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  June  30,  2005.
                                         ---------------

                                       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)

              Formerly known as Georgia Bank Financial Corporation
              ----------------------------------------------------
    (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 an accelerated filer (as defined in Rule 12b-2
of  the  Exchange  Act).   Yes  X  No
                               ---    ---

                      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:

     5,256,807 shares of common stock, $3.00 par value per share, outstanding as
of  July  31,  2005.


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

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

                  Consolidated Balance Sheets as of June 30, 2005 and
                    December 31, 2004                                              3

                  Consolidated Statements of Income for the Three and Six
                    Months ended June 30, 2005 and 2004                            4

                  Consolidated Statements of Cash Flows for the
                    Six Months ended June 30, 2005 and 2004                        6

                  Notes to Consolidated Financial Statements                       8

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

         Item 3.  Quantitative and Qualitative Disclosures about Market Risk      23

         Item 4.  Controls and Procedures                                         23

Part II  Other Information
         Item 1.  Legal Proceedings                                                *
         Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds     24
         Item 3.  Defaults Upon Senior Securities                                  *
         Item 4.  Submission of Matters to a Vote of Security Holders             24
         Item 5.  Other Information                                                *
         Item 6.  Exhibits                                                        25

Signature                                                                         26
</TABLE>

* No information submitted under this caption


                                        1
<PAGE>


                                     PART I
                              FINANCIAL INFORMATION






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

                                         ASSETS

                                                             June 30,      December 31,
                                                               2005            2004
                                                           -------------  --------------
<S>                                                        <C>            <C>
Cash and due from banks                                    $ 18,455,904   $  13,186,173
Federal funds sold                                           14,594,000      12,326,000
Interest-bearing deposits in other banks                      1,012,118         512,024
                                                           -------------  --------------
  Cash and cash equivalents                                  34,062,022      26,024,197

Investment securities
  Available-for-sale                                        166,150,577     152,637,090
  Held-to-maturity, at cost (fair values of
    $3,947,419 and $3,997,361, respectively)                  3,776,234       3,776,428

Loans held for sale                                          18,515,627      14,778,614

Loans                                                       533,770,596     479,391,209
  Less allowance for loan losses                             (8,677,660)     (7,930,366)
                                                           -------------  --------------
    Loans, net                                              525,092,936     471,460,843

Premises and equipment, net                                  18,228,058      18,437,500
Accrued interest receivable                                   4,164,211       3,638,247
Intangible assets, net                                          139,883         139,883
Bank-owned life insurance                                    11,648,537      11,463,591
Other assets                                                  4,532,665       4,160,918
                                                           -------------  --------------

                                                           $786,310,750   $ 706,517,311
                                                           =============  ==============

                          LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits
    Noninterest-bearing                                    $ 87,738,653   $  80,798,355
    Interest-bearing:
      NOW accounts                                           92,719,311      80,417,657
      Savings                                               265,079,711     225,533,029
      Money management accounts                              25,060,686      25,142,955
      Time deposits over $100,000                           110,317,208     106,835,743
      Other time deposits                                    35,168,950      38,056,932
                                                           -------------  --------------
                                                            616,084,519     556,784,671

Federal funds purchased and securities sold
  under repurchase agreements                                56,951,647      44,581,259
Advances from Federal Home Loan Bank                         46,000,000      40,000,000
Other borrowed funds                                            900,000         900,000
Accrued interest and other liabilities                        5,072,679       5,271,556
                                                           -------------  --------------
      Total liabilities                                     725,008,845     647,537,486
                                                           -------------  --------------

Stockholders' equity
  Common stock, $3.00 par value; 10,000,000 shares
    authorized; 5,281,104 and 5,287,100 shares issued in
    2005 and 2004, respectively; 5,256,807 and 5,249,604
    shares outstanding in 2005 and 2004, respectively        15,843,312      15,861,300
  Additional paid-in capital                                 34,229,127      34,375,510
  Retained earnings                                          12,002,520       8,878,633
  Treasury stock, at cost; 24,297 and 37,496 shares in
    2005 and 2004, respectively                                (332,755)       (497,127)
  Accumulated other comprehensive income                       (440,299)        361,509
                                                           -------------  --------------
      Total stockholders' equity                             61,301,905      58,979,825
                                                           -------------  --------------

                                                           $786,310,750   $ 706,517,311
                                                           =============  ==============
</TABLE>

          See accompanying notes to consolidated financial statements.


