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   March 31, 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
Number)
 incorporation or organization)


   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 March 31, 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 -
9

          Notes to Consolidated Financial Statements . . . . . . .  .
10

         Management's Discussion and Analysis of Financial
           Condition and Results of Operations . . . . . . . . . 11 -
18


Part II. Other Information  . . . . . . . . . . . . . . . . . .  .  .
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                        SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                      CONSOLIDATED BALANCE SHEETS
                              (UNAUDITED)


                                         March 31,        December 31,
                                         1999             1998

                                 ASSETS

Cash and due from banks                   $  4,073,038    $  6,122,085

Deposits in other banks -
 interest bearing                         $  1,340,000    $  1,539,000

Investment securities:
 Available for sale                       $ 16,486,883    $ 16,993,917

 Held to maturity                         $    747,626    $    747,716

Georgia Bankers stock                     $    547,283    $    547,283

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

Federal funds sold                        $ 12,646,000    $ 17,648,000

Loans                                     $118,717,570    $114,959,844
Less: Unearned discount                    (   154,545)    (   154,545)
Reserve for loan losses                    ( 2,046,172)    ( 1,970,620)

                                          $116,516,853    $112,834,679

Bank premises and equipment               $  4,093,843    $  4,020,735

Goodwill                                  $    249,102    $    262,137

Other assets                              $  3,652,216    $  3,778,990

Total Assets                              $160,778,944    $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)


                                         March 31,      December 31,
                                         1999           1998

                  LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
Deposits:  Demand - non-interest
                     bearing              $ 22,168,764    $ 23,299,454
           Demand - interest bearing        20,492,521      24,613,084
           Savings                           9,557,958       9,057,678
           Time                             88,980,230      89,019,729
                                          $141,199,473    $145,989,945
Borrowing                                    3,137,952       3,156,096
Accrued expenses and other
 liabilities                                 1,607,935       1,391,347
Federal funds purchased                              -               -
Note payable - Federal Home Loan Bank          133,333         146,667

Total Liabilities                         $146,078,693    $150,684,055

Stockholders' Equity
Common stock $1 par value; shares
 authorized - 1,000,000,  shares
 issued and outstanding -
 1998 and 1997 - 399,500
 and 399,500, respectively                $    399,500    $    399,500
Surplus                                      3,070,831       3,070,831
Undivided profits                           11,209,066      10,651,788
Accumulated other comprehensive
 income                                         20,854          84,568

Total Stockholders' Equity                $ 14,700,251    $ 14,206,687

Total Liabilities and
 Stockholders' Equity                     $160,778,944    $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 Months    Three Months
                                         Ended           Ended
                                         March 31,       March 31,
                                         1999            1998

Interest Income
Interest and fees on loans                $  3,051,810    $  2,939,846
Interest on federal funds sold                 155,146         140,878
Interest on deposits with other
 banks                                          17,208          15,416
Interest on investment securities:
 U. S. Treasury                                 42,009          52,229
 U. S. government agencies                     169,338         170,251
 Mortgage backed securities                     10,801          16,965
 State and political subdivisions               22,877          23,068
 Dividends                                      49,827          34,637


Total Interest Income                     $  3,519,016    $  3,393,290


Interest Expense
Interest on deposits                      $  1,475,238    $  1,453,482
Interest on other borrowings                    57,692          64,807

Total Interest Expense                    $  1,532,930    $  1,518,289

Net Interest Income                       $  1,986,086    $  1,875,001
Provision for loan losses                       75,000          54,000

Net interest income after provisions
 for loan losses                          $  1,911,086    $  1,821,001


Other Operating Income
Service charge on deposit accounts        $    336,116    $    280,274
Commission on insurance                         15,275          21,889
Other income                                   112,117          61,872
Gain (loss) sale of securities                       5               6
Computer income                                 86,585          42,199

Total Other Operating Income              $    550,098    $    406,240

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 Months    Three Months
                                         Ended           Ended
                                         March 31,       March 31,
                                         1999            1998

Other                        Operating                       Expenses
Salaries                                  $    742,425    $    595,839
Profit sharing and other personnel
 expense                                       133,086         111,738
Occupancy expense                               97,351         107,633
Furniture and fixtures expense                 178,262         167,506
Payroll taxes                                   51,208          38,869
Data processing                                 83,150          40,785
Other operating expenses                       379,636         402,990

Total Other Operating Expenses            $  1,665,118    $  1,465,360

Income before income taxes                $    796,066    $    761,881
Applicable income taxes                        238,787         227,848

Net income                                $    557,279    $    534,033
Other comprehensive income, net of tax
 Unrealized gains (losses) on
  securities                              $(    63,714)   $      5,363

Other comprehensive income (loss)         $(    63,714)   $      5,363

Comprehensive income                      $    493,565    $    539,396


Per share data on weighted average
 outstanding shares
Weighted average outstanding shares            399,500         399,500

