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SECURITIES
AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-QSB

xQUARTERLY REPORT PURSUANT TO
SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly
Period Ended March 31, 2004

OR

oTRANSITION REPORT PURSUANT TO
SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition
Period from _________ to  _________

Community Banks of Georgia, Inc.(Exact name of small business issuer as specified in its
charter)

|Georgia                                  |  | 20-0485183                            
|---------------------------------------- |  | --------------------------------------
|(State of Incorporation)                 |  | (I.R.S. Employer
  Identification No.)
|                                         |  |                                       
|15 Mountainside Drive
  Jasper, Georgia  |  | 30143                                 
|(Address of principal executive offices) |  | (Zip Code)                            

706-253-9600
(Telephone Number)

Indicate
whether the issuer: (1) has filed all reports required to be filed by Section
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 reports), and (2) has been subject to such filing requirements for the
past 90 days.

YESxNOo

State
the number of shares outstanding of each of the issuers classes of common
equity, as of the latest practicable date: 
Common stock, par value $5 per share: 
970,000 shares outstanding as of May 13, 2004

Transitional small
business disclosure format (check one):

YESoNOx

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COMMUNITY BANKS OF GEORGIA, INC.

|         | INDEX                 |                                                                                                                             |         
|-------- | --------------------- | --------------------------------------------------------------------------------------------------------------------------- | --------
|         |                       |                                                                                                                             |         
|         |                       |                                                                                                                             | Page No.
|         |                       |                                                                                                                             |         
|PART I   | FINANCIAL INFORMATION |                                                                                                                             |         
|         |                       |                                                                                                                             |         
|         | Item 1.               | Consolidated Financial Statements                                                                                           |         
|         |                       |                                                                                                                             |         
|         |                       | Consolidated Balance Sheet
  (unaudited) at March 31, 2004 and 
  Consolidated Balance Sheet (audited) at December 31, 2003 |         
|         |                       |                                                                                                                             |         
|         |                       | Consolidated Statements of
  Operations (unaudited) for the Three 
  Months Ended March 31, 2004 and 2003                   |         
|         |                       |                                                                                                                             |         
|         |                       | Consolidated Statements of
  Comprehensive Income (unaudited) for the Three Months Ended March 31, 2004
  and 2003          |         
|         |                       |                                                                                                                             |         
|         |                       | Consolidated Statements of Cash
  Flows (unaudited) for the Three 
  Months Ended March 31, 2004 and 2003                   |         
|         |                       |                                                                                                                             |         
|         |                       | Notes to Consolidated Financial
  Statements (unaudited)                                                                    |         
|         |                       |                                                                                                                             |         
|         | Item 2.               | Managements Discussion and Analysis
  of Financial Condition and Results of Operations                                     |         
|         |                       |                                                                                                                             |         
|         | Item 3.               | Controls and Procedures                                                                                                     |         
|         |                       |                                                                                                                             |         
|PART II. | OTHER INFORMATION     |                                                                                                                             |         
|         |                       |                                                                                                                             |         
|         | Item 1.               | Legal Proceedings                                                                                                           |         
|         |                       |                                                                                                                             |         
|         | Item 2.               | Changes in Securities and Purchases
  of Equity Securities                                                                  |         
|         |                       |                                                                                                                             |         
|         | Item 3.               | Defaults Upon Senior Securities                                                                                             |         
|         |                       |                                                                                                                             |         
|         | Item 4.               | Submission of Matters to a Vote of
  Security Holders                                                                       |         
|         |                       |                                                                                                                             |         
|         | Item 5.               | Other Information                                                                                                           |         
|         |                       |                                                                                                                             |         
|         | Item 6.               | Exhibits and Reports on Form 8-K                                                                                            |         

This
form 10-QSB contains forward-looking statements. These statements are subject
to risks and uncertainties that could cause actual results to differ materially
from those anticipated in the forward-looking statements. Factors that may
cause these differences include, but are not limited to, changes in interest
rate environment, managements business strategy, national, regional and local
market conditions and legislative and regulatory conditions.

