SECURITIES AND EXCHANGE COMMISSION
                        Washington, D. C. 20549

                               FORM 10-K

          Annual Report Pursuant to Section 13 or 15(d) of the
                    Securities Exchange Act of 1934

              For the fiscal year ended December 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
 incorporation or organization)         Number)

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

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

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:  None

      Indicate  by check mark whether the registrant (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.

   Yes     X          No

      Indicate by check mark if disclosure of delinquent filers pursuant
to  Item 405 of Regulation 5-K is not contained herein and will  not  be
contained to the best of registrant's knowledge in definitive  proxy  on
information  statements incorporated by reference in Part  III  of  this
Form 10-K or any amendment to this Form 10-K. (X)

      State  the  aggregate  market value of the voting  stock  held  by
nonaffiliates of the registrant:  There is no established market for the
outstanding common stock of the registrant.

       Indicate  the  number  of  shares  outstanding  of  each  of  the
registrant's classes of common stock, as of the most recent  practicable
date.

              Class                        Outstanding at  February  29,
2000
Common stock $1.00 par value per                    399,500
 Share
                   DOCUMENTS INCORPORATED BY REFERENCE

     List hereunder the following documents if incorporated by reference
and the part of the Form 10-K into which the documents are incorporated:
(1)  any  annual  reports to security holders; (2) any prospectus  filed
pursuant to Rule 424(b) or (c) under the Securities Act of 1933.  None



                                 PART 1.


SPECIAL CAUTIONARY NOTICE REGARDING FORWARD LOOKING INFORMATION

      Statements and financial discussion and analysis contained in this
Annual  Report on Form 10-K that are not historical facts  are  forward-
looking  statements made pursuant to the safe harbor provisions  of  the
Private  Securities  Litigation Reform  Act  of  1995.   Forward-looking
statements   describe  the  Company's  future  plans,   strategies   and
expectations, are based on assumptions and involve a number of risks and
uncertainties,  many  of  which are beyond the Company's  control.   The
important  factors that could cause actual results to differ  materially
from the forward-looking statements include, without limitation:

       changes in interest rates and market prices, which could reduce the
       Company's  net  interest  margins, asset valuations  and  expense
       expectations;

       changes in the levels of loan prepayments and the resulting effects
       on the value of the Company's loan portfolio;

       changes in local economic and business conditions which adversely
       affect the Company's customers and their ability to transact profitable
       business with the Company, including the ability of its borrowers to
       repay their loans according to their terms or a change in the value of
       the related collateral;

       increased competition for deposits and loans adversely affecting
       rates and terms;

       the  timing, impact and other uncertainties of the  Company's
       potential future acquisitions, including the Company's ability to
       identify suitable future acquisition candidates, the success or failure
       in the integration of their operations, and the Company's ability to
       enter new markets successfully and capitalize on growth opportunities;

       increased  credit risk in the Company's assets and  increased
       operating risk caused by a material change in commercial, consumer
       and/or real estate loans as a percentage of the total loan portfolio;

       the failure of assumptions underlying the establishment of and
       provisions made to the allowance for loan losses;

       changes in the availability of funds resulting in increased costs
       or reduced liquidity;

       changes in the Company's ability to pay dividends on its Common
       Stock;

       increased asset levels and changes in the composition of assets and
       the resulting impact on the Company's capital levels and regulatory
       capital ratios;

                                       1


       the  Company's ability to acquire, operate and maintain  cost
       effective and efficient systems without incurring unexpectedly difficult
       or expensive but necessary technological changes;

       the loss of senior management or operating personnel and  the
       potential  inability  to hire qualified personnel  at  reasonable
       compensation levels;

       changes  in  statutes  and government  regulations  or  their
       interpretations applicable to bank holding companies and the Company's
       present and future banking and other subsidiaries, including changes in
       tax requirements and tax rates;

       all written or oral forward-looking statements attributable to the
       Company are expressly qualified in their entirety by these cautionary
       statements.

Item 1.  Business

      South Banking Company (the "Registrant") is a business corporation
organized  at the direction of Alma Exchange Bank & Trust ("Alma  Bank")
and Citizens State Bank ("Citizens Bank") (collectively, the "Banks") in
1980  under  the Georgia Business Corporation Code.  It  was  formed  to
obtain  all  the issued and outstanding shares of Common  Stock  of  the
Banks.  Pursuant to the terms and provisions of a Plan of Reorganization
and  Agreement of Merger, dated as of January 13, 1981 and  approved  by
the  shareholders  of  the  Banks  on June  24,  1981,  the  Banks  were
reorganized into a holding company structure by merging the  Banks  with
wholly-owned  subsidiaries  of  the Registrant,  which  transaction  was
consummated on July
28,  1981.  In connection with those mergers, the outstanding shares  of
Common  Stock of the Banks were converted into shares of the  Registrant
at  specified  ratios and the Banks became wholly-owned subsidiaries  of
the Registrant.  Pursuant to the terms and provision of an agreement  of
merger  dated  June 12, 1989 between South Banking and  Georgia  Peoples
Bankshares,  Inc.  and approved by shareholders of  Georgia  Peoples  on
February  26,  1990,  Georgia  Peoples Bankshares  and  its  subsidiary,
Peoples  State  Bank,  were  merged  into  South  Banking  Company.   In
connection  with  the merger, the outstanding shares of Georgia  Peoples
Bankshares  were  converted into shares of the Registrant  at  specified
ratios.   During  1993,  South  Banking  Company  formed  Banker's  Data
Services,  Inc.  ("Banker's Data") for the purpose of handling  all  the
computer  functions  of  the banks.  Operations began  in  April,  1994.
South  Banking entered into an agreement in October of 1995  to  acquire
all  the  stock  of  Pineland State Bank ("Pineland  Bank")  in  Metter,
Georgia.  On January 11, 1996, the transaction was completed.

      During 1998, Alma Bank formed South Financial Products, Inc. (SFP)
as  a vehicle to enter the financial services market and provide service
to  its  customers.   South Financial Products, Inc. offers  a  complete
array  of  investments  options including stocks, bonds,  mutual  funds,
financial and retirement planning, tax advantaged investments and  asset
allocations.   SFP  offers securities through Unvest, a  North  Carolina
based  independent clearing firm.  SFP is licensed and regulated through
the  National  Association  of Securities Dealers,  the  Securities  and
Exchange Commission and various state and federal banking authorities.

                                      2


The  maturing  of the baby boomer generation is creating  a  market  for
asset management services. The Company expects growth in this department
and  anticipates  that resulting fees will provide a  stable  stream  of
income.

The Banks

      The Banks operate full service banking business in Bacon, Appling,
Candler  and Camden Counties, Georgia, providing such customary  banking
services as checking and savings accounts, various other types  of  time
deposits,  safe deposit facilities and money transfers.  The Banks  also
finance  commercial  and  agricultural transactions,  make  secured  and
unsecured  loans,  and  provide   other  financial  services    to   its
customers.  The Banks do not conduct trust activities. On  December  31,
1998, Alma Bank and Peoples Bank ranked, on the basis of total deposits,
as  the  smaller of the two banks in Bacon and Appling Counties and  the
224th  and  267nd  largest banks among 349 banks in  Georgia.   Citizens
Bank,  one of five banking operations in Camden County, ranked the 324th
largest bank among 349 banks in Georgia; and Pineland Bank, one of three
banking  operations  in Metter, Georgia, ranked the 300th  largest  bank
among  349  banks  in  Georgia,  Sheshunoff's  Banks  of  Georgia  (1999
edition).

      The  Banks  make and service both secured and unsecured  loans  to
individuals,  firms,  and corporations.  Commercial  lending  operations
include  various types of credit for the Banks' customers.   The  Banks'
installment loan departments make direct loans to individuals and, to  a
limited  extent,  purchase installment obligations from  retailers  both
with  and  without recourse.  The Banks make a variety  of  residential,
industrial,  commercial, and agricultural loans secured by real  estate,
including  interim  construction financing.  Each bank  has  established
desired mixes of real estate, commercial, agricultural, and consumer
lending depending upon activities within the local area.  The ratios are
established  in accordance with risk diversification goals.   All  banks
are  located  in  small rural areas with low to moderate income  levels.
The  banks  primarily look to real estate lending as a major portion  of
portfolio.  Real estate values have remained fairly stable over the past
few years to give stability to lending activities.  Loan to value ratios
are  maintained in the 60% to 80% level for various real estate lending.
Loan  to  value  ratio of non real estate loans vary from  50%  for  the
inventory or receivables to 90% for vehicles and other consumer lending.
The   economy  of  the  area  remains  fairly  constant  without   great
fluctuation.  The national economy will effect the area primarily in the
timber and other agricultural products; however, the movement is not  as
wide  locally  as national movement indicates.  Citizens Bank,  Pineland
Bank and Peoples Bank act as agents for another bank in offering "Master
Card"  and "VISA" credit cards to its customers and does not assume  the
credit  risk  on  these  transactions.  Alma Bank offers  "Master  Card"
credit cards to its customers.

      At  December  31, 1999, the Banks had correspondent  relationships
with  15  other  commercial  banks.  These correspondent  banks  provide
certain services to the banks such as processing checks and other items,
buying   and  selling  federal  funds,  handling  money  transfers   and
exchanges,   shipping  coins  and  currency,  providing   security   and
safekeeping  of  funds  or other valuable items and  furnishing  limited
management  information and advice.  As compensation for  the  services,
the   Banks  maintain  certain  balances  with  its  correspondents   in
noninterest bearing accounts.


                                     3

Employees

      On December 31, 1999, the  Registrant and its  subsidiaries had 91
full-time and 11 part-time employees.  The Registrant is not a party  to
any collective bargaining agreement and employee relations are deemed to
be good.

Competition

      The  Banking  business is highly competitive.  The  Banks  compete
primarily  with  other  commercial banks  operating  in  Bacon,  Camden,
Appling,  and  Candler Counties.  In addition, the  Banks  compete  with
other  financial institutions, including savings and loan  associations,
credit  unions and finance companies and, to a lesser extent,  insurance
companies  and certain governmental agencies.  The banking  industry  is
also   experiencing  increased  competition  for  deposits   from   less
traditional sources such as money-market mutual funds.

Customers

      The majority of the Banks' customers are individuals and small  to
medium-sized  businesses headquartered within  its  service  area.   The
Banks
are  not  dependent upon a single or a very few customers, the  loss  of
which  would  have a material adverse effect on the Banks.  No  customer
accounts  for  more than 5% of the Banks' total deposits  at  any  time.
Management does not believe that the Banks' loan portfolio is  dependent
on  a single customer or group of customers concentrated in a particular
industry  whose loss or insolvency would have a material adverse  effect
on the Banks.

Systems

  During 1999, the Company completely tested all of its core application
systems  for Year 2000 readiness.  For further information,  please  see
the "General" heading in Managements' Discussion and Analysis.

Monetary Policies

      The  results  of  operations of the Banks, and  therefore  of  the
Registrant,  are  affected by credit policies of  monetary  authorities,
particularly the Board of Governors of the Federal Reserve  System  (the
"Board  of  Governors"), even though the Banks are not  members  of  the
Federal Reserve.

      The instruments of monetary policy employed by the Federal Reserve
include  open  market  operations in U.  S.  Government  securities  and
changes in the discount rate on member bank borrowing changes in reserve
requirements  against  member  bank  deposits.   In  view  of   changing
conditions in the national economy and in the money markets, as well  as
the  effect of action by monetary and fiscal authorities, including  the
Federal Reserve System, no prediction can be made as to possible  future
changes  in interest rates, deposit levels, loan demand or the  business
and earnings of the Banks.

Supervision and Regulations

      The Registrant is a bank holding company within the meaning of the
Bank  Holding  Company  Act  of 1956, as amended  (the  "Act"),  and  is
required
                                      4


to  register  as  such with the Board of Governors.  The  Registrant  is
required  to file with the Board of Governors an annual report and  such
other  information  as may be required to keep the  Board  of  Governors
informed with respect to the Registrant's compliance with the provisions
of  the  Act.  The Board of Governors may also make examinations of  the
Registrant and its subsidiaries from time to time.

      The  Act  requires every bank holding company to obtain the  prior
approval  of  the Board of Governors before it may acquire substantially
all  the assets of any bank or ownership or control of any voting shares
of  any  bank,  if,  after such acquisition, it would  own  or  control,
directly  or indirectly, more than five percent of the voting shares  of
such bank.  In no case, however, may the Board of Governors approve  the
acquisition  by the Registrant of the voting shares of any bank  located
outside  Georgia, unless such acquisition is specifically authorized  by
the laws of the state in which the bank to be acquired is located.

      In  addition, a bank holding company is generally prohibited  from
engaging in or acquiring direct or indirect control of voting shares  of
any  company  engaged in nonbanking activities.  One  of  the  principal
exceptions to this prohibition is for activities found by the  Board  of
Governors, by order or regulation, to be so closely related to  banking,
managing or controlling banks as to be a proper incident thereto.   Some
of  the  activities  that  the  Board of  Governors  has  determined  by
regulation  to be closely related to banking are:  making  or  servicing
loans  and  certain types of leases; performing certain data  processing
services;  acting as fiduciary, investment or financial advisor;  making
investments  in corporations or projects designed primarily  to  promote
community welfare.

      In  January, 1989, the Board of Governors issued final regulations
which  implement  risk-based rules for assessing bank and  bank  holding
company  capital  adequacy.  The regulations revise  the  definition  of
capital  and establish minimum capital standards in relation  to  assets
and off-balance sheet exposures, as adjusted for credit risk.

Payment of Dividends and Other Restrictions

       South   is  a  legal  entity  separate  and  distinct  from   its
subsidiaries.  There are various legal and regulatory limitations  under
federal  and  state law on the extent to which South's subsidiaries  can
pay dividends or otherwise supply funds to South.

     The principal source of South's cash revenues is dividends from its
subsidiaries.   The prior approval of the FRB or the Georgia  Department
of  Bankers,  as  the  case may be, is required  if  the  total  of  all
dividends  declared  by  any state member bank of  the  Federal  Reserve
System  in any calendar year exceeds the Bank's net profits (as defined)
for  that  year combined with its retained net profits for the preceding
two calendar years, less any required transfers to surplus or a fund for
the  retirement of any preferred stock.  The relevant federal and  state
regulatory agencies also have authority to prohibit a state member  bank
or  bank  holding company, which would include South and  the Subsidiary
Banks  from  engaging in what, in the opinion of such  regulatory  body,
constitutes  an unsafe or unsound practice in conducting  its  business.
The  payment of dividends could, depending upon the financial  condition
of  the  subsidiary, be deemed to constitute such an unsafe  or  unsound
practice.

                                     5

     Under Georgia law, the prior approval of the DBF is required before
any  cash dividends may be paid by a state bank if: (i) total classified
assets  at  the most recent examination of such bank exceed 80%  of  the
equity  capital (as defined, which includes the reserve for loan losses)
of  such  bank;  (ii)  the  aggregate amount of  dividends  declared  or
anticipated to be declared in the calendar year exceeds 50% of  the  net
profits (as defined) for the previous calendar year; or (iii) the  ratio
of equity capital to adjusted total assets is less than 6%.

     In addition, the Banks are subject to limitations under Section 23A
of  the  Federal Reserve Act with respect to extensions  of  credit  to,
investments in, and certain other transactions with South.  Furthermore,
loans  and  extensions of credit are also subject to various  collateral
requirements.

Capital Adequacy

      The FRB has adopted risk-based capital guidelines for bank holding
companies.  The minimum ratio of total capital ("Total Capital") to risk-
weighted  assets  (including certain off-balance sheet  items,  such  as
standby letters of credit) is 8%.  At least half of the Total Capital is
to  be  composed  of  common stock, minority  interests  in  the  equity
accounts of consolidated subsidiaries, noncumulative perpetual preferred
stock  and a limited amount of perpetual preferred stock, less  goodwill
("Tier  I  Capital").  The remainder may consist of  subordinated  debt,
other preferred stock and a limited amount of loan loss reserves.

      In  addition,  the  FRB  has established  minimum  leverage  ratio
guidelines for bank holding companies.  These guidelines provide  for  a
minimum  ratio  of  Tier I Capital to total assets, less  goodwill  (the
"Leverage  Ratio")  of 3% for bank holding companies that  meet  certain
specified  criteria,  including  those  having  the  highest  regulatory
rating.   All  other bank holding companies generally  are  required  to
maintain  a Leverage Ratio of at least 3% plus an additional cushion  of
100  to 200 basis points.  The guidelines also provide that bank holding
companies  experiencing internal growth or making acquisitions  will  be
expected  to maintain strong capital positions substantially  above  the
minimum  supervisory levels without significant reliance  on  intangible
assets.   Furthermore, the FRB has indicated that  it  will  consider  a
"tangible Tier I capital leverage ratio" (deducting all intangibles) and
other  indications  of  capital strength  in  evaluating  proposals  for
expansion or new activities.

      Effective  December  19, 1992, a new Section  38  to  the  Federal
Deposit   Insurance   Act  implemented  the  prompt  corrective   action
provisions  that  Congress  enacted as a part  of  the  Federal  Deposit
Insurance  Corporation Improvement Act of 1991 (the  "1991  Act").   The
"prompt corrective action" provisions set forth five regulatory zones in
which  all  banks  are placed largely based on their capital  positions.
Regulators are permitted to take increasingly harsh action as  a  Bank's
financial condition  declines.
Regulators  are also empowered to place in receivership or  require  the
sale  of  a bank to another depository institution when a bank's capital
leverage ratio reaches two percent.  Better capitalized institutions are
generally subject to less onerous regulation and supervision than  banks
with less amounts of capital.

     The FDIC has adopted regulations implementing the prompt corrective
action provisions of the 1991 Act, which place financial institutions in

                                       6
the  following five categories based upon capitalization ratios:  (i)  a
"well  capitalized" institution has a total risk-based capital ratio  of
at  least  10%, a Tier I risk-based ratio of at least 6% and a  leverage
ratio of at least 5%; (ii) an "adequately capitalized" institution has a
total risk-based capital ratio of at least 8%, a Tier I risk-based ratio
of  at  least  4%  and  a  leverage ratio  of  at  least  4%,  (iii)  an
"undercapitalized" institution has a total risk-based capital  ratio  of
under  8%, a Tier I risk-based ratio of under 4% or a leverage ratio  of
under  4%;  (iv)  a "significantly undercapitalized" institution  has  a
total risk-based capital ratio of under 6%, a Tier I risk-based ratio of
under  3%  or  a  leverage  ratio of under 3%;  and  (v)  a  "critically
undercapitalized"  institution  has a leverage  ratio  of  2%  or  less.
Institutions  in any of the three undercapitalized categories  would  be
prohibited  from  declaring dividends or making  capital  distributions.
The  FDIC  regulations  also establish procedures for  "downgrading"  an
institution  to  a  lower capital category based on supervisory  factors
other than capital.

      The  downgrading of an institution's category is automatic in  two
situations:  (i) whenever an otherwise well-capitalized  institution  is
subject  to  any written capital order or directive; and (ii)  where  an
undercapitalized  institution fails to submit  or  implement  a  capital
restoration  plan  or  has its plan disapproved.   The  Federal  banking
agencies  may  treat  institutions in the  well-capitalized,  adequately
capitalized and undercapitalized categories as if they were in the  next
lower  level  based on safety and soundness considerations  relating  to
factors other than capital levels.

       All   insured   institutions  regardless  of   their   level   of
capitalization   are  prohibited  by  the  Federal   Deposit   Insurance
Corporation  Improvement Act of 1991 (the "FDIC Act")  from  paying  any
dividend or making any other kind of capital distribution or paying  any
management  fee  to any controlling person if following the  payment  or
distribution  the  institution  would be  undercapitalized.   While  the
prompt  corrective  action  provisions  of  the  FDIC  Act  contain   no
requirements   or   restrictions  aimed   specifically   at   adequately
capitalized  institutions, other provisions of  the  FDIC  Act  and  the
agencies'   regulations  relating  to  deposit  insurance   assessments,
brokered deposits and interbank liabilities treat adequately capitalized
institutions less favorably than those that are well-capitalized.

     Under the FDIC's regulations, all of the Subsidiary Banks are "well
capitalized" institutions.

