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   June 30, 1999    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 June 30, 1999.


     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

         Management's Discussion and Analysis of Financial
           Condition and Results of Operations . . . . . . . . . .12 -
19

Part II. Other Information  . . . . . . . . . . . . . . . . . . .20  -
21







































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

                                          June 30,        December 31,
                                           1999           1998

                                 ASSETS

Cash and due from banks                    $  6,422,357   $  6,122,085

Deposits in other banks -
 interest bearing                          $  1,349,000   $  1,539,000

Investment securities:
 Available for sale                        $ 17,668,425   $ 16,993,917

 Held to maturity                          $    747,530   $    747,716

Georgia Bankers stock                      $    547,283   $    547,283

Federal Home Loan Bank stock               $    426,100   $    396,200

Federal funds sold                         $  7,015,000   $ 17,648,000

Loans                                      $123,026,386   $114,959,844
Less: Unearned discount                     (   154,545)   (   154,545)
Reserve for loan losses                     ( 1,983,211)   ( 1,970,620)

                                           $120,888,630   $112,834,679

Bank premises and equipment                $  4,049,021   $  4,020,735

Goodwill                                   $    236,067   $    262,137

Other assets                               $  3,905,383   $  3,778,990

Total Assets                               $163,254,796   $164,890,742

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

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

                                          June 30,         December 31,
                                          1999            1998

                  LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
Deposits:  Demand - non-interest
                     bearing               $ 20,048,036   $ 23,299,454
           Demand - interest bearing         21,804,855     24,613,084
           Savings                           11,371,456      9,057,678
           Time                              90,260,575     89,019,729
                                           $143,484,922   $145,989,945
Borrowing                                     3,164,216      3,156,096
Accrued expenses and other
 liabilities                                  1,443,804      1,391,347
Federal funds purchased                               -              -
Note payable - Federal Home Loan Bank           120,000       146,667

Total Liabilities                          $148,212,942   $150,684,055

Stockholders' Equity
Common stock $1 par value; shares
 authorized - 1,000,000,  shares
 issued and outstanding -
 1999 and 1998 - 399,500
 and 399,500, respectively                 $    399,500   $    399,500
Surplus                                       3,070,831      3,070,831
Undivided profits                            11,744,974     10,651,788
Accumulated other comprehensive
 income                                     (   173,451)        84,568

Total Stockholders' Equity                 $ 15,041,854   $ 14,206,687

Total Liabilities and
 Stockholders' Equity                      $163,254,796   $164,890,742

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

                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                    CONSOLIDATED STATEMENT OF INCOME
                       AND COMPREHENSIVE INCOME
                              (UNAUDITED)

                   Three         Three
                   Months        Months        Six Months    Six Months
                   Ended         Ended         Ended         Ended
                   June 30,      June 30,      June 30,      June 30,
                   1999          1998          1999          1998
Interest Income:
 Interest & fees
  on loans         $ 3,106,089   $ 3,020,746   $ 6,157,899   $ 5,960,592
 Interest on federal
  funds sold           130,984       138,807       286,130       279,685
 Interest on deposits
  with other banks      22,625        15,939        39,833        31,355
 Interest on invest-
  ment securities:
  U.S. Treasury         40,376        53,468        82,385       105,697
  Mortgage backed
   securities            9,882        15,243        20,683        32,208
  U.S. Government
   agencies            172,032       163,457       341,370       333,708
  State & municipal
   subdivisions         22,195        22,877        45,072        45,945
 Other                   9,016         6,745        58,843        41,382

Total Interest
 Income            $ 3,513,199   $ 3,437,282   $ 7,032,215   $ 6,830,572

Interest Expense:
 Interest on
  deposits         $ 1,455,295   $ 1,505,695   $ 2,930,533   $ 2,959,177
 Interest on other
  borrowings            61,189        68,307       118,881       133,114

 Total Interest
  Expense          $ 1,516,484   $ 1,574,002   $ 3,049,414   $ 3,092,291

Net Interest
 Income            $ 1,996,715   $ 1,863,280   $ 3,982,801   $ 3,738,281

