               $   19,765,753       13.9%       5,687,986      >4.0%        8,531,980  >6.0%
                                                                                                -                       -
  Tier 1 Capital (to Average Assets):
      Consolidated                              $   20,625,527       11.3%       7,301,072      >4.0%            N/A     N/A
                                                                                                -
      FNB Griffin                               $   19,765,753       10.9%       7,253,487      >4.0%        9,066,859  >5.0%
                                                                                                -                       -

 AS OF DECEMBER 31, 1996
  Total Risk-Based Capital (to Risk
    Weighted Assets):
      Consolidated                              $   20,039,698       16.2%       9,896,147      >8.0%            N/A     N/A
                                                                                                -
      FNB Griffin                               $   19,192,076       15.5%       9,905,588      >8.0%       12,381,985 >10.0%
                                                                                                -                      -
  Tier I Capital (to Risk Weighted Assets):
      Consolidated                              $   18,617,095       15.0%       4,964,559      >4.0%            N/A    N/A
                                                                                                -
      FNB Griffin                               $   17,769,473       14.4%       4,935,965      >4.0%        7,403,947 >6.0%
                                                                                                -                      -
  Tier 1 Capital (to Adjusted Total Assets):
      Consolidated                              $   18,617,095       11.6%       6,419,688      >4.0%            N/A    N/A
                                                                                                -
      FNB Griffin                               $   17,769,473       11.1%       6,403,414      >4.0%        8,004,267 >5.0%
                                                                                                -                      -
</TABLE>
                                F-24

<PAGE>
                         FNB BANKING COMPANY AND SUBSIDIARY

             Notes to Consolidated Financial Statements, continued

(16) FNB BANKING COMPANY (PARENT COMPANY ONLY) FINANCIAL INFORMATION
<TABLE>
<CAPTION>
                                                                 Balance Sheets

                                                           December 31, 1997 and 1996

                                                                     Assets
                                                                     ------
                                                                                            1997           1996
                                                                                            ----           ----
 <S>                                                                                <C>                <C>
 Cash                                                                               $      359,257         261,611
 Investment in First National Bank of Griffin                                           19,816,834      17,830,807
 Investment securities available for sale                                                1,659,822         526,010
 Other assets                                                                              537,290         572,363
                                                                                        ----------      ----------
                                                                                    $   22,373,203      19,190,791
                                                                                        ==========      ==========
<CAPTION>
                                                      Liabilities and Stockholders' Equity
                                                      ------------------------------------
 <S>                                                                                <C>                 <C>
 Other liabilities                                                                  $      508,951          27,681
 Dividends payable                                                                         484,680         484,680
 Stockholders'  equity                                                                  21,379,572      18,678,430
                                                                                        ----------      ----------
                                                                                    $   22,373,203      19,190,791
                                                                                        ==========      ==========
<CAPTION>
                                                             Statements of Earnings

                                              For the Years Ended December 31, 1997, 1996 and 1995

                                                                             1997             1996              1995
                                                                             ----             ----              ----
 <S>                                                                   <C>                <C>               <C>
 Income:
   Interest                                                            $     31,514           17,796             7,966
   Other                                                                    220,148          240,879           288,501
   Dividends from subsidiary                                                888,580          807,800           886,630
                                                                          ---------        ---------         ---------
                                                                          1,140,242        1,066,475         1,183,097
                                                                          ---------        ---------         ---------
 Other operating expenses                                                   239,510          178,203           245,801
                                                                          ---------        ---------         ---------
     Earnings before income taxes and equity in undistributed
      earnings of bank subsidiary                                           900,732          888,272           937,296

 Income tax expense                                                            -            ( 27,361)          (23,353)
                                                                          ---------        ---------         ---------
     Earnings before equity in undistributed earnings of
      bank subsidiary                                                       900,732          860,911           913,943

 Equity in undistributed earnings of bank subsidiary                      1,926,003        1,869,256         1,636,908
                                                                          ---------        ---------         ---------
     Net earnings                                                      $  2,826,735        2,730,167         2,550,851
                                                                          =========        =========         =========
</TABLE>

