SECURITY AND EXCHANGE COMMISSION
                       WASHINGTON, D. C. 20549

                              FORM 10-Q

          QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
                   SECURITIES EXCHANGE ACT OF 1934



For quarter ended September 30, 2000 Commission file number 2-71249

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


                Georgia                                     58-1418696
(State  or  other  jurisdiction  of  (I.R.S.  Employer  Identification
incorporation or organization)    Number)


  104  North  Dixon  Street,  Alma,  Georgia                     31510
(Address of principal executive offices)               (Zip Code)


Registrant's telephone number, including area code    (912)  632-8631



Former name, former address and former fiscal year, if changed since
last report.


      Indicate by check mark whether the registrant (1) has filed  all
reports required to be filed by Sections 13 or 15(d) of the Securities
Exchange  Act  of  1934 during the preceding 12 months  (or  for  such
shorter  period  that  the  registrant  was  required  to  file   such
report(s), and (2) has been subject to such filing requirement for the
past 90 days.

                          Yes    X        No



      Indicate  the  number  of  shares outstanding  of  each  of  the
registrant's classes of common stock, as of September 30, 2000.


      Common stock, $1.00 par value - 399,500 shares outstanding










                        SOUTH BANKING COMPANY
                        SOUTH BANKING COMPANY
                          ALMA,      GEORGIA




Part I.  Financial Information

         Consolidated Financial Statements . . . . . . . . . . . 4 -10

         Notes to Consolidated Financial Statements . . . . . . 11 -12
         Management's Discussion and Analysis of Financial
          Condition and Results of Operations. . . . . . . . . .13 -19


Part  II. Other Information  . . . . . . . . . . . . .  .  .  .     20

                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                      CONSOLIDATED BALANCE SHEETS
                              (UNAUDITED)



                                        September 30,    December 31,
                                        2000             1999

                                 ASSETS

Cash and due from banks                  $  6,661,287     $ 11,695,998

Deposits in other banks -
 interest bearing                        $    774,000     $    869,000

Investment securities:
 Available for sale                      $ 18,764,499     $ 18,306,239

 Held to maturity                        $    247,300     $    747,339

Georgia Bankers stock                    $    547,283     $    547,283

Federal Home Loan Bank stock             $    426,100     $    426,100

Federal Funds Sold                       $ 11,064,000     $  3,180,000

Loans                                    $165,886,539     $132,282,615
Less: Unearned discount                   (   314,055)     (   216,397)
Reserve for loan losses                   ( 2,854,069)     ( 2,168,877)

                                         $162,718,415     $129,897,341

Bank premises and equipment              $  5,977,384     $  4,097,405

Intangible assets                        $  2,136,123     $    208,562

Other assets                             $  6,990,572     $  3,832,154


Total Assets                             $216,306,963     $173,807,421

The  accompanying  notes  are  an integral  part  of  these  financial
statements.


                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                  CONSOLIDATED BALANCE SHEETS (con't)
                              (UNAUDITED)

                                        September 30,    December 31,
                                        2000             1999

                 LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
Deposits:  Demand - noninterest
                     bearing             $ 23,794,897     $ 21,462,802
           Demand - interest bearing       24,686,933       23,089,387
           Savings                         11,639,017       10,520,013
           Time                           127,558,606       97,727,773
                                         $187,679,453     $152,799,975
Borrowing                                   6,227,199        2,669,743
Accrued expenses and other
 liabilities                               2,412,623         1,294,354
Federal funds purchased                             -        1,140,000
Note payable - FHLB                         2,053,333           93,333

Total Liabilities                        $198,372,608     $157,997,405


Stockholders' Equity
Common stock $1 par value; shares
 authorized - 1,000,000, shares issued
 and outstanding - September 30, 2000
 and December 31, 1999, 399,500
 and 399,500, respectively              $     399,500     $    399,500
Surplus                                     3,070,831        3,070,831
Undivided profits                          14,642,324       12,520,614
Accumulated other comprehensive
 income                                   (   178,300)     (   180,929)

Total Stockholders' Equity               $ 17,934,355     $ 15,810,016

Total Liabilities and
 Stockholders' Equity                    $216,306,963     $173,807,421

The  accompanying  notes  are  an integral  part  of  these  financial
statements.