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

                                             (Unaudited)


                                                   Three Months Ended          Six Months Ended
                                                        June 30,                   June 30,
                                               ------------  -----------  ------------  ------------
                                                   2005         2004          2005          2004
                                               ------------  -----------  ------------  ------------
<S>                                            <C>           <C>          <C>           <C>
Interest income:
  Loans, including fees                        $ 9,271,626   $6,791,048   $17,515,164   $13,431,392
  Investment securities                          1,936,599    1,712,465     3,701,141     3,419,308
  Federal funds sold                                95,762        9,006       151,369        17,230
  Interest-bearing deposits in other banks           6,766           14         9,199            43
                                               ------------  -----------  ------------  ------------
      Total interest income                     11,310,753    8,512,533    21,376,873    16,867,973
                                               ------------  -----------  ------------  ------------

Interest expense:
  Deposits                                       3,244,981    1,674,482     5,890,571     3,314,020
  Federal funds purchased and securities sold
    under repurchase agreements                    350,430      134,421       622,400       311,809
  Other borrowings                                 554,263      445,930     1,062,090       878,037
                                               ------------  -----------  ------------  ------------
      Total interest expense                     4,149,674    2,254,833     7,575,061     4,503,866
                                               ------------  -----------  ------------  ------------

      Net interest income                        7,161,079    6,257,700    13,801,812    12,364,107

Provision for loan losses                          515,269      131,197       986,963       519,920
                                               ------------  -----------  ------------  ------------

      Net interest income after provision
        for loan losses                          6,645,810    6,126,503    12,814,849    11,844,187
                                               ------------  -----------  ------------  ------------

Noninterest income:
  Service charges and fees on deposits           1,354,425    1,227,462     2,565,475     2,286,369
  Gain on sales of loans                         1,298,399    1,628,426     2,340,582     2,905,106
  Investment securities losses, net                (40,051)     (85,293)      (39,260)       (4,542)
  Retail investment income                         121,603      108,983       203,566       204,538
  Trust service fees                               150,024      135,831       306,936       258,070
  Increase in cash surrender value of
    bank-owned life insurance                      102,157      126,823       184,946       252,086
  Miscellaneous income                             202,201      112,612       327,303       211,944
                                               ------------  -----------  ------------  ------------
      Total noninterest income                   3,188,758    3,254,844     5,889,548     6,113,571
                                               ------------  -----------  ------------  ------------

Noninterest expense:
  Salaries                                       3,014,016    3,120,656     5,763,555     5,633,780
  Employee benefits                                775,925      730,100     1,585,369     1,496,955
  Occupancy expenses                               682,433      642,195     1,355,526     1,261,359
  Other operating expenses                       1,734,410    1,654,695     3,239,572     3,354,625
                                               ------------  -----------  ------------  ------------
      Total noninterest expense                  6,206,784    6,147,646    11,944,022    11,746,719
                                               ------------  -----------  ------------  ------------

      Income before income taxes                 3,627,784    3,233,701     6,760,375     6,211,039

Income tax expense                               1,222,052    1,076,978     2,270,654     2,048,226
                                               ------------  -----------  ------------  ------------

      Net income                               $ 2,405,732   $2,156,723   $ 4,489,721   $ 4,162,813
                                               ============  ===========  ============  ============
<FN>
                                                                                         (continued)
</TABLE>


                                        4
<PAGE>
<TABLE>
<CAPTION>
                  SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARY
                             Consolidated Statements of Income

                                        (Unaudited)


                                              Three Months Ended       Six Months Ended
                                                   June 30,                June 30,
                                            ----------  ----------  ----------  ----------
                                               2005        2004        2005        2004
                                            ----------  ----------  ----------  ----------
<S>                                         <C>         <C>         <C>         <C>
Basic net income per share                  $     0.46  $     0.41  $     0.85  $     0.79
                                            ==========  ==========  ==========  ==========

Diluted net income per share                $     0.45  $     0.41  $     0.84  $     0.78
                                            ==========  ==========  ==========  ==========

Weighted average common shares outstanding   5,256,807   5,247,204   5,255,175   5,247,204
                                            ==========  ==========  ==========  ==========

Weighted average number of common and
  common equivalent shares outstanding       5,343,086   5,323,482   5,337,433   5,323,786
                                            ==========  ==========  ==========  ==========
</TABLE>

See accompanying notes to consolidated financial statements.


                                        5
<PAGE>
<TABLE>
<CAPTION>
                     SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARY
                              Consolidated Statements of Cash Flows
                                           (Unaudited)


                                                                    Six Months Ended June 30,
                                                                      2005            2004
                                                                 --------------  ---------------
<S>                                                              <C>             <C>
Cash flows from operating activities:
Net income                                                       $   4,489,721   $    4,162,813
  Adjustments to reconcile net income to net cash
    provided by (used in) operating activities
      Depreciation and amortization                                    719,321          646,054
      Provision for loan losses                                        986,963          519,920
      Net investment securities losses                                  39,260            4,542
      Net amortization of premium on investment securities             194,700          186,162
      Increase in CSV of bank owned life insurance                    (184,946)        (252,086)
      Loss (gain) on disposal of premises and equipment                     17           (1,867)
      (Gain) loss on the sale of other real estate                      (4,150)          22,233
      Gain on sales of loans                                        (2,340,582)      (2,905,106)
      Real estate loans originated for sale                       (122,078,283)    (148,063,638)
      Proceeds from sales of real estate loans                     120,681,852      144,584,629
      (Increase) decrease in accrued interest receivable              (525,964)         228,925
      Increase in other assets                                         (12,122)          (5,688)
      Decrease in accrued interest and other liabilities              (198,877)        (834,614)
                                                                 --------------  ---------------
          Net cash provided by (used in) operating activities        1,766,910       (1,707,721)
                                                                 --------------  ---------------