                                F-25

<PAGE>
                         FNB BANKING COMPANY AND SUBSIDIARY

             Notes to Consolidated Financial Statements, continued


(16) FNB BANKING COMPANY (PARENT COMPANY ONLY) FINANCIAL INFORMATION, CONTINUED
<TABLE>
<CAPTION>
                                                            Statements of Cash Flows

                                              For the Years Ended December 31, 1997, 1996 and 1995


                                                                          1997             1996             1995
                                                                          ----             ----             ----
 <S>                                                                 <C>                 <C>              <C>
 Cash flows from operating activities:
      Net earnings                                                   $  2,826,735        2,730,167         2,550,851
      Adjustments to reconcile net earnings
        to net cash provided by operating activities:
          Equity in undistributed earnings
            of bank subsidiary                                        (1,926,003)       (1,869,256)       (1,636,908)
          Depreciation                                                    35,073            35,073            35,528
          Change in other liabilities                                     50,421            23,336          (413,421)
                                                                      ----------        ----------        ----------
      Net cash provided by operating activities                          986,226           919,320           536,050
                                                                      ----------        ----------        ----------

 Cash flows from financing activities - dividends paid                  (888,580)         (807,800)         (686,630)
                                                                      ----------        ----------        ----------
 Net increase (decrease) in cash                                          97,646           111,520          (150,580)

 Cash at beginning of the period                                         261,611           150,091           300,671
                                                                      ----------        ----------        ----------
 Cash at end of the period                                           $   359,257           261,611           150,091
                                                                      ==========        ==========        ==========
 Supplemental disclosure of cash flow information:

      Net unrealized loss on investment securities
        available for sale, net of tax                               $  (762,987)           17,993          (338,225)

      Change in dividends receivable from subsidiary                 $      -                 -              200,000)
</TABLE>


                                F-26

<PAGE>
                                SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) 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.

                                   FNB BANKING COMPANY
                                     (Registrant)


                                    By: /s/ C.A. Knowles
                                        ----------------------------------
                                        C. A. Knowles
                                        President

                                    Dated:  March 27, 1998


<PAGE>
                     POWER OF ATTORNEY AND SIGNATURES

     KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints C. A. Knowles and John T. Newton,
Jr., or each of them, his attorney-in-fact, each with full power of
substitution, for him in his name, place and stead, in any and all
capacities, to sign any amendments to this Report on Form 10-KSB, and to
file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, and hereby
ratifies and confirms all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue hereof.

     Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed by the following persons on behalf of the
Registrant in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
          Signature                                      Title                                 Date
          ---------                                      -----                                 ----
<S>                                        <S>                                                <C>
/s/ John T. Newton, Jr.                    Chairman of the Board of Directors                 3-27-98
-----------------------------
John T. Newton, Jr.


/s/ C.A. Knowles                           President, Treasurer, and                          3-27-98
-----------------------------              Director (principal executive
C. A. Knowles                              officer)


/s/ William K. Holmes                      Assistant Treasurer (principal                     3-27-98
-----------------------------              accounting and financial officer)
William K. Holmes


/s/ James A. Mankin                        Director and Secretary                             3-27-98
-----------------------------
James A. Mankin


/s/ Ernest F. Carlisle, III                Director                                           3-27-98
-----------------------------
Ernest F. Carlisle, III


/s/ J. Henry Cheatham, III                 Director                                           3-27-98
-----------------------------
J. Henry Cheatham, III


/s/ David G. Newton                        Director                                           3-27-98
-----------------------------
David G. Newton
</TABLE>


<PAGE>
                     EXHIBIT INDEX



Exhibit No.             Description of Exhibit

  21.0                  Subsidiaries of FNB Banking Company.

  24.0                  A Power of Attorney is set forth on the signature
                        page to this Form 10-KSB.

  27.0                  Financial Data Schedule (for SEC use only)