SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C.  20549

                                    FORM 10-Q

(Mark  One)

 X   Quarterly  Report  under Section 13 or 15(d) of the Securities Exchange Act
---  of  1934
      For the quarterly period ended March 31, 2006.
                                     --------------

                                       or

     Transition  Report under Section 13 or 15(d) of the Securities Exchange Act
---  of  1934
     For  the  transition  period  from                   to                   .
                                         ---------------      ----------------

                          Commission File No.  0-23980
                                               -------

                     Southeastern Bank Financial Corporation
                     ---------------------------------------
             (Exact name of registrant as specified in its charter)

              Georgia                                58-2005097
              -------                                ----------
     (State of Incorporation)           (I.R.S. Employer Identification No.)

                    3530 Wheeler Road, Augusta, Georgia 30909
                    -----------------------------------------
                    (Address of principal executive offices)

                                 (706) 738-6990
                                 --------------
                (Issuer's telephone number, including area code)

                                 Not Applicable
                                 --------------
   (Former name, former address and former fiscal year, if changed since last
                                    report)

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

     Check  whether  the  issuer  is  a  large accelerated filer, an accelerated
filer,  or  a  non-accelerated  filer.  See definition of "accelerated filer and
large  accelerated  filer"  in Rule 12b-2 of the Exchange Act. Large accelerated
filer  [_]  Accelerated  filer  [X]  Non-accelerated  filer  [_]

     Indicate  by  check  mark  whether  the  registrant  is a shell company (as
defined  in  Rule  12b-2  of  the  Exchange  Act):  Yes       No   X
                                                         ---      ---

                      APPLICABLE ONLY TO CORPORATE ISSUERS

     State  the  number of shares outstanding of each of the issuer's classes of
common  equity,  as  of  the  latest  practicable  date:

     5,278,749 shares of common stock, $3.00 par value per share, outstanding as
of  April  30,  2006.


<PAGE>
<TABLE>
<CAPTION>
                       SOUTHEASTERN BANK FINANCIAL CORPORATION
                                      FORM 10-Q
                                        INDEX


                                                                                Page
Part I
<S>     <C>       <C>                                                           <C>
        Item 1.   Financial Statements (Unaudited)

                  Consolidated Balance Sheets as of March 31, 2006 and
                    December 31, 2005                                              3

                  Consolidated Statements of Income for the Three
                    Months ended March 31, 2006 and 2005                           4

                  Consolidated Statements of Cash Flows for the
                    Three Months ended March 31, 2006 and 2005                     5

                  Notes to Consolidated Financial Statements                       6

        Item 2.   Management's Discussion and Analysis of
                  Financial Condition and Results of Operations                   11

        Item 3.   Quantitative and Qualitative Disclosures about Market Risk      24

        Item 4.   Controls and Procedures                                         24

Part II  Other Information

        Item 1.   Legal Proceedings                                                *
        Item 1A.  Risk Factors                                                    25
        Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds     25
        Item 3.   Defaults Upon Senior Securities                                  *
        Item 4.   Submission of Matters to a Vote of Security Holders              *
        Item 5.   Other Information                                                *
        Item 6.   Exhibits                                                        26

Signature                                                                         27
<FN>
* No information submitted under this caption
</TABLE>


                                        1
<PAGE>


                                     PART I
                              FINANCIAL INFORMATION



                                        2
<PAGE>
<TABLE>
<CAPTION>
                 SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARY
                               Consolidated Balance Sheets
                                       (Unaudited)


                             ASSETS
                                                             March 31,     December 31,
                                                               2006            2005
                                                           -------------  --------------
<S>                                                        <C>            <C>
Cash and due from banks                                    $ 23,214,668   $  18,792,799
Federal funds sold                                           20,266,000       2,758,000
Interest-bearing deposits in other banks                        512,282       1,012,257
                                                           -------------  --------------
      Cash and cash equivalents                              43,992,950      22,563,056

Investment securities
  Available-for-sale                                        204,376,377     197,551,996
  Held-to-maturity, at cost (fair values of
    $3,882,847 and $3,897,341, respectively)                  3,775,943       3,776,040

Loans held for sale                                          16,470,538      22,146,834

Loans                                                       610,506,213     579,087,791
  Less allowance for loan losses                             (9,470,026)     (9,124,801)
                                                           -------------  --------------
      Loans, net                                            601,036,187     569,962,990

Premises and equipment, net                                  21,291,426      21,376,183
Accrued interest receivable                                   4,609,793       4,624,023
Bank-owned life insurance                                    15,502,546      11,863,276
Restricted equity securities                                  4,287,481       4,287,481
Other assets                                                  6,634,176       6,125,360
                                                           -------------  --------------

                                                           $921,977,417   $ 864,277,239
                                                           =============  ==============

                LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
  Noninterest-bearing                                      $105,133,350   $  97,083,931
  Interest-bearing:
    NOW accounts                                            119,009,830     100,692,388
    Savings                                                 272,510,034     265,131,754
    Money management accounts                                40,696,076      37,719,408
    Time deposits over $100,000                             134,262,721     122,009,813
    Other time deposits                                      53,490,855      41,017,555
                                                           -------------  --------------
                                                            725,102,866     663,654,849

Federal funds purchased and securities sold
  under repurchase agreements                                56,486,054      67,013,416
Advances from Federal Home Loan Bank                         47,000,000      52,000,000
Other borrowed funds                                            350,000       1,000,000
Accrued interest payable and other liabilities                7,062,590       7,025,767
Subordinated debentures                                      20,000,000      10,000,000
                                                           -------------  --------------
      Total liabilities                                     856,001,510     800,694,032
                                                           -------------  --------------

Stockholders' equity:
  Common stock, $3.00 par value; 10,000,000 shares
    authorized; 5,279,472 and 5,279,241 shares issued in
    2006 and 2005, respectively; 5,279,472 and 5,263,144
    shares outstanding in 2006 and 2005, respectively        15,838,416      15,837,723
  Additional paid-in capital                                 34,138,079      34,138,876
  Retained earnings                                          17,873,536      16,099,414
  Treasury stock, at cost; 0 and 16,097 shares in
    2006 and 2005, respectively                                       -        (233,898)
  Accumulated other comprehensive loss, net                  (1,874,124)     (2,258,908)
                                                           -------------  --------------
Total stockholders' equity                                   65,975,907      63,583,207
                                                           -------------  --------------

                                                           $921,977,417   $ 864,277,239
                                                           =============  ==============
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>


                                        3
<PAGE>
<TABLE>
<CAPTION>
             SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARY
                        Consolidated Statements of Income
                                   (Unaudited)

                                                  Three Months Ended
                                                      March 31,
                                               ------------------------
                                                  2006         2005
                                               -----------  -----------
<S>                                            <C>          <C>
Interest income:
  Loans, including fees                        $11,812,088  $ 8,243,538
  Investment securities                          2,456,072    1,764,542
  Federal funds sold                               150,593       55,607
  Interest-bearing deposits in other banks           7,975        2,433
                                               -----------  -----------
      Total interest income                     14,426,728   10,066,120
                                               -----------  -----------

Interest expense:
  Deposits                                       4,918,651    2,645,590
  Federal funds purchased and securities sold
    under repurchase agreements                    683,908      271,970
  Other borrowings                                 846,988      507,827
                                               -----------  -----------
      Total interest expense                     6,449,547    3,425,387
                                               -----------  -----------

      Net interest income                        7,977,181    6,640,733

Provision for loan losses                          503,792      471,694
                                               -----------  -----------