Readers
should not place undue reliance on forward-looking statements, which reflect
managements view only as of the date of this form 10-QSB. We undertake no
obligation to publicly revise these forward-looking statements to reflect
subsequent events or circumstances. Readers should also carefully review the
other documents we file from time to time with the Federal Deposit Insurance
Corporation and Securities and Exchange Commission.

- 2 -

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PART I. 
FINANCIAL INFORMATIONItem 1.  CONSOLIDATED
FINANCIAL STATEMENTS

COMMUNITY BANKS OF GEORGIA, INC.

Consolidated
Balance Sheets

|                                                                                                            |  | March 31,
  2004
  (unaudited) |             | December 31,
  2003
  (audited) | 
|----------------------------------------------------------------------------------------------------------- |  | ------------------------------ | ----------- | ------------------------------- | 
|                                                                                                            |  |                                |             |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|Assets                                                                                                      |  |                                |             |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|Cash and due from banks, including reserve
  requirements of $124,000                                       |  | $                              | 608,862     |                                 | 
|Federal funds sold                                                                                          |  |                                | 799,000     |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|Cash
  and cash equivalents                                                                                 |  |                                | 1,407,862   |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|Investments available for sale                                                                              |  |                                | 23,336,446  |                                 | 
|Other investments                                                                                           |  |                                | 402,151     |                                 | 
|Loans, net                                                                                                  |  |                                | 97,701,904  |                                 | 
|Premises and equipment, net                                                                                 |  |                                | 2,398,086   |                                 | 
|Accrued interest receivable and other assets                                                                |  |                                | 1,552,814   |                                 | 
|Bank Owned Life Insurance                                                                                   |  |                                | 1,818,335   |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|Total
  assets                                                                                              |  | $                              | 128,617,598 |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|Liabilities
  and Stockholders Equity                                                                      |  |                                |             |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|Liabilities:                                                                                                |  |                                |             |                                 | 
|Deposits:                                                                                                   |  |                                |             |                                 | 
|Demand                                                                                                      |  | $                              | 6,097,861   |                                 | 
|Interest
  bearing demand and money market                                                                  |  |                                | 11,442,448  |                                 | 
|Savings                                                                                                     |  |                                | 1,975,194   |                                 | 
|Time                                                                                                        |  |                                | 61,343,314  |                                 | 
|Time
  over $100,000                                                                                        |  |                                | 32,774,761  |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|Total
  deposits                                                                                            |  |                                | 113,633,578 |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|Borrowings                                                                                                  |  |                                | 1,900,000   |                                 | 
|Accrued
  interest payable and other liabilities                                                            |  |                                | 866,913     |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|Total
  liabilities                                                                                         |  |                                | 116,400,491 |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|Commitments                                                                                                 |  |                                |             |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|Shareholders equity:                                                                                       |  |                                |             |                                 | 
|Common stock, $5 par
  value; authorized
        10,000,000 shares; issued and outstanding
  970,000 shares |  |                                | 4,850,000   |                                 | 
|Additional paid-in
  capital                                                                                |  |                                | 5,803,524   |                                 | 
|Retained earnings                                                                                           |  |                                | 1,393,347   |                                 | 
|Accumulated
  comprehensive income                                                                          |  |                                | 170,236     |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|Total
  shareholders equity                                                                                |  |                                | 12,217,107  |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|                                                                                                            |  |                                |             |                                 | 
|                                                                                                            |  | $                              | 128,617,598 |                                 | 
|                                                                                                            |  |                                |             |                                 | 

See accompanying notes to
unadudited consolidated financial statements

- 3 -

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- 4 -

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COMMUNITY BANKS OF GEORGIA, INC.Consolidated Statements of Operations