      The  written  policies of the Georgia Department  of  Banking  and
Finance  (the  "DBF")  require that state  banks  in  Georgia  generally
maintain a minimum ratio of primary capital to total assets of 6.0%.  At
December 31, 1999, the Banks were in compliance with these requirements.
In  addition,  the  DBF  is  likely to compute  capital  obligations  in
accordance with the risk-based capital rules while continuing to require
a minimum absolute level of capital.

      It  is not anticipated that such minimum capital requirements will
affect  the  business operations of the Banks.  However, the  Board,  in
connection with granting approval for bank holding companies to  acquire
other  banks  and  bank  holding companies or to engage  in  non-banking
activities, requires bank holding companies to maintain tangible capital
ratios at approximate peer group levels.  This requirement can result in


                                      7

a  bank holding company maintaining more capital than it would otherwise
maintain.  At the present time, South Banking Company's tangible primary
capital ratios are equal or above their peer group level.

     The laws of Georgia require annual registration with the DBF by all
Georgia  bank holding companies.  Such registration includes information
with  respect  to the financial condition, operations and management  of
intercompany  relationships  of  the  bank  holding  company   and   its
subsidiaries and related matters.  The DBF may also require  such  other
information  as  is  necessary  to  keep  informed  as  to  whether  the
provisions  of  Georgia  law  and  the regulations   and  orders  issued
thereunder by the DBF have been in compliance with and the DBF may  make
examinations  of  the  bank  holding company and  each  bank  subsidiary
thereof.

      The banks are also subject to examination by the DBF and the FDIC.
The DBF regulates and monitors all areas of the operations of the banks,
including  reserves, loans, mortgages, issuances of securities,  payment
of  dividends, interest rates, and establishment of branches.   Interest
and certain other charges collected or contracted for by the Banks are
also  subject  to  state usury laws and certain federal laws  concerning
interest rates.  The Banks' deposits are insured by the FDIC up  to  the
maximum permitted by law.

      Legislation has passed that would allow banks to branch  statewide
subject  to  certain restrictions.  This law became  effective  July  1,
1996.

     Georgia banking laws permit bank holding companies to own more than
one  bank,  subject to the prior approval of the Georgia  Department  of
Banking  and  Finance; thereby, in effect, permitting statewide  banking
organizations.   Such  banks  may be acquired  as  subsidiaries  of  the
Registrant or merged into its existing bank subsidiaries.

Support of Subsidiary Banks

      Under  the  FRB policy, South is expected to act as  a  source  of
financial strength to, and to commit resources to support, each  of  the
Subsidiary  Banks.  This support may be required at times  when,  absent
such  FRB policy, South may not be inclined to provide it.  In the event
of  a  bank  holding company's bankruptcy, any commitment  by  the  bank
holding  company  to a Federal bank regulatory agency  to  maintain  the
capital  of a subsidiary bank will be assumed by the bankruptcy  trustee
and entitled to a priority of payment.

      As  a  result  of  the enactment of Section 206 of  the  Financial
Institutions Reform, Recovery and Enforcement Act ("FIRREA")  on  August
9, 1989, a depository institution insured by the FDIC can be held liable
for  any loss incurred by, or reasonably expected to be incurred by, the
FDIC  after  August  9, 1989 in connection with (i)  the  default  of  a
commonly  controlled  FDIC-insured depository institution  or  (ii)  any
assistance  provided by the FDIC to any commonly controlled FDIC-insured
depository  institution "in danger of default" is defined  generally  as
the  existence of certain conditions indicating that a default is likely
to occur in the absence of regulator assistance.

FDIC Insurance Assessments

      The  Subsidiary  Banks  are  subject  to  FDIC  deposit  insurance
assessments for the  Bank Insurance  Fund (the "BIF").  Since  1989, the

                                     8


annual FDIC deposit insurance assessments increased from $.083 per  $100
of  deposits  to  a minimum level of $.23 per $100, an increase  of  177
percent.   The  FDIC implemented a risk-based assessment system  whereby
banks  are  assessed on a sliding scale depending on their placement  in
nine separate supervisory categories, from $.23 per $100 of deposits for
the  healthiest  banks (those with the highest capital, best  management
and  best overall condition) to as much as $.31 per $100 of deposits for
the  less-healthy  institutions, for an average of  $.259  per  $100  of
deposits.

      On  August 8, 1995, the FDIC lowered the BIF premium for "healthy"
banks  83%  from $.23 per $100 in deposits to $.04 per $100 in deposits,
while  retaining  the $.31 level for the riskiest  banks.   The  average
assessment  rate was therefore reduced from $.232 to $.044 per  $100  of
deposits.  The new rate took effect on September 29, 1995.  On  November
14,  1995,  the  FDIC again lowered the BIF premium for "healthy"  banks
from   $.04  per  $100  of  deposits  to  zero  for  the  highest  rated
institutions  (92%  of the industry).  All of the Subsidiary  Banks  are
insured under the BIF fund and it is expected that they will be required
to pay only the legally required annual minimum payments during 1998.

Recent Legislative and Regulatory Action

      On  April  19,  1995,  the four Federal bank  regulatory  agencies
adopted  revisions  to  the  regulations  promulgated  pursuant  to  the
Community  Reinvestment  Act (the "CRA"),  which  are  intended  to  set
distinct  assessment standards for financial institutions.  The  revised
regulations  contain three evaluation tests: (i) a  lending  test  which
will compare the
institution's market share of loans in low- and moderate-income areas to
its market share of loans in its entire service area and the  percentage
of  a  bank's  outstanding  loans to low- and moderate-income  areas  or
individuals; (ii) a services test which will evaluate the provisions  of
services  that promote the availability of credit to low- and  moderate-
income  areas;  and  (iii) an investment test, which  will  evaluate  an
institution's record of investments in organizations designed to  foster
community   development,  small-  and  minority-owned  businesses,   and
affordable housing lending, including state and local government housing
or  revenue bonds.  The regulation is designed to reduce some  paperwork
requirements   of  the  current  regulations  and  provide   regulators,
institutions, and community groups with a more objective and predictable
manner   with  which  to  evaluate  the  CRA  performance  of  financial
institutions.   The rule became effective on January 1, 1996,  at  which
time evaluation under streamlined procedures were scheduled to begin for
institutions with assets of less than $250 million.

      These  regulations have had little or no effect on South  and  the
Subsidiary  Banks.   Congress  and various Federal  agencies  (including
Housing  and  Urban  Development, the Federal Trade Commission  and  the
Department   of   Justice)   (collectively,  the   "Federal   Agencies")
responsible  for implementing the nation's fair lending laws  have  been
increasingly concerned that prospective home buyers and other  borrowers
are  experiencing discrimination in their efforts to obtain  loans.   In
recent years, the Department of Justice has filed suit against financial
institutions, which it determined had discriminated, seeking  fines  and
restitution  for  borrowers who allegedly suffered  from  discriminatory
practices.  Most, if not all, of these suits have been settled (some for
substantial sums) without a full adjudication on the merits.


                                      9

      On  March  8, 1994, the Federal Agencies, in an effort to  clarify
what
constitutes lending discrimination and specify the factors the agencies
will consider in determining if lending discrimination exists, announced
a  joint  policy  statement detailing specific discriminatory  practices
prohibited under the Equal Opportunity Act and the Fair Housing Act.  In
the  policy  statement, three methods of proving lending  discrimination
were  identified:  (i) over evidence of discrimination,  when  a  lender
blatantly  discriminates  on  a  prohibited  basis;  (ii)  evidence   of
disparate  treatment, when a lender treats applicants differently  based
on a prohibited factor even where there is no showing that the treatment
was  motivated  by  prejudice or a conscious intention  to  discriminate
against a person; and (iii) evidence of disparate impact, when a  lender
applies a practice uniformly to all applicants, but the practice  has  a
discriminatory  effect, even where such practices are neutral  on  their
face  and  are applied equally, unless the practice can be justified  on
the basis of business necessity.

      On  September  23,  1994,  President  Clinton  signed  the  Reigle
Community  Development  and  Regulatory Improvement  Act  of  1994  (the
"Regulatory Improvement Act").  The Regulatory Improvement Act  contains
funding  for community development projects through banks and  community
development  financial institutions and also numerous regulatory  relief
provisions  designed  to eliminate certain duplicative  regulations  and
paperwork requirements.  On September 29, 1994, President Clinton signed
the  Reigle-Neal Interstate Banking and Branching Efficiency Act of 1994
(the "Federal Interstate Bill") which amended Federal law to permit bank
holding  companies  to  acquire existing banks in  any  state  effective
September 29, 1995, and to permit any interstate bank holding company to
merge  its  various bank subsidiaries into a single bank with interstate
branches  after  May 31, 1997.  States have the authority  to  authorize
interstate  branching prior to June 1, 1997, or, alternatively,  to  opt
out  of  interstate branching prior to that date.  The Georgia Financial
Institutions  Code was amended in 1994 to permit the  acquisition  of  a
Georgia bank or bank holding company by out-of-state bank holding
companies beginning July 1, 1995.  On September 29, 1995, the interstate
banking  provisions  of  the Georgia Financial  Institutions  Code  were
superseded by the Federal Interstate Bill.

      In  February  1996, the Georgia legislature adopted  the  "Georgia
Interstate Branching Act," which permitted Georgia-based banks and  bank
holding  companies owning or acquiring banks outside of Georgia and  all
non-Georgia  banks and bank holding companies owning or acquiring  banks
in  Georgia  the  right  to merge any lawfully  acquired  bank  into  an
interstate  branch network.  The Georgia Interstate Branching  Act  also
allows  banks  to  establish de novo branch banks  on  a  limited  basis
beginning  July 1, 1996. Beginning July 1, 1998, the number of  de  novo
bank branches which may be established will no longer be limited.

      Effective March 11, 2000, pursuant to authority granted under  the
Gramm-Leach-Bliley Act, a bank holding company may  elect  to  become  a
financial  holding company and thereby to engage in a broader  range  of
financial and other activities than are permissible for traditional bank
holding  companies.  In order to quality for the election,  all  of  the
depository institution subsidiaries of the bank holding company must  be
well capitalized and well managed, as defined by regulation, and all  of
its  insured  depository institution subsidiaries must have  achieved  a
rating  of  "satisfactory" or better with respect to  meeting  community
credit   needs.   Pursuant  to  the  Gramm-Leach-Bliley  Act,  financial
holding

                                     10

companies  will be permitted to engage in activities that are "financial
in  nature" or incidental or complementary hereto, as determined by  the
Federal  Reserve  Board.  The Gramm-Leach-Bliley Act identifies  several
activities  as "financial in nature" including, among others,  insurance
underwriting and agency, investment advisory services, merchant  banking
and  underwriting,  dealing  or making  a  market  in  securities.   The
Registrant  has  not, at this time, made any decision  with  respect  to
whether  it will elect to become a financial holding company  under  the
Gramm-Leach-Bliley Act.

      The  Gramm-Leach-Bliley  Act  does  not  significantly  alter  the
regulatory  regimes  under which the Registrant and the  Bank  currently
operate.   While certain business combinations not currently permissible
will  be  possible after March 11, 2000, we cannot predict at this  time
resulting  changes  in  the  competitive environment  or  the  financial
condition  of the Registrant or the Bank's. Using the financial  holding
company  structure, insurance companies and securities firms may acquire
the bank holding companies, such as the registrant, and may compete more
directly with banks or bank holding companies.

      Various  legislation, including proposals to substantially  change
the  financial institution regulatory system and to expand  or  contract
the  powers of banking institutions and bank holding companies, is  from
time  to  time  introduced  in Congress.  This  legislation  may  change
banking  statutes and the operating environment of the combined  company
and its subsidiaries in substantial and unpredictable ways.  If enacted,
such  legislation could increase or decrease the cost of doing business,
limit or expand permissible activities or affect the competitive balance
among  banks,  savings associations, credit unions, and other  financial
institutions.  The Registrant cannot accurately predict whether  any  of
this  potential legislation will ultimately be enacted, and, if enacted,
the  ultimate  effect that it, or implementing regulations,  would  have
upon  the financial condition or results of operations of itself or  any
of its subsidiaries.

Omnibus Budget Reconciliation Act of 1993

      The  Omnibus  Budget Reconciliation Act of 1993  (the  "Tax  Act")
continues   the   recent  legislation  affecting  banks  and   financial
institutions.   The  Tax  Act was designed as a deficit  reduction  with
similarities  to  the  1990 Act which was also designed  to  slice  $500
billion from the deficit.

      Generally the Tax Act affects all corporations as to a new 35% tax
rate  for  income  in  excess of $10 million and the  maximum  corporate
capital gains rate was increased to 35%.  The Registrant currently  will
not be affected by the change due to the income level of the Registrant.
Various other provisions would restrict certain deductions and/or change
the treatment of certain transactions.

      Provisions that especially affect financial institutions  included
market  to market Accounting for Securities.  The Tax Act requires  that
securities that are inventory in the hands of a dealer be inventoried at
fair  market value (market to market).  For the purposes of these rules,
"securities"  and a "dealer" are defined more broadly than  under  prior
law.  A "dealer" is any person who either regularly purchases securities
from or sells securities to customers in the ordinary course of business
or regularly offers to enter into, assume, offset, assign or otherwise

                                     11


terminate positions in securities with customers in the ordinary  course
of  a  trade  or business.  Banks have been determined to qualify  as  a
dealer  under  the  new  definitions.  Unless  securities  are  properly
identified as held for investment, all inventory will be required to  be
market to market.

      A second item affecting financial institutions is the treatment of
tax-free FSLIC Assistance that was credited on or after March 4, 1991 in
connection   with  the  disposition  of  "covered"  assets.    Financial
institutions  are required to treat that assistance as compensation  for
any  losses  claimed  on dispositions or charge-offs  of  these  assets,
effectively denying them any tax loss for those assets.  This  provision
should not have any effect on the Registrant.

     The third item affecting financial institutions is the amortization
of  intangible assets effective for purchase after the enactment (August
10,   1993).   Taxpayers  are  required  to  amortize  most  intangibles
(including goodwill, core deposits, going concern value and covenant not
to  compete)  used  in  a  trade or business  over  a  15  year  period.
Exception  to this rule includes mortgage service rights.  The provision
will have significant impact on any future purchases the holding company
may decide to undertake.

      Some  of  the other provisions such as eliminating deductions  for
lobbying  expense  and club dues will impact the taxes  payable  by  the
Registrant.

Recent and Proposed Changes in Accounting Rules

       In   June,   1997,  the  FASB  issued  SFAS  No.  130,  Reporting
Comprehensive  Income.   The  statement  is  effective  for  annual  and
quarterly financial statements for fiscal years beginning after December
15,  1997,  with  earlier application permitted.  For the  Company,  the
statement  became  effective in the first quarter of 1998  and  required
reclassification  of  earlier  financial  statements   for   comparative
purposes.   SFAS  No.  130  requires that  changes  in  the  amounts  of
comprehensive  income  items be shown in a primary financial  statement.
Comprehensive  income  is defined by the statement  as  "the  change  in
equity  (net  assets)  of a business enterprise  during  a  period  from
transactions  and other events and circumstances from nonowner  sources.
It includes all changes in equity during a period except those resulting
from  investments  by owners and distributions to  owners."   While  the
adoption  of this statement changed the look of the Company's  financial
statements, it did not have a material effect on the Company.

     Also, in June 1997, the FASB issued SFAS No. 131, Disclosures about
Segments  of  an Enterprise and Related Information.  The  statement  is
effective  for  financial statements for fiscal  years  beginning  after
December  15,  1997, with earlier application permitted.  SFAS  No.  131
changes  the  way public companies report information about segments  of
their business in their annual financial statements and requires them to
report selected segment information in their quarterly reports issued to
shareholders.   A  company is required to report on  operating  segments
based  on  the management approach.  An operating segment is defined  as
any  component of an enterprise that engages in business activities from
which


                                      12


it  may  earn  revenues and incur expenses.  The management approach  is
based  on  the  way  that management organizes the segments  within  the
enterprise  for  making  operating decisions and assessing  performance.
The  adoption  of this standard did not have a material  effect  on  the
Company.

      In  February  1998,  the  FASB issued  SFAS  No.  132,  Employers'
Disclosures  about  Pensions  and Other  Postretirement  Benefits.   The
statement  is  effective for fiscal years beginning after  December  15,
1997.  SFAS  No.  132  provides  additional  information  to  facilitate
financial  analysis  and  eliminates certain disclosures  which  are  no
longer useful.  To the extent practical, the statement also standardizes
disclosures for retiree benefits.  The adoption of this standard did not
have a material effect on the Company.

      In  June  1998, the Financial Accounting Standards Board  ("FASB")
issued  SFAS No. 133 "Accounting for Derivative Instruments and  Hedging
Activities."   This  Statement  establishes  accounting  and   reporting
standards  for  derivative  instruments,  including  certain  derivative
instruments embedded in other contracts, and for hedging activities.  It
requires  that an entity recognize all derivatives as either  assets  or
liabilities  in  the statement of financial position and  measure  those
instruments at fair value.  The accounting for changes in the fair value
of  a  derivative depends on the intended use of the derivative and  the
resulting designation.

      In  June  of  1999, the FASB issued SFAS No. 137, "Accounting  for
Derivative  Instruments  and  Hedging  Activities  -  Deferral  of   the
Effective Date of FASB Statement No. 133."  This statement deferred  the
effective date of SFAS No. 133 to fiscal years beginning after June  15,
2000,  with  early application encouraged.  South is in the  process  of
determining the impact, if any, the implementation of SFAS No.  133  and
SFAS No. 137 will have on its results of operations.

      In  October  1998,  the FASB issued SFAS No. 134,  Accounting  for
Mortgage-Backed Securities Retained after the Securitization of Mortgage
Loans Held for Sale by Mortgage Banking Enterprise, an amendment to SFAS
No.  65.   This  statement  is effective for the  first  fiscal  quarter
beginning after December 15, 1998, (or January 1, 1999 for the Company).
The  statement requires that after the securitization of mortgage  loans
held for sale, any retained mortgage-backed securities be classified  in
accordance  with SFAS No. 115, based on the entity's ability and  intent
to  sell  or hold those investments.  Prior to this statement,  mortgage
banking  entities were required to classify these securities as  trading
only.   The adoption of this standard did not have a material effect  on
the Company.

Industry Developments

      Certain  recently-enacted and proposed legislation could  have  an
effect  on both the costs of doing business and the competitive  factors
facing the financial institution's industry.  Because of the uncertainty
of   the   final  terms  and  likelihood  of  passage  of  the  proposed
legislation, the Company is unable to assess the impact of any  proposed
legislation of its financial condition or operations at this time.





                                     13

Selected Statistical Information

      The  tables and schedules on the following pages set forth certain
significant  statistical data with respect to:  (i) the distribution  of
assets, liabilities and shareholders' equity and the interest rates  and
interest   differentials  experienced  by,  the   Registrant   and   its
subsidiaries;  (ii) the investment portfolio of the Registrant  and  its
subsidiaries;   (iii)  the  loan portfolio of  the  Registrant  and  its
subsidiaries,  including types of loans, maturities and  sensitivity  to
changes  in interest rates and information on nonperforming loans;  (iv)
summary of the loan loss experience and reserves for loan losses of  the
Registrant and its subsidiaries; (v) types of deposits of the Registrant
and  its subsidiaries; and (vi) the return on assets and equity for  the
Registrant and its subsidiaries.