Provision for loan
 losses                 75,000        74,000       150,000       128,000
Net interest income

Net interest income
 after provision
 for loan losses   $ 1,921,715   $ 1,789,280   $ 3,832,801   $ 3,610,281

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

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


                  Three         Three
                  Months        Months        Six Months    Six Months
                   Ended         Ended         Ended         Ended
                  June 30,      June 30,      June 30,      June 30,
                  1999          1998          1999          1998

Other Operating Income:
 Service charge on
  deposit accounts $   334,803   $   281,658   $   670,919   $   561,932
 Commission on
  insurance             13,805        28,008        29,080        49,897
 Other income           93,308       109,118       205,425       170,990
 Gain (loss) on sale
  of securities             45            17            50            23
 Computer income       100,864        40,332       187,449        82,531
Total Other
 Operating Income  $   542,825   $   459,133   $ 1,092,923   $   865,373
Other Operating Expenses:
 Salaries          $   727,662   $   629,486   $ 1,470,087   $ 1,225,325
 Profit sharing &
  personnel expense    137,221       111,219       270,307       222,957
 Occupancy expense     111,244       131,084       208,595       238,717
 Furniture &
  fixtures expense     175,940       138,031       354,202       305,537
 Payroll taxes          48,417        70,817        99,625       109,686
 Data processing        33,941         2,607       117,091        43,392
 Other operating
  expenses             457,324       438,379       836,960       841,369

Total Other Operating
 Expenses          $ 1,691,749   $ 1,521,623   $ 3,356,867   $ 2,986,983

Income before
 income taxes      $   772,791   $   726,790   $ 1,568,857   $ 1,488,671
Applicable income
 taxes                 236,883       217,046       475,670       444,894
Net Income         $   535,908   $   509,744   $ 1,093,187   $ 1,043,777

The   accompanying  notes  are  an  integral  part  of  these  financial
statements.
                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                    CONSOLIDATED STATEMENT OF INCOME
                   AND COMPREHENSIVE INCOME (Con't)
                              (UNAUDITED)


                   Three        Three
                          Months        Months       Six Months    Six Months
Ended                      Ended                 Ended                 Ended
June   30,            June  30,       June  30,       June  30,         1999
1998              1999          1998
Other Comprehensive
 Income, Net of Tax:
  Unrealized gains
   (losses) on
   securities       $( 194,305)  $    38,934   $(  258,019) $    44,297

Other Comprehensive
 Income (Loss)      $( 194,305)  $    38,934   $(  258,019) $     44,297

Comprehensive
 Income             $  341,603   $   548,678   $   835,168  $  1,088,074
Per share data based
 on weighted average
 outstanding shares

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

Net Income         $      1.34  $       1.28                $      2.74     $
2.61

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

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

                                          Six Months     Six Months
                                          Ended          Ended
                                          June 30,       June 30,
                                          1999           1998
Cash Flows From Operating Activities:
 Net income                                $  1,093,187   $  1,043,777
 Add expenses not requiring cash:
  Provision for depreciation and
   amortization                                 267,688        316,054
  Provision for loan losses                     150,000        128,000
 Bond portfolio losses (gains)                       50             23
 Gain on sale of other real estate
  owned                                               -              -
 Increase (decrease) in taxes payable           179,670        236,947
 Increase (decrease) in interest
   payable                                   (    80,809              )1
52,245
 Increase (decrease) in other
   liabilities                               (    46,404              )(
229,140                                               )
 (Increase) decrease in interest
   receivable                                (   138,957              )(
190,962                                               )
 (Increase) decrease in prepaid
  expenses                                       35,942         29,784
  (Increase) decrease in other assets        (    23,378              )2
74,473
 Recognition of unearned loan income                  -    (    20,000)