Net income per share                      $      1.395    $      1.337

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

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


                                           Three Months   Three Months
                                          Ended          Ended
                                          March 31,      March 31,
                                          1999           1998
Cash Flows From Operating Activities:
 Net income                                $    557,279   $    534,033
 Add expenses not requiring cash:
  Provision for depreciation and
   amortization                                 108,689        149,442
  Provision for loan losses                      75,000         54,000
 Bond portfolio losses (gains)                        -              6
 Gain on sale of other real estate
  owned                                               -              -
 Increase (decrease) in taxes payable           238,787        220,820
 Increase (decrease) in interest payable         16,571        105,955
 Increase (decrease) in other liabilities   (    38,770)   (   125,665)
 (Increase) decrease in interest
  receivable                                     67,662         24,550
 (Increase) decrease in prepaid
  expenses                                       33,567    (    19,339)
 (Increase) decrease in other assets             22,163        206,759
 Recognition of unearned loan income                 -     (     6,699)

Net Cash Provided (Used) in Operating
 Activities                                $  1,080,948   $  1,143,862

Cash Flows From Investing Activities:
 Proceeds from maturities of investment
  securities - available for sale          $  3,650,418  $   1,565,386
 Proceeds from maturities of investment
  security - held to maturity                         -        838,117
 Purchase of investment securities - AFS    ( 3,150,000)   ( 2,205,273)
 Purchase of investment securities - HTM              -    (   502,136)
 Net loans to customers                     ( 3,757,174)   ( 2,148,914)
 Purchase of premise and equipment          (   222,389)   (    91,630)
 Proceeds from sale of equipment                      -              -
 Proceeds from other real estate owned                -              -
 Purchase of FHLB stock                     (    29,900)   (    51,700)

Net Cash Provided (Used) in Investing
 Activities                                $( 3,509,045)  $( 2,596,150)

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

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


                                         Three Months     Three Months
                                         Ended           Ended
                                         March 31,       March 31,
                                         1999            1998

Cash Flows From Financing Activities:
 Net increase (decrease) in demand
  deposits, NOW and money market           $( 5,251,253)  $( 1,747,798)
 Net increase (decrease) in savings
  and time deposit                              460,781      2,284,713
 Net increase (decrease) in borrowings      (    18,144)   (    32,500)
 Dividends paid                                       -              -
 Redemptions of company stock                         -              -
 Federal funds purchased                              -    (   150,000)
 Net decrease - note payable - FHLB         (    13,334)            -
Net Cash Provided (Used) From
 Financing Activities                      $( 4,821,950)  $    354,415

Net Increase (Decrease) in Cash
 and Cash Equivalents                      $( 7,250,047)  $( 1,097,873)

Cash and Cash Equivalents at
 Beginning of Year                           25,309,085     19,448,444

Cash and Cash Equivalents at
 End of Period                             $ 18,059,038   $ 18,350,571

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  January 11, 1996, the merger of Pineland State Bank  into
South  Banking  Company  was completed.   The  purchase  method  of
accounting  was used to record this transaction.  The  activity  of
Pineland State Bank since January 11, 1996 has been consolidated in
these statements.

      Effective  January  1,  1993, the company  adopted  FASB  109
regarding  the  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  March  31,  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  March 31, 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 March 31, 1999,
total  capital  increased $493,564 to $14,700,251.  This  increase  in
capital  resulted  from net earnings of $557,279  and  a  decrease  of
$63,714 in unrealized gains on securities available for sale,  net  of
taxes.

      At  March  31,  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 first quarter of 1999 was $557,279, up $23,246
from  $534,033  in the first quarter of 1998.  On a  per  share  basis
earnings  registered a similar increase from $1.337 to $1.395.   These
levels  of  income represent annualized returns on average  assets  of
1.37%  and  1.42%,  respectively.   Return  on  average  equity   also
decreased  from  16.73% to 15.42%.  Details concerning  the  Company's
results of operations are discussed in the following sections of  this
report.

      Net  interest  income  for the first  quarter  of  1999  totaled
$1,986,086, up $111,085 from $1,875,001 in the first quarter of 1998.

     Interest income is being impacted by the mix of assets, the level
of  earning  assets  and a lower interest rate  environment.   Average
earning assets for the quarter of $151.9 million are $14.8 million  in
excess  of  the first 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  $111,964  from
$2,939,846  in the first quarter of 1998 to $3,051,810  in  the  first
quarter of 1999.  This increase reflects the downward repricing of the
Bank's substantial portfolio of one-year adjustable rate loans.

      Interest  expense, the other component of net  interest  income,
increased  $14,641  when compared to the first quarter  of  last  year
despite  the  fact  that  the  average  balance  of  interest  bearing
liabilities was up $8.8 million.  This is the result of lower interest
rates.   The  overall  cost of interest bearing  liabilities  for  the
quarter of 4.94% is 33 basis points lower than in the first quarter of
1998 reflecting several rate reductions implemented in late 1998.

      This  combination  of higher average balances  and  lower  rates
produced  a  net interest margin of 4.33% for the quarter,  down  from
5.01% in the first quarter of last year but still at the peer average.

                         SOUTH BANKING COMPANY
                             ALMA, GEORGIA
                MANGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                                   
Earnings Summary (Con't)

      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 $54,000 during
the three months ended March 31, 1999 and 1998, respectively.