      Net interest income after provision
        for loan losses                          7,473,389    6,169,039
                                               -----------  -----------

Noninterest income:
  Service charges and fees on deposits           1,352,144    1,211,050
  Gain on sales of loans                         1,254,345    1,042,183
  Investment securities gains, net                       -          791
  Retail investment income                         167,411       81,963
  Trust service fees                               192,465      156,912
  Increase in cash surrender value of
    bank-owned life insurance                      139,270       82,789
  Miscellaneous income                             149,625      125,102
                                               -----------  -----------
      Total noninterest income                   3,255,260    2,700,790
                                               -----------  -----------

Noninterest expense:
  Salaries                                       3,380,559    2,749,539
  Employee benefits                              1,059,421      809,444
  Occupancy expenses                               748,736      673,093
  Other operating expenses                       1,977,171    1,505,162
                                               -----------  -----------
      Total noninterest expense                  7,165,887    5,737,238
                                               -----------  -----------

      Income before income taxes                 3,562,762    3,132,591

Income tax expense                               1,102,787    1,048,602
                                               -----------  -----------

      Net income                               $ 2,459,975  $ 2,083,989
                                               ===========  ===========

Basic net income per share                     $      0.47  $      0.40
                                               ===========  ===========

Diluted net income per share                   $      0.46  $      0.39
                                               ===========  ===========

Weighted average common shares outstanding       5,273,688    5,253,526
                                               ===========  ===========

Weighted average number of common and
  common equivalent shares outstanding           5,327,383    5,331,762
                                               ===========  ===========
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>


                                        4
<PAGE>
<TABLE>
<CAPTION>
                       SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARY
                                Consolidated Statements of Cash Flows
                                             (Unaudited)

                                                                     Three Months Ended March 31,
                                                                        2006              2005
                                                                  ----------------  ----------------
<S>                                                               <C>               <C>
Cash flows from operating activities:
Net income                                                        $     2,459,975   $     2,083,989
  Adjustments to reconcile net income to net cash
    provided by operating activities
      Depreciation                                                        376,947           359,531
      Provision for loan losses                                           503,792           471,694
      Net investment securities gains                                           -              (791)
      Net (accretion of discount) amortization of premium
        on investment securities                                          (50,439)           93,823
      Increase in CSV of bank owned life insurance                       (139,270)          (82,789)
      Stock options compensation cost                                      69,706                 -
      Gain on disposal of premises and equipment                           (2,941)                -
      Gain on the sale of other real estate                                     -            (4,150)
      Gain on sales of loans                                           (1,254,345)       (1,042,183)
      Real estate loans originated for sale                           (60,698,915)      (52,982,473)
      Proceeds from sales of real estate loans                         67,629,556        53,967,068
      Decrease in accrued interest receivable                              14,230            35,557
      Increase in other assets                                           (707,038)         (142,735)
      Increase in accrued interest payable and other liabilities           36,823            13,166
                                                                  ----------------  ----------------
        Net cash provided by operating activities                       8,238,081         2,769,707
                                                                  ----------------  ----------------

Cash flows from investing activities:
      Proceeds from sales of available for sale securities                      -         4,232,172
      Proceeds from maturities of available for sale securities         6,420,409         3,779,820
      Purchase of available for sale securities                       (12,611,248)      (23,516,802)
      Purchase of Federal Home Loan Bank stock                                  -          (380,600)
      Net increase in loans                                           (31,576,989)      (29,847,361)
      Purchase of Bank-owned life insurance                            (3,500,000)                -
      Additions to premises and equipment                                (295,887)         (247,807)
      Proceeds from sale of other real estate                                   -            57,579
      Proceeds from sale of premises and equipment                          6,638                 -
                                                                  ----------------  ----------------
        Net cash used in investing activities                         (41,557,077)      (45,922,999)
                                                                  ----------------  ----------------

Cash flows from financing activities:
      Net increase in deposits                                         61,448,017        34,429,774
      Net (decrease) increase in federal funds purchased and
        securities sold under repurchase agreements                   (10,527,362)        4,708,179
      Advances from Federal Home Loan Bank                                      -         5,000,000
      Payments of Federal Home Loan Bank advances                      (5,000,000)                -
      Proceeds from subordinated debentures                            10,000,000                 -
      Proceeds from other borrowed funds                                        -           100,000
      Principal payments on other borrowed funds                         (650,000)                -
      Payment of cash dividends                                          (685,853)         (682,449)
      Proceeds from stock options exercised                               164,088                 -
                                                                  ----------------  ----------------
        Net cash provided by financing activities                      54,748,890        43,555,504
                                                                  ----------------  ----------------

        Net increase in cash and cash equivalents                 $    21,429,894   $       402,212

Cash and cash equivalents at beginning of period                       22,563,056        26,024,197

                                                                  ----------------  ----------------
Cash and cash equivalents at end of period                        $    43,992,950   $    26,426,409
                                                                  ================  ================

Supplemental disclosures of cash paid during the period for:
      Interest                                                    $     6,605,609   $     3,601,419
                                                                  ================  ================

      Income taxes                                                $       445,000   $       100,000
                                                                  ================  ================
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>


                                        5
<PAGE>
             SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                                 March 31, 2006

Note 1 - Basis of Presentation

The  accompanying  consolidated  financial  statements  include  the accounts of
Southeastern  Bank  Financial  Corporation,  and  its  wholly-owned  subsidiary,
Georgia  Bank  &  Trust  Company  (the  "Company"  or  the "Bank").  Significant
intercompany transactions and accounts are eliminated in consolidation.

The  financial statements for the three months ended March 31, 2006 and 2005 are
unaudited  and  have  been prepared pursuant to the rules and regulations of the
Securities and Exchange Commission. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with accounting
principles  generally  accepted  in  the  United  States  of  America  have been
condensed  or omitted pursuant to such rules and regulations. These consolidated
financial statements should be read in conjunction with the audited consolidated
financial  statements  and  footnotes included in the Company's annual report on
Form  10-K  for  the  year  ended  December  31,  2005.

In  the  opinion  of management, all adjustments necessary to present fairly the
financial  position and the results of operations and cash flows for the interim
periods  have been made.  All such adjustments are of a normal recurring nature.
The  results  of  operations  for  the three months ended March 31, 2006 are not
necessarily  indicative  of  the  results  of  operations  which the Company may
achieve  for  the  entire  year.

Some items in the prior period financial statements were reclassified to conform
to  the  current  presentation.

Note  2  -  Comprehensive  Income

Other  comprehensive income for the Company consists of net unrealized gains and
losses  on investment securities available for sale.  Total comprehensive income
for  the  three  months ended March 31, 2006 was $2,844,759 compared to $795,261
for  the  three  months  ended  March  31,  2005.

Note  3  -  Stock-based  Compensation

During  2000,  the  Company  adopted the 2000 Long-Term Incentive Plan (the 2000
Plan)  which  allows  for  stock  option  awards for up to 253,000 shares of the
Company's  common  stock  to key employees of the Company.  The Company believes
that  such  awards better align the interests of its employees with those of its
shareholders.  Under  the  provisions  of  the  2000  Plan,  the option price is
determined  by  a  committee  of  the


                                        6
<PAGE>
board  of  directors  at  the time of grant and may not be less than 100% of the
fair  value  of  the  common  stock  on  the  date  of the grant of such option.
Generally,  when  granted, these options vest over a five-year period.  However,
there  were  10,000  options  granted  in 2005, that vest based on specific loan
growth  performance  targets.  Compensation  cost  related  to these performance
stock  options  is considered immaterial.  Therefore, these options are included
in  all  disclosures presented for other options.  All options must be exercised
within  a  ten-year  period.