Cash flows from investing activities:
      Proceeds from sales of available for sale securities          20,164,223       15,930,455
      Proceeds from maturities of available for sale securities     10,070,942       25,926,243
      Proceeds from maturities of held to maturity securities                -          668,000
      Purchase of available for sale securities                    (44,546,679)     (50,231,608)
      Purchase of Federal Home Loan Bank stock                        (650,600)        (250,000)
      Net increase in loans                                        (54,619,056)     (23,461,164)
      Purchases of premises and equipment                             (512,396)      (3,303,103)
      Proceeds from sale of other real estate                           57,579          226,988
      Proceeds from sale of premises and equipment                       2,500           50,207
                                                                 --------------  ---------------
          Net cash used in investing activities                    (70,033,487)     (34,443,982)
                                                                 --------------  ---------------

Cash flows from financing activities:
      Net increase in deposits                                      59,299,848       54,753,462
      Net increase (decrease) in federal funds purchased and
          securities sold under repurchase agreements               12,370,388      (16,201,875)
      Advances from Federal Home Loan Bank                          11,000,000       10,000,000
      Payments of Federal Home Loan Bank advances                   (5,000,000)               -
      Proceeds from other borrowed funds                                     -          100,000
      Payment of cash dividends                                     (1,365,834)      (1,364,273)
                                                                 --------------  ---------------
          Net cash provided by financing activities                 76,304,402       47,287,314
                                                                 --------------  ---------------
<FN>
                                                                                     (continued)
</TABLE>


                                        6
<PAGE>
<TABLE>
<CAPTION>
                   SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARY
                           Consolidated Statements of Cash Flows
                                        (Unaudited)


                                                                   Six Months Ended June 30,
                                                                     2005            2004
                                                                 -------------  --------------
<S>                                                              <C>             <C>
          Net increase in cash and cash equivalents              $   8,037,825  $   11,135,611

Cash and cash equivalents at beginning of period                    26,024,197      15,721,884

                                                                 -------------  --------------
Cash and cash equivalents at end of period                       $  34,062,022  $   26,857,495
                                                                 =============  ==============
Supplemental disclosures of cash paid during the period for:
      Interest                                                   $   7,401,882  $    4,764,509
                                                                 =============  ==============
      Income taxes                                               $   2,420,000  $    2,200,000
                                                                 =============  ==============

Supplemental information on noncash investing activities:
      Loans transferred to other real estate                     $           -  $      249,221
                                                                 =============  ==============
</TABLE>

See accompanying notes to consolidated financial statements.


                                        7
<PAGE>
             SOUTHEASTERN BANK FINANCIAL CORPORATION AND SUBSIDIARY

                   Notes to Consolidated Financial Statements

                                  June 30, 2005

Note  1  -  Basis  of  Presentation

The  accompanying  consolidated  financial  statements  include  the accounts of
Southeastern  Bank  Financial  Corporation,  formerly  Georgia  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 and six months ended June 30, 2005 and
2004  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,  2004.

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 and six months ended June 30, 2005 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  -  Recent  Accounting  Pronouncements

SFAS  No.  123  (Revised  2004),  Accounting  for Stock-Based Compensation, will
require  most  public  entities,  effective at the beginning of the first annual
period  beginning  after  June 15, 2005, to compute the fair value of options at
the  date  of  grant  and  to  recognize  such  costs  as  compensation  expense
immediately  if there is no vesting period or ratably over the vesting period of
the  options.  Due  to the April 15, 2005, deferral of the effective date to the
beginning of the first annual period beginning after June 15, 2005, the Bank has
chosen  not to adopt the cost recognition principles of this statement for 2005.
If  the Bank had chosen to adopt these principles, an annual expense of $217,000
would  be  recorded  for  2005.  Based on the options outstanding as of June 30,
2005,  the  expense would decline in succeeding years as the options fully vest.
The  Bank  will  adopt  SFAS  No.  123  (Revised  2004)  as  of January 1, 2006.


                                        8
<PAGE>
Note  3  -  Comprehensive  Income

Other  comprehensive  income  (loss)  for the Company consists of net unrealized
gains  and  (losses)  on  investment  securities  available  for  sale.  Total
comprehensive  income  (loss)  for  the  three  months  ended  June 30, 2005 was
$2,893,000  compared  to  ($1,189,000) for the three months ended June 30, 2004.
Total comprehensive income for the six months ended June 30, 2005 was $3,688,000
compared  to  $1,537,000  for  the  six  months  ended  June  30,  2004.

Note  4  -  Stock-based  Compensation

The Company applies Accounting Principles Board (APB) Opinion No. 25, Accounting
for Stock Issued to Employees, and related interpretations in accounting for its
stock option plans.  Accordingly compensation cost is measured as the excess, if
any, of the quoted market price of the Company's stock at the date of grant over
the  amount  an  employee  must pay to acquire the stock.  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  and  six  months  ended  June  30,  2005  and  2004  is  indicated below.