For the Three
Months Ended March 31, 2004 and 2003
(Unaudited)

|                                                      |  | 2004 |           | 2003 | 
|----------------------------------------------------- |  | ---- | --------- | ---- | 
|                                                      |  |      |           |      | 
|Interest income:                                      |  |      |           |      | 
|Loans                                                 |  | $    | 1,638,461 |      | 
|Investment
  securities                               |  |      | 264,184   |      | 
|Federal
  funds sold                                  |  |      | 4,296     |      | 
|                                                      |  |      |           |      | 
|                                                      |  |      |           |      | 
|Total
  interest income                               |  |      | 1,906,941 |      | 
|                                                      |  |      |           |      | 
|                                                      |  |      |           |      | 
|Interest expense:                                     |  |      |           |      | 
|Deposits                                              |  |      | 582,548   |      | 
|Borrowings                                            |  |      | 12,140    |      | 
|                                                      |  |      |           |      | 
|                                                      |  |      |           |      | 
|Total
  interest expense                              |  |      | 594,688   |      | 
|                                                      |  |      |           |      | 
|                                                      |  |      |           |      | 
|Net
  interest income                                 |  |      | 1,312,253 |      | 
|                                                      |  |      |           |      | 
|Provision for loan losses                             |  |      | 40,000    |      | 
|                                                      |  |      |           |      | 
|                                                      |  |      |           |      | 
|Net
  interest income after provision for loan losses |  |      | 1,272,253 |      | 
|                                                      |  |      |           |      | 
|                                                      |  |      |           |      | 
|Other income:                                         |  |      |           |      | 
|Service
  charges on deposit accounts                 |  |      | 71,559    |      | 
|Other
  operating income                              |  |      | 46,732    |      | 
|                                                      |  |      |           |      | 
|                                                      |  |      |           |      | 
|Total
  other income                                  |  |      | 118,291   |      | 
|                                                      |  |      |           |      | 
|                                                      |  |      |           |      | 
|Other expense:                                        |  |      |           |      | 
|Salaries
  and other personnel expense                |  |      | 328,616   |      | 
|Net
  occupancy and equipment expense                 |  |      | 86,879    |      | 
|Other
  operating expense                             |  |      | 220,845   |      | 
|                                                      |  |      |           |      | 
|                                                      |  |      |           |      | 
|Total
  other expense                                 |  |      | 636,340   |      | 
|                                                      |  |      |           |      | 
|                                                      |  |      |           |      | 
|Income
  before provision for income taxes            |  |      | 754,204   |      | 
|                                                      |  |      |           |      | 
|Income tax expense                                    |  |      | 286,639   |      | 
|                                                      |  |      |           |      | 
|                                                      |  |      |           |      | 
|Net
  earnings                                        |  | $    | 467,565   |      | 
|                                                      |  |      |           |      | 
|                                                      |  |      |           |      | 
|Earnings per common share:                            |  |      |           |      | 
|                                                      |  |      |           |      | 
|Basic
  earnings per share                            |  | $    | .48       |      | 
|                                                      |  |      |           |      | 
|                                                      |  |      |           |      | 
|Diluted
  earnings per share                          |  | $    | .45       |      | 
|                                                      |  |      |           |      | 

See accompanying notes to
unaudited consolidated financial statements.

- 5 -

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COMMUNITY
BANKS OF GEORGIA, INC.

Consolidated
Statements of Comprehensive Income

For the Three
Months Ended March 31, 2004 and 2003
(Unaudited)

|                                                                                                    |  | 2004 |         | 2003 | 
|--------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- | 
|                                                                                                    |  |      |         |      | 
|                                                                                                    |  |      |         |      | 
|Net earnings (loss)                                                                                 |  | $    | 467,565 |      | 
|                                                                                                    |  |      |         |      | 
|Other comprehensive income, net of tax:                                                             |  |      |         |      | 
|Unrealized gain  (loss) on securities available-for-sale,
        net of tax of $103,174 and $9,105 |  |      | 168,337 |      | 
|                                                                                                    |  |      |         |      | 
|                                                                                                    |  |      |         |      | 
|Comprehensive income                                                                                |  | $    | 635,902 |      | 
|                                                                                                    |  |      |         |      | 

See accompanying notes to
unaudited consolidated financial statements.