The  Company  periodically purchases treasury stock, which if available, is used
when  stock  options  are  exercised.  If  treasury  stock  is  not  available,
additional  stock  is  issued.  The  Company estimates it will repurchase 25,000
shares  or  less  during  the  2006  year.

 The  Company  will  accept  as payment for options exercised, at the optionee's
discretion,  cash,  or  shares  of  the  Company's  stock  at market value, or a
combination  of  cash  and  Company  stock.  For the three month ended March 31,
2006,  the Company received $164,088 in cash, and stock with a fair market value
of  $21,567.  For  the  three  month  ended March 31, 2005, the Company received
stock  with  a  fair  market  value  of  $209,860 and no cash was received.  All
options  issued  are  incentive  stock  options and therefore, no tax benefit is
realized.

Effective  January  1,  2006,  the  Company adopted SFAS No. 123 (Revised 2004),
Accounting  for  Stock-Based Compensation, which requires the Company to compute
the  fair  value  of options at the date of grant and to recognize such costs as
compensation  expense  ratably  over the vesting period of the options.  For the
three  months  ended  March  31,  2006,  the  Company  recognized  $69,706  as
compensation  expense  resulting  from  stock  options.

The  fair  value  of  each  option  is  estimated on the date of grant using the
Black-Scholes  valuation  model that uses the assumptions noted in the following
table.  Expected  volatility  is  the  annualized  standard  deviation  of  the
continuously  compounded rate of return. The method used to calculate historical
average  annualized  volatility is based on the closing price of the first trade
of  each month. Expected dividends are based on the Company's historical pattern
of  dividend  payments.  The  Company  uses  historical  data to estimate option
exercise and employee termination within the valuation model. The risk-free rate
is  the  ten  year  U.S.  Treasury  note  at  the  time  of  grant.

During  April  2006, the Company adopted the 2006 Long-Term Incentive Plan which
allows  for stock option awards for up to 250,000 shares of the Company's common
stock  to  employees  of  the  Company.


                                        7
<PAGE>
<TABLE>
<CAPTION>
                                     Three Months Ended March 31
                                   -------------------------------
                                        2006             2005
                                   ---------------  --------------
<S>                                <C>              <C>
          Expected volatility               33.47%          29.87%

          Expected dividend yield            2.00%           2.00%

          Expected option life               7.92            8.54

          Risk-free interest rate            4.36%           4.05%
</TABLE>

A  summary  of option activity under the Plan as of March 31, 2006 and March 31,
2005,  and  changes during the three months is presented in the following table:

<TABLE>
<CAPTION>
                                           For the Three Month Ended March 31, 2005 and 2006
                                         -----------------------------------------------------
                                                                      Weighted
                                                     Weighted         average
                                                      average        remaining      Aggregate
                                                     exercise     contractual life  Intrinsic
                                          Shares    price/share       in years        Value
                                         --------  -------------  ----------------  ----------
<S>                                      <C>       <C>            <C>               <C>
Options outstanding - December 31, 2005  215,434   $      21.95

Granted in 2006                            5,000          39.25

Options exercised in 2006                (16,874)        (11.00)
                                         --------  -------------

Options outstanding - March 31, 2006     203,560   $      23.29               7.22  $2,994,368
                                         ========  =============  ================  ==========

Exercisable at March 31, 2006             96,743   $      17.12               6.25  $2,019,994
                                         ========  =============  ================  ==========



Options outstanding - December 31, 2004  188,040   $      17.05

Granted in 2005                            9,000          30.00

Options exercised in 2005                (13,200)        (15.90)
                                         --------  -------------

Options outstanding - March 31, 2005     183,840   $      17.77               7.27  $2,707,963
                                         ========  =============  ================  ==========

Exercisable at March 31, 2005             82,089   $      14.98               6.70  $1,438,199
                                         ========  =============  ================  ==========
</TABLE>

The  weighted  average  grant-date  fair value of the options granted during the
three  months  ended  March  31,  2006 and March 31, 2005 was $14.13 and $10.52,
respectively.  The  total  intrinsic value of options exercised during the three
months  ended  March  31,  2006  and  March  31, 2005 was $456,000 and $219,000,
respectively.


                                        8
<PAGE>
A  summary  of the status of the Company's nonvested shares as of March 31, 2006
and  March  31,  2005  is  presented  in  the  following  table.

<TABLE>
<CAPTION>
                                                     Weighted
                                                      Average
                                                    Grant Date
                                           Shares   Fair Value
                                          --------  -----------
<S>                                       <C>       <C>
          Nonvested at December 31, 2005  125,837   $     17.24

          Granted in 2006                   5,000         14.13

          Vested in 2006                  (24,020)        15.98
                                          --------  -----------

          Nonvested at March 31, 2006     106,817   $     17.38
                                          ========  ===========



          Nonvested at December 31, 2004  115,851   $     19.57

          Granted in 2005                   9,000         10.00

          Vested in 2005                  (23,100)        16.52
                                          --------  -----------

          Nonvested at March 31, 2005     101,751   $     19.42
                                          ========  ===========
</TABLE>

As of March 31, 2006, there was $731,000 of total unrecognized compensation cost
related  to  nonvested  share  based compensation arrangements granted under the
Plan.  That  cost is expected to be recognized over a weighted average period of
3.1 years.  The total fair value of shares vested during the periods ended March
31,  2006  and  2005  was  $944,000  and  $714,000,  respectively.

Had  compensation  cost been determined based upon the fair value of the options
at  the grant dates consistent with the method recommended by SFAS No. 123, on a
pro  forma  basis, the Company's net income and income per share, on a pro forma
basis,  for  the three months ended March 31, 2005 is indicated in the following
table.


                                        9
<PAGE>
<TABLE>
<CAPTION>
                                                   Three Months
                                                       Ended
                                                  March 31, 2005
                                                  ---------------
<S>                                          <C>
               Net income                         $     2,083,989
               Deduct: Total stock-based
                 Compensation expense determined
                 Under fair value based method,
                 net of related tax effect                 54,261
                                                  ---------------
               Pro Forma, net income              $     2,029,728
                                                  ===============

               Basic net income per share:
                 As reported                      $          0.40
                 Pro forma                        $          0.39

               Diluted net income per share:
                 As reported                      $          0.39
                 Pro forma                        $          0.38
</TABLE>

Note  4  -  Cash  Dividend  Declared

On January 18, 2006, the Company declared a quarterly cash dividend of $0.13 per
share  on  outstanding  shares.  The  dividend  was paid on February 22, 2006 to
shareholders  of  record  as  of  February  8,  2006.

On  April  18, 2006, the Company declared a quarterly cash dividend of $0.13 per
share  on  outstanding  shares.  The  dividend  is  payable  on  May 19, 2006 to
shareholders  of  record  as  of  May  4,  2006.


                                       10
<PAGE>
Item  2.  Management's  Discussion  and  Analysis  of  Financial  Condition  and
          Results of Operations

Overview
--------

The  Bank  was  organized by a group of local citizens and commenced business on
August 28, 1989, with one branch location.  Today, the Bank is Augusta's largest
community  banking company operating eight full service branches in Richmond and
Columbia  counties  in  Augusta,  Martinez, and Evans, Georgia and one branch in
Athens, Georgia.  The Bank operates two mortgage origination offices in Augusta,
Georgia,  and  Savannah,  Georgia.  The  Savannah  Georgia  office  also  offers
construction  lending  services.  Bank  and  mortgage  operations are located in
Augusta,  Georgia  in  two operations campuses located in close proximity to the
main  office  in  Augusta,  Georgia.   Wealth  management and trust services are
located  in  the  main  office.  The  Company  is in the process of organizing a
federally  chartered  thrift  in  Aiken,  South  Carolina.