<TABLE>
<CAPTION>
                                       Three Months Ended       Six Months Ended
                                            June 30,                June 30,
                                     ----------------------  ----------------------
                                        2005        2004        2005        2004
                                     ----------  ----------  ----------  ----------
<S>                                  <C>         <C>         <C>         <C>
Net income                           $2,405,732  $2,156,723  $4,489,721  $4,162,813
Deduct: Total stock-based
  Compensation expense determined
  Under fair value based method,
  net of related tax effect              54,261      51,969     108,522     103,938
                                     ----------  ----------  ----------  ----------
Pro Forma, net income                $2,351,471  $2,104,754  $4,381,199  $4,058,875
                                     ==========  ==========  ==========  ==========

Basic net income per share:
  As reported                        $     0.46  $     0.41  $     0.85  $     0.79
  Pro forma                          $     0.45  $     0.40  $     0.83  $     0.77

Diluted net income per share:
  As reported                        $     0.45  $     0.41  $     0.84  $     0.78
  Pro forma                          $     0.44  $     0.40  $     0.82  $     0.76
</TABLE>

Note  5  -  Cash  Dividend  Declared

On  April  20, 2005, the Company declared a quarterly cash dividend of $0.13 per
share  on  outstanding  shares.  The  dividend  was  paid  on  May  20,  2005 to
shareholders  of  record  as  of  May  4,  2005.

On  July  18,  2005, the Company declared a quarterly cash dividend of $0.13 per
share  on  outstanding  shares.  The  dividend  is payable on August 15, 2005 to
shareholders  of  record  as  of  August  1,  2005.


                                        9
<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.  It began operations with one branch.  Today, the Bank operates
eight  full  service  branches  in  Richmond  and  Columbia counties in Augusta,
Martinez,  and  Evans,  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, trust,
and  retail  investment  services  are  located in the main office.  The Bank is
Augusta's  largest  community  banking  company.  On  July 12, 2005, the Company
announced its plans to expand outside its current markets by opening a branch in
Athens,  Georgia  and  chartering  a  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 2003 population of the Augusta-Richmond
County,  GA-SC  metropolitan  area  was  340,048, the second largest in Georgia.

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  combined  Richmond and Columbia counties, the Bank had
16.84% of all deposits and was the second largest depository institution at June
30,  2004,  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
income from its investment activities, service charges and fees on deposits, and
gain  on  sale  of mortgage loans in the secondary market.  Loan interest income
increased  during  the  first  six  months  of 2005 as compared to the first six
months  of 2004 due to rising interest rates and increased volumes while gain on
sales  of  mortgage  loans  decreased  due  to lower production levels.  Service
charges  and  fees  on  deposits increased for the first six months of 2005 as a
result  of  new  retail  checking  account  products  introduced  in March 2004.


                                       10
<PAGE>
Both  trust  services and retail investments generated record income in 2004 and
trust  services  income  increased  for  the  six months ended June 30, 2005, as
compared with the six months ended June 30, 2004, while retail investment income
remained stable.  The Bank is focusing on the expansion of its wealth management
area.

The  Bank  continues  to  experience  steady  growth.  Over the past five years,
assets  grew  from  $405.8  million  at  December  31, 2000 to $706.5 million at
December 31, 2004.  At June 30, 2005, assets were $786.3 million.  From year end
2000  to  year  end 2004, loans increased $210.6 million, and deposits increased
$245.9  million.  From December 31, 2004 to June 30, 2005, loans increased $58.1
million  and  deposits increased $59.3 million.  Also, from 2000 to 2004, return
on  average  equity increased from 12.58% to 15.50% and return on average assets
increased  from  1.08%  to 1.29%.  At June 30 2005, return on average assets was
1.21%  and  return  on average equity was 15.10%.  Net income for the year ended
2000  was  $4.0 million compared to net income of $8.7 million at year end 2004.
Net income for the six months ended June 30, 2005 was $4.5 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,  as  well  as  the  first  two  quarters  of  2005.

The  Bank meets its liquidity needs by managing cash and due from banks, federal
funds  purchased  and  sold,  maturity  of  investment securities, paydowns 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  wholesale borrowings.  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 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
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


                                       11
<PAGE>
competition in the banking business; 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  Policies
------------------------------

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 policy
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, where cash receipts
on  impaired  and  nonaccrual  loans  for which the accrual of interest has been
discontinued  are  applied  first  to  principal  and  then  to interest income.
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