- 7 -

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COMMUNITY
BANKS OF GEORGIA, INC.

Consolidated
Statements of Cash Flows

For the Three
Months Ended March 31, 2004 and 2003
(Unaudited)

|                                                                                                         |  | 2004 |             | 2003 | 
|-------------------------------------------------------------------------------------------------------- |  | ---- | ----------- | ---- | 
|                                                                                                         |  |      |             |      | 
|Cash flows from operating activities:                                                                    |  |      |             |      | 
|Net earnings                                                                                             |  | $    | 467,565     |      | 
|Adjustments to
  reconcile net earnings to net
          cash provided (used) by
  operating activities: |  |      |             |      | 
|Provision
  for loan losses                                                                              |  |      | (40,000     | )    | 
|Depreciation,
  amortization and accretion                                                               |  |      | 33,935      |      | 
|Change in:                                                                                               |  |      |             |      | 
|Accrued
  interest receivable and other assets                                                           |  |      | (131,868    | )    | 
|Accrued
  interest payable and other liabilities                                                         |  |      | 425,793     |      | 
|                                                                                                         |  |      |             |      | 
|                                                                                                         |  |      |             |      | 
|Net
  cash provided (used) by operating activities                                                       |  |      | 755,425     |      | 
|                                                                                                         |  |      |             |      | 
|                                                                                                         |  |      |             |      | 
|Cash flows from investing activities:                                                                    |  |      |             |      | 
|Proceeds from calls,
  maturities, and 
          paydowns of securities
  available for sale            |  |      | 227,309     |      | 
|Purchases of other
  investments                                                                         |  |      | (138,401    | )    | 
|Purchases of
  investment securities available for sale                                                  |  |      | (2,384,242  | )    | 
|Change in loans                                                                                          |  |      | (7,870,833  | )    | 
|Purchases of premises
  and equipment                                                                    |  |      | (58,229     | )    | 
|Purchase of CSV                                                                                          |  |      | (467,340    | )    | 
|                                                                                                         |  |      |             |      | 
|                                                                                                         |  |      |             |      | 
|Net
  cash used by investing activities                                                                  |  |      | (10,691,736 | )    | 
|                                                                                                         |  |      |             |      | 
|                                                                                                         |  |      |             |      | 
|Cash flows from financing activities:                                                                    |  |      |             |      | 
|Net change in deposits                                                                                   |  |      | 8,094,948   |      | 
|Net change in
  repurchase agreements                                                                    |  |      | -           |      | 
|Proceeds from sale of
  stock, net of offering costs of $38,055 in 2003                                  |  |      | -           |      | 
|                                                                                                         |  |      |             |      | 
|                                                                                                         |  |      |             |      | 
|Net
  cash provided by financing activities                                                              |  |      | 8,094,948   |      | 
|                                                                                                         |  |      |             |      | 
|                                                                                                         |  |      |             |      | 
|Net increase (decrease) in cash and cash equivalents                                                     |  |      | (1,841,363  | )    | 
|                                                                                                         |  |      |             |      | 
|Cash and cash equivalents at beginning of the period                                                     |  |      | 3,249,225   |      | 
|                                                                                                         |  |      |             |      | 
|                                                                                                         |  |      |             |      | 
|Cash and cash equivalents at end of period                                                               |  | $    | 1,407,862   |      | 
|                                                                                                         |  |      |             |      | 
|                                                                                                         |  |      |             |      | 
|Supplemental schedule of noncash investing
  activities:                                                 |  |      |             |      | 
|Change in unrealized
  gain on securities available for sale, net of tax                                 |  | $    | 64,000      |      | 
|                                                                                                         |  |      |             |      | 
|Supplemental disclosure of cash flow information:                                                        |  |      |             |      | 
|Interest paid                                                                                            |  | $    | 541,438     |      | 
|Taxes paid                                                                                               |  | $    | 122,395     |      | 

See accompanying notes to unaudited
consolidated financial statements.