Richmond  and  Columbia  counties  have a diversified economy based primarily on
government,  transportation,  public  utilities,  health  care,  manufacturing,
construction,  and  wholesale  and  retail  trade. Augusta is one of the leading
medical  centers  in  the Southeast. The 2005 population of the Augusta-Richmond
County,  GA-SC metropolitan area was 520,332, the second largest in Georgia. The
Bank  expanded  into  the  Athens, Georgia market in December 2005. Athens has a
diversified  economy  which  includes  government,  retail  services,  tourism,
manufacturing,  other  services,  and  health  care,  with  the largest share of
government  jobs  in  the  state. The Athens-Clarke County, GA metropolitan area
ranks  sixth  in  Georgia  with  a  2005  population  of  175,085.

The  Bank's  services include the origination of residential and commercial real
estate  loans,  construction  and development loans, and commercial and consumer
loans.  The  Bank  also  offers  a  variety  of  deposit  programs,  including
noninterest-bearing  demand,  interest  checking, money management, savings, and
time deposits. In the Augusta-Richmond County, GA-SC metropolitan area, the Bank
had  11.25% of all deposits and was the fourth largest depository institution at
June  30,  2005,  as  cited  from  the  Federal  Deposit Insurance Corporation's
website.  Securities  sold  under  repurchase  agreements  are  also  offered.
Additional  services  include  wealth  management, trust, retail investment, and
mortgage. As a matter of practice, most mortgage loans are sold in the secondary
market;  however,  some  mortgage  loans  are  placed  in the portfolio based on
marketing and balance sheet considerations. The Bank continues to concentrate on
increasing  its  market  share through various new deposit and loan products and
other financial services and by focusing on the customer relationship management
philosophy.  The  Bank is committed to building life-long relationships with its
customers,  employees,  shareholders,  and  the  communities  it  serves.

The  Bank's  primary source of income is from its lending activities followed by
interest  income  from  its  investment  activities, service charges and fees on
deposits, and gain on sales of mortgage loans in the secondary market.  Interest
income  on  loans  and  investment  securities  increased during the first three
months  of  2006  as  compared  to  the


                                       11
<PAGE>
first  three  months of 2005 due to rising interest rates and increased volumes.
Gain  on  sales  of  mortgage  loans  increased due to higher production levels.
Service  charges  and  fees  on deposits increased for the first three months of
2006  as  compared  to the same period in 2005 due to increases in NSF income on
retail  checking  accounts  and  debit/ATM  card  income, both the result of new
account  growth.  Other  significant  contributors  to income are trust services
fees,  retail  investment  income, and increases in cash surrender value of life
insurance.

The  Bank  continues  to  experience  steady  growth.  Over the past four years,
assets  grew  from  $481.5  million  at  December  31, 2001 to $864.3 million at
December  31,  2005.  At  March 31, 2006, assets were $922.0 million.  From year
end  2001  to  year  end  2005,  loans  increased  $261.6  million, and deposits
increased  $294.5  million.  From  December  31,  2005  to March 31, 2006, loans
increased  $25.7  million and deposits increased $61.4 million.  Also, from 2001
to  2005, return on average equity increased from 12.19% to 16.15% and return on
average  assets  increased  from 1.02% to 1.27%.  For the quarter ended March 31
2006,  annualized  return  on  average assets was 1.13% and annualized return on
average  equity was 15.42%.  Net income for the year ended 2001 was $4.6 million
compared  to  net  income of $10.0 million at year end 2005.  Net income for the
three  months  ended March 31, 2006 was $2.5 million.  The Company has reached a
level  of  maturity  evidenced  by long-term financial performance and stability
that resulted in cash dividends of $0.13 per share paid for each quarter of 2004
and  2005.

The  Bank meets its liquidity needs by managing cash and due from banks, federal
funds  purchased  and  sold,  maturity  of  investment  securities,  principal
repayments  from  mortgage-backed  securities,  and  draws  on  lines of credit.
Additionally,  liquidity  can  be  managed  through structuring deposit and loan
maturities.  The  Bank  funds  loan  and  investment  growth with core deposits,
securities sold under repurchase agreements and Federal Home Loan Bank advances.
During  inflationary  periods,  interest  rates generally increase and operating
expenses  generally  rise.  When  interest  rates  rise, variable rate loans and
investments  produce  higher  earnings;  however,  deposit  and other borrowings
interest  expense  also  rise.  The  Bank  monitors its interest rate risk as it
applies  to  net  income  in  a  ramp up and down annually 200 basis points (2%)
scenario  and  as  it applies to economic value of equity in a shock up and down
200  (2%)  basis  points  scenario. The Bank monitors operating expenses through
responsibility  center  budgeting.

Forward-Looking  Statements
---------------------------

Southeastern  Bank Financial Corporation (the "Company") may, from time to time,
make  written or oral forward-looking statements, including statements contained
in  the  Company's  filings  with  the  Securities  and Exchange Commission (the
"Commission")  and  its  reports  to  shareholders.  Statements  made  in  such
documents,  other  than  those  concerning  historical  information,  should  be
considered forward-looking and subject to various risks and uncertainties.  Such
forward-looking  statements  are  made based upon management's belief as well as
assumptions made by, and information currently available to, management pursuant
to  "safe  harbor" provisions of the Private Securities Litigation Reform Act of
1995.  The  Company's  actual  results  may  differ  materially from the results
anticipated in forward-looking statements due to a variety of factors, including


                                       12
<PAGE>
unanticipated  changes  in  the  Bank's  local  economy,  the  national economy,
governmental  monetary  and  fiscal  policies, deposit levels, loan demand, loan
collateral values and securities portfolio values; difficulties in interest rate
risk  management;  the  effects  of  competition  in  the  banking  business;
difficulties  in  expanding  the  Bank's  business  into new markets; changes in
governmental  regulation relating to the banking industry, including regulations
relating  to  branching  and acquisitions; failure of assumptions underlying the
establishment  of  reserves  for  loan losses, including the value of collateral
underlying  delinquent  loans; and other factors. The Company cautions that such
factors  are  not  exclusive.  The  Company  does  not  undertake  to update any
forward-looking  statement  that  may be made from time to time by, or on behalf
of,  the  Company.

Critical  Accounting  Estimates
-------------------------------

The  accounting  and  financial  reporting  policies  of  the Company conform to
accounting  principles generally accepted in the United States of America and to
general practices within the banking industry. Of these policies, management has
identified  the allowance for loan losses as a critical accounting estimate that
requires  difficult, subjective judgment and is important to the presentation of
the  financial  condition  and  results  of  operations  of  the  Company.

The allowance for loan losses is established through a provision for loan losses
charged  to  expense,  which  affects the Company's earnings directly. Loans are
charged  against the allowance for loan losses when management believes that the
collectibility  of the principal is unlikely. Subsequent recoveries are added to
the  allowance.  The  allowance  is  an  amount that management believes will be
adequate  to absorb losses on existing loans that become uncollectible, based on
evaluations  of  the  collectibility  of  loans.  The  evaluations  take  into
consideration  such  factors  as  changes  in  the nature and volume of the loan
portfolio,  historical loss rates, overall portfolio quality, review of specific
problem  loans,  and  current  economic  conditions and trends that may affect a
borrower's  ability  to  repay.