Net Cash Used in Operating Activities      $  1,436,989   $  1,741,201

Cash Flows From Investing Activities:
 Proceeds from sale of investment
  securities - available for sale          $          -   $          -
 Proceeds from maturities of
  investment securities - available
  for sale                                    4,925,051      2,998,690
 Purchase of investment securities -
   available for sale                        ( 5,550,000              )(
3,552,086                                             )
  Net loans to customers                     ( 8,203,951              )(
8,012,662                                             )
  Purchase of premise and equipment          (   327,346              )(
235,077                                               )
 Proceeds from sale of premises
  and equipment                                       -              -
 Proceeds from other real estate owned                -              -
 Proceeds from maturities of investment
  securities held to maturity                         -      1,060,097
 Purchase of equity securities              (   250,000              )-

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

                           SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                    STATEMENT OF CASH FLOWS (Con't)
                              (UNAUDITED)

                                          Six Months     Six Months
                                          Ended          Ended
                                          June 30,       June 30,
                                           1999          1998

Cash Flows From Investing Activities (con't):
Purchase of investment securities
  held to maturity                        $          -    $(   502,137)
Purchase of FHLB stock                      (    29,900             )  (
51,700                                                )

Net Cash Used in Investing Activities      $( 9,436,146              )$(
8,294,875                                             )

Cash Flows From Financing Activities:
 Federal funds purchased repaid            $          -   $(   150,000)
 Net increase (decrease) in demand
   deposits, NOW and money market            ( 6,059,648              )(
1,440,117                                             )
 Net increase (decrease) in savings
  and time deposit                            3,554,624      6,628,140
 Net increase (decrease) in
  borrowings                                     8,120     (    65,000)
 Net decrease - FHLB loan                  (    26,667)              -
 Redemptions of company stock                         -              -
 Increase in securities sold under
  repurchase agreement                                -              -

Net Cash Provided (Used) From
  Financing Activities                      $( 2,523,571              )$
4,973,023

Net Increase (Decrease) in Cash
 and Cash Equivalents                      $(10,522,728              )$(
1,580,651                                             )

Cash and Cash Equivalents at
 Beginning of Year                           25,309,085     19,448,444
Cash and Cash Equivalents at
 End of Period                             $ 14,786,357   $ 17,867,793
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 accompanying consolidated financial statements in this report
have  not  been  audited.   The  statements  have  been  prepared   in
accordance  with generally accepted accounting principles and  general
practice within the banking industry.

      On  February 28, 1990, the merger of Georgia Peoples Bankshares,
Inc. into South Banking Company was completed.  The purchase method of
accounting  was  used  to record this transaction.   The  activity  of
Georgia  Peoples  Bankshares, Inc. since February 28,  1990  has  been
consolidated in these statements.

     Effective January 1, 1993, the Company adopted FASB 109 regarding
recording  of deferred income taxes.  Prior year statements have  been
restated  to  reflect an adjustment required of $58,508  reduction  in
deferred taxes and an increase in equity.

      In  the  opinion  of management, all adjustments  for  the  fair
presentation  of the financial position and results of operations  for
the interim periods have been made.

                        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 is 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  June  30,  1999  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  June  30, 1999, 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 June 30,  1999,
total capital increased $  341,603 to $  15,041,854.  This increase in
capital  resulted from  net earnings of $  535,908 and  a decrease  of
$ 194,305 in unrealized gains on securities available for sale, net of
taxes.

       At  June  30,  1999,  South  Banking  Company  had  no  binding
commitments  for  capital  expenditures.  No  additional  mergers   or
acquisitions requiring cash are being negotiated at present.

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  Subsidiary for  the  periods  indicated.   This
discussion  and  analysis  should be  read  in  conjunction  with  the
Company's 1998 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 second quarter of 1999  was  $535,908,  up
$26,164  from $509,744 in the second quarter of 1998.  On a per  share
basis,  earnings  registered a similar increase from $1.28  to  $1.34.
These  levels of income represent annualized returns on average assets
of  1.31%  and  1.33%,  respectively.  Return on average  equity  also
decreased  from  15.63% to 14.65%.  Details concerning  the  Company's
results of operations are discussed in the following sections of  this
report.

      Net  interest  income  for the second quarter  of  1999  totaled
$1,996,715, up $133,435 from $1,863,280 in the second quarter of 1998.