- 8 -

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COMMUNITY BANKS OF GEORGIA, INC.Notes to Consolidated Financial Statements
(Unaudited)

|(1) | Basis of
  Presentation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | The
  accounting principles followed and the methods of applying these principles
  conform with accounting principles generally accepted in the United States of
  America and with general practices within the banking industry.  In preparing financial statements in
  conformity with GAAP, management is required to make estimates and
  assumptions that affect the reported amounts in the financial statements.
  Actual results could differ significantly from those estimates.  Material estimates common to the banking
  industry that are particularly susceptible to significant change in the near
  term include, but are not limited to, the determinations of the allowance for
  loan losses, the valuation of real estate acquired in connection with or in
  lieu of foreclosure on loans, and valuation allowances associated with
  deferred tax assets, the recognition of which are based on future taxable
  income.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The
  accompanying unaudited financial statements have been prepared in accordance
  with accounting principles generally accepted in the United States of America
  for interim financial information and with the instructions to Form
  10-QSB.  Accordingly, they do not
  include all the information and footnotes required by GAAP for complete
  financial statements. In the opinion of management, all adjustments
  (consisting of normal recurring accruals) considered necessary for a fair
  presentation have been included. Operating results for the three-month period
  ended March 31, 2004 are not necessarily indicative of the results that may
  be expected for the year ended December 31, 2004.  For further information, refer to the financial statements and
  footnotes thereto included in our Form 10-KSB for the fiscal year ended
  December 31, 2003 as filed with the Securities and Exchange Commission..   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(2) | Public
  Offering of Common Stock                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|    | Beginning
  September 30, 2002, we offered for sale at $12.50 per share up to 400,000
  shares of our $5.00 par value common stock in a secondary stock
  offering.  We completed this sale of
  common stock during the first quarter of 2003, selling 400,000 shares and
  receiving proceeds in the amount of $5,000,000, net of offering costs of
  $38,055.  The proceeds of the offering
  is being used to provide necessary capital for future growth.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(3) | Corporate
  Reorganization                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    | On October
  20, 2003, Community Banks of Georgia, Inc. received approval to become a
  one-bank holding company owning 100% of the stock of Community Bank of
  Pickens County.  On December 19, 2003,
  the Company effected a corporate reorganization whereby the shareholders of
  the Bank became shareholders of the Company by exchanging their current
  shares of the Bank for shares of the Company on a one for one basis.  This transaction has been accounted for as
  a corporate reorganization by entities under common control, whereby the
  Company has been capitalized as of the effective date of the reorganization
  based on the historical financial statements of the Banks December 31, 2002
  financial statements.                                                                                                                                                                                                

- 9 -

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COMMUNITY BANKS OF GEORGIA, INC.Notes to Consolidated Financial Statements
(Unaudited)

|(4) | Net Earnings
  Per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | Basic
  earnings per share are based on the weighted average number of common shares
  outstanding during the period while the effects of potential common shares
  outstanding during the period are included in diluted earnings per share. The
  presentation of earnings per share is required on the face of the statement
  of operations with and without the dilutive effects of potential common stock
  issuances from instruments such as options, convertible securities, and
  warrants.