I.  DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS' EQUITY;
    INTEREST RATES AND INTEREST DIFFERENTIALS

A.   The condensed average balance sheets for the periods indicated are
    presented below.
                               Year Ended    Year Ended    Year Ended
                                December 31,   December 31,  December  31,
1999                           1998              1997
ASSETS                                       (In Thousands)
Cash and due from banks        $    7,836     $    5,736              $    8,723
Cash in bank - interest bearing     1,355          1,411         1,412
Taxable investment securities      15,905         15,285        12,026
Nontaxable investment securities    1,825          1,945         1,833
Others                              1,435            932           833
Federal funds sold and securities
 purchased under agreements to
 resell                             8,757         11,354         7,202
Loans - net                       121,166        111,239        96,657
Other assets                        8,031          8,625         7,944

Total Assets                   $  166,310     $  156,527    $  136,630

LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits: Demand - non-interest
           bearing             $   20,341     $   20,209    $   18,052
     Demand - interest bearing     23,777         22,732        21,118
     Savings                       10,674          9,048         8,327
     Time                          92,406         86,113        72,070
Total Deposits                 $  147,198     $  138,102    $  119,567
Federal funds purchased                 55             -           507
Other borrowed funds                 3,087         3,380         3,614
Other liabilities                      962         1,694         1,102

Total Liabilities               $  151,302    $  143,176    $  124,790
Shareholders' equity                15,008        13,351        11,840

Total Liabilities and
 Shareholders' Equity           $  166,310    $  156,527    $  136,630


B.    Interest Rates.  The tables below show for the periods indicated
    the average amount outstanding for major categories of interest


                                     14

    earning  assets  and  interest bearing  liabilities;  the  average
    interest  rates  earned or paid; the interest income  and  expense
    earned  or  paid thereon; net interest earnings and the net  yield
    on interest-earning assets.
                                     Year Ended December 31, 1999
                               Average        Yield/
                               Balance        Interest       Rate
ASSETS                                            (In    Thousands)
Cash in banks - interest bearing$    1,355     $      78          5.75%
Loans                              121,166        12,859         10.61
Taxable investments                 15,905           936          5.88
Non-taxable investments              1,825            87          4.77
Other                                1,435            96          6.68
Federal funds sold and
 securities Purchased under
 agreements to resell                8,757           462          5.28
Total Interest-Bearing
 Assets                         $  150,443     $  14,518          9.65%

LIABILITIES
Demand - interest bearing       $   23,777     $     633          2.66%
Savings deposits                    10,674           352          3.30
Other time deposits                 92,406         5,037          5.45
Other borrowing                      3,087           236          7.65
Federal funds purchased                 55             3          5.54
Total Interest-Bearing
 Liabilities                    $  129,999     $   6,261          4.82%

Net interest earnings                          $   8,257
Net yield on interest earning assets                              4.83%

                                      Year Ended December 31, 1998
                               Average        Yield/
                               Balance        Interest       Rate
ASSETS                                        (In Thousands)
Cash in banks - interest
 bearing                       $     1,411    $       82          5.81     %
Loans                              111,239        12,152         10.92
Taxable investments                 15,285           936          6.12
Non-taxable investments              1,945            92          4.73
Other                                  932            57          6.11
Federal funds sold and
 securities purchased
 under agreements to resell         11,354           601          5.29
Total Interest-Bearing
 Assets                        $   142,166   $    13,920          9.79%

LIABILITIES
Demand  -  interest bearing      $    22,732    $        678           2.98
%
Savings deposits                     9,048           288          3.18
Other time deposits                 86,113         5,164          5.99
Other borrowing                      3,380           262          7.75
Federal funds purchased                  -             -             -
Total Interest-Bearing
 Liabilities                   $   121,273   $     6,392          5.27%

Net interest earnings                        $     7,528
Net yield on interest earning assets                              4.52%

                                     15


                                      Year Ended December 31, 1997
                               Average        Yield/
                               Balance        Interest       Rate
ASSETS                                        (In Thousands)
Cash in banks - interest
 bearing                       $     1,412    $       92         6.50%
Loans                               96,657        10,770         11.14
Taxable investments                 12,026           941          7.82
Non-taxable investments              1,833            90          4.91
Other                                  833            42          5.04
Federal funds sold and
 securities purchased
 under agreements to resell          7,202           393          5.45
Total Interest-Bearing
 Assets                        $   119,963   $    12,328         10.28%


LIABILITIES
Demand - interest bearing      $    21,118   $       720         3.41%
Savings deposits                     8,327           258          3.10
Other time deposits                 72,070         4,074          5.65
Other borrowing                      3,614           305          8.44
Federal funds purchased                507            30          5.91
Total Interest-Bearing
 Liabilities                   $   105,636   $     5,387          5.10%

Net interest earnings                        $     6,941
Net yield on interest earning assets                              5.18%


(1)  Note:  Loan fees are included for rate calculation purposes.   Loan
fees  included in interest amounted to approximately $892,522  in  1999,
$810,462  in  1998 and $732,852 in 1997.  Non accrual  loans  have  been
included in the average balances.

C.   Interest  Differentials.  The following tables set  forth  for  the
periods  indicated  a  summary of the changes  in  interest  earned  and
interest paid resulting from changes in volume and changes in rates.

1999 compared to 1998

                                     Increase (Decrease) Due to (1)
                                Volume        Rate          Change
Interest earned on:                       (In Thousands)
Cash in banks - interest
 bearing                       $(       3)  $(        1)   $(        4)
Loans                                1,084   (      377)           707
Taxable investments             (       38)          38              -
Nontaxable investments         (         7            )                2
(        5                               )
Other                                   24           14             38
Federal funds sold and
 securities purchased under
 agreement to resell           (       137)  (        2)    (      139)

Total Interest-Earning Assets $        923  $(      326               )$
597



                                     16


1999 compared to 1998 (Con't)
                                     Increase (Decrease) Due to (1)
                                Volume        Rate          Change
                                          (In Thousands)
Interest paid on:
 NOW deposits                  $        31  $(       76              )$(
45                                       )
 Savings deposits                       52          12              64
 Other time deposits                  372    (      499)    (      127)
 Other borrowing              (        23)   (        3)    (       26)
   Federal  funds  purchased                  3                        -
3

Total Interest-Bearing
 Liabilities                  $        435  $(      566              )$(
131                                      )

Net Interest Earnings         $        488  $       240    $       728


(1)    The  change  in  interest due to volume has  been  determined  by
applying  the  rate  from  the earlier year to  the  change  in  average
balances  outstanding from one year to the next.  The change in interest
due  to rate has been determined by applying the change in rate from one
year to the next to average balances outstanding in the later year.

1998 compared to 1997
                                    Increase (Decrease) Due to (1)
                               Volume        Rate          Change
Interest earned on:                       (In Thousands)
Cash in banks - interest
  bearing                       $         -  $(       10)   $(        10
)
Loans                                1,624   (      242)         1,382
Taxable investments                    255   (      260)    (        5)
Nontaxable investments                   5   (        3)             2
Other                                    5           10             15
Federal funds sold and
 securities purchased under
 agreement to resell                   230   (       22)           208

Total Interest-Earning Assets  $     2,119  $(      527)   $     1,592

Interest paid on:
 NOW deposits                  $        55  $(       97)   $(       42)
      Savings     deposits                           22                8
30
     Other    time    deposits                      793              297
1,090
 Other borrowing               (       20)  (       23)     (       43)
 Federal funds purchased       (       30)            -     (       30)

Total Interest-Bearing
 Liabilities                   $       820  $       185    $     1,005

Net Interest Earnings          $     1,299  $(      712)   $       587

(1)  The  change  in  interest  due to volume  has  been  determined  by
       applying the rate from the earlier year to the change in  average
       balances outstanding from one year to the next.  The change in interest
       due to rate has been determined by applying the change in rate from one
       year to the next to average balances outstanding in the later year.

                                     17


1997 compared to 1996
                                    Increase (Decrease) Due to (1)
                               Volume         Rate          Change
Interest earned on:                       (In Thousands)
Cash in banks - interest
 bearing                       $(       40)  $       13    $(       27)
Loans                                1,426    (     135)         1,291
Taxable  investments              (       155              )         217
62
Nontaxable investments         (        6 )           1     (        5)
Other                                  14             -             14
Federal funds sold and
 securities purchased under
 agreement to resell            (      126)          13     (      113)

Total Interest-Earning Assets  $     1,113   $      109    $     1,222

1997 compared to 1996
                                    Increase (Decrease) Due to (1)
                                Volume        Rate          Change
Interest paid on:
 NOW deposits                   $       22   $      119    $       141
 Savings deposits                       12           15             27
  Other time deposits                   443    (      72               )
371
 Other borrowing                 (      10)          23             13
     Federal    funds    purchased                    9                3
12

Total Interest-Bearing
 Liabilities                    $      476   $       88    $       564

Net  Interest Earnings           $      637                  $       21$
658


(1)   The  change  in  interest due to volume  has  been  determined  by
applying  the  rate  from  the earlier year to  the  change  in  average
balances  outstanding from one year to the next.  The change in interest
due  to rate has been determined by applying the change in rate from one
year to the next to average balances outstanding in the later year.

II.  INVESTMENT PORTFOLIO

A.   Types of Investments  The carrying amounts of investment securities
at the dates indicated are summarized as follows:

                               Year Ended    Year Ended   Year Ended
                               December 31,  December 31, December 31,
                               1999          1998         1997
                                             (In Thousands)
U. S. Treasury and other
 U. S. government agencies
 and corporations              $    16,292   $    14,750   $    13,892
State and political
 subdivisions (domestic)             1,714         1,959         1,976
Mortgage backed securities            502            732         1,080
Equities                              545            300             -

Totals                         $    19,053   $    17,741   $    16,948


                                      18


B.  Maturities  The amounts of investment securities in each category as
of  December  31,  1999 are shown in the following  table  according  to
maturity  classifications  (1) one year or  less,  (2)  after  one  year
through  five years, (3) after five years through ten years,  (4)  after
ten years.

                  U. S. Treasury
                  and Other U. S.
                  Government        State
                  Agencies and      and Political     Mortgage Backed
                  Corporations      Subdivisions      Securities
                            Average          Average
                            Yield            Yield             Average
                 Amount     (1)     Amount   (1)(2)   Amount   Yield
                                       (In Thousands)
Maturity:
One year or less  $  2,297    5.99%  $  200   6.17%  $     -         -
After one year
  through  five  years 13,508    5.83      905   7.06        213       6.02
%
After five years
 through ten years       -       -        -      -                   -
After ten years        487    5.50     610  8.58    289  7.41

Totals             $ 16,292    5.84% $ 1,715   7.50%   $   502      6.82
%


(1)   Yields  were  computed  using  coupon  interest,  adding  discount
accretion  or  subtracting premium amortization, as  appropriate,  on  a
ratable  basis  over  the life of each security.  The  weighted  average
yield  for each maturity range was computed using the acquisition  price
of each security in that range.

(2)  Yields on securities of state and political subdivisions are stated
on a tax equivalent basis, using a tax rate of 34%.

III.  Loan Portfolio

   A.   Types of Loans  The amount of loans outstanding at the indicated
dates are shown in the following table according to type of loan.

                               Year Ended    Year Ended     Year Ended
                                 December 31,  December 31,  December 31
,
                                   1999              1998               1997
(In Thousands)
Commercial, financial and
 agricultural                   $   34,607    $   29,889    $   29,728
Real estate - mortgage              62,829        58,005        52,544
Real estate - construction          13,413         7,909         6,968
Installments                        21,433        19,157        17,285
                                $  132,282    $  114,960    $  106,525
Less - Unearned income                 216           154           149
       Reserve for possible
        losses                       2,169         1,971         1,822

Total Loans                     $  129,897    $  112,835    $  104,554



                                      19

C.   Maturities and Sensitivity to Changes in Interest Rates  The amount
    of total loans by category outstanding as of December 31, 1999 which,
    based on remaining repayments of principal, are due in (1) one year or
    less, (2) more than one year but less than five and (3) more than five
    years are shown in the following table.  The amounts due after one year
    are  classified according to the sensitivity to changes in  interest
    rates.


                                  Maturity Classification
                                 Over One
                   One Year      Through       Over
                   or Less       Five Years    Five Years    Total
Types of Loans                       (In Thousands)
Commercial,
 financial and
 agricultural       $   28,375    $    4,955  $      1,191   $   34,521
Real estate
 mortgage               42,131        12,223         8,058       62,412
Real estate
 construction           11,568           662         1,182       13,412
Installment              9,118         9,130         2,739        2,987

Total loans due
 after one year
 with:
 Predetermined
  interest rate                       36,693
 Floating interest
  rate                                 3,447


C.   Nonperforming  Loans  The following table presents,  at  the  dates
indicated,  the  aggregate  amounts  of  nonperforming  loans  for   the
categories indicated.

                               Year Ended    Year Ended    Year Ended
                                December 31,  December 31,  December 31     ,
                               1999          1998          1997
                                             (In Thousands)
Loans accounted for on a
 non-accrual basis              $      422   $       557   $       311

Loans contractually past
 due ninety days or more
 as to interest or principal
 payments                              419           492           760

Loans, the terms of which
 have been renegotiated to
 provide a reduction or
 deferral of interest or
 principal because of a
 deterioration in the financial
 position of the borrower               29            37            36




                                     20



C. Nonperforming Loans - (con't)

                               Year Ended     Year Ended    Year Ended
                               December 31,   December 31,  December 31,
                               1999           1998          1997
                                              (In Thousands)
Loans now current about which
 there are serious doubts as
 to the ability of the borrower
 to comply with present loan
 repayment terms                         -             -             -

      Loans  are  placed on non-accrual basis when loans  are  past  due
ninety  days or more.  Management can elect not to place loans  on  non-
accrual  status if net realizable value of collateral is  sufficient  to
cover the balance and accrued interest.

D.    Commitments and Lines of Credit  The banks provide commitments and
    lines  of  credits  to  their  most credit  worthy  customers  only.
    Commitments are for short terms, usually not exceeding 30 days, and are
    provided for a fee of 1% of the amount committed.  Lines of credit are
    for periods extending up to one year.  No fee is usually charged with
    respect to the unused portion of a line of credit.  Interest rates on
    loans  made  pursuant to commitments or under lines  of  credit  are
    determined  at  the  time that the commitment is  made  or  line  is
    established.

                                     21
E.   Rate Sensitivity Analysis

                                         SOUTH BANKING COMPANY
                                           DECEMBER 31, 1999

                                        +------Interest Sensitive-------+
                                                    0 -        91 -       1
to 3
                                        90 Day     365 Days   Years
                                             (Thousands of Dollars)
Earning Assets:
 Loans                                 $  72,332  $  19,575  $  16,839
 Investment securities                       289      2,497      9,576
 Interest bearing deposits                   491        279          -
 Federal funds sold and
  securities purchased under
  agreement to resell                      3,180          -          -

Total Earning Assets                   $  76,292  $  22,351  $  26,415

Supporting Sources of Funds
 Savings                               $  10,520  $       -  $       -
 Money market and NOW                     23,089          -          -
 Other time deposits                      18,741     49,210      5,039
 CD's - $100,000 or more                   4,808     17,370      2,214
 Other borrowings                             33        720        867
 Federal funds purchased                   1,140          -          -

Total Interest Bearing Deposits        $  58,331  $  67,300  $   8,120

Demand deposits and other funds
 supporting earning assets -
 non interest earning                  $       -  $       -  $       -

Total Supporting Sources of Funds      $  58,331  $  67,300  $   8,120

Interest Sensitive - interest
 earning assets less interest
 bearing liabilities                   $  17,961  $(44,949)  $  18,295

Cumulative interest rate sensitivity
 gap                                   $  17,961  $(26,988)  $( 8,693)

Interest rate sensitivity gap ratio         1.31        .33        .33

Cumulative interest rate sensitivity
gap ratio                                   1.31        .79        .94

                                        3 to 5     5 Years +
                                        Years      Over                  Total
Earning Assets:
 Loans                                $   10,319  $  13,217  $ 132,282
 Investment securities                     5,050      1,097     18,509
 Interest bearing deposits                    99          -        869
 Federal funds sold and
  securities purchased under
  agreement to resell                          -          -      3,180

Total Earning Assets                   $  15,468  $  14,314  $ 154,840

Supporting Sources of Funds
 Savings                               $       -  $       - $   10,520
 Money market and NOW                          -          -     23,089
 Other time deposits                         346          -     73,336
 CD's - $100,000 or more                       -          -     24,392
 Other borrowings                            700        350      2,670
 Federal funds purchased                       -          -      1,140

Total Interest Bearing Deposits        $   1,046  $     350  $ 135,147

Demand deposits and other funds
 supporting earning assets -
 non interest earning                  $       -  $       -  $  21,463

Total Supporting Sources of Funds      $   1,046  $     350  $ 156,610


Interest Sensitive - interest
 earning assets less interest
 bearing liabilities                   $  14,422  $  13,964  $   1,770

Cumulative interest rate sensitivity
 gap                                   $   5,729  $  19,693  $   1,770

Interest rate sensitivity gap ratio        14.78          -          -

Cumulative interest rate sensitivity
gap ratio                                   1.04       1.15       98.9

                                              22
     The rate sensitivity analysis table is designed to demonstrate South's
sensitivity  to  changes in interest rates by setting forth in  comparative
form  the  repricing maturities of South's assets and liabilities  for  the
period shown. A ratio of greater than 1.0 times interest earnings assets to
interest  bearing liabilities indicates that an increase in interest  rates
will generally result in an increase in net income for South and a decrease
in interest rates will result in a decrease in net income.  A ratio of less
than  1.0  times earnings assets to interest-bearing liabilities  indicates
that  a  decrease in interest rates will generally result in a increase  in
net  income for South and an increase in interest rates will result  in  an
decrease in net income.

                                     22



IV.  Summary of Loan Loss Experience

      The  following table summarizes loan balances at the end  of  each
period  and average balances during the year for each category;  changes
in  the reverse for possible loan losses arising from loans charged  off
and recoveries on loans previously charged off; additions to the reserve
which  have  been  charged to operating expense; and the  ratio  of  net
charge-offs during the period to average loans.


                              Year Ended    Year Ended      Year Ended
                              December 31, December 31,     December 31,
                              1999         1998             1997
                                           (In Thousands)
A.  Average amount of loans
     outstanding              $   121,166   $   111,239     $    96,657
B.  Balance of reserve for
     possible loan losses at
     beginning of period      $     1,971   $     1,822     $     1,781
C.  Loans charged off:
     Commercial, financial
      and agricultural        $       149   $        10     $        44
     Real estate - mortgage            67            75             123
     Installments                     217          172               97

                              $       433   $       257     $       264
D.  Recoveries of loans
     previously charged off:
     Commercial, financial
      and agricultural        $         2   $        20     $        34
     Real estate                       31             2              8
     Installment                       95            98             83

                              $       128   $       120    $       125
E.  Net loans charged off
     during period            $       305   $       137   $        139
    Additions to reserve
     charged to operating
     expense during period (1)$       503   $       286    $       180
    Addition from bank
     acquisition                        -             -              -

                              $       503   $       286    $       180
F.  Balance of reserve for
     possible loan losses at
     end of period            $     2,169   $     1,971    $     1,822
G.  Ratio of net loans charged
     off during the period to
     average loans outstanding        .25           .12            .14


                                       23

(1)      Although the provisions exceeded the minimum provision required
    by  regulatory authorities, the Board of Directors believe that  the
    provision has not been in excess of the amount required to maintain the
    reserve at a sufficient level to cover potential losses.  The amount
    charged to operations and the related balance in the reserve for loan
    losses is based upon periodic evaluations by management of the  loan
    portfolio. These evaluations consider several factors including, but not
    limited to, general economic conditions, loan portfolio composition,
    prior  loan  loss experience and management's estimation  of  future
    potential losses.

(2)     Management's  review  of  the loan portfolio  did  not  allocate
    reserves  by  category  due  to  the portfolio's  small  size.   The
    reserves  were  allocated on the basis of a  review  of  the  entire
    portfolio.   The portfolio does not contain excessive concentrations
    in  any  industry  or  loan  category that  might  expose  South  to
    significant risk.


V.  Deposits


A.    Average  deposits, classified as demand deposits, savings deposits
   and time certificates of deposit for the periods indicated are presented
   below:

                               Year Ended    Year Ended    Year Ended
                               December 31,  December 31, December 31,
                               1999          1998          1997
                                           (In Thousands)
     Demand deposits           $    20,341   $    20,209   $    18,052
     NOW deposits                   23,777        22,732        21,118
     Savings deposits               10,674         9,048         8,327
     Time certificates of
      deposits                      92,406        86,113        72,070

     Total Deposits            $   147,198   $   138,102   $   119,567


     B.   The  amounts of time certificates of deposit issued in amounts
     of  $100,000  or  more as of December 31, 1999 are shown  below  by
     category,  which is based on time remaining until maturity  of  (1)
     three  months or less, (2) over three through six months, (3)  over
     six through twelve months and (4) over twelve months.

     Three months or less                                  $     4,808
     Over three through twelve months                           17,370
     Over twelve months                                          2,214

     Total                                                 $    24,392

                                      24

VI.  Return on Assets and Shareholders' Equity

         The  following  rate  of return information  for  the  periods
     indicated is presented below:

                               Year Ended    Year Ended     Year Ended
                               December 31,  December 31,   December 31,
                               1999          1998           1997
Return on assets (1)                 1.28%          1.23    %          1.13
%
Return on equity (2)                 14.18         14.45         13.06
Dividend payout ratio (3)            12.20         13.46         15.54
Equity to assets ratio (4)            9.02          8.53          8.67

(1)  Net income divided by average total assets.
(2)  Net income divided by average equity.
(3)  Dividends declared per share divided by net income per share.
(4)  Average equity divided by average total assets.