                                       12
<PAGE>
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 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 second quarter of 2005 was $2,406,000 which was
an  increase  of  $249,000  (11.5%) compared to net income of $2,157,000 for the
second quarter of 2004.  Diluted net income per share for the three months ended
June  30,  2005  was $0.45 compared to $0.41 for the three months ended June 30,
2004.  Net  income  for the first six months of 2005 was $4,490,000, an increase
of  $327,000  (7.9%)  compared  with  net income of $4,163,000 for the first six
months  of  2004.  The increase in net income for the three and six months ended
June 30, 2005 as compared with the three and six months ended June 30, 2004, was
primarily  a  result  of increases in net interest income, somewhat offset by an
increase  in  the  loan  loss provision, a decrease in noninterest income and an
increase in noninterest expense.  Both loan interest income and deposit interest
expense  increased  due  to  higher  interest  rates and increased volumes.  The
provision  for  loan  losses  increased  due  to  increases  in outstanding loan
balances and the level of Classified debt.  Factors contributing to the decrease
in  noninterest  income were a decrease in the gain on sale of mortgage loans in
the  secondary  market  due  to  lower  volumes, somewhat offset by increases in
service  charges  and  fees on deposits.  Retail checking accounts introduced in
March  2004  generated  increases in NSF fees and ATM income, somewhat offset by
decreases  in  service  charges.  Noninterest  expense  increased  during  the
six-month period ended June 30, 2005 compared to the six-month period ended June
30, 2004 primarily due to increases in salaries and employee benefits related to
company  growth,  somewhat  offset  by  decreases  in  other operating expenses.
Significant changes in other operating expenses include a decrease in loan costs
for  losses  that  were recorded in the first six months of 2004 for a loan that
was  sold  into  the  secondary  market  based on a fraudulent appraisal and for
commercial  loan litigation settlement.  Additional factors include decreases in
processing  expenses  attributable  to  ATM  processing  and new retail checking
products,  the  expiration  of  commissions  due  under  an overdraft protection
contract,  increases  in  trust  advisory  fees  and  professional  fees  for
Sarbanes-Oxley  404  compliance  and  increases in staff development expense for
sales  training.

Total  assets  of  $786.3  million at June 30, 2005 reflect an increase of $79.8
million  (11.3%)  from year-end 2004. This increase is primarily attributable to
higher  loan  and  investment balances since December 2004.  Total loans at June
30,  2005  were  $552.3  million  which represented an increase of $58.1 million
(11.8%)  from  December  31,  2004.


                                       13
<PAGE>
Since  December  31,  2004 investment securities increased $13.5 million (8.6%),
cash  and  due from banks increased $5.3 million (40.0%), and federal funds sold
increased  $2.3  million  (18.4%).  These  increases were funded by increases in
total  deposits  of  $59.3  million  (10.7%), increases in securities sold under
repurchase  agreements  of $12.4 million (27.8%), increases in Federal Home Loan
Bank  advances  of  $6.0  million  (15.0%),  and net income of $4.5 million less
dividends  paid  of  $1.4  million.

The  annualized  return  on average assets for the Company was 1.21% for the six
months  ended  June  30,  2005, compared to 1.28% for the same period last year.
While  total assets have increased $107.7 million since second quarter 2004, net
income  has  only increased $327,000, resulting in a decrease in ROA.  Increases
in  net  interest  income  were  offset  by  decreases in noninterest income and
increases  in noninterest expense and income tax expense.  The annualized return
on  average  stockholders'  equity was 15.10% for both the six months ended June
30,  2005  and  2004.  The  steady  ratio reflects growth of both net income and
stockholders'  equity  in proportion to one another during the periods compared.

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

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

                                 Three Months Ended                         Six Months Ended
                                      June 30,             Variance             June 30,            Variance
                               ----------------------  -----------------  ---------------------  --------------
                                 2005        2004      Amount      %        2005        2004     Amount     %
                               ---------  -----------  -------  --------  ---------  ----------  -------  -----
<S>                            <C>        <C>          <C>      <C>       <C>        <C>         <C>      <C>
                                                              (Dollars in thousands)
Interest income:
  Loans, including fees        $   9,272  $     6,791  $ 2,481     36.5%  $  17,515  $   13,431  $ 4,084  30.4%
  Investment securities            1,937        1,712      225     13.1%      3,701       3,419      282   8.2%
Interest expense:
  Deposits                         3,245        1,674    1,571     93.8%      5,891       3,314    2,577  77.8%
  Federal funds purchased
    and securities sold under
    repurchase agreements            350          134      216    161.2%        622         312      310  99.4%

Net interest income                7,161        6,258      903     14.4%     13,802      12,364    1,438  11.6%
                               =========  ===========  =======  ========  =========  ==========  =======  =====
</TABLE>

Net interest income increased $903,000 (14.4%) during the three-month period and
$1,438,000  (11.6%)  during  the  six-month period as the result of increases in
both  interest income and interest expense.  Loan interest income increased $2.5
million and $4.1 million in the three and six month periods, respectively, while
deposit  interest  expense  increased $1.6 million and $2.6 million in the three
and six month periods, respectively, all the result of higher interest rates and
increased  volumes.  Other  contributing  factors  during both the three and six
month  periods included the increase in interest income on investment securities
and  the  increase in interest expense on federal funds purchased and securities
sold  under  repurchase  agreements,  again  the result of increased volumes and
higher  interest rates.  Interest-earning assets were $737.8 million at June 30,
2005,  an


                                       14
<PAGE>
increase of $103.7 million (16.4%) over June 30, 2004 and $74.4 million (11.21%)
over  December  31,  2004.

The  Company's  net interest margin for both the three and six months ended June
30,  2005 was 3.96%, as compared to 3.97% and 4.01% for the three and six months
ended  June  30,  2004,  respectively.  Both  the rates earned on assets and the
costs to fund those earnings have increased at primarily the same rate resulting
in  a  stable  net  interest  margin  for  all  comparable  periods.