                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                   CONSOLIDATED STATEMENTS OF INCOME
                              (UNAUDITED)

                   Three       Three        Nine          Nine
                   Months      Months       Months        Months
                   Ended       Ended        Ended         Ended
                   September   September    September     September
                   30, 2000    30, 1999     30, 2000      30, 1999
Interest Income:
 Interest & fees
  on loans         $ 4,442,206  $ 3,353,084 $ 12,108,231  $ 9,510,983
 Interest on
  Federal funds sold   154,695       97,544      399,011      383,674
 Interest on deposits
  with other banks      11,381       19,570       36,524       59,403
 Interest on
  investment
  securities:
  U.S. Treasury         19,709       35,725       69,823      118,110
  U.S. Government
   agencies            227,944      198,693      663,175      540,063
  Mortgage backed
   bonds                 8,520        8,926       25,399       29,609
  State & municipal
   subdivisions         18,880       20,853       60,584       65,925
 Other                  16,301       18,593       53,313       77,436

Total Interest
 Income           $  4,899,636  $ 3,752,988 $ 13,416,060  $10,785,203
Interest Expense:
 Interest on
  deposits        $  2,187,669  $ 1,498,150 $  5,732,172  $ 4,428,683
 Interest on other
  borrowings           147,653       61,838      275,751      180,719

Total Interest
 Expense          $  2,335,322  $ 1,559,988 $  6,007,923  $ 4,609,402
Net interest
 income           $  2,564,314  $ 2,193,000 $  7,408,137  $ 6,175,801
Provision for loan
 losses                112,500       84,000      309,500      234,000
Net interest income
 after provision
 for loan losses  $  2,451,814  $ 2,109,000    7,098,637  $ 5,941,801

The  accompanying  notes  are  an integral  part  of  these  financial
statements.


                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
               CONSOLIDATED STATEMENTS OF INCOME (con't)
                              (UNAUDITED)

                   Three        Three        Nine          Nine
                   Months       Months       Months        Months
                   Ended        Ended        Ended         Ended
                   September    September    September     September
                   30, 2000     30, 1999     30, 2000      30, 1999
Other Operating Income:
 Service charge on
  deposit accounts  $   441,659  $   401,246 $  1,157,885  $ 1,072,165
 Commission on
  Insurance              15,293       16,127       61,460       45,207
 Other income            89,459       84,534     487,418       289,959
 Computer processing
  Fees                  117,312       98,712      338,869      286,161
 Gain (loss) on sale
  of securities               1           80            5          130

Total Other
 Operating Income   $   663,724  $   600,699 $  2,045,637  $ 1,693,622

Other Operating
 Expenses:
 Salaries           $   753,778  $   745,096 $  2,463,733  $ 2,215,183
 Profit sharing &
  personnel expense     149,459      147,002      449,233      417,309
 Occupancy expense     113,231        95,924     333,999       304,519
 Furniture &
  fixtures expense      274,218      194,484      672,650      548,686
 Payroll taxes           54,682       46,601      155,993      146,226
 Data processing         45,543       45,471     134,273       162,562
 Other operating
  Expenses             796,641       434,642    1,736,208    1,271,602

Total Other
 Operating Expenses $ 2,187,552  $ 1,709,220 $  5,946,089  $ 5,066,087

Income before
 income taxes       $   927,986  $ 1,000,479 $  3,198,185  $ 2,569,336
Applicable income
 taxes                  308,203      320,885    1,076,475      796,555

Net Income          $   619,783  $   679,594 $  2,121,710  $ 1,772,781

The  accompanying  notes  are  an integral  part  of  these  financial
statements.


                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                   CONSOLIDATED STATEMENTS OF INCOME
                   AND COMPREHENSIVE INCOME (con't)
                              (UNAUDITED)

                   Three        Three         Nine        Nine
                   Months       Months        Months      Months
                   Ended        Ended         Ended       Ended
                   September    September     September   September
                   30, 2000     30, 1999      30, 2000    30, 1999
Other comprehensive
 income, net of tax:
 Unrealized gains
 (losses) on
  Securities        $   77,320 $(   66,591) $     2,629   $(  324,610)

Other Comprehensive
 Income (Loss)      $   77,320 $(   66,591) $     2,629   $(  324,610)

Comprehensive
 Income             $  697,103 $   613,003  $ 2,124,339   $ 1,448,171

Per share data based
 on weighted average
 outstanding shares

 Weighted average
  outstanding
  shares                399,500      399,500      399,500      399,500

Net Income          $      1.55  $      1.70  $      5.31  $      4.44

The  accompanying  notes  are  an integral  part  of  these  financial
statements.