| | For the Three Months Ended March 31, 2004:       |  | Net Earnings |   | Weighted
  Average
  Common Shares |  | Per Share
  Amount | 
| | ------------------------------------------------ |  | ------------ | - | ---------------------------------- |  | ------------------ | 
| |                                                  |  |              |   |                                    |  |                    | 
| |                                                  |  |              |   |                                    |  |                    | 
| | Basic
  earnings per share                       |  |              | $ | 467,565                            |  |                    | 
| | Effect of
  dilutive securities  stock warrants |  |              |   | -                                  |  |                    | 
| |                                                  |  |              |   |                                    |  |                    | 
| |                                                  |  |              |   |                                    |  |                    | 
| | Diluted
  earnings per share                     |  |              | $ | 467,565                            |  |                    | 
| |                                                  |  |              |   |                                    |  |                    | 

| | For the Three Months Ended March 31, 2003:       |  | Net Earnings |   | Weighted
  Average
  Common Shares |  | Per Share
  Amount | 
| | ------------------------------------------------ |  | ------------ | - | ---------------------------------- |  | ------------------ | 
| |                                                  |  |              |   |                                    |  |                    | 
| |                                                  |  |              |   |                                    |  |                    | 
| | Basic earnings
  per share                       |  |              | $ | 203,937                            |  |                    | 
| | Effect of
  dilutive securities  stock warrants |  |              |   | -                                  |  |                    | 
| |                                                  |  |              |   |                                    |  |                    | 
| |                                                  |  |              |   |                                    |  |                    | 
| | Diluted
  earnings per share                     |  |              | $ | 203,937                            |  |                    | 
| |                                                  |  |              |   |                                    |  |                    | 

- 10 -

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|Item 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
  RESULTS OF OPERATIONS
|------- | ---------------------------------------------------------------------------------------

For the Three Months Ended March 31, 2004

Financial Condition

Total
assets at March 31, 2004 were $128,618,000 representing a $9,260,000 (7.8%)
increase from December 31, 2003. Deposits increased $8,945,000 (7.7%) from
December 31, 2003, while loans increased $7,911,000 (8.8%).

The
allowance for loan losses at March 31, 2004 totaled $1,200,000, representing
1.2% of total loans compared to the December 31, 2003 total of $1,163,000,
which represented 1.23% of total loans. Cash and cash equivalents decreased
$1,841,000 from December 31, 2003, which is discussed in more detail in
Liquidity.

There were
no related party loans or other loans which were considered nonperforming at
March 31, 2004.

Results of Operations

Overall
Year to Date.Our results for the three months ended
March 31, 2004, when compared to the three months ended March 31, 2003,
reflected the continued growth of our earning assets which resulted in
increased net interest income. Total revenues, which are comprised of interest
income and noninterest income, for the three months ended March 31, 2004 were
$2.0 million, compared to total revenues for the three months ended March
31, 2003 of $1.4 million. The provision for loan losses was $40,000 for the
first three months of 2004 compared to $116,000 in the first three months of
2003.  Noninterest expenses were
$636,000 for the three months ended March 31, 2004, compared to $513,000 for
the three months ended March 31, 2003. 
On a pre-tax basis net earnings for the three months ended March 31,
2004 were $754,000 compared to $322,000 for the same 2003 period.  Net income for the three months ended March
31, 2004 was $468,000 compared to 
$204,000 for the three months ended March 31, 2003.

For
the three months ended March 31, 2004, our yield on earning assets was 5.96%
while the cost of funding sources was 2.24%. 
While the net interest spread was 3.72%, net interest margin, which
considers the effect of non-interest bearing deposits, was 4.42%.  For the three months ended March 31, 2003,
our yield on earning assets was 7.50% while the cost of funding sources was
2.89%.  While net interest spread was 4.61%,
net interest margin, which considers the effect of non-interest bearing
deposits, was 4.95%.   Our overall
results of operations are materially consistent with the year to date
planned/budgeted operations.

Net
Interest Income.For the three months ended March 31,
2004, we reported net interest income of $1,312,000, a  49.3% increase over the $879,000 reported
for the period ended March 31, 2003. This increase in net interest income is
attributable to the growth of our balance sheet in interest earning assets,
primarily loans.

