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, 2001     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, 2001.


      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)



	June 30,     	December 31,
	2001        	2000

	ASSETS

Cash and due from banks	$  7,926,823	$  8,911,914

Deposits in other banks -
 interest bearing	$    773,000	$    825,279

Investment securities:
 Available for sale	$ 18,165,280 	$ 20,695,055

 Held to maturity	$    147,431	$    147,326

Georgia Bankers stock	$    547,283	$    547,283

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

Federal funds sold	$ 15,214,000	$ 14,693,000

Loans 	$169,637,763	$163,227,679
Less: Unearned discount	(   251,654	)	(   253,273	)
Reserve for loan losses 	 ( 2,889,425) 	 ( 2,728,219)

	$166,496,684	$160,246,187

Bank premises and equipment	$  6,184,574	$  6,111,361

Goodwill	$  1,798,465	$  1,916,358

Other assets	$  5,938,810	$  5,930,175


Total Assets	$223,618,450	$220,450,038

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

4

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


	June 30,     	December 31,
	2001         	2000

	LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
Deposits:  Demand - non-interest
                     bearing	$ 24,560,245	$ 24,298,756
           Demand - interest bearing	28,718,750	27,404,525
           Savings	11,417,186	11,326,824
           Time	 130,802,359	 129,649,110
	$195,498,540	$192,679,215
Borrowing	6,096,528	6,223,363
Accrued expenses and other
 liabilities	 2,387,570 	2,236,900
Federal funds purchased	169,000	-
Note payable - Federal Home Loan Bank	13,333	   1,040,000

Total Liabilities	$204,164,971	$202,179,478

Stockholders' Equity
Common stock $1 par value; shares
 authorized - 1,000,000,  shares
 issued and outstanding - June 30,
 2001 and 2000 - 399,500
 and 399,500, respectively	$    399,500	$    399,500
Surplus	3,070,831	3,070,831
Undivided profits	15,896,161	14,887,046
Accumulated other comprehensive
 income	      86,987		 (    86,817)

Total Stockholders' Equity	$ 19,453,479	$ 18,270,560

Total Liabilities and
 Stockholders' Equity	$223,618,450	$220,450,038

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

5

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,
      2001              2000              2001              2000
Interest Income:
 Interest & fees
  on loans $ 4,281,783	$ 3,897,235	$ 8,743,090	$ 7,666,025
 Interest on federal
  funds sold	232,997	137,279	519,667	244,316
 Interest on deposits
  with other banks	11,729	14,410	22,768	25,143
 Interest on invest-
  ment securities:
  U.S. Treasury	7,757	25,742	15,452	50,114
  Mortgage backed
   securities	4,460	8,530	9,994	16,879
  U.S. Government
   Agencies	224,136	217,863	489,276	435,231
  State & municipal
   subdivisions	18,070	20,852	36,889	41,704
 Other	     14,538	     16,005	     34,766	     37,012

Total Interest
 Income	$ 4,795,470	$ 4,337,916	$ 9,871,902	$ 8,516,424

Interest Expense:
 Interest on
  deposits $ 2,404,585	$ 1,843,246	$ 4,934,045	$ 3,544,503
 Interest on other
  borrowings    129,421	     68,264	    268,194	    128,098

 Total Interest
  Expense $ 2,534,006	$ 1,911,510	$ 5,202,239	$ 3,672,601

Net Interest
 Income	$ 2,261,464	$ 2,426,406	$ 4,669,663	$ 4,843,823

Provision for loan
 losses	    169,000	    109,500	    310,500 	    197,000

Net interest income
 after provision
 for loan losses $ 2,092,464 $ 2,316,906 $ 4,359,163	$ 4,646,823

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

6

	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,
	2001        	2000        	2001        	2000

Other Operating Income:
 Service charge on
  deposit accounts $   431,045	$   362,003 $   841,365	$   716,226
 Commission on
  insurance	21,848	18,028	45,062	46,167
 Other income	197,529	218,845	559,518	397,959
 Gain (loss) on sale
  of securities	-	4	-	4
 Computer income    132,191	109,212	    266,897	    221,557
Total Other
 Operating Income $   782,613	$   708,092 $ 1,712,842 $ 1,381,913
Other Operating Expenses:
 Salaries	$   968,246	$   914,542 $ 1,913,122 $ 1,709,955
 Profit sharing &
  personnel expense	183,621	    140,686	362,738	    299,774
 Occupancy expense	131,963	    122,636	260,979	    220,768
 Furniture &
  fixtures expense	268,310	216,878	529,063	398,432
 Payroll taxes	62,677	50,366	124,683	101,311
 Data processing	    80,904 	44,184 	153,700	88,730
 Other operating
  expenses	    673,246	    472,603    1,205,289     939,567
Total Other Operating
 Expenses	$ 2,368,967	$ 1,961,895  $ 4,549,574 $ 3,758,537
Income before
 income taxes	$   506,110	$ 1,063,103  $ 1,522,431 $ 2,270,199
Applicable income
 taxes	       171,641	    365,063	    513,315	    768,272

Net Income $   334,469	$   698,040	$ 1,009,116	$ 1,501,927
The accompanying notes are an integral part of these financial
statements.