Item 2.  Properties

      Alma  Bank's main banking office and the Registrant's  principal
executive offices are located at 104 North Dixon Street, Alma, Georgia
31510.   The building, containing approximately 13,040 square feet  of
usable  office  and  banking space, and the  land,  approximately  1.2
acres,  are owned by Alma Bank. Alma Bank also has a separate drive-in
banking  facility located at 505 South Pierce Street,  Alma,  Georgia.
The  building,  containing 510 square feet, in  which  the  branch  is
located  and the land, approximately .4 acres, on which it is  located
are owned by Alma Bank.

      Citizens Bank's main banking office is located at 205 East  King
Street,   Kingsland,   Georgia  31548.    The   building,   containing
approximately  6,600 square feet of usable office and  banking  space,
and the land, approximately 2 acres, are owned by Citizens Bank.

      Peoples  Bank's main banking office is located at Comas  and  E.
Parker  Streets,  Baxley,  Georgia 31513.   The  building,  containing
approximately  7,800 square feet of usable office and  banking  space,
and  the land, approximately 2.5 acres, are owned by the Peoples Bank.
The Bank does not have branches.

     Pineland Bank's main banking office is located at 257 North Broad
Street, Metter, Georgia 30439.  The building, containing approximately
10,000  square feet of usable office and banking space, and the  land,
approximately 1 acre, are owned by the Pineland Bank.  The Bank opened
a branch in 1998 on land under a long term lease.

Item 3. Legal Proceedings

      Neither the Registrant or its subsidiaries are parties to,  nor
is  any of their property the subject of, any material pending  legal
proceedings,  other than ordinary routine proceedings  incidental  to
the business of the Banks, nor to the knowledge of the management  of
the  Registrant are any such proceedings contemplated  or  threatened
against it or its subsidiaries.

                                     25
Item 4.  Submission of Matters to a vote of Security Holders

     None applicable.

Part II.

Item  5.   Market  for  the  Registrant's Common  Stock  and  Related
Security          Holder Matters

      There is no public market for the common stock of South or  the
Banks.   The last known selling price of South's common stock,  based
on  information available to South's management, was $12.00 per share
on  October  7,  1999.   As of March 1, 2000,  the  Company  had  464
shareholders with 399,500 shares outstanding.

     For the years ended December 31, 1999, 1998 and 1997, South paid
cash  dividends of $259,675 or $.65 per share, $259,654 or  $.65  per
share,  and $239,681 or $.65 per share, respectively.  These  dollars
equate to  dividend payout ratios (dividends declared divided by  net
income)  of  12.20%,  13.46%  and 15.54%  in  1999,  1998  and  1997,
respectively.   Certain  other information concerning  dividends  and
historical trading prices is set forth below:

                     QUARTERLY COMMON STOCK DATA

      Set  forth below is information concerning high and  low  sales
prices  by quarter for each of the last two fiscal years and dividend
information  for  the  last two fiscal years.  The  Company's  common
stock  is  not traded on any established pubic trading  market.   The
Company   acts  as  its  own  transfer  agent,  and  the  information
concerning sales prices set forth below is derived from the Company's
stock  transfer  records.  As of December 31, 1999,  there  were  464
shareholders of record.
                                                SALES PRICES BY QUARTER
                                                 High          Low
     Fiscal Year 1999
     First Quarter                                $12.00        $12.00
     Second Quarter                                12.00         12.00
     Third Quarter                                 12.00         12.00
     Fourth Quarter                                12.00         12.00

                                                SALES PRICES BY QUARTER
                                                  High          Low
     Fiscal Year 1998
     First Quarter                                $12.00        $12.00
     Second Quarter                                    -             -
     Third Quarter                                     -             -
     Fourth Quarter                                12.00         12.00

                                                DIVIDENDS PAID PER SHARE
                                                       Fiscal Year
     Fiscal Year 1999                             1999          1998
     March 31                                     $  .00           .00
     June 30                                         .00           .00
     September 30                                    .00           .00
     December 31                                     .65           .65

                                   26

Item 6.  Selected Financial Data

Years Ended December 31,
                  1999       1998       1997      1996      1995
                                             (In Thousands)

Total Assets       $ 173,807 $ 164,890   $ 149,895 $ 132,291 $ 97,175

Operations:
 Interest income   $  14,518 $  13,920   $  12,328 $  11,107$  8,090
 Interest expense      6,261     6,392       5,387     4,823    3,314
Net Interest
 Income            $   8,257 $   7,528   $   6,941 $   6,284$  4,776
Provision for
 loan losses             503       286         179       202      62
Net interest
 income after
 provision for
 loan losses       $   7,754 $   7,242   $   6,762 $   6,082$  4,714
Other income       $   2,298 $   1,905   $   1,569 $   1,596$  1,371
Other expenses     $   6,906 $   6,387   $   6,017 $   5,586$  4,345
Income before
 income taxes      $   3,146 $   2,760   $   2,314 $   2,092$  1,740
Federal Income
 Taxes             $   1,017 $     831   $     768 $     662$    590
Net income before
 extraordinary
 items             $   2,129 $   1,929   $   1,546 $   1,430$  1,150
Extraordinary
 items             $       - $       -   $       - $       -$      -
Net income         $   2,129 $   1,929   $   1,546 $   1,430$  1,150
Per Share Data:
 Income after
  extraordinary
  items            $    5.33 $    4.83   $    3.86 $    3.54 $    2.84
 Net income        $    5.33 $    4.83   $    3.86 $    3.54 $    2.84
 Dividends
  Declared         $     .65 $     .65   $     .60 $     .55 $     .55
 Book value        $   39.57 $   35.56   $   31.28 $   27.72 $   24.79

Profitability Ratios
 Net income to
 average total
  assets                 1.28         %     1.23  %       1.13          %
1.14                       %      1.28%
Net income to average
 stockholders'
  equity                 14.18          %   $   14.45 $   13.06  $    13.29
$   12.08
Net interest
 margin                 4.83         %   $    4.52 $    5.18 $    4.86
$    5.20



                                      27

Item  7.   Management's Discussion and Analysis of Financial Condition  and
Results of Operations

      The  purpose  of this discussion is to focus on information  about
South  Banking  Company's financial condition and results of  operations
which   is  not  otherwise  apparent  from  the  consolidated  financial
statement  included in this report.  Reference should be made  to  those
statements, selected statistical information and the selected  financial
data  presented  elsewhere in this report for an  understanding  of  the
following discussion and analysis.

Year 2000 Compliance

     GENERAL. The Year 2000 risk involved computer programs and computer
software  that  are  not able to perform without interruption  into  and
during  the Year 2000.  If computer systems did not correctly  recognize
the  date  change from December 31, 1999, to January 1,  2000,  computer
applications that rely on the date field could fail or create  erroneous
results.   Such erroneous results could have affected interest, payments
or due dates, or caused the temporary inability to process transactions,
send  invoices or engage in similar normal business activities.  If  the
Company, its suppliers and its borrowers, failed to address these issues
there  be a material adverse impact on the Company's financial condition
or results of operations.

      STATE OF READINESS.  The Company formally initiated its Year  2000
project  and  plan in 1997 to insure that its operational and  financial
systems  would  not  be adversely affected by Year 2000  problems.   The
Company formed a Year 2000 project team, and the Board of Directors  and
management supported all compliance efforts and allocated the  necessary
resources to ensure completion. An inventory of all systems and products
(including  both  information  technology ("IT")  and  non-informational
technology ("non-IT") systems) that could have been affected by the Year
2000  date  change was developed, verified and categorized as  to  their
importance  to the Company and an assessment of all mission critical  IT
and  mission  critical  non-IT systems was completed.   This  assessment
involved  inputting test data which simulated the Year 2000 date  change
into such IT systems and reviewing the system output for accuracy.   The
Company's  assessment  of  mission  critical  non-IT  systems   involved
reviewing  such  systems to determine whether they were date  dependent.
Based on such assessment, the Company believed that none of its critical
systems were date dependent.  The software for the Company's systems  is
provided  through software vendors.  The Company contacted  all  of  its
third  party  vendors  and  software  providers  and  required  them  to
demonstrate  and  represent that the products provided  were  Year  2000
compliant  and  a  program  of  testing  compliance  was  planned.   The
Company's   item   processing   software   provider,   which    performs
substantially  all  of the Company's data processing  functions,  stated
that  its  software  is Year 2000 compliant and pursuant  to  applicable
regulatory  guidelines  the  Company tested  scenarios  to  verify  this
assertion.  In addition, the FDIC reviewed the Company's compliance with
Year 2000 issues on several occasions.


                                     28

      RISKS  RELATED TO THIRD PARTIES.  The impact of Year 2000  noncom-
pliance by third parties with which the Company transacts business could
not  be  accurately gauged.  The Company identified its  largest  dollar
depositors and loan customers and, based on information available to the
Company,  conducted  evaluations to determine which of  those  customers
were likely to be affected by Year 2000 issues.  To the extent a problem
was  identified  with respect to a customer, the Company  monitored  the
customer's progress in resolving such problem.  The Company is not aware
of  any material problem by any of its customers that would affect their
repayment  of  any loans.  With respect to depositors, the  Company  had
additional  cash  on  hand  to handle any excessive  withdrawals.   With
respect  to its borrowers, the Company includes in its loan documents  a
Year 2000 disclosure form and an addendum to the loan agreement in which
the  borrower  represents and warrants its Year 2000 compliance  to  the
Company.

     TRANSITION INTO THE YEAR 2000.  The Company suffered no failures in
any  system  or product upon the date change from December 31,  1999  to
January 1, 2000.  In addition, management is not aware of any vendor  or
provider  used  by  the Company for data processing or related  services
which experienced a material failure of its product or service due to  a
Year  2000  related  problem.  The Company  is  also  subject  to  risks
associated with Year 2000 noncompliance by its customers.  Management is
not  aware of any customer which suffered losses related to a Year  2000
problem which would adversely affect that customer's financial condition
or its ability to repay any outstanding loan is has with the Company.

      ONGOING  PLANS.   Although many of the critical dates  related  to
potential  Year 2000 related problems have passed, experts predict  that
Year  2000 related failures could occur throughout the year, such as  on
February  29,  2000 and December 31, 2000.  Accordingly,  the  Company's
Year 2000 project team will continue to monitor the Company's IT and non-
IT  systems  and attempt to identify any potential problems  during  the
course  of the year.  In addition, the Company will continue to  monitor
the  Year  2000 compliance of the third parties with which  the  Company
transacts business.

Financial Condition and Liquidity

Financial Condition

      South  functions  as  a  financial institution  and  as  such  its
financial condition should be examined in terms of trends in its sources
and  uses of funds.  A comparison of daily average balances indicate how
South  has  managed  its  sources and uses of funds.   Included  in  the
selected  statistical  information,  the  comparison  of  daily  average
balance  in the business portion of the filing indicated how  South  has
managed  its sources and uses of funds.  South used its funds  primarily
to support its lending activities.

      South's  total assets increased to $173,807,421 at year  end  1999
from  $164,890,742  at  year end 1998.  This growth  represents  a  5.4%
increase in 1999 compared to 10.00% increase in 1998.  This increase  is
attributable


                                   29

to  normal  growth  within  the banking area  with  limited  entry  into
competitive  situations  for  large  deposits.   Due  to  the  increased
competition in certain markets, the net interest margins have  declined.
The net interest margin is not anticipated to change much in 2000 as the
effect  of  the  new  competition has leveled off.   However,  continued
increases in the prime rate could impact the margins.  The interest rate
sensitivity  analysis,  which  is a part  of  this  report,  gives  some
indication of the repricing opportunities of South.  The gap ratios  for
the  first twelve months are outside the limits established by the  Bank
as  ideal,  however,  the current interest rates are  not  favorable  to
customers  purchasing  certificates in excess  of  twelve  months.  Loan
demand continues to be strong with loans increasing $17,322,771 in 1999.
The banks
continue  to look for good quality loans as loans represent the  highest
yielding  asset on the Bank's books.  The rural economy  of  the  Banks'
market area has been stable prior to 1998.  The Banks have noticed  some
decline  in  1999 in the overall economy, and especially  in  the  agri-
cultural  and  timber industries.  While the Banks are  not  heavy  into
these  industries, the decline in these areas have impacted the  overall
economy.  Classified loans for regulatory purposes remain at low  levels
and,  despite  the problem in the local economies, do not represent  any
trend   or  uncertainties  which  management  reasonably  expects   will
materially  impact  future  operating  results,  liquidity  of   capital
resources,  or  represents material credits about  which  management  is
aware that causes management to have serious doubts as to the ability of
such borrowers to comply with the loan payment terms.

     South's investment portfolio, including certificates of deposits in
other  banks,  increased  to $19,922,578 from  $19,280,633.   The  small
increase of $641,945 from operations is an indication of the loan demand
of  the banks and the desire of the banks to utilize the assets of South
in  the  highest yielding manner available to the banks without creating
liquidity problems. South has maintained adequate federal funds sold and
investments  available  for  sale  to  sufficiently  maintain   adequate
liquidity.   South's securities are primarily short term of three  years
or  less  in  maturity,  enabling  South  to  better  monitor  the  rate
sensitivity  of  these  assets.  Unrealized  gain  and  losses  on  this
portfolio is not material to the statement as South maintains  a  slight
unrealized loss of $286,251.

      As  the  primary source of funds, aggregate deposits increased  by
$6,810,030  in 1999 compared to $13,387,853 in 1998. This  represents  a
4.66% increase for the year compared to a 10.09% increase in 1998.  This
illustrates  the  efforts  of the banks to maintain  good  core  deposit
growth and not reach for the higher paying time certificates. One of the
markets experienced new competition in 1998 which continues to have some
impact on time certificate rates.

Liquidity

      The  primary function of asset/liability management is  to  assure
adequate  liquidity and maintain an appropriate balance between interest
sensitive  earning  assets and interest bearing liabilities.   Liquidity
management  involves the ability to meet the cash flow  requirements  of
customers   who may  be either  depositors desiring to  withdraw   funds
or


                                    30


borrowers requiring assurance that sufficient funds will be available to
meet their credit needs.  Interest rate sensitivity management seeks  to
avoid  fluctuating net interest margins and to enhance consistent growth
of net interest income through periods of changing interest rates.

      Interest rate sensitivity varies with different types of interest-
earning  assets  and  interest bearing liabilities.   Overnight  federal
funds  on  which rates change daily and loans which are  tied  to  prime
differ  considerably  from long-term investment and  fixed  rate  loans.
Similarly,  time  deposits over $100,000 and money market  accounts  are
much more interest sensitive than passbook savings and long-term capital
notes. The shorter-term interest rate sensitivities are key to measuring
the  interest  sensitivity  gap,  or excess  interest-sensitive  earning
assets  over interest-bearing liabilities.  An interest rate sensitivity
table  is included elsewhere in this document, and it shows the interest
sensitivity gaps for different time intervals as of December  31,  1999.
The  first  30 days there is an excess of interest-bearing  assets  over
interest-bearing liabilities. South becomes more sensitive  to  interest
rate  fluctuations  on a short time period.  While  the  cumulative  gap
declines  with  each  time interval, South remains within  a  manageable
position.

     Marketable  investment securities, particularly  those  of  shorter
maturities,  and federal funds sold are the principal sources  of  asset
liquidity.   Securities  maturing  in  one  year  or  less  amounted  to
$2,497,226  and  federal funds sold net of federal funds purchased  with
daily  maturities  amounted to $2,040,000 at year end 1999,  a  decrease
from  prior  years  as  loan  demand  exceeded  deposit  growth  demand.
Maturing  loans  and certificates of deposits in other banks  are  other
sources of liquidity.

      The  overall liquidity of South has been enhanced by a significant
aggregate  amount of core deposits.  These core deposits  have  remained
constant  during this period.  South has utilized less stable short-term
funding  sources  to enhance liquidity such as large  denomination  time
deposits and money market certificates within its current customer base,
but  has  not attempted to acquire these type of accounts from  non-core
deposit  customers.  South has utilized its core deposit  base  to  help
insure it maintains adequate liquidity.

      Historically,  the  trend  in cash flows  as  represented  in  the
statement  of  cash flows shows a steady increase in cash  generated  by
operations  from the last three years.  This is a result  of  increasing
net  income  for  each  year.  While income is not  predictable,  it  is
anticipated  that  liquidity  will  continue  to  be  enhanced  by   the
operations of the bank.  Operations activity, however, generate  only  a
small  portion  of the cash flow activities of the bank.   Primary  cash
flow  comes  from investing activities such as sales and/or maturity  of
investment securities and in the financing activity through an  increase
in  deposits.   The primary use of cash flow includes  the  purchase  of
securities and making new loans as investing activities.  The history of
the  bank's  cash flow indicates a nonrepeating source such as  proceeds
from  borrowings  utilized  as  sources  of  cash  for  the  purpose  of
acquisition or expansion.  South's overall


                                    31

cash flows indicate the relative stability and manageable growth of  the
bank's  assets.  South utilized deposit growth as its primary source  of
funds  to  handle  growth.  South's liquidity is  maintained  at  levels
determined by management to be sufficient to handle the cash needs  that
might  arise  at  any given date.  Outside sources are  maintained,  but
South  looks to these sources only on a very short term basis.   South's
long   term  liquidity  plans  include  utilizing  internally  generated
deposits  as its primary source of cash flows and utilizing the shifting
of the make up of assets to handle short term demands on cash.

Capital Resources

      In  January 1989, the Federal Reserve Board released new standards
for  measuring capital adequacy for U. S. banking organizations.   These
standards  are  based  on the original risk-based  capital  requirements
first proposed in early 1986 by U. S. bank regulators and then developed
jointly  by  authorities from the twelve leading  industrial  countries.
As  a  result, the standards are designed to not only provide more risk-
responsive capital guidelines for financial institutions in the  U.  S.,
but  also  incorporate  a  consistent framework  for  use  by  financial
institutions operating in the major international financial markets.

     In  general, the standards require banks and bank holding companies
to  maintain capital based on "risk-adjusted" assets so that  categories
of  assets with potentially higher credit risk will require more capital
backing  than  assets  with  lower risk.  In addition,  banks  and  bank
holding companies are required to maintain capital to support, on a risk-
adjusted  basis,  certain  off-balance sheet  activities  such  as  loan
commitments and interest rate swaps.

      The  Federal  Reserve Board standards classify  capital  into  two
tiers,  referred  to as Tier 1 and Tier 2.  Tier 1 capital  consists  of
common  shareholders' equity, noncumulative and cumulative  (BHCs  only)
perpetual preferred stock and minority interest less goodwill.   Tier  2
capital  consists  of  allowance for loan and  lease  losses,  perpetual
preferred  stock  (not included in Tier 1), hybrid capital  instruments,
term  subordinated  debt  and  intermediate-term  preferred  stock.   By
December 31, 1992, all banks were required to meet a minimum ratio of 8%
of  qualifying total capital to risk-adjusted total assets with at least
4%  Tier 1 capital.  Capital that qualifies as Tier 2 capital is limited
to 100% of Tier 1 capital.

Loans and Asset Quality

      Management  of  the Company believes that the  loan  portfolio  is
adequately  diversified.  Commercial loans are spread  through  numerous
types  of businesses with no particular industry concentrations.   Loans
to  individuals are made primarily to finance consumer goods  purchased.
At  December 31, 1999, total loans, net of unearned discounts, were  76%
of total earning assets.  Loans secured by real estate accounted for 57%
of total loans as of December 31, 1999.  Most of the loans classified as
real  estate-mortgage  are commercial loans where real  estate  provides
additional  collateral.  The Banks do not participate in  the  secondary
loan market.


                                    32


      Nonperforming assets include nonaccrual loans, accruing loans past
due  90 days or more and other real estate, which includes foreclosures,
deeds in lieu of foreclosure and in-substance foreclosures.