<TABLE>
<CAPTION>
Noninterest Income
------------------

                                           Table 2 - Noninterest Income

                             Three Months Ended                          Six Months Ended
                                  June 30,              Variance            June 30,              Variance
                          -----------------------  ------------------  ---------------------  -----------------
                             2005        2004       Amount      %        2005       2004       Amount      %
                          ----------  -----------  --------  --------  --------  -----------  --------  -------
<S>                       <C>         <C>          <C>       <C>       <C>       <C>          <C>       <C>
                                                              (Dollars in thousands)
Service charges and fees
  on deposits             $    1,354  $     1,227  $   127     10.4%   $  2,565  $     2,236  $   279    12.2%
Gain on sales of loans         1,298        1,628     (330)   (20.3%)     2,341        2,905     (564)  (19.4%)
Miscellaneous income             202          113       89     78.8%        327          212      115    54.2%
Noninterest income             3,189        3,254      (65)    (2.0%)     5,890        6,114     (224)   (3.7%)
</TABLE>

Noninterest  income  decreased  $65,000 (2.0%) during the three-month period and
$224,000  (3.7%)  during  the  six-month  period.  Contributing factors included
decreases  in gain on sales of mortgage loans in the secondary market during the
three  and  six  month  periods  due  to  lower  mortgage loan volumes which are
primarily  the  result  of  overall  market  conditions,  increased competition,
reduced  staff  in existing offices, and the closing of the Nashville, Tennessee
mortgage  office.  These decreases were partially offset by increases in service
charges  and  fees  on deposits during the three and six month periods primarily
due  to  increases  in  NSF fees and ATM income, somewhat offset by decreases in
service  charges,  all  a  result of new retail checking accounts.  In addition,
recognition  of  income  due  to  changes  in  the fair value of derivative loan
commitments  and  forward  loan sales commitments was the primary contributor to
the  increase  in miscellaneous income for the three and six month periods ended
June  30,  2005.


                                       15
<PAGE>
<TABLE>
<CAPTION>
Noninterest  Expense
--------------------

                                          Table 3 - Noninterest Expense

                             Three Months Ended                            Six Months Ended
                                  June 30,               Variance              June 30,             Variance
                           ----------------------  --------------------  ---------------------  ----------------
                             2005        2004       Amount       %         2005       2004       Amount     %
                           ---------  -----------  --------  ----------  --------  -----------  --------  ------
<S>                        <C>        <C>          <C>       <C>         <C>       <C>          <C>       <C>
                                                            (Dollars in thousands)
Salaries                   $   3.014  $     3.121  $  (107)      (3.4%)  $  5.764  $     5.634  $   130    2.3%
Employee benefits                776          730       46        6.3%      1,585        1,497       88    5.9%
Occupancy expenses               682          642       40        6.2%      1,355        1,261       94    7.5%
Other operating expenses       1.735        1.655       80        4.8%      3,240        3,355     (115)  (3.4%)
                           ---------  -----------  --------  ----------  --------  -----------  --------  ------
Total noninterest expense  $   6.207  $     6.148  $    59        1.0%   $ 11,944  $    11,747  $   197    1.7%
                           =========  ===========  ========  ==========  ========  ===========  ========  ======
</TABLE>

Noninterest  expense  increased $59,000 (1.0%) during the three-month period and
$197,000  (1.7%)  during  the six-month period.  Salary expense decreased during
the  three-month  period  due to decreases in mortgage commissions and incentive
compensation  related  to  reduced  mortgage  loan  volumes  partially offset by
increases  in  salaries  related to company growth.  Salary expense and employee
benefits  increased  during  the  six-month  period  primarily  as the result of
company  growth.  The increase in occupancy expenses during the six-month period
is  primarily  due  to  depreciation  and  maintenance expense on the Walton Way
Operations  Campus  opened in February 2004 and the Cotton Exchange branch which
opened  in  September  2004.  Other operating expenses decreased $115,000 (3.4%)
during  the  first  six  months  of  2005.  Contributing  factors include losses
recorded  in the first six months of 2004 for $150,000 for a loan which was sold
into  the  secondary  market  based  on  a  fraudulent  appraisal, $50,000 for a
commercial  loan  litigation  settlement,  and  $147,000  (23.6%)  decrease  in
processing  expense  attributable  to  moving  ATM  processing  in-house, retail
checking products expense, and the expiration of the contract to pay commissions
for  overdraft  protection.  These  decreases  in  other operating expenses were
partially  offset  by an $88,000 (21.7%) increase in professional fees for trust
advisory  fees and Sarbanes-Oxley 404 compliance and a $108,000 (54.9%) increase
in  staff  development  expense  for  sales  training.  The  increase  in  other
operating  expenses  for  the  three-month period was primarily due to the sales
training  expense.