Noninterest Income

      Following  is a comparison of noninterest income for  the  three
months ended March 31, 1999 and 1998.

                                              Three          Three
                                                Months          Months
Ended                                             Ended
                                                           March 31,  March 31,
                                                            1999      1998
Service charges on deposits                  $  336,116     $  280,274
Other service charges, commissions
 & fees                                          15,275         21,889
Other income                                    198,707        104,077

Total Noninterest Income                     $  550,098     $  406,240

      Total  noninterest income for the three months ended  March  31,
1999  was  $143,858 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.

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 first quarter of 1999 of $1,665,118
was $199,758, or 8.2%, greater than during the first quarter of 1998.

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

Noninterest Expense (Con't)

      The  majority  of  this increase was due to  higher  salary  and
benefit costs, up $167,934 to $875,511.  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.   As  a
consequence  of this, payroll related taxes also increased.  Increases
were also experienced in group insurance and pension expense.

      Other  increases were experienced in equipment  costs  and  data
processing,  while other noninterest expense decreased by  $23,354  to
$379,635  for  the quarter.  This reflects decreases in  a  number  of
items  including postage, stationery and supplies, professional  fees,
and  educational expense. Management expects several of  these  items,
including  stationery, professional fees, and educational expense,  to
be reduced during the remainder of the year.

     One category of noninterest expense, occupancy expense, decreased
during  the quarter.  Net occupancy expense fell by $10,282, or  9.55%
for the quarter.

Income Taxes

      The Company's provision for income taxes, which totaled $238,787
in  the  first  quarter of 1999 and $227,848 in the first  quarter  of
1998, includes both federal and state income taxes.  The effective tax
rates during the two periods were 30.0% in 1999 and 29.9% in 1998.

Financial Condition

      Average  total  assets during the first  quarter  of  1999  were
$162,834,843, up from $12.4 million from the first 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  first quarter by $3,757,726  to  $118,717,570.
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.   However,
management believes that with the recent decline in the local  farming
economy,  there  exists little opportunity to expand and  develop  the
agricultural  loan portfolio. In the year since March  31,  1998  this
portfolio increased substantially. Commercial and real estate  lending
remains the largest part of the portfolio.

                         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 March 31, 1999 commitments to extend credit, including unused lines
of  credit,  totaled  $13,782,000  while  letters  of  credit  totaled
$669,000.

     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)
                                   
                                                 -------March 31------
-
                                                1999           1998
                                                      (Unaudited)
     Loans past due 90 or more days
      still accruing interest                   $   285        $   183

     Nonperforming assets:
      Nonaccruing loans                         $   254        $   625
      Other real estate owned                       182            183

                                                $   436        $   808

      Management makes this determination by its analysis  of  overall
loan  quality,  changes  in he mix and size  of  the  loan  portfolio,
previous  loss  experience, general economic  conditions,  information
about  specific borrowers and other factors.  At March 31,  1999,  the
allowance  for  loan losses was $2,046,172 or 1.61%  of  gross  loans.
Given  the  inherent  risk contained in the portfolio,  including  the
nonaccrual  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 sufficient level.
The  provision totaled $75,000 during the first quarter  of  1999  and
$54,000 during the first quarter of 1998.

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

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 March 31, 1999, the held to maturity portfolio
totaled $747,626.

      Management  also  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 March  31,
1999  this  portfolio  had  an estimated fair  value  of  $17,460,266,
$31,597  in  excess of the amortized cost.  Such excess represents  an
unrealized gain.

      This  portfolio, which represents 90.5% 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  $15,103,553 at quarter-end or 86.5% of the available  for  sale
portfolio.  Tax exempt municipals totaling $1,083,324 comprised  6.2%.
The  remainder of the portfolio, which totals $1,273,383, consists  of
Georgia Bankers Stock, C. B. Financial Corp 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.

      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 March 31, 1999 of $141,199,473 were down  from
their   year-end  total  of  $145,989,945.   The  first  quarter   has
traditionally  not been a growth period, however, while first  quarter
deposits  have decreased, they are well above the first  quarter  1998
totals of $133,139,007.
                         SOUTH BANKING COMPANY
                             ALMA, GEORGIA
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Deposits and Other Funding Sources (Con't)

      Noninterest bearing deposit decreased $1,130,690 to  $22,168,764
during  the  quarter.  In contrast to this, interest bearing  deposits
declined $3,659,782 or 3.0%, to $122,690,491 during the quarter.   The
area  of  greatest  decline  was  NOW  accounts  which  decreased   by
$4,120,563  to $20,492,521 due to the lower interest rates which  have
been  in  effect  since  the fourth quarter of 1998.   Increases  were
experienced in savings accounts.

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

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
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  second  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  March  31, 1999, the Bank expenditures have  been  non-
material  in  preparation for the Year 2000.  It is not expected  that
additional  capital  expenditures of  a  significant  amount  will  be
needed.

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

Year 2000 Compliance (Con't)

      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 March 31, 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:  May 13, 1999               By:
                                     Paul Bennett
                                     President


Date:  May 13, 1999               By:
                                     Olivia Bennett
                                     Vice President