                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                       STATEMENTS OF CASH FLOWS
                              (UNAUDITED)

                                           Nine Months   Nine Months
                                           Ended         Ended
                                           September     September
                                           30, 2000      30, 1999

Cash Flows from Operating Activities:
 Net income                                 $  2,121,710  $  1,772,781
 Add expenses not requiring cash:
  Provision for depreciation and
   Amortization                                  581,744       397,554
  Provision for loan losses                      309,500       234,000
 Bond portfolio gains (losses)                         5           130
 Gain on sale of other real estate owned               -             -
 Increase (decrease) in taxes payable             40,049       226,989
 Increase (decrease) in interest
  payable                                        431,771   (    92,852)
 Increase (decrease) in other liabilities       361,284        161,428
 (Increase) decrease in interest
  receivable                                 (   815,180)  (   403,764)
 (Increase) decrease in prepaid expenses     (    39,785)       28,068
 (Increase) decrease in other assets         ( 1,080,917)      103,178
 Recognition of unearned loan income         (     2,342)            -

Net Cash Used in Operating Activities       $  1,907,839  $  2,427,512

Cash Flows from Investing Activities:

 Proceeds from sale of investment
  securities - available for sale           $         -   $          -
 Proceeds from maturities of
  investment securities - available
  for sale                                    1,298,593      5,338,681
 Purchase of investment securities -
  available for sale                         ( 1,740,917)  ( 6,600,000)
 Net loans to customers                      (14,719,953)  (11,950,087)
 Purchase of premise and equipment           ( 1,180,737)  (   370,373)
 Proceeds from sale of premises and
  equipment                                            -             -
 Proceeds from maturity of investment
  securities - held to maturity                  500,000             -
 Purchase of investment securities -
  held to maturity                                     -             -
 Purchase of equity securities                         -    (   250,000)
 Premium paid for branch deposits            ( 2,000,000)             -

The  accompanying  notes  are  an integral  part  of  these  financial
statements.


                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                       STATEMENTS OF CASH FLOWS
                              (UNAUDITED)

                                           Nine Months   Nine Months
                                           Ended         Ended
                                           September     September
                                           30, 2000      30, 1999

Cash Flows from Investing Activities:(con't)

Purchase of branch fixed assets             $( 1,200,000)  $          -
Purchase of CB Financial Corp stock                    -              -
Net purchase of branch loans and deposits    (   993,634)             -
Purchase of FHLB stock                                 -    (    29,900)

Net Cash Used in Investing Activities       $(20,036,648)  $(13,861,679)

Cash Flows from Financing Activities:

 Net increase(decrease)in demand
  deposits, NOW and money market            $( 1,535,390)  $( 3,965,508)
 Net increase(decrease)in savings
  and time deposits                           18,041,032      5,141,383
 Net increase(decrease)in borrowings           3,557,456    (   125,621)
 Dividends paid                                        -              -
 Redemptions of company stock                          -              -
 Increase(decrease)in federal
  funds sold                                 ( 1,140,000)             -
 Increase(decrease)note payable - FHLB         1,960,000    (    40,001)

Net Cash Provided (Used) From
 Financing Activities                       $ 20,883,098   $  1,010,253

Net Increase(Decrease)in Cash
 and Cash Equivalents                       $  2,754,289   $(10,423,914)

Cash and Cash Equivalents at
 Beginning of Period                          15,744,998     25,309,085

Cash and Cash Equivalents at
 End of Period                              $ 18,499,287   $ 14,885,171

The  accompanying  notes  are  an integral  part  of  these  financial
statements.


                       SOUTH BANKING COMPANY
                       ALMA,         GEORGIA
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


  Basis of Presentation

       The  accounting  and  financial  reporting  policies  of  South
  Banking  Company and its subsidiaries conform to generally  accepted
  accounting  principles and to general practice  within  the  banking
  industry.   The  consolidated statements  include  the  accounts  of
  South  Banking  Company  and  its wholly  owned  subsidiaries.   All
  material   intercompany   accounts  and   transactions   have   been
  eliminated  in  consolidation.  The accompanying  interim  financial
  statements   are   unaudited.    In   management's   opinion,    the
  consolidated  financial statements reflect a  fair  presentation  of
  the  consolidated  financial position of South Banking  Company  and
  subsidiaries, and the results of its operations and its  cash  flows
  for  the  interim  periods presented, in conformity  with  generally
  accepted  accounting principles.  These interim financial statements
  should  be read in conjunction with the audited financial statements
  and  footnote  disclosures in the Bank's 10K  for  the  fiscal  year
  ended December 31, 1999.