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

Income tax expense in the second quarter of 2005 totaled $1,222,000, an increase
of $145,000 (13.5%) over the second quarter of 2004.  The effective tax rate for
the three months ended June 30, 2005 and 2004 was 33.7% and 33.3%, respectively.
Income tax expense for the six months ended June 30, 2005 totaled $2,271,000 for
an  effective  tax rate of 33.6% compared to 33.0% for the six months ended June
30,  2004.  The  increase  in  the effective tax rate for both the three and six
month  periods  is  primarily  due  to an adjustment to deferred income taxes in
2004,  with  a  smaller impact from a decrease in cash surrender value, somewhat
offset  by  an  increase  in  tax  exempt  municipal  and  loan  income.


                                       16
<PAGE>
Asset  Quality
--------------

Table  5  which  follows  shows  the  current  and  prior  period  amounts  of
non-performing  assets.  Non-performing  assets  were  $4.0  million at June 30,
2005, compared to $3.0 million at December 31, 2004 and $2.6 million at June 30,
2004.  The  ratio  of non-performing assets to total loans and other real estate
was  0.72% at June 30, 2005, compared to 0.60% at December 31, 2004 and 0.56% at
June 30, 2004.  The control and monitoring of non-performing assets continues to
be  a  priority  of  management.

There  was  $29,000  of  loans  past  due  90 days or more and still accruing at
December  31,  2004.  There  were  no  loans  past due 90 days or more and still
accruing  at  June  30,  2005  and  June  30,  2004.

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

The  allowance  for loan losses represents a reserve for probable 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 policy of the Company.  See "Critical
Accounting  Policies."

When  reviewing  the allowance for loan losses, it is important to understand to
whom  the  Company  lends.  At June 30, 2005, the loan portfolio is comprised of
81.43% real estate loans.  Commercial, financial and agricultural loans comprise
11.80%,  and  consumer  loans  comprise  6.77%  of  the  portfolio.

While the Company has 81.43% of its loan portfolio secured by real estate loans,
this  percentage is not significantly higher than in previous years.  Commercial
real  estate  comprises  29.52%  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 loans,
repayment  is  not  dependent upon liquidation of the real estate.  Construction
and  development (28.84%) 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
liquidation  of  the  real estate and is impacted by national and local economic
conditions.  The residential category, 19.72% 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,  3.35%  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 or
industries.  Unsecured  loans  at  June  30,  2005  were  $9.9  million.  While
management  uses  available  information  to  recognize  losses on loans, future
additions  to  the  allowance  may  be


                                       17
<PAGE>
necessary  based  on  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
require  the  Company  to  recognize  additions  to the allowance based on their
judgments  about information available to them at the time of their examination.

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 $515,000 was charged to
expense for the quarter ended June 30, 2005 compared to $131,000 for the quarter
ended  June  30,  2004,  and  $987,000  for  the  six months ended June 30, 2005
compared  to  $520,000  for  the  six  months  ended  June 30, 2004.  The higher
provision  for  the  three and six months ended June 30, 2005 as compared to the
three and six months ended June 30, 2004 is due to increases in outstanding loan
balances  and  the  level  of  Classified  and  Watch-rated  debt.

At June 30, 2005 the ratio of allowance for loan losses to total loans was 1.57%
compared  to  1.60% at December 31, 2004 and 1.58% at June 30, 2004.  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 June 30, 2005 was 89.6% compared to
88.8%  at  December  31,  2004  and  85.7% at June 30, 2004.  The steady loan to
deposit  ratio  from  December 31, 2004 to June 30, 2005 reflects growth of both
loans  and  deposits in proportion to one another during the first six months of
2005.  The  increase in the loan to deposit ratio from June 30, 2004 to December
31,  2004 reflects significant loan growth during that time period.  Deposits at
June  30,  2005 and December 31, 2004 include $37.6 million and $34.9 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 collateralized by eligible first
mortgage  loans,  and  commercial  real  estate loans.  These borrowings totaled
$46.0  million  at  June  30,  2005.  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 June 30,
2005.  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


                                       18
<PAGE>
fund  growth.  Securities sold under repurchase agreements were $57.0 million at
June  30,  2005.

Shareholders'  equity  to  total  assets  was 7.80% at June 30, 2005 compared to
8.35%  at  December  31,  2004  and  7.94% at June 30, 2004.  The capital of the
Company  and  the  Bank  exceeded all required regulatory guidelines at June 30,
2005.  The  Company's  Tier  1 risk-based, total risk-based and leverage capital
ratios  were  9.77%, 11.02%, and 7.98%, respectively, at June 30, 2005.  Table 6
which  follows  reflects  the  current regulatory capital levels in more detail,
including  comparisons  to  the  regulatory  minimums.

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.

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  $172.8  million  at June 30, 2005.  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 for the
next  five  years.