The Company segments its allowance for loan losses into the following four major
categories:  1)  identified  losses  for impaired loans; 2) general reserves for
Classified/Watch loans; 3) general reserves for loans with satisfactory ratings;
and  4)  general reserves based on economic and market risk qualitative factors.
Risk  ratings  are  initially  assigned  in  accordance with the Bank's loan and
collection  policy.  An  organizationally  independent  department reviews grade
assignments  on  an  ongoing  basis.  Management reviews current information and
events  regarding  a  borrower's  financial  condition and strengths, cash flows
available for debt repayment, the related collateral supporting the loan and the
effects of known and expected economic conditions.  When the evaluation reflects
a  greater  than  normal  risk  associated  with the individual loan, management
classifies  the  loan  accordingly.  If  the  loan is determined to be impaired,
management  allocates  a  portion of the allowance for loan losses for that loan
based  upon  the  present  value  of  future cash flows discounted at the loan's
effective  interest  rate,  or the fair value of the collateral if collection of
the  loan is deemed to be dependent upon the collateral.  Regulatory guidance is
also  considered.  Cash receipts for accruing loans are applied to principal and
interest  under  the  contractual  terms  of  the  loan  agreement;


                                       13
<PAGE>
however, cash receipts on impaired and nonaccrual loans for which the accrual of
interest has been discontinued are generally applied first to principal and then
to  interest  income  depending  upon  the overall risk of principal loss to the
Company.  Impaired  and  Classified/Watch loans are aggressively monitored.  The
reserves  for loans rated satisfactory are further subdivided into various types
of  loans  as  defined by call report codes.  Qualitative factors are based upon
economic,  market and industry conditions that are specific to the Company's two
local  county  markets.  These  qualitative factors include, but are not limited
to,  national  and  local  economic  conditions, bankruptcy trends, unemployment
trends, loan concentrations, and competitive factors in the local market.  These
allocations  for  the qualitative factors are included in the various individual
components  of  the  allowance  for  loan  losses.  The  qualitative factors are
subjective  in  nature  and  require  considerable  judgment  on the part of the
Company's  management.  However,  it is the Company's opinion that these factors
do  represent  uncertainties  in  the  Bank's  business environment that must be
factored into the Company's analysis of the allowance for loan losses.

Performance Overview -- Net Income
----------------------------------

The  Company's net income for the first quarter of 2006 was $2,460,000 which was
an  increase  of  $376,000  (18.0%) compared to net income of $2,084,000 for the
first  quarter of 2005.  Diluted net income per share for the three months ended
March  31, 2006 was $0.46 compared to $0.39 for the three months ended March 31,
2005.  The  increase  in net income for the three months ended March 31, 2006 as
compared  with  the three months ended March 31, 2005, was primarily a result of
increases  in  net  interest  income  and noninterest income, somewhat offset by
increases  in noninterest expense.  Interest income on both loans and investment
securities  increased  due  to  increased  volumes  and  higher  interest rates.
Interest  expense  on  deposits, securities sold under repurchase agreements and
other  borrowings  increased  as  the result of rising interest rates and higher
volumes.  Factors  contributing  to  the  increase in noninterest income for the
three  months  ended  March 31, 2006, were increases in both service charges and
fees  on  deposits  and  gains  on sales of loans. Increases in both NSF fees on
retail  checking accounts and debit/ATM card income were primarily the result of
new account growth while increases in the gain on sales of mortgage loans in the
secondary market were due to increased production. Noninterest expense increased
$1,429,000  during  the  three-month period ended March 31, 2006 compared to the
three-month  period ended March 31, 2005, primarily due to increases in salaries
and employee benefits related to company growth and increases in other operating
expenses.  The  increase  in  noninterest  expense included $331,000 in expenses
related  to  the  Company's  expansion  into new markets. Significant changes in
other  operating  expenses  during  the  three-month period include increases in
professional  fees for Sarbanes-Oxley 404 compliance and other advisory services
and increases in processing expenses attributable to new account growth for both
retail  and  business  checking  products.

Total  assets  of  $922.0 million at March 31, 2006 reflect an increase of $57.7
million  (6.7%)  from year-end 2005.  This increase is primarily attributable to
higher  balances  for  loans, federal funds sold and investment securities since
December  2005.  Total  loans  at


                                       14
<PAGE>
March  31,  2006  were  $627.0  million  which  represented an increase of $25.7
million  (4.3%)  from December 31, 2005.  Since December 31, 2005, federal funds
sold  increased  $17.5  million  (634.8%),  investment securities increased $6.8
million  (3.4%),  and  cash  and  due from banks increased $4.4 million (23.5%).
These  increases  were  funded  by  increases in total deposits of $61.4 million
(9.3%)  and  increases  in  subordinated  debentures  of $10.0 million, somewhat
offset  by  decreases  in  securities  sold under repurchase agreements of $10.5
million (15.7%) and decreases in Federal Home Loan Bank advances of $5.0 million
(9.6%).  Net  income  of  $2.5  million  less  dividends  paid  of $686,000 also
contributed  to  the  funding.

The  annualized return on average assets for the Company was 1.13% for the three
months  ended  March  31, 2006, compared to 1.17% for the same period last year.
While  total  assets have increased $171.1 million since first quarter 2005, net
income  has  only increased $376,000, resulting in a decrease in ROA.  Increases
in  net  interest income of $1.3 million and noninterest income of $554,000 were
somewhat  offset  by  increases  in  noninterest  expense  of $1.4 million.  The
annualized  return  on  average  stockholders'  equity  was 15.42% for the three
months  ended  March 31, 2006, compared to 14.14% for the same period last year.
The  increase  is  primarily  attributable  to  net  income  growth.

Net  Interest  Income
---------------------

<TABLE>
<CAPTION>
                          Table 1 - Net Interest Income

                                 Three Months Ended
                                      March 31,              Variance
                                ---------------------  ---------------------
                                  2006        2005      Amount        %
                                ---------  ----------  ---------  ----------
<S>                             <C>        <C>         <C>        <C>
                                            (Dollars in thousands)
Interest income:
  Loans, including fees         $  11,812  $    8,244  $   3,568       43.3%
  Investment securities             2,456       1,764        692       39.2%

Interest expense:
  Deposits                          4,919       2,646      2,273       85.9%
  Federal funds purchased
    and securities sold under
    repurchase agreements             684         272        412      151.5%
  Other borrowings                    847         508        339       66.7%

Net interest income                 7,977       6,641      1,336       20.1%
</TABLE>

Net interest income increased $1.3 million (20.1%) during the three-month period
as  the  result of increases in both interest income and interest expense.  Loan
interest  income  increased $3.6 million in the three month period while deposit
interest  expense  increased $2.3 million in the same period, both the result of
rising  interest  rates  and  the  continued  growth of account balances.  Other
contributing  factors  during  the  three  month  period  included  increases in
interest income on investment securities, increases in interest


                                       15
<PAGE>
expense  on  federal  funds  purchased  and  securities  sold  under  repurchase
agreements and increases in interest expense on other borrowings, all the result
of  increased  volumes  and higher interest rates.  Interest-earning assets were
$875.7  million  at  March  31, 2006, an increase of $161.5 million (22.6%) over
March 31, 2005 and $53.2 million (6.5%) over December 31, 2005.

The  Company's net interest margin for the three months ended March 31, 2006 was
3.77%  as  compared  to  3.86%  for  the three months ended March 31, 2005.  The
decrease  in the net interest margin for the three month period is primarily the
result  of  increases in the cost to fund earning assets due to interest expense
on  subordinated  debentures  issued  in  December  2005.