       A   loan   is  generally  classified  as  nonaccrual  when   full
collectibility of principal or interest is doubtful or a loan becomes 90
days  past due as to principal or interest, unless management determines
that  the estimated net realizable value of the collateral is sufficient
to  cover  the  principal balance and accrued interest.   When  interest
accruals  are  discontinued, unpaid interest credited to income  in  the
current  year is reversed and unpaid interest accrued in prior years  is
charged  to  the  allowance  for loan losses.  Nonperforming  loans  are
returned to performing status when the loan is brought current  and  has
performed  in accordance with contract terms for a period  of  time.   A
summary  of South's loan loss experience is included elsewhere  in  this
report.

Distribution of Nonperforming Assets
                                           1999      1998    1997
                                                 (In Thousands)
Nonaccrual loans                           $   442   $   557   $   311
Past due 90 days still accruing                419       492       760
Other real estate (ORE)                        168       163       122

                                           $ 1,029   $ 1,212   $ 1,193
Nonperforming loans to year
 end loans                                     .65        %        .91
%                                   1.00         %
Nonperforming assets to year
 end loan and ORE                              .78         %      1.05
%                                   1.11        %

     The ratio of nonperforming assets has increased each year from 1994
to  1997.   However in 1998 and 1999, a slight decrease occurred  as  90
days  past  dues  declined. This decrease is attributed to  management's
early  review  system to grasp problems before they become unmanageable.
Management  continues to work on nonperforming assets to further  reduce
this ratio.

Asset-Liability Management and Market Risk Sensitivity

      Market  risk  is the risk of loss from adverse changes  in  market
prices  and  rates.  The Company's market risk arises  principally  from
interest  rate  risk  inherent  in its lending,  deposit  and  borrowing
activities.  Management actively monitors and manages its inherent  rate
risk  exposure.  Although the Company manages other risks, as in  credit
quality and liquidity risk, in the normal course of business, management
considers interest rate risk to be its most significant market risk  and
could  potentially  have the largest material effect  on  the  Company's
financial  condition and results of operations.  Other types  of  market
risks,  such as foreign currency exchange rate risk and commodity  price
risk,  do  not  arise  in  the normal course of the  Company's  business
activities.

                                    33

     The Company's profitability is affected by fluctuations in interest
rates.   Management's goal is to maintain a reasonable  balance  between
exposure  to  interest  rate fluctuations and earnings.   A  sudden  and
substantial  increase  in  interest  rates  may  adversely  impact   the
Company's  earnings to the extent that the interest rates  on  interest-
earning  assets and interest-bearing liabilities do not  change  at  the
same  speed,  to  the  same extent or on the same  basis.   The  Company
monitors  the  impact of changes in interest rates on its  net  interest
income using several tools.

      The Banks' goal is to minimize interest rate risk between interest
bearing assets and liabilities at various maturities  through its  Asset-
Liability  Management (ALM).  ALM involves managing the mix and  pricing
of assets and liabilities in the face of uncertain interest rates and an
uncertain  economic outlook.  It seeks to achieve steady growth  of  net
interest  income  with an acceptable amount of interest  rate  risk  and
sufficient liquidity.  The process provides a framework for determining,
in  conjunction with the profit planning process, which elements of  the
Company's   profitability  factors  can  be  controlled  by  management.
Understanding the current position and implications of past decisions is
necessary in providing direction for the future financial management  of
the Company.  The Company uses an asset-liability model to determine the
appropriate strategy for current conditions.

      Interest  sensitivity  management is part of  the  asset-liability
management  process.  Interest sensitivity gap (GAP) is  the  difference
between total rate sensitive assets and rate sensitive liabilities in  a
given  time  period.   The  Company's rate sensitive  assets  are  those
repricing  within  one year and those maturing within  one  year.   Rate
sensitive  liabilities  include insured money market  accounts,  savings
accounts,  interest-bearing  transaction  accounts,  time  deposits  and
borrowings.    The   profitability  of   the   Company   is   influenced
significantly by management's ability to manage the relationship between
rate   sensitive  assets  and  liabilities.   At  December   31,   1999,
approximately  64%  of the Company's earnings assets could  be  repriced
within  one  year  compared to approximately 93% of its interest-bearing
liabilities.  This compares to 65% and 96% in 1998.

      The  Company's current GAP analysis reflects that  in  periods  of
increasing  interest  rates, rate sensitive assets will  reprice  slower
than  rate sensitive liabilities.  The Company's GAP analysis also shows
that  at  the interest repricing of one year, the Company's net interest
margin  would be adversely impacted.  This analysis, however,  does  not
take  into  account the dynamics of the marketplace.  GAP  is  a  static
measurement  that  assumes  if the prime rate  increases  by  100  basis
points, all assets and liabilities that are due to reprice will increase
by  100  basis points at the next opportunity.  However, the Company  is
actually  able to experience a benefit from rising rates  in  the  short
term   because  deposit rates do not follow the national  money  market.
They  are  controlled by the local market.  Loans do  follow  the  money
market; so when rates increase they reprice immediately, but the Company
is  able  to  manage the deposit side.  The Company generally  does  not
raise  deposit  rates  as fast or as much.  The  Company  also  has  the
ability  to manage its funding costs by choosing alternative sources  of
funds.



                                    34


      The  Company's  current GAP position would also be interpreted  to
mean  that  in  periods of declining interest rates, the  Company's  net
interest  margin would benefit.  However, competitive pressures  in  the
local  market may not allow the Company to lower rates on deposits,  but
force the Company to lower rates on loans.

      Computation  of prospective effects of hypothetical interest  rate
changes  are based on numerous assumptions including relative levels  of
market  interest  rates, loan prepayments and deposit decay  rates,  and
should not be relied upon as indicative of actual results.  Further, the
computations do not contemplate any actions the Company could  undertake
in response to changes in interest rates.

      The  rate  sensitivity  analysis  as  presented  in  the  selected
statistical  information shows the Company's financial instruments  that
are  sensitive  to  changes in interest rates, categorized  by  expected
maturity.  Market risk sensitive instruments are generally defined as on
and off balance sheet derivatives and other financial instruments.

Notes to Market Risk Sensitivity Table:

            Expected maturities are contractual maturities adjusted  for
     prepayments  of principal when possible.  The Company uses  certain
     assumptions to estimate expected maturities.

    For  loans, the Company has used contractual maturities due  to  the
     fact  that  the Company has no historical information on prepayment
     speeds.   Since  most  of these loans are consumer  and  commercial
     loans,  and  since  the Company's customer base is community-based,
     the Company feels its prepayment rates are insignificant.

    For  mortgage-backed securities, expected maturities are based  upon
     contractual  maturity,  projected  repayments  and  prepayment   of
     principal.   The prepayment experience herein is based on  industry
     averages as provided by the Company's investment trustee.

    Loans receivable includes non-performing loans.

    Interest-bearing  liabilities are included in the  period  in  which
     the  balances  are  expected  to  be  withdrawn  as  a  result   of
     contractual  maturities.  For accounts with no  stated  maturities,
     the balances are included in the 0 to 90 day category.

    The  interest rate sensitivity gap represents the difference between
     total    interest-earning   assets   and   total   interest-bearing
     liabilities.

      An  important aspect of achieving satisfactory net interest income
is   the  composition  and  maturities  of  rate  sensitive  assets  and
liabilities.  The  table generally reflects that in  periods  of  rising
interest rates, rate sensitive liabilities will reprice faster than rate
sensitive assets, thus having a negative effect on net interest  income.
It must be
understood,  however, that such an analysis is only a  snapshot  picture
and


                                    35


does   not  reflect  the  dynamics  of  the  market  place.   Therefore,
management reviews simulated earnings statements on a monthly  basis  to
more accurately anticipate its sensitivity to changes in interest rates.

Results of Operations

                          1999 Compared to 1998

      Net  interest income remains an effective measurement of how  well
management  has  balanced  South's interest rate  sensitive  assets  and
liabilities.   Net interest income increased by $728,607.  The  increase
of 9.68% compared to a 8.45% increase in 1998.  The primary determinants
of the increase were loans and time deposits.  As loan demand increased,
funds  were channeled into higher yielding loans.  Management  continues
its  policy  of not soliciting high interest deposits and  was  able  to
maintain stable cost of funds.  The growth of assets and liabilities was
only part of the reason for the increase as net interest yield increased
to 4.83% from 4.52%.  With the low interest rate currently in the market
and South's current rate gap, South will continue its efforts to channel
funds  into  higher yielding assets.  Due to the rate  sensitivity  gap,
South  will  attempt to improve its current position with  a  controlled
attempt  to lengthen its maturity of interest rate sensitive liabilities
although this remains difficult without rate adjustments upward.

     Interest and fees on loans increased $706,985 or 5.82% from 1998 to
1999  due  to  loan  growth of 15.1% in 1999.   Interest  on  investment
securities increased $29,504 or 2.5% from 1998 to 1999 due to  a  slight
increase  in the yield in investments as rates have increased  slightly.
Interest income on federal funds sold decreased $113,905 or 18.9% due to
lower average balances invested.

     Total interest expense decreased 20% or $131,134 from 1998 to 1999.
The  largest component of total interest expense is interest expense  on
deposits, which decreased $117,482 or 1.9% from 1998 to 1999  due  to  a
rate decrease that offset growth in deposits.  The average rate paid  on
deposits   was  4.82%,  5.27%  and  5.10%  in  1999,  1998   and   1997,
respectively.

      The  allowance  for  possible loan losses is  established  through
charges  to  expense in the form of a provision for  loan  losses.   The
provision  for loan losses was $503,000 and $286,000, respectively,  for
the  years  ended  December 31, 1999 and 1998.  The  provision  in  1999
reflects replenishing the allowance for loan losses to cover net charge-
offs  of $432,472, plus providing for the 15.10% increase in total loans
outstanding.   The allowance for loan losses to total loans  outstanding
is  1.64%  at December 31, 1999.  Net charge-offs to average  loans  are
 .25% for 1999 as compared to 0.12% for 1998.

      The allowance for loan losses is based on an in-depth analysis  of
the  loan  portfolio.  Specifically included in that  analysis  are  the
following types of loans:  loans determined to be of a material  amount,
loans  commented  on by regulatory authorities, loans  commented  on  by
internal and external auditors, loans past due more than 60 days, and


                                    36



loans  on  a  nonaccrual status.  The allowance for loan losses  is  not
allocated  to  specific  credit risk, but rather  to  the  overall  loan
portfolio as the individual banks are relatively small and can be looked
at  as  a  whole.  The overall loan portfolio remains of  good  quality,
however, some deterioration has been noted in the economy which reflects
on  the  loan portfolio.  The Banks have made provisions where necessary
to reflect the overall quality of loans.


Non-Interest Income

      Non-interest income for 1999 increased by $392,788 or  20.6%  over
1998, as compared to an increase in 1998 of $335,546 or 21.4% over 1997.
These  increases  generally  resulted from increased  activity  in  data
processing,  financial  services  and service  charges  on  deposits.  A
significant  contributor to non-interest income is  service  charges  on
deposit  accounts which increased 24.2%.  Management views  deposit  fee
income  as critical influence on profitability.  Periodic monitoring  of
competitive  fee schedules and examination of alternative  opportunities
ensure  that  the Company realizes the maximum contribution  to  profits
from this area.


Non-Interest Expense

      Non-interest  expenses totaled $6,905,856 in 1999 as  compared  to
$6,386,678 in 1998.  This represented an 8% increase from 1998 to  1999,
and  a 6% increase from 1997 to 1998.  The overall increases during  the
year were to growth in all geographic markets, which is evidenced by the
growth in deposits of $4.7% from 1998 to 1999 and 11% from 1997 to 1998.
Salaries and other personnel expenses, which comprised 54% of total non-
interest expenses for 1999, were up $410,409 or 12.5% over 1998  due  to
normal salary increases, benefit cost increases, and increased personnel
due  to  one  new  branch.   During 1998 and 1997,  salaries  and  other
personnel  expenses accounted for 51% and 50% of total  other  operating
expenses, respectively.

      Combined  net  occupancy  and  furniture  and  equipment  expenses
increased $26,489, or 2.3% from 1998 to 1999, as compared to an increase
of $102,423, or 9.8% in 1998.


Income Taxes

      Income  tax  expense  totaled $1,017,056 in 1999  as  compared  to
$830,744  in 1998.  The changes in net income tax expense for the  years
were due to changes in taxable income for each respective year.  Taxable
income  is  affected  by  net income, income on  tax  exempt  investment
securities  and  loans,  and the provision for  loan  losses.   For  tax
purposes,  the Bank can only recognize actual loan losses.  The  Company
works actively with outside tax consultants to minimize tax expenses.


                                    37
Results of Operations

                        1998 Compared to 1997

      Net  interest income remains an effective measurement of how  well
management  has  balanced  South's interest rate  sensitive  assets  and
liabilities.   Net interest income increased by $586,672.  The  increase
of   8.45%  compared  to  a  10.46%  increase  in  1997.   The   primary
determinants  of  the increase were loans and time  deposits.   As  loan
demand  increased,  funds  were channeled into  higher  yielding  loans.
Management continues its policy of not soliciting high interest deposits
and was able to maintain stable cost of funds.  The growth of assets and
liabilities  was necessary to maintain the level of net interest  income
as  net  interest  yield decreased to 4.52% from 5.18%.   With  the  low
interest rate currently in the market and South's current interest  rate
gap,  South  will  continue  its efforts to channel  funds  into  higher
yielding assets.  Due to the rate sensitivity gap, South will attempt to
improve  its current position with a controlled attempt to lengthen  its
maturity  of  interest  rate  sensitive  liabilities  although  this  is
difficult without rate adjustments upward.

     Interest and fees on loans increased $1,382,418 or 12.83% from 1997
to  1998  due  to loan growth of 7.9% in 1998.  Interest  on  investment
securities decreased $14,505 or 1% from 1997 to 1998 due to a  reduction
in  the  yield  in  investments as rates have  declined  in  securities.
Interest income on federal funds sold increased $208,034 or 53%  due  to
higher average balances invested.

      Total interest expense increased 18.6% or $1,005,298 from 1997  to
1998.   The  largest  component of total interest  expense  is  interest
expense on deposits, which increased $1,077,074 or 21% from 1997 to 1998
due  to a 10% growth in deposits.  The average rate paid on deposits was
5.27%, 5.10% and 4.98% in 1998, 1997 and 1996, respectively.

      The  allowance  for  possible loan losses is  established  through
charges  to  expense in the form of a provision for  loan  losses.   The
provision  for loan losses was $286,000 and $334,531, respectively,  for
the  years  ended  December 31, 1998 and 1997.  The  provision  in  1998
reflects replenishing the allowance for loan losses to cover net charge-
offs  of  $137,066, plus providing for the 7.9% increase in total  loans
outstanding.   The allowance for loan losses to total loans  outstanding
is  1.71%  at December 31, 1998.  Net charge-offs to average  loans  are
0.12% for 1998 as compared to 0.14% for 1997.

      The allowance for loan losses is based on an in-depth analysis  of
the  loan  portfolio.  Specifically included in that  analysis  are  the
following types of loans:  loans determined to be of a material  amount,
loans  commented  on by regulatory authorities, loans  commented  on  by
internal  and external auditors, loans past due more than 60  days,  and
loans  on  a  nonaccrual status.  The allowance for loan losses  is  not
allocated  to  specific  credit risk, but rather  to  the  overall  loan
portfolio as the individual banks are relatively small and can be looked
at  as  a  whole.  The overall loan portfolio remains of  good  quality,
however,  some  deterioration  has  been  noted  in  the  economy  which
reflects  on  the loan portfolio.  The Banks have made provisions  where
necessary to reflect the overall quality of loans.

                                    38


Non-Interest Income

     Non-interest income for 1998 increased by $335,546 or 4% over 1997,
as  compared to a decrease in 1997 of $26,778 or 1.6% over 1996.   These
increases generally resulted from increased SBA loan activity.

     A significant contributor to non-interest income is service charges
on  deposit accounts which decreased 2.3%.  Management views deposit fee
income as a critical influence on profitability.  Periodic monitoring of
competitive  fee schedules and examination of alternative  opportunities
ensure  that  the Company realizes the maximum contribution  to  profits
from this area.

Non-Interest Expense

      Non-interest  expenses totaled $6,386,678 in 1998 as  compared  to
$6,017,178 in 1997.  This represented a 6% increase from 1997  to  1998,
and  a  7.7% increase from 1996 to 1997.   The overall increases  during
the
year were due to growth in all geographic markets, which is evidenced by
the  growth  in deposits of 11% from 1997 to 1998 and 9%  from  1996  to
1997.  Salaries  and other personnel expenses, which  comprised  51%  of
total  non-interest expenses for 1998, were up $219,187 or 7% over  1997
due  to  normal salary increases and increased personnel due to the  one
new branch.  During 1997 and 1996, salaries and other personnel expenses
accounted   for   50%  and  48%  of  total  other  operating   expenses,
respectively.

      Combined  net  occupancy  and  furniture  and  equipment  expenses
increased  $102,423,  or  9.8% from 1997 to  1998,  as  compared  to  an
increase of $117,214, or 12%, in 1997.  The increase in 1998 is  due  to
the opening of one new branch.

Income Taxes

     Income tax expense totaled $830,744 in 1998 as compared to $767,811
in  1997.  The changes in net income tax expense for the years were  due
to  changes in taxable income for each respective year.  Taxable  income
is  affected  by net income, income on tax exempt investment  securities
and  loans,  and the provision for loan losses.  For tax  purposes,  the
Bank  can only recognize actual loan losses.  The Company works actively
with outside tax consultants to minimize tax expenses.

Results of Operations

                        1997 Compared to 1996

      Net  interest income remains an effective measurement of how  well
management  has  balanced  South's interest rate  sensitive  assets  and
liabilities.   Net interest income increased by $657,643.  The  increase
of 10.46% compared to a 7.8% increase in 1996.  The primary determinants
of the increase were loans and time deposits.  As loan demand increased,
funds  were channeled into higher yielding loans.  Management  continues
its policy of not soliciting high interest deposits and was able to


                                    39

maintain  stable cost of funds.  The shifting of assets and  liabilities
was  necessary  to  maintain the level of net  interest  income  as  net
interest  yield  increased to 5.20% from 4.96%.  With the  low  interest
rate  currently  in  the market and South's current interest  rate  gap,
South  will  continue its efforts to channel funds into higher  yielding
assets.   Due to the rate sensitivity gap, South will attempt to improve
its  current position with a controlled attempt to lengthen its maturity
of  interest  rate  sensitive liabilities, although  this  is  difficult
without rate adjustments upward.

      The  provision  for loan loss was $1,821,680 in 1997  compared  to
$1,781,013  in 1996.  The provision for loan losses has been  sufficient
to  increase the allowance for loan losses each year.  During  the  year
1997, loan loss were held to low levels as management continues to  work
its loan portfolio to minimize charge-offs and place maximum efforts  to
collect previously charged off.

      Other  income  decreased slightly from the  prior  year.   Service
charges  increased  in  1997 compared to 1996.   Additionally,  a  small
loss
on  securities  occurred in 1997 on early calls.   A  loss  on  sale  of
equipment from the computer center during a conversion accounts for  the
decline in other income in 1997.

      Operating  cost  grew  at  a rate of  7.72%.   The  increases  are
primarily personnel related as the Bank works hard at controlling  cost.
Decrease  in  FDIC  fees and increased data processing  efficiency  help
maintain cost levels.

      Income  tax  expense was $767,811 in 1997 or 33.1% of  net  income
compared  to $662,078 in 1996 or 31.6% of net income.  The nondeductible
cost attributable to the 1996 acquisition of Pineland Bank accounts  for
the higher tax rate.

      Results  of operations can be measured by various ratio  analysis.
Two  widely recognized performance indicators are the return on  average
equity and the returns on average assets.  South's return on equity
increased from 11.66% to 13.06%.  The return on assets decreased from
1.16% to 1.13%.  These levels are within peer group ranges of some other
bank  holding  companies,  management  believes  that  1998  can  obtain
comparable ratios despite increased competition.

Regulatory Matters

      During  the  year  1999,  federal and  state  regulatory  agencies
completed  asset  quality  examinations  at  South's  subsidiary  banks.
South's  level and classification of identified potential problem  loans
was not revised significantly as a result of this regulatory examination
process.

       Examination  procedures  require  individual  judgments  about  a
borrower's ability to repay loans, sufficiency of collateral values  and
the  effects  of changing economic circumstances.  These procedures  are
similar  to those employed by South in determining the adequacy  of  the
allowance for loan losses and in classifying loans.  Judgments  made  by
regulatory examiners may differ from those made by management.