7

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,
    	2001        	2000         2001        	2000

Other Comprehensive
 Income, Net of Tax:
  Unrealized gains
   (losses) on
   securities	$    23,825 $    37,734	$   173,804	$(   74,691)

Other Comprehensive
 Income (Loss)	$    23,825 $    37,734	$   173,804	$(   74,691)

Comprehensive
 Income	      $   358,294 $   735,774	$ 1,182,920	 $ 1,427,236


Per share data based
 on weighted average
 outstanding shares

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

Net Income	$       .84	$     1.75 $      2.53	$      3.76

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

8

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


				Six Months   	Six Months
				Ended       	Ended
				June 30,     	June 30,
				2001         	2000
Cash Flows From Operating Activities:
 Net income	$  1,009,116	$  1,501,927
 Add expenses not requiring cash:
  Provision for depreciation and
   amortization	549,473	340,692
  Provision for loan losses	310,500	197,000
 Bond portfolio losses (gains)	-	4
 Gain on sale of other real estate
  owned	-	-
 Increase (decrease) in taxes payable	143,913	49,861
 Increase (decrease) in interest
  payable	83,893		169,286
 Increase (decrease) in other
  liabilities	(    77,136	)	273,220
 (Increase) decrease in interest
  receivable	102,448		(   448,287	)
 (Increase) decrease in prepaid
  expenses	(    66,330)	(    44,292)
 (Increase) decrease in other assets	142,420 (   614,762)
 Recognition of unearned loan income(     1,619)        9,000
Net Cash Used in Operating Activities $  2,196,678$  1,433,649

Cash Flows From Investing Activities:
 Proceeds from sale of investment
  securities - available for sale $          -	$          -
 Proceeds from maturities of
  investment securities - available
  for sale	15,664,682	31,385
 Purchase of investment securities -
  available for sale	(13,150,000)	(   397,414)
 Net loans to customers	( 6,559,378)	(12,778,957)
 Purchase of premise and equipment  (   503,175)  (   983,898)
 Proceeds from maturities of investment
  securities held to maturity	-	400,000
 Purchase of equity securities	-		-

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

9

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

					 Six Months   	Six Months
					 Ended      	Ended
					 June 30,     	June 30,
					 2001        	2000

Cash Flows From Investing Activities (con't):
Purchase of investment securities
  held to maturity	$          - 	$          -
Purchase of FHLB stock	           -		           -

Net Cash Used in Investing Activities  	$( 4,547,871) $(13,728,884)
Cash Flows From Financing Activities:
 Net increase (decrease) in demand
  deposits, NOW and money market	$  1,575,714  $  2,996,417
 Net increase (decrease) in savings
  and time deposit	1,243,611	10,490,691
 Net increase (decrease) in
  borrowings	(   126,835)	587,055
 Net increase (decrease) - FHLB loan	( 1,026,667)	973,334
 Redemptions of company stock	-	-
 Increase (decrease) in federal
  funds purchased   	     169,000		  ( 1,140,000)

Net Cash Provided (Used) From
 Financing Activities	$  1,834,823		$ 13,907,497

Net Increase (Decrease) in Cash
 and Cash Equivalents	$(   516,370)	$  1,612,262

Cash and Cash Equivalents at
 Beginning of Year	  24,430,193	  15,744,998
Cash and Cash Equivalents at
 End of Period	$ 23,913,823	$ 17,357,260

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

10

	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, 2000.

	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.
11

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
establishes 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.

12

	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, 2001 were considered
satisfactory.  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, 2001, 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, 2001, total capital increased $358,294 to
$19,453,479.  This increase in capital resulted from net earnings of
$334,469 and  a decrease  of $23,825 in unrealized gains on securities
available for sale, net of taxes.

	At June 30, 2001, South Banking Company had one binding commitment
for capital expenditures. South Banking Company's subsidiary, Alma
Exchange Bank, had entered into an agreement to remodel its main bank
building.  Alma Exchange Bank has estimated the final cost to
approximate $2,000,000.

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
2000 Form 10-K.
13

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.  The acquisition
of the three branches by subsidiary, Pineland State Bank, in July of
2000 has an impact on these comparisons and all comments below should
be read taking the acquisition in effect.

Earnings Summary

	Net income for the second quarter of 2001 was $334,469, down
$363,571 from $698,040 in the second quarter of 2000.  On a per share
basis, earnings registered a similar decrease from $1.75 to $.84.  These
levels of income represent annualized returns on average assets of .60%
and 1.53%, respectively.  Return on average equity also decreased from
16.90% to 7.09%.  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 2001 totaled
$2,261,464, down $164,942 from $2,426,406 in the second quarter of 2000.