       Basic  earnings  per share have been computed by  dividing  net
  income  (the  numerator) by the weighted average  number  of  common
  shares (the denominator)for the period.

       In  June 1997, the FASB issued SFAS No. 131, "Disclosures about
  Segments  of an Enterprise and Related Information".  SFAS  No.  131
  requires  that  public  companies report certain  information  about
  operating segments in complete sets of financial statements  of  the
  company  and  in  condensed financial statements of interim  periods
  issued  to  shareholders.  It also requires  that  public  companies
  report  certain information about their products and  services,  the
  geographic  areas in which they operate, and their major  customers.
  SFAS  No.  131 applies to fiscal years beginning after December  15,
  1997.   South  Banking  Company  is  a  four  bank  holding  company
  operating  primarily in Southeast Georgia.  The primary  purpose  of
  the  company  is  the  delivery  of financial  services  within  its
  market.  Each  of  the  company's entities  are  part  of  the  same
  reporting  segment,  whose operating results are regularly  reviewed
  by  management.   Therefore, consolidated financial  statements,  as
  presented,  fairly reflect the operating results  of  the  financial
  services segment of our business.

        In   June   1997,   FASB  issued  SFAS  No.  130,   "Reporting
  Comprehensive Income" ("SFAS 130").  SFAS 130 established  standards
  for   reporting  and  display  of  comprehensive  income   and   its
  components in the financial statements.  SFAS 130 applies to  fiscal
  years  beginning  after  December  15,  1997.   Reclassification  of
  financial  statements  for earlier periods  has  been  provided  for
  comparative purposes.


                         SOUTH BANKING COMPANY
                         ALMA,         GEORGIA
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


       During  1998,  the  FASB issued SFAS No. 133,  "Accounting  for
  Derivative  Instruments and Hedging Activities"("SFAS  133"),  which
  established  accounting  and  reporting  standards  for   derivative
  instruments  and  for  hedging activities.  The  statement  requires
  that  all  derivatives be recognized as either assets or liabilities
  in  the  statement  of financial position and be  measured  at  fair
  value.   SFAS  133 is effective for fiscal quarters  of  all  fiscal
  years  beginning  after  June  15,  1999;  earlier  application   is
  permitted.    The   company  does  not  hold  or  issue   derivative
  instruments  as  defined  by SFAS 133; and accordingly,  it  is  the
  opinion of management that there will be no future impact from  this
  recent accounting standard.

       On  July  31,  2000, Pineland Bank of Metter, Georgia  acquired
  certain  branches of Flag, Inc. in Pineland's trade area.   Pineland
  paid  a  $2,000,000  premium for the deposits of  the  branches  and
  assumed   the   loans  and  fixed  assets  at  book   value,   which
  approximates  fair market value.  All transactions of  the  acquired
  branches  have  been included since August 1, 2000,  which  was  the
  date of transfer.



                        SOUTH BANKING COMPANY
                        ALMA,         GEORGIA
               MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Liquidity and Capital Resources

      Liquidity  management involves the matching  of  the  cash  flow
requirements  of customers, who may be either depositors  desiring  to
withdraw  funds  or borrowers needing assurance that sufficient  funds
will  be available to meet their credit needs and the ability of South
Banking  Company and its subsidiaries (the "Company")  to  meet  those
needs.  The Company strives to maintain an adequate liquidity position
by managing the balances and maturities of interest-earning assets and
interest-bearing liabilities so that the balance it has in  short-term
investments  (Federal  funds sold) at any given time  will  adequately
cover   any   reasonably  anticipated  immediate   need   for   funds.
Additionally,   the   subsidiary   banks   (the   "Banks")    maintain
relationships with correspondent banks, which could provide  funds  to
them on short notice, if needed.