                                       19
<PAGE>
<TABLE>
<CAPTION>
 Table 4 - Commitments and    Due in    Due in    Due in    Due in    Due in
  Contractual Obligations     1 Year   2 Years   3 Years   4 Years   5 Years
---------------------------  --------  --------  --------  --------  --------
<S>                          <C>       <C>       <C>       <C>       <C>
Lines of credit              $172,820         -         -         -         -
Lease agreements                   86        75        22         -         -
Deposits                      266,673   119,082    91,156    37,944    39,017
Securities sold under
  repurchase agreements        56,952         -         -         -         -
FHLB advances                   5,000         -         -         -    23,000
Other borrowings                  900         -         -         -         -
                             --------  --------  --------  --------  --------
  Total commitments and
    contractual obligations  $502,431  $119,157  $ 91,178  $ 37,944  $ 62,017
                             --------  --------  --------  --------  --------
</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.

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.


                                       20
<PAGE>
<TABLE>
<CAPTION>
TABLE 5
-------

                             SELECTED FINANCIAL DATA
                             (Dollars in Thousands)


                                 Six Months Ended June 30,
                              -------------------------------
PROFITABILITY                      2005            2004
----------------------------  --------------  ---------------
<S>                           <C>             <C>
Return on average assets *             1.21%            1.28%

Return on average equity *            15.10%           15.10%

ALLOWANCE FOR LOAN LOSSES
----------------------------

Beginning balance, January 1  $       7,930   $        7,278
Provision charged to expense            987              520
Recoveries                              511              335
Loans charged off                      (750)            (831)
                              --------------  ---------------
Ending balance, June 30       $       8,678   $        7,302
                              ==============  ===============
</TABLE>

<TABLE>
<CAPTION>
NON-PERFORMING ASSETS        June 30, 2005   December 31, 2004   June 30, 2004
---------------------------
<S>                          <C>             <C>                 <C>
Non-accrual loans            $        3,955  $            2,972  $        2,568
Other real estate owned                   0                  53               5
                             --------------  ------------------  --------------
Total non-performing assets  $        3,955  $            3,025  $        2,578
                             ==============  ==================  ==============

LOANS PAST DUE 90 DAYS OR
MORE AND STILL ACCRUING      $            0  $               29  $            0
                             ==============  ==================  ==============
</TABLE>

* Annualized


                                       21
<PAGE>
<TABLE>
<CAPTION>
TABLE 6
-------

                              Regulatory Capital Requirements
                                       June 30, 2005
                                  (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              $61,602     9.77%      25,232        4.00%  36,370     5.77%
  Total capital                69,497    11.02%      50,464        8.00%  19,033     3.02%
Tier 1 leverage ratio          61,602     7.98%      30,871        4.00%  30,731     3.98%

Georgia Bank & Trust Company

Risk-based capital:
  Tier 1 capital              $59,095     9.39%      25,170        4.00%  33,925     5.39%
  Total capital                66,971    10.64%      50,341        8.00%  16,630     2.64%
Tier 1 leverage ratio          59,095     7.67%      30,811        4.00%  28,284     3.67%
</TABLE>


                                       22
<PAGE>
Item  3.  Quantitative  and  Qualitative  Disclosures  About  Market  Risk

As  of  June  30,  2005,  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, 2004.  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, 2004 included in the
Company's  2004  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  Executive  Vice  President  and Chief
Operating  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.


                                       23
<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 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  second  quarter  of 2005. There were no
          shares  repurchased  under  an  existing  stock  repurchase  plan  or
          otherwise  during  the  second  quarter  of  2005.

Item 3.   Defaults  Upon  Senior  Securities

          Not  applicable

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

     (a)  The  Annual  Meeting of Shareholders was held on April 27, 2005 at the
          Company's  Cotton  Exchange  office located at 32 8th Street, Augusta,
          Georgia.

     (b)  The  following directors were elected for a term of one year and until
          a  successor  is  duly  qualified  and  elected:

               William J. Badger
               R. Daniel Blanton
               Warren Daniel
               Edward G. Meybohm
               Robert W. Pollard, Jr.
               Randolph R. Smith
               Ronald L. Thigpen
               John W. Trulock, Jr.

     (c)  The  following  matters were voted on at the meeting as was previously
          identified  in  the  Proxy  materials  forwarded  to each shareholder:


                                       24
<PAGE>
          1.   Proposal  to  elect the eight individuals nominated by management
               as  Directors.

               Votes  were  cast  as  follows:

<TABLE>
<CAPTION>
          Director                 For        Withhold
          -----------------------  ---------  --------
<S>                                <C>        <C>
          William J. Badger        4,520,472     5,190
          R. Daniel Blanton        4,516,972     8,690
          Warren Daniel            4,520,472     5,190
          Edward G. Meybohm        4,520,472     5,190
          Robert W. Pollard, Jr.   4,516,972     8,690
          Randolph R. Smith, M.D.  4,520,472     5,190
          Ronald L. Thigpen        4,515,392    10,270
          John W. Trulock, Jr.     4,520,472     5,190
</TABLE>


Item 5.   Other Information

          None

Item 6.   Exhibits

          3.1       Articles of Incorporation, as amended.

          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.


                                       25
<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:  August 8, 2005                   By:  /s/ Ronald L. Thigpen            .
       --------------                      ------------------------------------
                                             Ronald L. Thigpen
                                             Executive Vice President, Chief
                                             Operating Officer (Duly Authorized
                                             Officer of Registrant and Principal
                                             Financial Officer)


                                       26