	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 $199.5 million are $35.2 million in excess of
the second quarter 2000 average.  These funds are primarily being
invested in the loan portfolio until the first quarter of 2001 when
loan demand weakened.  The loan volume has caused loan income to
increase $457,554 from $4,337,916 in the second quarter of 2000 to
$4,795,470 in the second quarter of 2001. This increase reflects the
volatile repricing of the Bank's substantial portfolio of one-year
adjustable rate loans, as the recent decreases in the prime rate has
begun to negatively impact interest income.

	Interest expense, the other component of net interest income,
increased $622,496 when compared to the second quarter of last year
including the fact that the average balance of interest bearing
liabilities was up $37.2 million.  The overall cost of interest bearing
liabilities for the quarter of 5.04% is 22 basis points lower than in
the second quarter of 2000, reflecting several rate changes implemented
in 2000 and 2001 that decreased rates.  Many of the higher rates have
not matured and overall rates have remained high.

14

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 loan rates
dropping faster than savings rates produced a net interest margin of
4.53% for the quarter, down from 5.30% in the second 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 $169,000 and $109,500
during the three months ended June 30, 2001 and 2000, respectively.

Noninterest Income

	Following is a comparison of noninterest income for the three
months ended June 30, 2001 and 2000.


                              Three Months  	Three Months
                              Ended        	Ended
                              June 30,      	June 30,
                              2001         	2000

Service charges on deposits	$     431,045	$     362,003
Other service charges, commissions
 & fees                              21,848	       18,028
Other income	                  329,720	      328,061
Total Noninterest Income	$     782,613	$     708,092


	Total noninterest income for the three months ended June 30, 2001
was $74,521 higher than during the same period in 2000.  The primary
increase is related to additional computer processing income from
nonaffiliated  banks and brokerage services and gain from asset sale.

	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.
15

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 2001 of $2,368,967
was $407,077 or 20.75%, greater than during the second quarter of 2000.

	The majority of this increase was due to the addition of the
three branches purchased by Pineland State Bank and includes all areas
of expenses.  Salaries have increased as a result of the normal growth
in assets and normal salary increases.  Increases were also experienced
in group insurance and pension expense.

	Other non-personnel expense had little change from prior year
except for new branch costs.  Management expects this trend to remain
constant during the remainder of the year.

Income Taxes

	The Company's provision  for income taxes, which totaled $171,641
in the second quarter of 2001 and $365,063 in the second quarter of
2000, includes both federal and state income taxes.  The effective tax
rates during the two periods were 33.9% in 2001 and 34.3% in 2000.

Financial Condition

	Average total assets during the second quarter of 2001 were
$222,034,244, up from $162,016,870 from the second quarter of 2000.  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 $1,518,956 to $169,637,763.
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 June 30, 2000, the loan portfolio
has increased substantially.  Commercial and real estate lending remains
the largest part of the portfolio.

16

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



Loan Portfolio (con't)

	The Bank 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 the amount recognized in the consolidated balance sheets.
At June 30, 2001, commitments to extend credit, including unused lines
of credit, totaled $27,412,000 while letters of credit totaled $349,000.
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,---------
       						2001      	2000
                                    	    (Unaudited)
	Loans past due 90 or more days
	 still accruing interest	$      657	$      564

	Nonperforming assets:
	 Nonaccruing loans	$    1,210	$      734
	 Other real estate owned	       949	       656

		$    2,159	$    1,390


	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, 2001, the
allowance for loan losses was $2,889,425 or 1.70% of gross loans. Given
the inherent risk contained in the portfolio, including the non-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.

17

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



Loan Portfolio (con't)

	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 $169,000 during the second quarter of 2001 and
$109,500 during the second quarter of 2000.

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, 2001, the held to maturity portfolio
totaled $147,431.

	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, 2001, this portfolio
had an estimated fair value of $18,165,280, $134,863 more than the
amortized cost.  Such excess 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
$16,350,060 at quarter-end or 90.0% of the available for sale portfolio.
Tax exempt municipals totaling $1,289,047 comprised 7.1%. The remainder
of the portfolio, which totals $526,173, consists of bank holding
company stock.

	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.

	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.
18

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



Deposits and Other Funding Sources

	Total deposits at June 30, 2001 of $195,498,540 were up from
their year end total of $192,679,215, but down from the first quarter
deposits.  The second quarter has traditionally been a slow growth
period.  Second quarter deposits have decreased $8,304,640.

	Noninterest bearing deposits decreased $4,303,576 to $24,560,245
during the quarter.  Interest bearing deposits decreased $4,001,064, or
2.3%, to $170,938,295 during the quarter.  Decreases were experienced
primarily in all types 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 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.

19

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, 2001.

20





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 13, 2001            By:
                                     Paul T. Bennett
                                     President



Date:  August 13, 2001            By:
                                     Olivia Bennett
                                     Vice President