                                    40

      Management  and  the boards of directors of South  and  affiliates
evaluate  existing  practices and procedures on an  ongoing  basis.   In
addition,  regulators often make recommendations during  the  course  of
their  examinations  that  relate to the operations  of  South  and  its
affiliates.   As  a  matter of practice, management and  the  boards  of
directors  of  South and its subsidiaries consider such  recommendations
promptly.

Impact of Inflation and Changing Prices

     The majority of assets and liability of a financial institution are
monetary  in nature; therefore, differ greatly from most commercial  and
industrial  companies that have significant investments in fixed  assets
or inventories.  However, inflation does have an important impact on the
growth of total assets in the banking industry and the resulting need to
increase equity capital at higher than normal rates in order to maintain
an  appropriate equity-to-assets ratio.  An important effect of this has
been  the  reduction  of  asset growth to maintain  appropriate  levels.
Another significant effect of inflation is on other expenses, which tend
to rise during periods of general inflation.

      Management  believes  the  most significant  impact  on  financial
results  is South's ability to react to changes in interest  rates.   As
discussed   previously,  management  is  attempting   to   maintain   an
essentially  balanced  position between interest  sensitive  assets  and
liabilities in order to protect against wide interest rate fluctuations.

Item 8.  Financial Statements and Supplementary Data

      The  following consolidated financial statements of the Registrant
and  its  subsidiaries are included on pages F-2 through  F-40  of  this
Annual report on Form 10-K.

     Consolidated Balance Sheets - December 31, 1999 and 1998

      Consolidated Statements of Income and Other Comprehensive Income -
Years ended December 31, 1999, 1998 and 1997

      Consolidated Statements of Changes in Stockholders' Equity - Years
ended December 31, 1999, 1998 and 1997

     Consolidated  Statement  of Cash Flow - Years  ended  December  31,
     1999, 1998 and 1997

     Notes to Consolidated Financial Statements

Item 9.  Disagreement on Accounting and Financial Disclosures

     Not applicable.

                                    41


Part III.

Item 10. Directors and Executive Officers of the Registrant

      The  Directors and Executive Officers of the Registrant  and  their
respective ages, positions with the Registrant, principal occupation  and
Common Stock of the Registrant beneficially owned as of March 1, 1999 are
as follows:
                                                Director
                                              (Officer) of   # of shares
                           Position with        Registrator Owned
                           Registrant          of one of     Beneficiary
                           & Principal         the Banks    (Percent of
Name (Age)                 Occupation          Since        Class)
Paul T. Bennett (44)       President,          1978(1)(2)        19,103
                            Treasurer and             (3)      (  4.78%)
                            Director; Vice            (4)
                            Chairman and Director,
                            Citizens Bank; Vice
                            Chairman and Director,
                            Peoples State Bank &
                            Trust, Baxley, Georgia;
                            President Peoples Bank,
                            Lyons, Georgia; Director,
                            Banker's Data Services;
                            Director, Alma Exchange
                            Bank and Trust

Olivia Bennett (80)        Executive Vice      1969(1)(2)       193,583
                            President, Secretary      (3)     (  48.45%)
                            and Director; Chairman
                            and Director, Alma
                            Bank; Director,
                            Banker's Data Services;
                            Chairman of Board,
                            President, Citizens Bank;
                            Director, Peoples Bank

Lawrence Bennett (52)      President and       1987(1)(2)        12,498
                            Director, Alma            (4)       (  3.13    %)
                            Bank; Director,
                            Banker's Data Services;
                            Director, Peoples
                            Bank, Baxley; Director
                            Peoples Bank, Lyons

Charles Stuckey (52)         Director; Executive  1990(3)         1,592
                              Vice President,                    (   .4    %)
                              Peoples Bank; Director,
                              Banker's Data Services





                                     42

Item 10. Directors and Executive Officers of the Registrant (Con't)


                                                Director
                                              (Officer) of   # of shares
                           Position with        Registrator Owned
                           Registrant          of one of     Beneficiary
                           & Principal         the Banks    (Percent of
Name (Age)                 Occupation          Since        Class)


James W. Whiddon (55)      Director; Executive     1989(2)          279
                            Vice President and                  (    .1    %)
                            Director, Citizens
                            Bank; Director,
                            Banker's Data Services

Kenneth F. Wade (57)       Director; Executive     1980(1)        4,862
                            Vice President, Director            (  1.21    %)
                            and Cashier, Alma Bank;
                            Director, Banker's
                            Data Services

John Rogers (52)           Director, Executive     1996(4)          100
                            Vice President, Pineland            (     -    %)
                            State Bank; Director;
                            Banker's Data Services

(1) Director of Alma Bank
(2) Director of Citizens Bank
(3) Director of Peoples Bank
(4) Director of Pineland State Bank


     Included in shares owned by Olivia Bennett are 175,501 shares owned
by Estate of Valene Bennett of which she is the Executrix.

     None of the directors are a director of a publicly-held corporation
which  is  required  to  file reports with the Securities  and  Exchange
Commission.

      Each of the Directors and Executive Officers have been engaged  in
his or her present principal occupation for at least five years.  Olivia
Bennett  is  the mother of Paul T. Bennett and Lawrence Bennett.   There
are  no  other  family  relationships  between  any  other  Director  or
Executive  Officer.  Directors serve until the next  annual  meeting  of
shareholders  or  until  their successors  are  elected  and  qualified.
Officers serve at the pleasure of the Board of Directors.
                                     43

Item 11.  Management Renumeration and Transactions

     The following information is given as to the cash and cash equivalent
forms of renumeration received by South's CEO.

                                                Long-Term Compensation
                   Annual Compensation          Awards           Payouts
(A)       (B)  (C)      (D)       (E)         (F)      (G)     (H)    (I)

                                 Other                                All
Name and                         Annual    Restricted                 Other
Principal                        Compen-     Stock  Options/ LTIP    Compen-
Position           Year          Salary   Bonus    sation (2)  Award   SARS
#     Payouts sation
Valene
Bennett
CEO     1999   $     - $     -   $     -  $      -  $    - $     -  $   -
CEO     1998         -       -         -         -       -        -      -
CEO     1997         -       -         -         -       -        -     -
1996         -      -        -        -        -       -       -
        1995    72,486       -     8,985         -       -        -    -
Paul T.
Bennett
CEO     1999   164,348       -    28,910         -       -        -     -
CEO      1998   140,956       -    26,200         -        -         -      -
1997    125,138        -   20,235           -           -         -         -
1996     109,480        -  22,940           -           -         -         -
1995    87,566      -  15,310        -         -       -      -

Olivia
Bennett
Secretary1999  205,366       -    20,345         -       -        -     -
        1998   195,935       -    22,010         -       -        -    -
         1997   182,936       -    15,135         -       -        -    -
1996    168,748       -   15,295         -          -         -         -
1995   100,857      -  12,200        -         -       -       -

(1)   Does  not include fees and dues for clubs and fraternal and  civic
organizations paid by the Banks to certain officers for business related
purposes.  Also, does not include any amounts for use of an automobile.

(2)   Other  compensation consists of director fees from registrant  and
subsidiary banks.

Transactions with Management

Item 12.  Security Ownership of Certain Beneficial Owners and Management

     The following table sets forth, as of March 1, 2000, the beneficial
ownership  of Common Stock of Registrant by the Only "person"  (as  that
term is defined by the Securities and Exchange Commission), who owns  of
record  or is known by the Registrant to own beneficially 5% or more  of
the  outstanding  shares of Common Stock of the Registrant  and  by  all
Executive Officers and Directors of the Registrant as a group.

                                     44

                                             Number of     Percent of
                                              Shares Owned  Outstanding
Name                                          Beneficially Shares
Estate of Valene Bennett
Route 4
Alma, Georgia 31510                                175,501       43.93%

Olivia Bennett
Route 4
Alma, Georgia 31510                                 18,082        4.52%

ll Executive Officers and Directors
 as a group (7 persons)                            232,017        58.0%

Item 13.  Certain Relationships and Related Transactions

      The  Banks  have  had, and expect to have in the  future,  banking
transactions  in  the  ordinary course of business  with  Directors  and
Officers  of  the  Banks  and their associates, including  corporations,
partnerships  and  other  organizations  in  which  such  Directors  and
Officers  have  an interest, on substantially the same terms  (including
interest  rates  and collateral) as those prevailing  at  the  time  for
comparable transactions with unrelated parties.  Such transactions  have
not  involved  more than the normal risk of collectibility or  presented
other unfavorable features.

Item 14.  Exhibits, Financial Statement Schedule and Reports on Form 8-K
Item 14(a)  1. and 3. and Item 14(d)

     (a)  The following documents are filed as part of this report:

          1.  Financial Statements

          (a)   South Banking Company and Subsidiaries:
           (i  )    Consolidated  Balance Sheets - December  31,  1999  and
1998
             (ii)     Consolidated   Statements   of   Income   and   Other
Comprehensive Income - Years ended December
                 31, 1999, 1998 and 1997
            (iii)   Consolidated  Statements  of  Stockholders'  Equity   -
Years ended December 31, 1999, 1998 and 1997
           (iv  )  Consolidated  Statements of  Cash  Flow  -  Years  ended
December 31, 1999, 1998 and 1997
          (b)   South Banking Company (Parent Corporation Only):
          (i  )  Balance Sheets - December 31, 1999 and 1998
           (ii  )  Statements  of Income and Other Comprehensive  Income  -
Periods ended December 31, 1999, 1998 and 1997
            (iii)  Statements  of  Stockholders'  Equity  -  Periods  ended
December 31, 1999, 1998 and 1997
           (iv  )  Statements  of  Cash Flow -  Years  ended  December  31,
1999, 1998 and 1997

                                     45


Item 14.  Exhibits,  Financial Statement Schedule and Reports on  Form  8-K
          (Con't)

          3.  Exhibits required by Item 7 of regulation S-K:

          (3)   Articles of Incorporation and By-Laws (included as
           Exhibits  3(a)  and  (b), respectively,  to  Appendix  II  to
           Registrant's Registration Statement on Form S-14, File No. 2-
           71249,  previously filed with the Commission and incorporated
           herein by reference).

          (13)  2000  Annual  Report to Shareholders  of  South  Banking
          Company  (not deemed filed except to the extent that  sections
          thereof  are  specifically incorporated into  this  report  on
          Form 10-K by reference).

          (22)  List of the Registrant's subsidiaries:

          (1)   Alma Exchange Bank & Trust
          (2)   Citizens State Bank
          (3)   Peoples State Bank & Trust
          (4)   Bankers' Data Services, Inc.
          (5)   Pineland State Bank
          (6)   South Financial Products, Inc.

      All of the Registrant's subsidiaries were incorporated under the
laws  of the State of Georgia and are doing business in Georgia  under
the above names.

          (b)  The registrant has not filed a Form 8-K during the last
          quarter of the period.

          (c)  The response to this Item 14(c) is included in item 14(a).

          (d)  Financial Statements Schedules - None.

                                    46


                            POWER OF ATTORNEY


      Know  all men by these present, that each person whose signature
appears  below constitutes and appoints Paul T. Bennett, his attorney-
in-fact, to sign any amendments to this Report, and to file the  same,
with  exhibits  thereto, and other documents in connection  therewith.
The Securities and Exchange Commission hereby ratifying and confirming
all  that said attorney-in-fact, or his substitute or substitutes, may
do or cause to be done by virtue hereof.

      Pursuant  to  the requirements of Section 13  or  15(d)  of  the
Securities Exchange Act of 1934, this report has been signed below  by
the  following  persons  on  behalf  of  the  Registrant  and  in  the
capacities and on the dates indicated.



Date:      March 29, 2000
                                      Paul T. Bennett
                                      Principal Executive,
                                      Financial and Accounting
                                      Officer and Director

Date:      March 29, 2000
                                      Olivia Bennett           Executive Vice
President
                                      And Director

Date:                    March               29,               2000
Charles Stuckey                       Director

Date:      March 29, 2000
                                      James W. Whiddon              Director

Date:      March 29, 2000
                                      Kenneth F. Wade
                                      Director

Date:      March 29, 2000
                                      Lawrence Bennett              Director

Date:      March 29, 2000
                                      John Rogers                   Director
                                     47


                              SIGNATURES


      Pursuant  to  the requirements of Section 13  or  15(d)  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




Date:      March 29, 2000               By:
                                              Paul    T.    Bennett
President, Treasurer
                                          and Director

                                     48
                       SUPPLEMENTAL INFORMATION


      The following supplemental information has not been sent to  the
Registrant's shareholders, but will be sent subsequent to  the  filing
of this Annual Report on Form 10-K:

     (1)  2000 annual report to shareholders.

     (2)  Proxy statement for 2000 annual meeting of shareholders.

     The foregoing  materials will be furnished to the Commission when
they  are sent to the shareholders since the Registrant does not  have
securities  registered  pursuant  to  Section  12  of  the  Securities
Exchange Act of 1934.  The foregoing materials shall not be deemed  to
be "filed" with the Commission or otherwise subject to the liabilities
of Section 18 of that Act.






































                                     49

                          SOUTH BANKING COMPANY

                              ALMA, GEORGIA

                          FINANCIAL STATEMENTS

                            DECEMBER 31, 1999



                                   F1

               REPORT OF INDEPENDENT ACCOUNTANTS


Board of Directors
South Banking Company
Alma, Georgia 31510


      We  have  audited the accompanying consolidated balance sheets  of
South Banking Company and Subsidiaries as of December 31, 1999 and  1998
and  the related consolidated statements of income, stockholders' equity
and  cash flows for each of the three years in the period ended December
31, 1999. These consolidated financial statements are the responsibility
of  the  Company's  management.  Our responsibility  is  to  express  an
opinion on these consolidated financial statements based on our audits.

      We  conducted  our  audit  in accordance with  generally  accepted
auditing  standards.  Those standards require that we plan  and  perform
the  audit  to  obtain reasonable assurance about whether the  financial
statements  are  free  of  material  misstatement.   An  audit  includes
examining,  on  a  test  basis,  evidence  supporting  the  amounts  and
disclosures  in  the  financial  statements.   An  audit  also  includes
assessing the accounting principles used and significant estimates  made
by  management,  as  well as evaluating the overall financial  statement
presentation.  We believe that our audits provide a reasonable basis for
our opinion.

      In our opinion, the  consolidated financial statements referred to
above  present  fairly,  in  all  material  respects,  the  consolidated
financial position of South Banking Company and Subsidiaries at December
31,  1999  and  1998  and the consolidated results  of  its  operations,
stockholders' equity, and cash flows for each of the three years in  the
period  ended  December 31, 1999, in conformity with generally  accepted
accounting principles.

                                          Respectfully submitted,


                                          H. H. BURNET & COMPANY, P.C.
Waycoss, Georgia
March 1, 2000


                                   F2

                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                      CONSOLIDATED BALANCE SHEETS



                                           December 31,   December 31,
                                            1999           1998

                                 ASSETS

Cash and due from banks                    $ 11,695,998   $  6,122,085

Deposits in other banks -
 interest bearing                          $    869,000   $  1,539,000

Investment securities
 Available for sale                        $ 18,306,239   $ 16,993,917
 Held to maturity - market value
  of $749,139 in 1999 and
  $765,060 in 1998                         $    747,339   $    747,716

Georgia  Bankers stock                      $    547,283   $     547,283
Federal Home Loan Bank stock               $    426,100   $    396,200

Federal funds sold                         $  3,180,000   $ 17,648,000
Loans                                                       $132,282,615
$114,959,844
Less: Unearned discount                     (   216,397)   (   154,545)
Reserve for loan losses                     ( 2,168,877              ) (
1,970,620                                             )
                                           $129,897,341   $112,834,679
Bank premises and equipment                $  4,097,405   $  4,020,735
Goodwill                                   $    208,562   $    262,137
Other assets                               $  3,832,154   $  3,778,990

Total Assets                               $173,807,421   $164,890,742
The accompanying notes are an integral part of these financial statements.

                                   F3


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



                                           December 31,   December 31,
                                          1999            1998


                  LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities
Deposits:  Demand - non-interest
                     bearing               $ 21,462,802   $ 23,299,454
           Demand - interest bearing         23,089,387     24,613,084
           Savings                           10,520,013      9,057,678
           Time                              97,727,773     89,019,729
                                           $152,799,975   $145,989,945
Borrowing                                     2,669,743      3,156,096
Accrued expenses and other
 liabilities                                  1,294,354      1,391,347
Federal  funds purchased                       1,140,000               -
N/P - Federal Home Loan Bank                     93,333        146,667

Total Liabilities                          $157,997,405   $150,684,055

Stockholders' Equity
Common stock $1 par value; shares
 authorized - 1,000,000,  shares
 issued and outstanding -
 1999 and 1998 - 399,500
 and 399,500, respectively                 $    399,500   $    399,500
Surplus                                       3,070,831      3,070,831
Undivided profits                            12,520,614     10,651,788
Accumulated other comprehensive income      (    180,929               )
84,568
Total Stockholders' Equity                 $ 15,810,016   $ 14,206,687
Total Liabilities and
 Stockholders' Equity                      $173,807,421   $164,890,742
The accompanying notes are an integral part of these financial
statements.

                                   F4


                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                   CONSOLIDATED STATEMENTS OF INCOME
                        AND COMPREHENSIVE INCOME


                           Year Ended     Year Ended     Year Ended
                            December 31,   December 31,   December 31,
                           1999           1998           1997
Interest Income
Interest and other
 fees on loans              $ 12,858,967   $ 12,151,982   $ 10,769,564
Interest on deposits -
 interest bearing                 78,124         82,264         92,506
Interest on federal
 funds sold                      462,292        601,351        393,317
Interest on investment
 securities:
 U. S. Treasury                  144,635        208,785        202,516
 U. S. Government agencies       753,245        668,239        655,440
 Mortgage backed securities       37,875         58,537         83,951
 State and municipal
  subdivisions                    86,777         91,698         89,615
 Other securities                 95,849         57,435         41,412

Total Interest Income       $ 14,517,764   $ 13,920,291   $ 12,328,321
Interest Expense
Interest on deposits        $  6,012,117   $  6,129,599   $  5,052,525
Interest - other borrowing       249,103        262,755        334,531
Total Interest Expense      $  6,261,220   $  6,392,354   $  5,387,056
Net interest income         $  8,256,544   $  7,527,937   $  6,941,265
Provision for loan losses        503,000        286,000        179,500
Net interest income after
 provision for loan losses  $  7,753,544   $  7,241,937   $  6,761,765
Other Operating Income
Service charge on deposits     1,446,630   $  1,164,506   $  1,191,927
Commission on insurance           68,614         93,217        108,277
Other income                     399,993        450,789        264,480
Securities gains (losses)            236          2,288            246
Data processing fees             382,396        195,701        153,811
Loss on sale of fixed
 assets                                     (     1,420              ) (
149,206                                )
Total Other Operating
 Income                     $  2,297,869   $  1,905,081   $  1,569,535

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

                                   F5


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

                           Year Ended     Year Ended     Year Ended
                            December 31,   December 31,   December 31,
                           1999           1998           1997
Other Operating Expenses
Salaries                    $  2,866,950   $  2,643,285   $  2,416,589
Profit sharing and other
 personnel expenses              827,359        640,615        648,124
Occupancy expense of bank
 premises                        408,211        393,219        383,268
Furniture and equipment
 expense                         765,963        754,466        661,994
Stationery and supplies          167,909        194,675        182,727
Data processing                  240,633        179,560        178,838
Director fees                    170,260        156,950        137,586
Other real estate expenses        21,112         13,991         15,781
Other expenses                 1,437,459      1,409,917      1,392,271
Total Other Operating
 Expenses                   $  6,905,856   $  6,386,678   $  6,017,178
Income before income taxes  $  3,145,557   $  2,760,340   $  2,314,122
Applicable income taxes        1,017,056        830,744        767,811
Net Income                  $  2,128,501   $  1,929,596   $  1,546,311
Other Comprehensive Income
 before tax
Unrealized gain on
  securities                 $(   402,268              )   $     61,798$
83,074
Other Comprehensive Income
  before tax                 $(   402,268              )   $     61,798$
83,074

Income tax expenses related
 to items of other
  comprehensive income        (   136,771              )          21,011
28,245

Other comprehensive income,
  net of tax                 $(   265,497              )   $     40,787$
54,829