     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 $148.6 million are $11.4 million in  excess
of  the second quarter 1998 average.  These funds are primarily  being
invested  in the loan portfolio.  The lower rate environment, however,
has caused loan income to increase only $85,343 from $3,020,746 in the
second  quarter of 1998 to $3,106,089 in the second quarter  of  1999.
This   increase  reflects  the  downward  repricing  of   the   Bank's
substantial portfolio of one-year adjustable rate loans, however,  the
recent  increase  in  the prime rate has begun  to  positively  impact
interest income.

      Interest  expense, the other component of net  interest  income,
decreased  $50,400 when compared to the second quarter  of  last  year
despite  the  fact  that  the  average  balance  of  interest  bearing
liabilities was up $7.3 million.  This is the result of lower interest
rates.   The  overall  cost of interest bearing  liabilities  for  the
quarter  of 4.80% is 48 basis points lower than in the second  quarter
of  1998, reflecting several rate reductions implemented in late  1998
and early 1999.

                         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  lower  rates
produced  a  net interest margin of 4.65% for the quarter,  down  from
4.73%  in  the  second  quarter of last year but  still  at  the  peer
average.

      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 $75,000 and $74,000 during
the three months ended June 30, 1999 and 1998, respectively.

Noninterest Income

      Following  is a comparison of noninterest income for  the  three
months ended June 30, 1999 and 1998.

                                       Three           Three
                                       Months          Months
                                      Ended            Ended
                                       June 30,        June 30,
                                       1999            1998

Service charges on deposits           $     334,803    $     281,658
Other service charges, commissions
 & fees                                       13,805          28,008
Other income                                 194,217         149,467

Total Noninterest Income               $     542,825   $     459,133

     Total noninterest income for the three months ended June 30, 1999
was  $83,692 higher than during the same period in 1998.  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 second quarter of 1999 of $1,691,749
was $170,126 or 11.1%, greater than during the second quarter of 1998.

      The  majority  of  this increase was due to  higher  salary  and
benefit costs, up $124,178 to $864,883.  Salaries have increased as  a
result  of  the  retention  of a full-time broker  and  a  new  branch
location,  in addition to regular compensation adjustments.  Increases
were also experienced in group insurance and pension expense.

      Other  increases were experienced in equipment  costs  and  data
processing,  while other noninterest expense increased by  $18,945  to
$379,635  for  the quarter.  Management expects this trend  to  remain
constant during the remainder of the year.

     One category of noninterest expense, occupancy expense, decreased
during  the quarter.  Net occupancy expense fell by $19,840, or 15.13%
for the quarter.

Income Taxes

     The Company's provision  for income taxes, which totaled $236,883
in  the  second quarter of 1999 and $217,046 in the second quarter  of
1998, includes both federal and state income taxes.  The effective tax
rates during the two periods were 30.6% in 1999 and 29.9% in 1998.

Financial Condition

      Average  total  assets during the second quarter  of  1999  were
$162,016,870, up from $153,017,859 from the second quarter of 1998.  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 second quarter by $4,308,816  to  $123,026,386.
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

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

Loan Portfolio (Con't)

little  opportunity  to  expand  and  develop  the  agricultural  loan
portfolio.   In  the year since June 30, 1998, the loan portfolio  has
increased  substantially.  Commercial and real estate lending  remains
the largest part of the portfolio.

     The Bank is also a part 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 the amount recognized in the consolidated balance sheets.
At June 30, 1999, commitments to extend credit, including unused lines
of  credit,  totaled  $12,714,000  while  letters  of  credit  totaled
$633,000.

     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)

                                             ---------June 30,--------
                                   -
                                            1999            1998
                                                  (Unaudited)
     Loans past due 90 or more days
      still accruing interest               $      114      $       79

     Nonperforming assets:
      Nonaccruing loans                     $      913      $    1,222
      Other real estate owned                      182             117

                                            $    1,095      $    1,339

      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 June  30,  1999,  the
allowance  for  loan losses was $1,983,211 or 1.61%  of  gross  loans.
Given the inherent risk contained in the portfolio, including the non-

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

Loan Portfolio Con't)

accrual  loan 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 $75,000 during the second quarter of  1999  and
$74,000 during the second quarter of 1998.