      The liquidity and capital resources of the Company are monitored
on  a periodic basis by state and Federal regulatory authorities.   As
determined   under   guidelines  established   by   these   regulatory
authorities,  the Banks' liquidity ratios at September 30,  2000  were
considered  satisfactory but on the lower level.  At  that  date,  the
Banks'  Federal  funds  sold were adequate  to  cover  any  reasonably
anticipated  immediate need for funds.  The Company  is  aware  of  no
events  or  trends likely to result in a material change in liquidity.
At  September  30,  2000, the Company's and the Banks'  capital  asset
ratios   were   considered  well  capitalized  based   on   guidelines
established by regulatory authorities.  During the three months  ended
September  30, 2000, total capital increased $697,103 to  $17,934,355.
This increase in capital resulted from net earnings of $619,783 and  a
decrease  of  $77,320 in unrealized gains on securities available  for
sale, net of taxes.

      At  September  30, 2000, South Banking Company  had  no  binding
commitments for capital expenditures.

Results of Operations

      The  following discussion and analysis presents the  significant
changes in financial condition and the results of operations of  South
Banking  Company  and  Subsidiaries for the periods  indicated.   This
discussion  and  analysis  should be  read  in  conjunction  with  the
Company's 1999 Annual Report to Shareholders and Form 10-K.



                         SOUTH BANKING COMPANY
                         ALMA,         GEORGIA
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Results of Operations (con't)

      Since  the primary business activities of South Banking  Company
are conducted through its Banks, this discussion focuses primarily  on
the financial condition and operations of the Banks.  Included in this
discussion  are  forward  looking  statements  based  on  management's
current  expectations. Actual results, however, may  differ.   Amounts
and percentages used in this discussion have been rounded.

Earnings Summary

      Net  income  for  the third quarter of 2000 was  $619,783,  down
$59,811  from $679,594 in the third quarter of 1999.  On a  per  share
basis,  earnings  registered a similar decrease from $1.70  to  $1.55.
These  levels of income represent annualized returns on average assets
of  1.31%  and  1.63%.  respectively.  Return on average  equity  also
decreased  from  18.21% to 14.69%.  Details concerning  the  Company's
results of operations are discussed in the following sections of  this
report.

      Net  interest  income  for the third  quarter  of  2000  totaled
$2,564,314, up $371,314 from $2,193,000 in the third quarter of 1999.

     Interest income is being impacted by the mix of assets, the level
of earning assets, and the interest rate environment.  Average earning
assets  for the quarter of $188.6 million, which includes the purchase
of  Flag's branches, are $38.1 million in excess of the third  quarter
1999  average.  These funds are primarily being invested in  the  loan
portfolio.   The  rate  environment and loan volume  has  caused  loan
income to increase $1,223,957 from $3,218,249 in the third quarter  of
1999  to  $4,442,206  in  the third quarter of  2000.   This  increase
reflects the volatile repricing of the Banks' substantial portfolio of
one-year adjustable rate loans; however, the recent increases  in  the
prime rate has begun to positively impact interest income.

      Interest  expense, the other component of net  interest  income,
increased  $775,334 when compared to the third quarter  of  last  year
including  the  fact  that  the average balance  of  interest  bearing
liabilities  was  up  $9.1  million.  This is  the  result  of  higher
interest rates.  The overall cost of interest bearing liabilities  for
the  quarter  of  5.58% is 80 basis points higher than  in  the  third
quarter of 1999, reflecting several rate increases implemented in late
1999 and early 2000.



                         SOUTH BANKING COMPANY
                         ALMA,         GEORGIA
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Earnings Summary (con't)

      This  combination of higher average balances  and  higher  rates
produced  a  net interest margin of 4.81% for the quarter,  down  from
5.22% in the third quarter of last year.

      The  provision  for loan losses is a charge to earnings  in  the
current period to replenish the allowance for loan losses and maintain
it  at the level management determines is adequate.  The provision for
loan  losses  charged  to earnings amounted to  $112,500  and  $84,000
during   the  three  months  ended  September  30,  2000   and   1999,
respectively.

Noninterest Income

      Following  is a comparison of noninterest income for  the  three
months ended September 30, 2000 and 1999.

                                          Three Months    Three Months
                                          Ended          Ended
                                          September 30,   September 30,
                                          2000           1999

Service charges on deposits                $     441,659  $    401,246
Other service charges, commissions
 & fees                                          15,293         16,127
Other income                                     206,772       183,326

Total Noninterest Income                   $     663,724  $    600,699

     Total noninterest income for the three months ended September 30,
2000  was  $63,025 higher than during the same period  in  1999.   The
primary  increase is related to additional computer processing  income
from nonaffiliated banks and brokerage services.