Comprehensive Income        $  1,863,004   $  1,970,383   $  1,600,893

Per share data based on
 weighted outstanding shares:
   Weighted average
   outstanding                   399,500        399,500        400,501
Net Income                  $       5.33   $       4.83   $       3.86


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

                                   F6
                              SOUTH BANKING COMPANY
                                       ALMA,     GEORGIA
                        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


     Common                            Undivided
     Stock               Surplus       Profits
Balance,
 December 31, 1996       $   403,500   $ 3,116,581   $ 7,675,216
 Net income                        -             -     1,546,311
 Cash dividends                    -             -    (  239,681)
 Unrealized gain
  (loss) on securities
  available for sale               -             -             -
 Redemption of shares     (    4,000             )    (   45,750)             -

Balance,
 December 31, 1997       $   399,500   $ 3,070,831   $ 8,981,846
 Net income                        -             -     1,929,596
 Cash dividends                    -             -    (  259,654)
 Unrealized gain
  (loss) on securities
  available for sale               -             -             -

Balance,
 December 31, 1998       $   399,500   $ 3,070,831   $10,651,788
 Net income                        -             -     2,128,501
 Cash dividends                    -             -    (  259,675)
 Unrealized gain
  (loss) on securities
  available for sale               -             -            -

Balance,
 December 31, 1999       $   399,500   $ 3,070,831  $12,520,614




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

                                       F7



                          Accumulated
                          Other        Total
                        Comprehen-   Stockholders'
                         sive Income Equity
Balance,
 December 31, 1996      $(   11,048)   $11,184,249
 Net income                       -      1,546,311
 Cash dividends                   -     (  239,681             )
 Unrealized gain
  (loss) on securities
  available for sale          54,829        54,829
 Redemption of shares              -                  (   49,750             )

Balance,
 December 31, 1997       $    43,781   $12,495,958
 Net income                        -     1,929,596
 Cash dividends                    -    (  259,654             )
 Unrealized gain
  (loss) on securities
  available for sale          40,787        40,787

Balance,
 December 31, 1998       $    84,568   $14,206,687
 Net income                        -     2,128,501
 Cash dividends                    -    (  259,675             )
 Unrealized gain
  (loss) on securities
  available for sale      (  265,497             )   (  265,497)

Balance,
 December 31, 1999       $(  180,929             )  $15,810,016

                              SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                 CONSOLIDATED STATEMENTS OF CASH FLOWS


                              Year   Ended      Year  Ended         Year   Ended
December   31,                                 December   31,     December   31,
1999                                       1998           1997
Cash Flows From Operating
 Activities:
 Net income                 $  2,128,501   $  1,929,596   $  1,546,311
 Add expenses not
  requiring cash:
  Provision for depreciation
   and amortization              668,207        643,978        599,366
  Provision for loan losses      503,000        286,000        179,500
  Provision for loss on ORE        5,000          8,000          7,000
  Bond portfolio losses
   (gains)                     (       202              )    (        247)     (
265                                    )
 (Gain) loss on sale of
  premises & equipment       (     6,080              )              -153,151
 (Gain) loss on sale of
    other  real  estate  owned          34,444                (     11,336    )(
19,071                                 )
 Increase (decrease) in
    taxes   payable                   290,973           74,038                 (
125,505                                )
 Increase (decrease) in
  interest payable           (    39,109              )        171,545139,213
 Increase (decrease) in
  other liabilities          (   348,857              )    (   153,424)    1,156
(Increase) decrease in
   interest  receivable            167,420                   (     60,192)     (
192,363                                )
 Decrease (increase) in
   prepaid  expenses                17,824                   (      4,947)     (
22,924                                 )
 (Increase) decrease in
  other assets               (   101,191              )(    33,042   )134,274
 Recognition of unearned
    loan   income                     61,852            8,202                  (
1,039                                  )
 Net Cash Provided By
  Operating Activities      $  3,381,782   $  2,858,171   $  2,398,804
Cash Flows From Investing
 Activities:
 Proceeds from maturities
  of securities held to
  maturity                  $          -   $  1,360,102   $  1,056,813
 Purchase of securities
   held  to  maturity                                          (  502,131)     (
398,399                                )
 Proceeds from maturity of
  securities available for
  sale                         6,371,028                     8,074,0115,209,008
   Net  loans  to  customers       (17,816,584               )     (  8,810,806)
(17,755,789                            )

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

                                   F8

                              SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                  CONSOLIDATED STATEMENTS OF CASH FLOWS (Con't)



                            Year Ended     Year Ended     Year Ended
                            December 31,   December 31,   December 31,
                            1999           1998           1997
Cash Flows From Investing
 Activities: (con't)
 Purchase of securities
   available  for sale      $( 7,849,323)  $( 9,351,464)  $( 6,892,671)
 Purchase of premises and
   equipment                 (   696,558)   (   576,788)   (   814,681)
 Proceeds from sale of
  premises and equipment          11,538         29,394         19,986
 Proceeds from sale of
  other real estate owned        163,262        198,212        379,997
 Purchase  of Bank stock    (   250,000)   (   300,000)             -
 Purchase of FHLB stock     (    29,900)   (    51,700)   (    96,900)

Net Cash Provided By
   Investing Activities    $(20,096,537)  $( 9,931,170)  $(19,292,636)
Cash Flows From Financing
 Activities:
 Net increase (decrease) in
  demand deposits, NOW and
    money markets          $( 3,360,349)  $   4,074,732  $   2,335,042
 Net increase in savings
  and time deposits          10,170,379       9,313,121     13,574,063
 Proceeds from borrowing         38,812         460,000        320,043
 Payments  on borrowing     (   578,499)   (    504,559)  (    480,000)
 Dividends  paid            (   259,675)   (    259,654)  (    239,681)
 Payments  to  retire  stock          -               -   (     49,750)
 Increase in federal funds
  Purchased                   1,140,000    (    150,000)       150,000
Net Cash Provided By
 Financing Activities       $  7,150,668   $ 12,933,640   $ 15,609,717
Net increase (decrease) in
 Cash and Cash Equivalents  $( 9,564,087)  $  5,860,641   $( 1,284,115)

Cash and Cash Equivalents
 at Beginning of Year         25,309,085     19,448,444     20,732,559

Cash and Cash Equivalents
 at End of Year             $ 15,744,998   $ 25,309,085   $ 19,448,444


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

                                       F9


                        SOUTH BANKING COMPANY
                          ALMA,     GEORGIA
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          DECEMBER 31, 1999




Note 1.  Significant Accounting Policies

              The accounting and reporting policies of South Banking Company,
         Inc. and its subsidiaries conform with generally accepted accounting
         principles and with practices within the banking industry.

         (a)  Basis of Presentation

               During 1996, Pineland State Bank was acquired by South Banking
         Company.   The  transaction was accounted  for  using  the  purchase
         method.

         (b)  Principles of Consolidation

              The  consolidated financial statements include the accounts  of
         South Banking Company, Alma, Georgia (The Bank) and its wholly owned
         bank  subsidiaries, Alma Exchange Bank, Alma, Georgia; Peoples State
         Bank,  Baxley,  Georgia;  Citizens State Bank,  Kingsland,  Georgia;
         Pineland  State Bank, Metter, Georgia; and its wholly owned computer
         center,   Bankers'   Data  Services,  Inc.,  Alma,   Georgia.    All
         significant  intercompany  transactions  and  balances   have   been
         eliminated in consolidation.

         (c)  Nature of Operations:

               The Banks provide a variety of banking services to individuals
         and  businesses  through  its offices in Alma,  Georgia;  Kingsland,
         Georgia;  Baxley, Georgia; and Metter, Georgia.  Its primary  source
         of  revenue  is loans to customers who are primarily low  to  middle
         income individuals and small to mid size businesses.

         (d)  Use of Estimates:

               The  preparation  of financial statements in  conformity  with
         generally accepted accounting principles requires management to make
         estimates and assumptions that affect the reported amounts of assets
         and  liabilities and disclosure of contingent assets and liabilities
         at  the date of the financial statements and the reported amounts of
         revenues  and expenses during the reporting period.  Actual  results
         could differ from those estimates.




                                       F10
                        SOUTH BANKING COMPANY
                          ALMA,     GEORGIA
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          DECEMBER 31, 1999


Note 1.  Significant Accounting Policies (Con't)

         (d)  Use of Estimates (Con't)

         Material  estimates that are particularly susceptible to significant
         change  relate to the determination of the allowance  or losses   on
         loans  and  the  valuation  of fore-
         closed  real  estate.  In connection with the determination  of  the
         estimated  losses  on loans and foreclosed real  estate,  management
         obtains independent appraisals for significant properties.

              While management uses available information to recognize losses
         on  loans  and  foreclosed real estate, further  reductions  in  the
         carrying  amounts  of loans and foreclosed assets may  be  necessary
         based  on  changes  in  local  economic  conditions.   In  addition,
         regulatory  agencies,  as  an integral  part  of  their  examination
         process,  periodically  review the estimated  losses  on  loans  and
         foreclosed  real  estate.  Such agencies may  require  the  Bank  to
         recognize   additional  losses  based  on  their   judgments   about
         information  available  to them at the time  of  their  examination.
         Because  of  these  factors,  it  is reasonably  possible  that  the
         estimated  losses  on loans and foreclosed real  estate  may  change
         materially in the near term.  However, the amount of the change that
         is reasonably possible cannot be estimated.

         (e)  Securities:

              The Bank's investments in securities are
        classified in two categories and accounted for as follows.

            Securities  to be Held to Maturity.  Bonds, notes and  debentures
            for which the Bank has the positive intent and ability to hold to
            maturity  are  reported  at cost, adjusted  for  amortization  of
            premiums  and  accretion  of discounts which  are  recognized  in
            interest  income  using the interest method over  the  period  to
            maturity.

            Securities  Available for Sale.  Securities  available  for  sale
            consist of bonds, notes, debentures and certain equity securities
            not  classified as trading securities or as securities to be held
            to maturity.

             Declines  in  fair  value  of  individual  held-to-maturity  and
         available-for-sale securities below their cost that are  other  than
         temporary  have resulted in write-downs of the individual securities
         to  their fair value.  The related write-downs have been included in
         earnings as realized losses.


                                       F11
                              SOUTH BANKING COMPANY
                          ALMA,     GEORGIA
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          DECEMBER 31, 1999


Note 1.  Significant Accounting Policies (Con't)

        (e)  Securities (Con't)

              Unrealized holding gains and losses, net of tax, on  securities
         available  for  sale  are reported as a net  amount  in  a  separate
         component of shareholders' equity until realized.

               Gains  and losses on the sale of securities available-for-sale
         are determined using the specific-identification method.

         Federal Home Loan Bank Stock

                Individual banks within the holding company have  joined  the
     Federal  Home  Loan  Bank  ("FHLB") of Atlanta to  increase  the  Bank's
     available  liquidity.   As  a FHLB member, the  Banks  are  required  to
     acquire  and  retain shares of capital stock in FHLB of  Atlanta  in  an
     amount  equal  to  the greater of (1) 1.0% of the aggregate  outstanding
     principal  amount  of  the  residential mortgage  loans,  home  purchase
     contracts  and similar obligations, or (2) 0.3% of total assets  at  the
     beginning  of  each   year.   The  Bank  is  in  compliance  with   this
     requirement with an investment in FHLB stock of $426,100 and $396,200 at
     December  31, 1999 and 1998, respectively.  No ready market  exists  for
     this  stock  and it has no quoted market value. However,  redemption  of
     this stock has historically been at par value.

         (f)   Loans Receivable:

         Loans and Interest Income

                Loans are carried at principal amounts outstanding reduced by
         unearned discounts.  Interest income on all loans is recorded on  an
         accrual basis.  The accrual of interest is generally discontinued on
         loans  which  become 90 days past due as to principal  or  interest.
         The  accrual of interest on some loans, however, may  continue  even
         though they  are 90 days past due if the loans are well secured,  in
         the  process of collection, and management deems inappropriate.   If
         non-accrual loans decrease their past due status to 60 days or less,
         they  are reviewed individually by management to determine  if  they
         should be returned to accrual status.

         Impaired Loans

                The  Bank accounts for its impaired loans in accordance  with
         SFAS  No.  114, Accounting by Creditors for Impairment  of  a  Loan,
         which requires that all creditors value all specifically


                                       F12

                              SOUTH BANKING COMPANY
                          ALMA,     GEORGIA
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          DECEMBER 31, 1999


Note 1.  Significant accounting Policies (Con't)

         Impaired Loans (Con't)

         reviewed  nonhomogeneous  loans for which it  is  probable  that  the
         creditor will  be unable to collect all amounts due according to  the
         terms of the loan agreement at the loan's fair value. Fair value  may
         be  determined based upon the present value of expected  cash  flows,
         market  price  of the loan, if available, or value of the  underlying
         collateral. Expected cash flows are required to be discounted at  the
         loan's effective interest rate.  SFAS No. 114 was amended by SFAS No.
         118  to  allow  a creditor to  use existing  methods for  recognizing
         interest  in-  come  on  impaired loans and by  requiring  additional
         disclosures  about how a creditor recognizes interest income  related
         to impaired loans.

                The  Bank determines which loans are impaired through  a  loan
         review  process.   When the ultimate collectibility  of  an  impaired
         loan's  principal is in doubt, wholly or partially, all cash receipts
         are  applied  to  principal. When this doubt no longer  exists,  cash
         receipts  are  applied  under  the  contractual  terms  of  the  loan
         agreement first to principal and then to interest income.   Once  the
         recorded  principal  balance has been reduced to  zero,  future  cash
         receipts  are  applied to interest income, to  the  extent  that  any
         interest  has  been foregone. Further cash receipts are  recorded  as
         recoveries  or  any  amounts previously charged  off.  SFAS  No.  114
         specifically states that it need not be applied to "large  groups  of
         smaller-balance homogeneous loans that are collectively evaluated for
         impairment."   Thus, the Company determined that the  statement  does
         not  apply to its consumer loan, credit card or residential  mortgage
         loan  portfolios, except that it may choose to apply  it  to  certain
         specific  larger  loans determined by management.  In  effect,  these
         portfolios are covered adequately in the Company's normal formula for
         determining loan loss reserves.

         Loan Fees and Costs

                Nonrefundable  fees and certain direct costs  associated  with
         originating  or acquiring loans  are recognized as  yield  adjustment
         over  the  contractual life of the related loans, or if  the  related
         loan  is  held  for  resale, until the loan is sold.  Recognition  of
         deferred  fees and costs is discontinued on non-accrual  loans  until
         they  return  to accrual status or are charged-off.  Commitment  fees
         associated  with  lending are deferred  and  if  the   commitment  is
         exercised,  the  fee  is

                                       F13

                              SOUTH BANKING COMPANY
                          ALMA,     GEORGIA
                    NOTES TO FINANCIAL STATEMENTS
                          DECEMBER 31, 1999


Note 1.  Significant Accounting Policies (Con't)

         Impaired Loans (Con't)

         recognized  over the life of the related loan as a yield  adjustment.
         If  the commitment expires unexercised, the amount is recognized upon
         expiration of the commitment.

         (g)  Allowances for Loan Losses:

              The allowance for loan losses is maintained at a level which, in
         management's  judgment, is adequate to absorb credit losses  inherent
         in  the  loan  portfolio.  The amount of the allowance  is  based  on
         management's evaluation of the collectibility of the loan  portfolio,
         including the nature of the portfolio, credit concentrations,  trends
         in  historical  loss  experience, specific impaired  loans,  economic
         conditions,  and  other risks inherent in the portfolio.   Allowances
         for  impaired  loans  are generally determined  based  on  collateral
         values  or  the  present  value of estimated  cash  flows.   Although
         management uses available information to recognize losses  on  loans,
         because  of  uncertainties associated with local economic conditions,
         collateral  values, and future cash flows on impaired  loans,  it  is
         reasonably  possible  that  a material  change  could  occur  in  the
         allowance  for loan losses in the near term.  However, the amount  of
         the  change  that  is reasonably possible cannot be  estimated.   The
         allowance  is  increased by a provision for  loan  losses,  which  is
         charged  to  expense and reduced by charge-offs, net  of  recoveries.
         Changes  in  the allowance relating to impaired loans are charged  or
         credited to the provision for loan losses.

         (h)  Premises and Equipment:

              Land  is  carried  at cost.  Other premises  and  equipment  are
         carried  at  cost  net of accumulated depreciation.  Depreciation  is
         computed  using  he straight-line and the declining  balance  methods
         based  principally  on  the estimated useful  lives  of  the  assets.
         Maintenance  and  repairs  are  expensed  as  incurred  while   major
         additions  and  improvements are capitalized.  Gains  and  losses  on
         dispositions are included in current operations.

              (i)  Other Real Estate (ORE)

               Real estate acquired in satisfaction of a loan and in-substance
         foreclosures are reported in other assets.  In-substance foreclosures
         are properties in which a  borrower with

                                       F14

                              SOUTH BANKING COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                ALMA,    GEORGIA
                                DECEMBER 31, 1999



Note 1.  Significant Accounting Policies (Con't)

             (i)Other Real Estate (ORE) (Con't)

         little  or no equity in the collateral, effectively abandons  control
         of  the  property or has no economic interest to continue involvement
         in the property.    The borrower's ability to rebuild equity based on
         current financial conditions also is considered doubtful.  Properties
         acquired by foreclosure or deed in lieu of foreclosure and properties
         classified as in-substance  foreclosures are transferred to ORE   and
         recorded at the lower of cost or fair market value based on appraised
         value  at  the  date  actually  or constructively  received.     Loan
         losses  arising  from  the acquisition of such property  are  charged
         against  the  allowance  for  loan losses.   Losses  on  ORE  due  to
         subsequent valuation adjustments are recorded on a specific  property
         basis.

         (j)  Income Taxes

                 Income  taxes  are  provided  for  the  tax  effects  of  the
         transactions  reported  in the financial statements  and  consist  of
         taxes  currently  due  plus  deferred  taxes  related  primarily   to
         differences  between the basis of the allowance for loan  losses  and
         accumulated  depreciation.  The deferred tax assets  and  liabilities
         represent  the  future tax return consequences of those  differences,
         which  will  either  be taxable or deductible  when  the  assets  and
         liabilities  are  recovered  or  settled.  Deferred  tax  assets  and
         liabilities  are  reflected at income tax  rates  applicable  to  the
         period  in which the deferred tax assets or liabilities are  expected
         to  be  realized  or settled.  As changes in tax laws  or  rates  are
         enacted, deferred tax assets and liabilities are adjusted through the
         provision  for  income  taxes. The Bank files a consolidated  federal
         income  tax  return with its subsidiaries.  Each subsidiary  provides
         for  income taxes on a separate return basis and remits to the parent
         company amounts determined to be currently payable.

         (k)  Intangibles

               The  intangibles  (Goodwill) recorded by  the  Company  in  the
         acquisition of Pineland State Bank are being amortized on a  straight
         line basis over an eight year period.

         (l)  Earnings Per Share

               Earnings per share are based on the weighted average number  of
         shares outstanding.

                                       F15
                              SOUTH BANKING COMPANY
                                 ALLMA, GEORGIA
                   NOTES TO CONCOLIDATED FINANCIAL STATEMENTS


Note 1.  Significant Accounting Policies  (Con't)

        (m)  Comprehensive Income

             Comprehensive income includes net income and all other changes in
        equity  during  a  period except those resulting from  investments  by
        owners  and  distributions  to  owners.   Other  comprehensive  income
        includes  revenues, expenses, gains, and losses that  under  generally
        accepted  accounting  principles are included in comprehensive  income
        but excluded from net income.

             Comprehensive  income and accumulated other comprehensive  income
        are   reported  net  of  related  income  taxes.   Accumulated   other
        comprehensive  income  for  the  Bank consists  solely  of  unrealized
        holding   gains  or  losses  on  available-for-sale  securities.    In
        accordance with SFAS No. 130, the Company elected to disclose  changes
        in  comprehensive income in its Consolidated Statements of Income  and
        Comprehensive Income.

         (n)  Cash Flow Information

                  For  purposes of the statements of cash flows,  the  Company
     considers  cash, federal funds sold and due from banks as cash  and  cash
     equivalents.   Cash paid during the years ended December 31,  1999,  1998
     and  1997  for  interest  was   $6,300,329, $6,220,809,  and  $5,526,269,
     respectively.  Total income tax payments during 1999, 1998 and 1997  were
     $1,025,000, $879,500, and $893,316, respectively.