Noninterest  Income
-------------------

<TABLE>
<CAPTION>
                          Table 2 - Noninterest Income

                             Three Months Ended
                                  March 31,              Variance
                           ----------------------   ---------------------
                              2006        2005       Amount         %
                           ---------  -----------   --------  -----------
<S>                        <C>        <C>          <C>        <C>
                                        (Dollars in thousands)
Service charges and fees
  on deposits              $   1,352  $     1,211  $     141        11.6%
Gain on sales of loans         1,254        1,042        212        20.3%

Noninterest income             3,255        2,701        554        20.5%
</TABLE>

Noninterest  income  increased  $554,000  (20.5%) during the three-month period.
The  most  significant  changes  were for gain on sales of mortgage loans in the
secondary market and service charges and fees on deposits.  Increases in gain on
sales  of loans were due to increased mortgage production which is primarily the
result  of  local  market  conditions.  Increases in service charges and fees on
deposits  during  the  three-month period were primarily due to increases in NSF
fees  for retail checking accounts and debit/ATM card income, both the result of
new  account  growth.


                                       16
<PAGE>
<TABLE>
<CAPTION>
Noninterest  Expense
--------------------

                          Table 3 - Noninterest Expense

                             Three Months Ended
                                  March 31,               Variance
                            ----------------------  ----------------------
                              2006        2005       Amount         %
                            ---------  -----------  ---------  -----------
<S>                         <C>        <C>          <C>        <C>
                                        (Dollars in thousands)
Salaries                    $   3,381  $     2,750  $     631        22.9%
Employee benefits               1,059          809        250        30.9%
Occupancy expenses                749          673         76        11.3%
Other operating expenses        1,977        1,505        472        31.4%
                            ---------  -----------  ---------  -----------
Total noninterest expense   $   7,166  $     5,737  $   1,429        24.9%
                            =========  ===========  =========  ===========
</TABLE>

Noninterest  expense  increased  $1.4  million  (24.9%)  during  the three-month
period.  Noninterest  expense  attributable  to the Company's expansion into new
markets  totaled  $331,000 for the quarter ended March 31, 2006.  Salary expense
increased  primarily  as  the  result  of company growth related to new markets,
opening  of  a customer care center and expansion of the wealth management area.
Increases in employee benefits were for FICA taxes and medical expenses directly
related  to  salaries and stock option compensation expense recognized to comply
with  SFAS  No. 123 (Revised 2004).  Other operating expenses increased $472,000
(31.4%)  for  the  three-month period.  Significant changes include increases in
professional  fees for Sarbanes-Oxley 404 compliance and other advisory services
and increases in processing expenses attributable to new account growth for both
retail  and  business  checking  products.

Income  Taxes
-------------

Income  tax expense in the first quarter of 2006 totaled $1,103,000, an increase
of $54,000 (5.2%) over the first quarter of 2005. The effective tax rate for the
three  months  ended  March 31, 2006 and 2005 was 31.0% and 33.5%, respectively.
The  decrease  in the effective tax rate for the three month period is primarily
due  to  increases  in interest income on tax-exempt municipal securities, loans
and  cash  surrender  value  of  life  insurance.

Asset  Quality
--------------

Table  4  which  follows  shows  the  current  and  prior  period  amounts  of
non-performing  assets.  Non-performing  assets  were  $3.4 million at March 31,
2006,  compared  to  $4.0 million at December 31, 2005 and $2.7 million at March
31,  2005. The increase from March 2005 to December 2005 is primarily the result
of  $1.3  million  in  loans  for  two  customers who have filed bankruptcy. The
decrease  from  December  2005  to  March  2006  is  mostly  due to decreases in
non-performing  assets  with  balances  less  than  $100,000.  The  ratio  of
non-performing  assets  to  total loans and other real estate was 0.54% at March
31,  2006,  compared  to  0.67%  at  December  31,  2005  and 0.51% at March 31,


                                       17
<PAGE>
2005.  The  control  and  monitoring  of non-performing assets continues to be a
priority  of  management.

There  were  no  loans  past due 90 days or more and still accruing at March 31,
2006 and March 31, 2005.  At December 31, 2005 there were loans past due 90 days
or  more  and  still  accruing  of  $1,000.

<TABLE>
<CAPTION>
                           Table 4 - Non-Performing Assets


                                 March 31, 2006   December 31, 2005   March 31, 2005
                                 ---------------  ------------------  ---------------
<S>                              <C>              <C>                 <C>
Nonaccrual loans                 $         3,387  $            4,009  $         2,652
Other real estate owned                        0                   0                0
                                 ---------------  ------------------  ---------------
    Total non-performing assets  $         3,387  $            4,009  $         2,652
                                 ===============  ==================  ===============


Loans past due 90 days or more
  and still accruing interest    $             0  $                1  $             0
                                 ===============  ==================  ===============
</TABLE>

Allowance  for  Loan  Losses
----------------------------

The  allowance  for  loan losses represents a reserve for probable incurred loan
losses  in  the loan portfolio. The adequacy of the allowance for loan losses is
evaluated  periodically  based  on  a  review  of  all  significant  loans, with
particular  emphasis  on  impaired, non-accruing, past due, and other loans that
management  believes  require  special  attention.  The  determination  of  the
allowance  for  loan  losses is considered a critical accounting estimate of the
Company.  See  "Critical  Accounting  Estimates."

When  reviewing  the allowance for loan losses, it is important to understand to
whom  the  Company lends.  The following table sets forth the composition of the
Company's loan portfolio as of March 31, 2006 and December 31, 2005.


                                       18
<PAGE>
<TABLE>
<CAPTION>
                          Table 5 - Loan Portfolio Composition


                                           March 31, 2006     December 31, 2005
                                        -------------------  ---------------------
                                         Amount       %         Amount        %
                                        ---------  --------  ----------  ---------
<S>                                     <C>        <C>       <C>         <C>
                                                    (Dollars in thousands)

Commercial financial and agricultural.  $ 69,075     11.02%  $  64,398      10.71%
                                        ---------  --------  ----------  ---------
Real estate
  Commercial . . . . . . . . . . . . .  $178,661     28.50%  $ 171,652      28.55%
  Residential. . . . . . . . . . . . .   123,167     19.64%    123,960      20.62%
  Residential held for sale. . . . . .    16,471      2.63%     22,147       3.68%
  Construction and
    development. . . . . . . . . . . .   206,581     32.95%    184,826      30.74%
                                        ---------  --------  ----------  ---------
      Total real estate. . . . . . . .   524,880     83.72%    502,585      83.59%
                                        ---------  --------  ----------  ---------
Lease financing. . . . . . . . . . . .       124      0.02%        111       0.02%
Consumer.
  Direct . . . . . . . . . . . . . . .    24,283      3.87%     24,343       4.05%
  Indirect.. . . . . . . . . . . . . .     8,746      1.39%      9,752       1.62%
  Revolving. . . . . . . . . . . . . .       622      0.10%        656       0.11%
                                        ---------  --------  ----------  ---------
    Total consumer . . . . . . . . . .    33,651      5.37%     34,751       5.78%
                                        ---------  --------  ----------  ---------
Deferred loan origination fees . . . .      (753)    -0.12%       (610)     -0.10%
                                        ---------  --------  ----------  ---------
    Total. . . . . . . . . . . . . . .  $626,977    100.00%  $ 601,235     100.00%
                                        =========  ========  ==========  =========
</TABLE>

At  March 31, 2006, the loan portfolio is comprised of 83.72% real estate loans.
Commercial, financial and agricultural loans comprise 11.02%, and consumer loans
comprise  5.37%  of  the  portfolio.