Securities Portfolio and Federal Funds Sold

      The  Bank's securities portfolio consists of available for  sale
and held to maturity securities while no securities are maintained  in
a  trading  account.  At June 30, 1999, the held to maturity portfolio
totaled $747,530.

     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 June  30,  1999,
this  portfolio  had an estimated fair value of $17,668,425,  $173,451
less  than  the amortized cost.  Such deficit represents an unrealized
loss.

      This  portfolio, which represents 91.1% of the total  securities
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  $16,034,919 at quarter-end or 82.7% of the available  for  sale
portfolio.  Tax exempt municipals totaling $1,831,036 comprised  9.4%.
The  remainder of the portfolio, which totals $1,523,383, consists  of
bank holding company stock, Georgia Bankers Stock, and stock which the
Bank  is  required to hold for membership in the Federal Reserve  Bank
and the Federal Home Loan Bank.

      The  Bank  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.

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

Securities Portfolio and Federal Funds Sold (Con't)

      The  Bank  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.

Deposits and Other Funding Sources

      Total  deposits at June 30, 1999 of $143,484,922  were  up  from
their  first  quarter total of $141,199,473.  The second  quarter  has
traditionally  not  been a large growth period. While  second  quarter
deposits have increased only slightly, they are well above the  second
quarter 1998 totals of $137,790,115.

      Noninterest bearing deposits decreased $2,120,729 to $20,048,035
during  the  quarter.  In contrast to this, interest bearing  deposits
increased  $4,403,177, or 3.7%, to $123,436,886  during  the  quarter.
Increases were experienced in all types of interest bearing deposits.

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

Year 2000 Compliance

      Historically, certain computerized systems have had  two  digits
rather  than  four digits to define the applicable year,  which  could
result in recognizing a date using 00 as the year 1900 rather than the
year  2000.  This could result in failures or miscalculations  and  is
generally referred to as the Year 2000 issue.

     Because the Bank, as well as some of its suppliers, customers and
service  providers, is heavily dependent on computers to  conduct  its
business operations it recognizes and seeks to responsibly address the
Year 2000 issue.  Failure to address Year 2000 issues could result  in
business   disruption  that  could  materially  affect  the  Company's
operations, liquidity or capital resources.  A Year 2000 Task Team has
been assembled to study, test, and remedy Year 2000 issues.  This team
includes members of senior management and reports regularly to the

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

Year 2000 Compliance (Con't)

Board  of Directors. The team has inventoried all computer related  or
dependent  hardware and software, identified those which are critical,
and  assessed the year 2000 compliance of each component.  Testing  of
critical items, which involve a third party software vendor, are being
jointly conducted with that processor.  During 1998, such tests of the
processors'  major functions were successful.  Additional  testing  is
scheduled  for  the  third  quarter  of  1999.   Backup  systems   for
noncritical  functions have also been identified and are also  subject
to  testing.   The  Bank  also has contingency  plans  which  will  be
implemented  in  the event of a Year 2000 failure.  In  addition,  the
Bank has contacted those customers and vendors, who, if unable to cope
with the Year 2000 issue may negatively impact the Bank, to attempt to
determine their degree of readiness.

       Through  June  30,  1999,  the  Bank  expenditures  have   been
nonmaterial in preparation for the Year 2000.  It is not expected that
additional  capital  expenditures of  a  significant  amount  will  be
needed.

      While the Bank believes the tests and procedures in place should
minimize  the Year 2000 risks and enable it to meet the needs  of  its
customers  in  the Year 2000, the Bank cannot quantify  the  potential
impact  of  any unforeseen Year 2000 failures that might occur  either
internally or from external third parties.

Impact of Inflation

      The  consolidated financial statements and related data included
in  this  report  were prepared in accordance with generally  accepted
accounting principles, 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 three month period ended June 30, 1999.
                              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:  August 12, 1999            By:
                                     Paul T. Bennett
                                     President


Date:  August 12, 1999            By:
                                     Olivia Bennett
                                     Vice President