Provision
for Loan Losses. We provided $40,000 for the three
months ended March 31, 2004 to the allowance for loan losses for potential
problem loans, compared to $116,000 for the corresponding period in 2003, to
adequately provide for estimated future losses which may arise in our growing
loan portfolio. The decrease in the amount provided in 2004 compared to the
same period in 2003 is due to the reversal of a specific reserve for an
impaired loan that was paid off during the quarter.

Noninterest
Income. Noninterest income consists predominately of
service charges on deposit accounts, and other miscellaneous revenues and
fees.  Noninterest income may tend to
have more fluctuations on a quarter to quarter basis than does net interest
income, since net interest income is the result of interest income from the
growth of earning assets offset by interest expense from interest-bearing
liabilities.

For the
three months ended March 31, 2004, our noninterest income was $118,000, which
was an increase of $46,000, or 63.9%, when compared to the three months ended
March 31, 2003.  Our increase in
noninterest income is primarily the result of increased service charges on a
growing transaction deposit base, as well as income from bank owned life
insurance.  Noninterest income
comprised  5.8% of our total revenues
(interest income plus noninterest income) for the first three months of
2004.

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Noninterest
expense.  Noninterest expense
consists of salaries and employee benefits, equipment and occupancy expenses,
and other operating expenses.  For the
three months ended March 31, 2004, we incurred approximately $ 636,000 in
noninterest expenses compared to $513,000 for the three months ended March 31,
2003.  Our primary component of
noninterest expense is salaries and employee benefits, which is the primary
component of the increase in noninterest expense due to an increase in employees
to service our growing customer base.  In addition to the increase in salaries and employee benefits, we
also incurred additional occupancy expenses related to depreciation of the main
office, as well as additional outside service fees.

Capital

The
following tables present the Banks regulatory capital position at March 31,
2004. The Companys consolidated capital ratios are consistent with the Banks
capital ratios.

Risk-Based
Capital Ratios

|                 | Tier 1 Tangible Capital, Actual                            |  |  | 12.36 | %
|---------------- | ---------------------------------------------------------- |  |  | ----- | -
|                 | Tier 1
  Tangible Capital minimum requirement              |  |  | 4.00  | %
|                 |                                                            |  |  |       |  
|                 |                                                            |  |  |       |  
|                 | Excess                                                     |  |  | 8.36  | %
|                 |                                                            |  |  |       |  
|                 |                                                            |  |  |       |  
|                 | Total
  Capital, Actual                                    |  |  | 13.60 | %
|                 | Total
  Capital minimum requirement                        |  |  | 8.00  | %
|                 |                                                            |  |  |       |  
|                 |                                                            |  |  |       |  
|                 | Excess                                                     |  |  | 5.60  | %
|                 |                                                            |  |  |      
|                 |                                                            |  |  |       |  
|Leverage
  Ratio |                                                            |  |  |      
|                 |                                                            |  |  |       |  
|                 | Tier 1
  Tangible Capital to adjusted total assets, Actual |  |  | 9.65  | %
|                 | Minimum
  leverage requirement                             |  |  | 4.00  | %
|                 |                                                            |  |  |       |  
|                 |                                                            |  |  |       |  
|                 | Excess                                                     |  |  | 5.65  | %
|                 |                                                            |  |  |       |  

Liquidity

We must
maintain, on a daily basis, sufficient funds to cover the withdrawals from
depositors accounts and to supply new borrowers with funds. To meet these
obligations, we keep cash on hand, maintain account balances with its
correspondent banks, and purchase and sell federal funds and other short-term
investments. Asset and liability maturities are monitored in an attempt to meet
liquidity needs. It is our policy to monitor our liquidity to meet regulatory
requirements and their local funding requirements. Management believes the
current level of liquidity is adequate to meet our needs.