While  the  Company  has  83.72%  of  its loan portfolio composed of real estate
loans,  this  percentage  is  not  significantly  higher than in previous years.
Commercial  real  estate comprises 28.50% of the loan portfolio and is primarily
owner  occupied properties where the operations of the commercial entity provide
the  necessary  cash  flow to service the debt.  For this portion of real estate
loan portfolio, repayment is not dependent upon the sale of the real estate held
as  collateral.  Construction  and development (32.95%) has been an increasingly
important  portion  of  the  real  estate loan portfolio.  The Company carefully
monitors  the  loans  in  this  category  since  the repayment of these loans is
generally  dependent  upon  the  sale of the real estate in the normal course of
business  and  can  be  impacted by national and local economic conditions.  The
residential  category,  19.64% of the portfolio, represents those loans that the
Company  chooses  to  maintain  in  its  portfolio  rather than selling into the
secondary  market  for  marketing  and  competitive reasons and commercial loans
secured  by  residential  real  estate.  The residential held for sale category,
2.63%  of  the  portfolio, comprises loans that are in the process of being sold
into  the secondary market.  In these loans, the credit has been approved by the
investor  and  the interest rate locked so that the Company minimizes credit and
interest  rate  risk  with  respect  to  these  loans.

The Company has no large loan concentrations to individual borrowers.  Unsecured
loans  at  March  31,  2006 were $10.1 million.  While management uses available
information  to recognize losses on loans, future additions to the allowance may
be  necessary  based  on


                                       19
<PAGE>
changes in economic conditions.  In addition, various regulatory agencies, as an
integral  part  of  their examination process, periodically review the Company's
allowance  for loan losses.  Such agencies may advise additions to the allowance
based  on  their  judgments  about  information available to them at the time of
their  examination.  Such regulatory guidance is considered, and the Company may
recognize  additions  to  the  allowance  as  a  result.

Additions to the allowance for loan losses are made periodically to maintain the
allowance  at an appropriate level based upon management's analysis of potential
risk in the loan portfolio.  Loans determined to be uncollectible are charged to
the  allowance  for  loan  losses  and  subsequent  recoveries  are added to the
allowance.  A  provision  for  losses  in  the amount of $504,000 was charged to
expense  for  the  quarter  ended  March  31,  2006 compared to $472,000 for the
quarter  ended  March 31, 2005.  The higher provision for the three months ended
March  31,  2006  as compared to the three months ended March 31, 2005 is due to
increases  in outstanding loan balances and specific reserves somewhat offset by
decreases  in  qualitative  factors  related  to employment assumptions for Fort
Gordon  and  Savannah  River  Site.

<TABLE>
<CAPTION>
                       Table 6 - Allowance for Loan Losses


                                                        2006     2005
                                                       -------  -------
<S>                                                    <C>      <C>
     Beginning balance, January 1                      $9,125   $7,930
     Provision charged to expense                         504      472
     Recoveries                                           259      259
     Loans charged off                                   (418)    (358)
                                                       -------  -------
     Ending balance, March 31                          $9,470   $8,303
                                                       =======  =======
</TABLE>

At  March  31,  2006  the  ratio of allowance for loan losses to total loans was
1.51%  compared  to  1.52%  at  December  31,  2005 and 1.58% at March 31, 2005.
Management  considers  the  current  allowance for loan losses appropriate based
upon  its analysis of the potential risk in the portfolio, although there can be
no  assurance  that the assumptions underlying such analysis will continue to be
correct.

Liquidity  and  Capital  Resources
----------------------------------

The  Company's  liquidity  remains  adequate  to meet operating and loan funding
requirements.  The loan to deposit ratio at March 31, 2006 was 86.5% compared to
90.6%  at  December  31,  2005 and 88.6% at March 31, 2005.  The decrease in the
loan  to  deposit  ratio  from  December  31,  2005  to  March 31, 2006 reflects
significant  deposit growth during the first three months of 2006.  The increase
in  the  loan to deposit ratio from March 31, 2005 to December 31, 2005 reflects
loan  growth  at  a  higher  rate  than  deposit growth during that time period.
Deposits at March 31, 2006 and December 31, 2005 include $43.4 million and $40.4
million of brokered certificates of deposit, respectively.  The Company has also
utilized  borrowings  from  the Federal Home Loan Bank.  The Company maintains a
line  of  credit with the Federal Home Loan Bank approximating 10% of the Bank's
total  assets.  Federal  Home  Loan  Bank  advances  are


                                       20
<PAGE>
collateralized  by  eligible  first mortgage loans, commercial real estate loans
and  investment securities.  These borrowings totaled $47.0 million at March 31,
2006.  The  Company  maintains repurchase lines of credit with SunTrust Robinson
Humphrey,  Atlanta,  Georgia,  for  advances  up  to  $20.0 million and with The
Bankers  Bank,  Atlanta,  Georgia,  for advances up to $10.0 million of which no
amounts  were  outstanding  in either case at March 31, 2006.  The Company has a
federal  funds  purchased accommodation with The Bankers Bank, Atlanta, Georgia,
for  advances  up  to $16.7 million and with SunTrust Bank, Atlanta, Georgia for
advances up to $10.0 million.  Additionally, liquidity needs can be satisfied by
the  structuring  of the maturities of investment securities and the pricing and
maturities  on  loans  and deposits offered to customers.  The Company also uses
retail  securities  sold  under  repurchase  agreements  to fund growth.  Retail
securities  sold  under  repurchase  agreements  were $56.5 million at March 31,
2006.

Shareholders'  equity  to  total  assets was 7.16% at March 31, 2006 compared to
7.36%  at  December  31,  2005  and 7.87% at March 31, 2005.  The capital of the
Company  and  the  Bank exceeded all required regulatory guidelines at March 31,
2006.  The  Company's  Tier  1 risk-based, total risk-based and leverage capital
ratios  were  12.17%,  13.49%,  and 9.89%, respectively, at March 31, 2006.  The
following  table  reflects the current regulatory capital levels in more detail,
including  comparisons  to  the  regulatory  minimums.

<TABLE>
<CAPTION>
                         Table 7 - Regulatory Capital Requirements
                                      March 31, 2006
                                  (Dollars in Thousands)

                                                  Required for capital
                                   Actual           adequacy purposes        Excess
                              Amount   Percent     Amount      Percent    Amount  Percent
                              -----------------  -----------------------  ----------------
<S>                           <C>      <C>       <C>         <C>          <C>     <C>
Southeastern Bank Financial
Corporation

Risk-based capital:
  Tier 1 capital              $87,710    12.17%      28,828        4.00%  58,882     8.17%
  Total capital                97,213    13.49%      57,656        8.00%  39,557     5.49%
Tier 1 leverage ratio          87,710     9.89%      35,462        4.00%  52,248     5.89%

Georgia Bank & Trust Company

Risk-based capital:
  Tier 1 capital              $64,232     8.98%      28,622        4.00%  35,610     4.98%
  Total capital                73,183    10.23%      57,244        8.00%  15,939     2.23%
Tier 1 leverage ratio          64,232     7.35%      34,944        4.00%  29,288     3.35%
</TABLE>

Management  is  not  aware  of  any  events or uncertainties that are reasonably
likely  to  have a material effect on the Company's liquidity, capital resources
or  operations.