      During  the  third  quarter of 1998,  the  Bank  began  offering
brokerage  services,  including  stocks,  bonds,  mutual  funds,   and
annuities, to its customers.  The effect on the deposit base has  been
limited  as  less than one quarter of the total sales have  come  from
Bank  deposits.   In the long-term, management believes  this  service
will actually increase deposits.



                         SOUTH BANKING COMPANY
                             ALMA, GEORGIA
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Noninterest Expense

      Noninterest  expense includes all items of  expense  other  than
interest  expense,  the provision for loan losses, and  income  taxes.
Total  noninterest expense for the third quarter of 2000 of $2,187,552
was $478,332 or 28.00% greater than during the third quarter of 1999.

      The  majority of this increase was due to increased cost related
to the new branch acquisition.

Income Taxes

      The Company's provision for income taxes, which totaled $308,203
in the third quarter of 2000 and $320,885 in the third quarter of 1999
includes both federal and state income taxes.  The effective tax rates
during the two periods were 33.2% in 2000 and 32.1% in 1999.

Financial Condition

      Average  total  assets during the third  quarter  of  2000  were
$204,457,000, up from $166,277,174 from the third quarter of 1999.   A
detailed discussion of the Bank's financial condition and its  various
balance sheet components follows:

Loan Portfolio

      The loan portfolio, which represents South's largest asset,  has
increased  during  the third quarter by $20,844,483  to  $165,881,539.
Loans  acquired in the Flag branch acquisition amounted to $19,031,599
of  this  increase.  The increase from operations totaled  $1,812,884.
Competitive  pressures  from  auto  manufacturers  and  a  variety  of
mortgage  providers continue to make loan growth at acceptable  yields
and  risk levels difficult for those types of loans.  Management  also
believes  that  with the recent decline in the local farming  economy,
there exists little opportunity to expand and develop the agricultural
loan  portfolio; however, in the year since September  30,  1999,  the
loan  portfolio  has  increased substantially.   Commercial  and  real
estate lending remains the largest part of the portfolio.

      The  Company is also a party to financial instruments with  off-
balance  sheet  risk  in the normal course of  business  to  meet  the
financing needs of its customers.  These financial instruments include
commitments to extend credit and letters of credit.  Those instruments
involve, to varying degrees, elements of credit and interest rate risk
in excess of


                         SOUTH BANKING COMPANY
                             ALMA, GEORGIA
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                          FINANCIAL CONDITION


Loan Portfolio (con't)

the  amount  recognized  in  the  consolidated  balance  sheets.    At
September  30,  2000, commitments to extend credit,  including  unused
lines  of credit, totaled $23,880,000 while letters of credit  totaled
$440,000.

     Company policy requires those loans which are past due 90 days or
more  be placed on nonaccrual status unless they are both well secured
and  in  the  process of collection.  The following table  provides  a
summary of past due loans and nonperforming assets.

          Summary of Past Due Loans and Nonperforming Assets
                            (in thousands)

                                             -------September 30,-----
-
                                            2000           1999
                                                    (Unaudited)
     Loans past due 90 or more days
      still accruing interest               $       806   $       277

     Nonperforming assets:
      Nonaccruing loans                     $       862   $       790
      Other real estate owned                     1,408           180

                                            $     2,270   $       970

       Management makes this determination by its analysis of  overall
loan  quality,  changes  in the mix and size of  the  loan  portfolio,
previous  loss  experience, general economic  conditions,  information
about  specific borrowers, and other factors.  At September 30,  2000,
the  allowance for loan losses was $2,854,069 or 1.72% of gross loans.
Given  the  inherent  risk contained in the portfolio,  including  the
nonaccrual  loans  described above as well as  commitments  to  extend
credit, this level is considered adequate.  Management is not aware of
any  trends, uncertainties, or other information relating to the  loan
portfolio,  which  it expects will materially impact future  operating
results, liquidity, or capital resources.

      The provision for loan losses is a charge to earnings, which  is
made to maintain the allowance for loan losses at a significant level.
The  provision totaled $112,500 during the third quarter of  2000  and
$84,000 during the third quarter of 1999.