Primary
sources of liquidity for us are a stable base of deposits, scheduled repayments
on our loans, and interest and maturity of its investments.  We have classified all securities as
available-for-sale.  If necessary, we
have the ability to sell a portion of its investment securities to manage its
interest rate sensitivity gap or liquidity. 
We may also use cash and due from banks and federal funds sold to meet
liquidity needs.

We maintain
relationships with correspondent banks that can provide funds to it on short
notice, if needed. Presently, we have an arrangement with The Bankers Bank for
short term unsecured advances up to $2,500,000.

Cash and
cash equivalents decreased $1,841,000 from December 31, 2003. Cash inflows from
financing activities totaled $8,095,000, attributable to net deposit increases
during 2004.

During
2004, cash provided by operating activities totaled $755,000, while investing
activities used $10,692,000, of which investment security purchases totaled
$2,384,000 and loans to customers, net of repayments, totaled $7,871,000.

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Item 3.  CONTROLS AND PROCEDURES

Our
management, including the Chief Executive Officer and Chief Financial Officer,
supervised and participated in an evaluation of our disclosure controls and
procedures (as defined by Exchange Act Rule 13a-15). Based on, and as of the
date of, March 31, 2004, our Chief Executive Officer and Chief Financial
Officer have concluded that our disclosure controls and procedures were
effective in accumulating and communicating information to management,
including the Chief Executive Officer and Chief Financial Officer, information
required to be included in our reports that are filed or submitted by us as
appropriate to allow timely decisions regarding disclosures of that information
under the Securities and Exchange Commissions rules and forms and that our
disclosure controls and procedures are designed to ensure that such information
is recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commissions rules and forms.

There have
been no significant changes in our internal controls or, to managements
knowledge,  in other factors that could
significantly affect those internal controls subsequent to the date of their
evaluation, and there have been no corrective actions with respect to
significant deficiencies or material weaknesses.

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COMMUNITY BANKS OF GEORGIA, INC.

PART II.  OTHER INFORMATION

Item
1.     LEGAL PROCEEDINGS                None

Item
2.     CHANGES IN SECURITIES AND PURCHASES OF
EQUITY SECURITIES                None

Item
3.     DEFAULTS UPON SENIOR SECURITIES                None

Item
4.     SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS                None

Item
5.     OTHER INFORMATION                None

Item
6.     EXHIBITS AND REPORTS ON FORM 8-K

(a)  Exhibits

| | Exhibit
  Number | Description                                                                                                                                          
| | ---------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------
| | 31.1             | Certification by Chief Executive Officer pursuant to
  Rule 12a  14(a) / 15(d)  14(a).                                                             
| | 31.2             | Certification by Chief Financial Officer pursuant to
  Rule 12a  14(a) / 15(d)  14(a).                                                             
| | 32.1             | Certification by Chief Executive Officer pursuant to
  18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002
| | 32.2             | Certification by Chief Financial Officer pursuant to
  18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
  Sarbanes-Oxley Act of 2002

(a)  Reports on Form 8-K

There
were no Form 8-Ks filed during the fiscal quarter ended March 31, 2004.

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COMMUNITY BANKS OF GEORGIA, INC.

SIGNATURES

In
accordance with the requirements of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

| | COMMUNITY BANKS OF GEORGIA, INC. |                                             
| | -------------------------------- | --------------------------------------------
| |                                  |                                             
| |                                  |                                             
| | By:                              | /s/ John Trammell                           
| |                                  |                                             
| |                                  | John Trammell, President/CEO                
| |                                  | (Principal Executive Officer)               
| |                                  |                                             
| | Date:                            | May 13, 2004                                
| |                                  |                                             
| |                                  |                                             
| |                                  |                                             
| | By:                              | /s/ Frank Eubanks                           
| |                                  |                                             
| |                                  | Frank Eubanks, CFO                          
| |                                  | (Principal Financial and Accounting Officer)
| |                                  |                                             
| | Date:                            | May 13, 2004                                

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