                                       21
<PAGE>
Commitments  and  Contractual  Obligations
------------------------------------------

The Bank is a party to lines of credit with off-balance sheet risk in the normal
course  of  business  to  meet  the  financing needs of its customers.  Lines of
credit are unfunded commitments to extend credit.  These instruments involve, in
varying  degrees,  exposure  to  credit  and interest rate risk in excess of the
amounts  recognized  in the financial statements.  The Bank's exposure to credit
loss  in  the  event  of  nonperformance  by  the  other  party to the financial
instrument  for  unfunded  commitments to extend credit and letters of credit is
represented  by the contractual amount of those instruments.  The Bank evaluates
construction  and acquisition and development loans for the percentage completed
before  extending  additional credit.  The Bank follows the same credit policies
in  making  commitments  and  contractual  obligations as it does for on-balance
sheet  instruments.

Unfunded commitments to extend credit where contract amounts represent potential
credit  risk  totaled  $181.9  million at March 31, 2006.  These commitments are
primarily  at  variable  interest  rates.

The  Company's  commitments  are  funded  through  internal  funding  sources of
scheduled  repayments of loans and sales and maturities of investment securities
available  for  sale  or external funding sources through acceptance of deposits
from  customers  or  borrowings  from  other  financial  institutions.

The  following table is a summary of the Company's commitments to extend credit,
commitments  under  contractual  leases  as  well  as  the  Company' contractual
obligations,  consisting  of deposits, FHLB advances, which are subject to early
termination options, and borrowed funds by contractual maturity date.

<TABLE>
<CAPTION>
Table 8 - Commitments and
Contractual Obligations       Less than 1                               More than
($in thousands)                   Year      1 - 3 Years   3 - 5 Years    5 Years
----------------------------  ------------  ------------  ------------  ----------
<S>                           <C>           <C>           <C>           <C>
Lines of credit               $    181,901             -             -           -
Lease agreements                        84            60            12           -
Deposits                           670,463        44,829         5,109       4,702
Securities sold under
  repurchase agreements             56,486             -             -           -
FHLB advances                            -             -        30,000      17,000
Other borrowings                       350             -             -           -
                              ------------  ------------  ------------  ----------
  Total commitments and
    contractual obligations   $    909,284  $     44,889  $     35,121  $   21,702
                              ============  ============  ============  ==========
</TABLE>

Although management regularly monitors the balance of outstanding commitments to
fund  loans  to  ensure  funding  availability should the need arise, management
believes  that  the  risk  of  all customers fully drawing on all these lines of
credit  at  the  same  time  is  remote.


                                       22
<PAGE>
Effects of Inflation and Changing Prices
----------------------------------------

Inflation  generally  increases the cost of funds and operating overhead, and to
the  extent  loans  and  other  assets  bear  variable rates, the yields on such
assets.  Unlike  most  industrial  companies,  virtually  all  of the assets and
liabilities  of  a  financial  institution are monetary in nature.  As a result,
interest  rates generally have a more significant impact on the performance of a
financial institution than the effects of general levels of inflation.  Although
interest  rates  do  not  necessarily move in the same direction and to the same
extent  as  the  prices  of goods and services, increases in inflation generally
have  resulted in increased interest rates.  In addition, inflation can increase
a  financial  institution's  cost  of  goods and services purchased, the cost of
salaries  and  benefits,  occupancy  expense  and  similar items.  Inflation and
related  increases  in  interest  rates  generally  decrease the market value of
investments  and  loans  held  and may adversely affect liquidity, earnings, and
stockholders'  equity.  Mortgage  originations  and refinancings tend to slow as
interest  rates  increase,  and  can  reduce  the  Company's  earnings from such
activities  and  the  income  from the sale of residential mortgage loans in the
secondary  market.


                                       23
<PAGE>
Item 3.  Quantitative and Qualitative Disclosures About Market Risk

As  of  March  31,  2006, there were no substantial changes in the interest rate
sensitivity  analysis or the sensitivity of market value of portfolio equity for
various  changes  in  interest  rates  calculated  as of December 31, 2005.  The
foregoing  disclosures  related to the market risk of the Company should be read
in  conjunction  with  the  Company's audited consolidated financial statements,
related  notes  and  management's discussion and analysis of financial condition
and  results  of operations for the year ended December 31, 2005 included in the
Company's  2005  Annual  Report  on  Form  10-K.

Item 4.  Controls and Procedures

As  of  the end of the period covered by this report, the Company carried out an
evaluation,  under  the  supervision and with the participation of the Company's
management,  including  the  Company's  President  and  Chief  Executive Officer
(principal  executive  officer) and its Group Vice President and Chief Financial
Officer  (principal  financial  officer), of the effectiveness of the design and
operation  of  the  Company's  disclosure  controls  and  procedures pursuant to
Exchange  Act  Rule 13a-15.  Based upon that evaluation, such officers concluded
that  the  Company's  disclosure controls and procedures are effective in timely
alerting  them  to  material  information relating to the Company (including its
consolidated  subsidiaries)  that  is  required  to be included in the Company's
periodic  filings  with the Securities and Exchange Commission.  There have been
no  significant  changes in the Company's internal controls or, to the Company's
knowledge,  in  other  factors  that  could  significantly affect those internal
controls  subsequent  to  the  date  the Company carried out its evaluation, and
there  have  been no corrective actions with respect to significant deficiencies
or  material  weaknesses.


                                       24
<PAGE>
                                     Part II
                                OTHER INFORMATION


Item 1.        Legal  Proceedings

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

Item 1A.       Risk  Factors

               In  addition  to  the other information set forth in this report,
               you  should  carefully  consider the factors discussed in Part I,
               "Item  1A.  Risk  Factors" in the Company's Annual Report on Form
               10-K for the year ended December 31, 2005, which could materially
               affect  its  business, financial condition or future results. The
               risks  described  in  the  Annual Report on Form 10-K are not the
               only risks facing the Company. Additional risks and uncertainties
               not  currently  known  to management or that management currently
               deems  to  be immaterial also may materially adversely affect the
               Company's business, financial condition and/or operating results.

Item 2.        Unregistered  Sales  of  Equity  Securities and  Use  of Proceeds

               Issuer Purchases of Equity Securities

               On  April  15,  2004, the Company announced the commencement of a
               stock repurchase program, pursuant to which it will, from time to
               time,  repurchase  up to 100,000 shares of its outstanding stock.
               The  program  does  not  have  a stated expiration date. No stock
               repurchase  programs  were terminated during the first quarter of
               2006.  There  were  no shares repurchased under an existing stock
               repurchase  plan  or  otherwise during the first quarter of 2006.

Item 3.        Defaults  Upon  Senior  Securities

               Not  applicable

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

               None

Item 5.        Other  Information

               None


                                       25
<PAGE>
Item 6.        Exhibits

                3.1 Articles  of  Incorporation,  as  amended  April  26,  2006.

               31.1 Certification of Chief Executive Officer Pursuant to Section
                    302  of  the  Sarbanes-Oxley  Act  of  2002.

               31.2 Certification of Chief Financial Officer Pursuant to Section
                    302  of  the  Sarbanes-Oxley  Act  of  2002.

               32.1 Certification of Chief Executive Officer and Chief Financial
                    Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of
                    2002.


                                       26
<PAGE>
                     SOUTHEASTERN BANK FINANCIAL CORPORATION
                              Form 10-Q Signatures


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

                                       SOUTHEASTERN BANK FINANCIAL CORPORATION



Date:  May 5, 2006                        By: /s/ Darrell R. Rains
     -----------------                    --------------------------------
                                          Darrell R. Rains
                                          Group Vice President, Chief
                                          Financial Officer (Duly Authorized
                                          Officer of Registrant and Principal
                                          Financial Officer)


                                       27