                         SOUTH BANKING COMPANY
                             ALMA, GEORGIA
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Securities Portfolio and Federal Funds Sold

      The  Banks' securities portfolio consists of available for  sale
and held to maturity securities while no securities are maintained  in
a  trading  account.   At September 30, 2000,  the  held  to  maturity
portfolio totaled $247,300.

     Management attempts to emphasize the available for sale portfolio
due  to  the  flexibility  it  allows in managing  the  balance  sheet
structure  and  addressing asset/liability issues.  At  September  30,
2000,  this  portfolio  had an estimated fair  value  of  $18,527,524,
$236,975  less  than the amortized cost.  Such deficit  represents  an
unrealized loss.

      This portfolio is invested primarily in U.S. Treasury and agency
obligations  and  tax  exempt municipals.   The  treasury  and  agency
portion of the portfolio, including agency backed mortgage securities,
total  $16,914,525 at quarter-end or 90.0% of the available  for  sale
portfolio.  Tax exempt municipals totaling $1,349,973 comprised  4.8%.
The  remainder of the portfolio, which totals $1,473,383, consists  of
bank holding company stock, Georgia Bankers Stock, and stock which the
Company is required to hold for membership in the Federal Reserve Bank
and the Federal Home Loan Bank.

      The Company has typically favored investments with maturities of
five  years  or  less  which  have known  cash  flow  patterns.   Such
instruments  typically  provide  greater  safety,  less  market  value
fluctuation,  and  more simplified asset/liability  issues.   However,
some  callable  securities  and  mortgage  backed  securities  may  be
purchased from time to time for their increased yield.

      The  Company generally tries to minimize its involvement in  the
overnight  federal  funds  sold  market,  instead,  relying   on   the
continually  maturing  securities portfolio to provide  the  liquidity
needed  to  fund loans or meet deposit withdraw demands.  Nonetheless,
at  any  given  time, the execution of specific investing  or  funding
strategies  or  normal fluctuations in deposit and loan  balances  may
require  the  bank  to  sell or buy funds on an  overnight  basis.  In
addition, any daily excess funds are maintained in Federal Funds until
demands on accounts are determined.



                         SOUTH BANKING COMPANY
                             ALMA, GEORGIA
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF
            FINANCIAL CONDITION AND RESULTS OF OPERATIONNS


Deposits and Other Funding Sources

      Total  deposits  at  September 30, 2000 of  $187,679,453,  which
included  $18,373,838 from the Flag acquisition, were  up  from  their
second quarter total of $166,287,083.  Although the third quarter  has
traditionally not been a large growth period, deposits are well  above
the third quarter of 1999 totals of $147,165,820.

      Noninterest  bearing deposits decreased $548,423 to  $23,794,897
during  the  quarter.  Interest bearing deposits increased $25,701,389
to  $163,884,556  during  the  quarter.   Increases  were  experienced
primarily  in  certificates  of deposit.  The  acquisition  of  Flag's
branches  accounted  for  $1,344,679 increase in  noninterest  bearing
deposits and $17,029,189 of interest bearing deposits.

     In addition to deposits, the Bank may generate funding by the use
of borrowing.

Impact of Inflation

      The  consolidated financial statements and related data included
in  this  report  were prepared in accordance with generally  accepted
accounting principals, which require the Company's financial  position
and  results  of  operations to be measured  in  terms  of  historical
dollars,  except  for  the  available for sale  securities  portfolio.
Consequently, the relative value of money generally is not considered.
Nearly  all  of the Company's assets and liabilities are  monetary  in
nature  and, as a result, interest rates and competition in the market
area  tend  to  have  a  more  significant  impact  on  the  Company's
performance than the effect of inflation.


                        SOUTH BANKING COMPANY
                          ALMA,     GEORGIA
                     PART II.  OTHER INFORMATION


Item 1.  Legal Proceedings - None

Item 6.  Exhibits and Reports on Form 8-K

         (A)  Exhibits

         (27) Financial Data Schedule

               The  registrant has not filed any reports on  form  8-K
         during the nine-month period ended September 30, 2000.


                              SIGNATURES


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


                                   SOUTH BANKING COMPANY
                                    (Registrant)


Date:                              By:
                                      Paul T. Bennett
                                       President


Date:                               By:
                                       Olivia Bennett
                                       Vice President