Note 2.  Investment Securities

              The  amortized cost and estimated market values of invest- ments
     in debt securities are as follows

                                 Gross        Gross
                     Amortized   Unrealized   Unrealized  Fair
                     Cost        Gains        Losses      Value
Securities available
 for sale -
December 31, 1999:

 U.S. Government
  and agency
  securities        $15,997,526  $         -  $   305,658  $15,691,868
 State and municipal
  securities          1,550,851       20,427        3,926    1,567,052
 Mortgage backed
  securities            495,913        8,975        2,673      502,215
 Equity securities      550,000            -        4,896      545,104

 Totals             $18,594,290   $   29,402  $   317,153  $18,306,239

                                       F16

                              SOUTH BANKING COMPANY
                                ALMA,     GEORGIA
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999



Note 2.  Investment Securities (Con't)


                     Gross       Gross
                     Amortized    Unrealized  Unrealized   Fair
                     Cost        Gains        Losses       Value

 U.S. Government
  and agency
  securities        $14,097,093   $   81,725   $   29,509  $14,149,309
 State and municipal
  securities          1,747,121       65,315            -    1,812,436
 Mortgage backed
  securities            721,401       10,772                   732,173
 Equity  securities     300,000            -            -      300,000

 Totals             $16,865,615   $  157,812   $   29,509  $16,993,918

Securities to be
 Held to maturity -
December 31, 1999:

 U.S. Government
  and agency
  securities        $   600,223  $       493  $       841  $   599,875
 State and municipal
  securities            147,116        2,148            -      149,264
 Mortgage backed
  Securities                  -            -            -            -

 Totals             $   747,339  $     2,641  $       841  $   749,139

December 31, 1998:

 U.S. Government
  and agency
  securities        $   600,809  $     8,973  $         -  $   609,782
 State and municipal
  securities            146,907        8,371            -      155,278
 Mortgage backed
  securities                  -            -            -            -

 Totals             $   747,716  $    17,344  $         -  $   765,060

                                       F17

                              SOUTH BANKING COMPANY
                               ALMA,      GEORGIA
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


Note 2.  Investment Securities (Con't)

               Gross  realized gains on sales and losses of available-for-sale
         securities were $-0- and $-0- in 1999, respectively and $-0- and $-0-
         , respectively for 1998 and $-0- and $-0-, respectively in 1997.

                Assets,   principally  securities  carried  at   approximately
         $13,588,845  at  December 31, 1999 and $10,490,274  at  December  31,
         1998,  were pledged to secure public deposits and for other  purposes
         required or permitted by law.

              The scheduled contractual maturities of securities to be held to
         maturity  and  securities  available for sale at December 31,    1999
         were as follows:


                       Securities to be       Securities
                       Held to Maturity       Held to Maturity
                       Amortized              Amortized
                       Cost        Fair Value  Cost         Fair Value
     Due in one year
      or less           $ 600,273   $ 599,875  $ 1,899,362  $ 1,897,003
     Due from one year
      to five years       100,000     100,837   14,814,908   14,527,946
     Due from five
      years to ten years        -           -            -            -
     Due after ten
      years                47,116      48,427    1,330,020    1,336,186

                       $  747,389  $  749,139  $18,044,290  $17,761,135


                   The  market  value of State and Other Political Subdivision
         Obligations  is  established with the assistance of an  outside  bond
         department and is based on available market data which often reflects
         transactions  of  relatively  small  size  and  is  not   necessarily
         indicative  of  prices  at which large amounts of  particular  issues
         could readily be sold or purchased.

                                    Expected   maturities  will  differ   from
         contractual maturities because issuers may have the right to call  on
         prepay obligations with or without call on prepayment penalties.

Note 3.  Loans

         The composition of the bank's portfolio was as follows:

                                       F18

                              SOUTH BANKING COMPANY
                                  ALMA, GEORGIA
                   NOTES TO CONS0LIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


Note 3.  Loans (Con't)
                                             1999         1998
                                               (In Thousands)
Commercial, financial and
 agricultural                          $     34,607   $     29,889
Real    estate   -   mortgage                62,829         58,005
Real    estate   -   construction            13,413          7,909
Installment and consumer                     21,433         19,157
           Total Loans                 $    132,282   $    114,960
Less: Unearned discount                 (       216)   (       154)
      Reserve  for loan losses          (     2,169)   (     1,971)
Loans, net                             $    129,897   $    112,835

               Non-accrual  loans (principally collateralized by real  estate)
         amounted  to  approximately  $422,000,   $557,000  and  $311,000   at
         December 31, 1999, 1998, and 1997, respectively.  Impaired loans were
         $-0- and $-0- at December 31, 1999 and 1998.

               The  Company  and its subsidiaries have granted  loans  to  the
         officers and directors of the Company, its subsidiaries and to  their
         associates.  Related party loans are made on substantially  the  same
         terms,  including interest rates and collateral, as those  prevailing
         at  the  time  for comparable transactions  with  unrelated   persons
         and  do  not  involve  more than normal risk of collectibility.   The
         aggregate  dollar amount of these loans was $506,787 and $500,391  at
         December 31, 1999 and 1998.  During 1999, $403,058 of new loans  were
         made, and repayments totaled $396,662.

Note 4.  Reserve for Loan Losses

              Transactions in the reserve for loan losses are summarized
         as follows:
                             Year Ended    Year Ended    Year Ended
                              December 31,  December 31,  December 31,
                             1999           1998          1997

         Balance at beginning
          of period            $ 1,970,620   $ 1,821,680  $  1,781,013
         Additions:  Provision
          charged to operating
          expenses             $   503,000   $   286,000  $    179,500
         Balance from bank
          acquisition                    -             -             -
                               $   503,000   $   286,000  $    179,500


                                      F19

                              SOUTH BANKING COMPANY
                                ALMA,     GEORGIA
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999



Note 4.  Reserve for Loan Losses (Con't)


                             Year Ended    Year Ended    Year Ended
                             December 31,  December 31,  December 31,
                             1999           1998          1997

         Deductions: Loans
           charged  off      $    432,472  $    257,163  $    263,945
         Less: recoveries         127,729       120,103       125,112
                             $    304,743  $    137,060  $    138,833
         Balance at end of
           period            $  2,168,877  $  1,970,620  $  1,821,680

                Additions  to  the  reserve  for  loan  losses  are  based  on
         management's evaluation of the loan portfolio under current  economic
         conditions,  past loan loss experience and such other factors  which,
         in  management's  judgment, deserve recognition  in  estimating  loan
         losses.   Loans  are charged off when, in the opinion of  management,
         such  loans  are deemed to be uncollectible.  Recognized  losses  are
         charged to the reserve and subsequent recoveries added.

               Loans  having  carrying values of $189,070  and  $236,049  were
         transferred to foreclosed real estate in 1999 and 1998, respectively.

             The  bank  is not committed to lend additional funds  to  debtors
         whose loans have been modified.

Note 5.  Deposits

               The  aggregate  amount of short-term jumbo  CDs,  each  with  a
         minimum  denomination of $100,000, was approximately  $24,392,234  in
         1999 and $21,155,947 in 1998.

              At  December 31, 1999, the scheduled maturities of  CDs  are  as
         follows:
                                           (In Thousands)
                    2000                     $    91,627
                    2001 and 2002                  6,057
                    2003 and thereafter               44

                                             $    97,728





                                      F20


                        SOUTH BANKING COMPANY
                          ALMA,     GEORGIA
              NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          DECEMBER 31, 1999



Note 6.  Premises and Equipment

          A summary of the account:
                                                  Year Ended    Year Ended
                                            December 31,  December 31,
                                            1999          1998

          Land                              $    448,148   $   448,148
          Buildings                            3,779,637     3,469,813
          Furniture and equipment              3,989,406     3,683,407
                                            $  8,217,191   $ 7,601,368
          Less:  Accumulated depreciation      4,119,786     3,580,633
                                             $ 4,097,405   $ 4,020,735

                 Depreciation  expense  was  $614,430  in  1999,   $605,161   in
     1998 and $547,940 in 1997.

Note 7. Borrowings

         Data relating to borrowing is as follows:

                                            Year Ended    Year ended
                                            December 31,  December 31,
         Parent Company -                   1999          1998

         Note payable in 10 annual payments
          of $350,000.  Interest is payable
          quarterly and accrues at prime rate
          and is secured by subsidiary bank
          stock.                            $  2,100,000  $  2,450,000

         Note payable due June 30, 2000.
          Interest payable quarterly and
          accrues at prime and is secured
          by bank stock                          260,000       300,000

        Subsidiary - Bankers Data Services, Inc.

        Note payable in 60 monthly principal
         amount of $10,833.33 plus interest.
         Interest accrues at prime rate basis.
         Computer equipment is pledged as
         collateral for loan.                    276,097       406,096

        Note payable in 36 monthly payments
         of $434.02.  Interest accrues at
         1.9% rate and is secured by vehicle.     10,630           -0-

                                      F21
                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          DECEMBER 31, 1999


Note 7. Borrowings (Con't)
                                             Year Ended     Year ended
                                             December 31,   December 31,
                                             1999           1998

        Subsidiary - South Financial Products, Inc.

        Note payable in 36 monthly payments
         of $696.98.  Interest accrues at 3.9%
         rate and is secured by vehicle.          23,016           -0-

                 Following are maturities of long term debt for each of the next
          five years.

                    2000 752,644
                    2001 493,043
                    2002 374,055
                    2003 350,000
                    2004 350,000

Note 8.  Income Taxes

             Income tax expense (benefit) was $1,017,056 for 1999, (an effective
        rate  of  32.3%),  $830,744 for 1998 (an effective rate  of  30.1%)  and
        $767,811  for 1997 (an effective rate of 33.2%). The actual expense  for
        1997,  1998 and 1999 differs from the "expected" tax expense  for  those
        years  (computed  by  applying the federal corporate  rate  of  34%)  as
        follows:

                               1999          1998          1997
     Computed "expected"
         tax    expenses             34.0%          34.0%        34.0%
     Alternative minimum tax            -              -             -
     Effect of State Income Tax       2.4%             -             -
     Tax exempt interest
      on securities and loans     (   2.9%)     (   4.2%)     (   2.8%)
     Other, net                   (   1.2%)          .3%          2.0%)

                                      32.3%         30.1%         33.2%

              The  current and deferred amounts of these tax provisions were  as
         follows:
                              1999          1998          1997

Current  - Federal     $  1,140,833    $    912,639    $     793,779
         - State            104,994               -                -
Deferred - Federal       (  146,891)    (    81,895)      (   25,968)
         - State         (   81,880)              -                -

                        $ 1,017,056     $   830,744      $   767,811
                                      F22
                              SOUTH BANKING COMPANY
                                ALMA,     GEORGIA
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


Note 8.  Income Taxes (Con't)

              The  tax effects of each type of income and expense item that gave
        rise to deferred taxes are:

                                             December 31,  December 31,
                                             1999          1998

         Net unrealized appreciation on
          securities available for sale      $   107,121   $(   43,621)
          Depreciation                        (  185,348)   (  204,985)
         Deferred loan fees                       81,086        52,545
         Allowance for credit losses             560,611       395,222
         0ther                                        -          5,788
         Purchase accounting treatment        (   69,763)   (   59,297)

         Net deferred tax asset (liability)  $   493,707   $   145,652

Note 9.  Employee Benefit Plans

               The  Company maintains a 401K deferred compensation plan for  all
         subsidiaries effective January 1, 1993.  The Company elected  to  match
         75%  of employee  contributions  for 1999,  1998 and 1997.  The expense
         to  the  Company  for  1999, 1998 and 1997 was $115,297,  $87,658,  and
         $89,746, respectively.

Note 10. Leases

               The  Pineland  State Bank leases 5.35 acres of  land  in  Candler
         County  under  an operating lease expiring December 31,  2054  with  an
         option to lease the land for an additional 75 years.

             Minimum future rental payments under non-cancelable operating lease
         having  remaining term in excess of 1 year as of December 31, 1999  for
         each of the next 5 years and in the aggregate is:

                    Year Ended
                    2000                     $     4,000
                    2001                           4,000
                    2002                           4,000
                    2003                           4,000
                    2004                           4,000
                    Subsequent to 2004           200,000

                    Total minimum future
                           rental payments   $   220,000



                                     F23
                              SOUTH BANKING COMPANY
                                ALMA,     GEORGIA
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


Note 10. Leases - (Con't)

                In  June, 1997, the parties amended the lease to allow  Pineland
     State  Bank  to  sublet  part  of the property and  in  consideration,  the
     landlord will receive 50% of gross rental under the sublease in addition to
     the minimum amount above.


Note 11. Liabilities

         Standby  Letters  of  Credit.   These  transactions  are  used  by  the
         Company's  customers as a means of improving their credit  standing  in
         their dealings with others.  Under these agreements, the Company agrees
         to  honor certain financial commitments in the event that its customers
         are unable to do so.  As of December 31, 1999 and 1998, the Company had
         $526,005 and $931,000 in outstanding standby letters of credit.

         Loan  Commitments.  As of December 31, 1999 and 1998, the  Company  had
         commitments  outstanding  to  extend credit  totaling  $21,211,119  and
         $10,596,552,  respectively.  These commitments  generally  require  the
         customers  to maintain certain credit standards.  Management  does  not
         anticipate any material losses as a result of these commitments.


Note 12. Financial Instruments

               The  Bank  is  a party to financial instruments with off-balance-
         sheet risk in the normal course of business to meet the financing needs
         of  its  customers  and to reduce its own exposure to  fluctuations  in
         interest  rates.   These financial instruments include  commitments  to
         extend  credit and standby letters of credit and financial  guarantees.
         Those  instruments involve, to varying  degrees,  elements  of   credit
         and   interest-rate  risk  in excess of the amount  recognized  in  the
         consolidated  statements  of  financial  condition.   The  contract  or
         notional amounts of those instruments reflect the extent of the  Bank's
         involvement in particular classes of financial instruments.

              The  Bank's exposure to credit loss in the event of nonperformance
         by  the  other  party  to the financial instrument for  commitments  to
         extend  credit,  standby  letters of credit, and  financial  guarantees
         written  is  represented by the contractual notional  amount  of  those
         instruments.   The  Bank  uses  the  same  credit  policies  in  making
         commitments and conditional obligations as it does for on-balance-sheet
         instruments.



                                     F24

                              SOUTH BANKING COMPANY
                                ALMA,     GEORGIA
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


Note 12. Financial Instruments - (Con't)

         Commitments to Extend Credit and Financial Guarantees.

               Commitments to extend credit are agreements to lend to a customer
         as  long as there is no violation of any condition established  in  the
         contract.  Commitments generally have fixed expiration dates  or  other
         termination  clauses and may require payment of a fee.  Since  many  of
         the  commitments are  expected to expire without being drawn upon,  the
         total  commitment  amounts  do not necessarily  represent  future  cash
         requirements.  The Bank evaluates each  customer's  credit   worthiness
         on  a  case-by-case basis.  The amount of collateral obtained, if it is
         deemed  necessary  by the Bank upon extension of credit,  is  based  on
         management's  credit evaluation of the counterparty.   Collateral  held
         varies but may include accounts receivable; inventory, property,  plant
         and equipment; and income-producing commercial properties.

               Standby  letters of credit and financial guarantees  written  are
         conditional commitments issued by the Bank to guarantee the performance
         of  a customer to a third party.  Those guarantees are primarily issued
         to  support private borrowing arrangements, including commercial  paper
         and similar transactions.  The  credit risk involved in issuing letters
         of  credit  is essentially the same as that involved in extending  loan
         facilities  to  customers. The Bank holds various assets as  collateral
         supporting those commitments for which collateral is deemed necessary.

               The  Bank  has  not  been required to perform  on  any  financial
         guarantees  during the past two years.  The Bank has not  incurred  any
         losses on its commitments in 1999, 1998 or 1997.

Note 13. Restrictions on Subsidiary Dividends, Loans or Advances

              Dividends are paid by the Company from its assets which are mainly
         provided  by  dividends from the Banks. However,  certain  restrictions
         exist  regarding  the  ability of the Banks to transfer  funds  to  the
         Company in the form of cash dividends, loans or advances.  The approval
         of  the  Georgia Department of Banking is required to pay dividends  in
         excess of 50% of the Bank's net profits for the prior year.

               Under Federal Reserve regulation, the Bank also is limited as  to
         the amount it may loan to its affiliates, including the Company, unless
         such  loans  are collateralized by specified obligations.  At  December
         31,  1999, the maximum amount available for transfer from the  Bank  to
         the  Company in the form of loans approximated 20% of consolidated  net
         equity.

                                     F25
                              SOUTH BANKING COMPANY
                                  ALMA, GEORGIA
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                          DECEMBER 31, 1999


Note 14. Restrictions on Cash and Due from Banks

              The bank is required to maintain reserve balances with the Federal
         Reserve  Bank.   The average amount of those reserve balances  for  the
         year ended December 31, 1999 was approximately $-0-.

Note 15. Related Party Transactions

               The  Company  has  entered  into a split  dollar  life  insurance
         arrangement  with a director and substantial shareholder.  The  Company
         and  director's trust each contribute toward the payment of premium for
         life  insurance  policy.  The Company records its contribution  at  the
         present  value  of  anticipated future return or total  cash  surrender
         value  of  policy  whichever is higher; however,  the  carrying  amount
         cannot  exceed the amount of premiums paid by the Company.  The Company
         will  receive  all  reimbursement from anticipated withdrawal  of  cash
         surrender  value or from the proceeds of policy in  the event  of   the
         death   of the director. All cash surrender value of the policy accrues
         to  the  benefit  of the Company until such time as the cash  surrender
         value  exceeds advances made by the Company.  As of December 31,  1999,
         $1,046,596 is carried in other assets related to this arrangement.

Note 16. Fair Value of Financial Instruments

              The following table shows the estimated fair value and the related
         carrying  values  of South Banking Company's financial  instruments  at
         December  31, 1999 and 1998.  Items which are not financial instruments
         are not included.

                                                        1999
                                             Carrying     Estimated
                                             Amount       Fair Value
        Cash and due from financial
         institutions                        $ 11,695,998 $ 11,695,998
        Interest earning balances with
         financial institutions                   869,000      869,000
        Federal funds sold                      3,180,000    3,180,000
        Securities available for sale          18,306,239   18,306,239
        Securities held to maturity               747,339      749,139
        Federal Home Loan Bank stock              426,100      426,100
        Georgia Bankers Bank - stock              547,283      798,470
        Loans - net of allowances             129,897,341  129,912,490
        Demand and savings deposits            55,072,202   55,072,202
        Time deposits                          97,727,773   98,079,626
        Federal funds purchased                 1,140,000    1,140,000


                                      F26

                              SOUTH BANKING COMPANY
                                ALMA,     GEORGIA
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999


Note 16. Fair Value of Financial Instruments - (Con't)

                                                        1998
                                             Carrying     Estimated
                                             Amount       Fair Value
        Cash and due from financial
         institutions                        $  6,122,085 $  6,122,085
        Interest earning balances with
         financial institutions                 1,539,000    1,539,000
        Federal funds                          17,648,000   17,648,000
        Securities available for sale          16,993,917   16,993,917
        Securities held to maturity               747,716      765,060
        Federal Home Loan Bank stock              396,200      396,200
        Georgia  Bankers  Bank  -  stock          547,283      787,320
Loans - net of allowances                     112,834,679  113,319,807
        Demand and savings deposits            56,970,216   56,970,216
        Time deposits                          89,019,729   88,647,457


              For purposes of the above disclosures of estimated fair value, the
        following  assumptions were used as of December 31, 1999 and 1998.   The
        estimated  fair  value for cash and due from financial institutions  and
        federal  funds  sold are considered to approximate cost.  The  estimated
        fair  value  for interest-earning balances with financial  institutions,
        securities  available-for-sale, securities held-to-maturity and  Georgia
        Bankers  Bank stock are based on quoted market values for the individual
        securities  or for equivalent securities. The estimated fair  value  for
        commercial  loans  is based on estimates of the difference  in  interest
        rates the Company would charge the borrowers for similar such loans with
        similar  maturities made at December 31, 1999 and 1998, applied  for  an
        estimated time period until the loan is assumed to reprice or  be  paid.
        The  estimated fair value for other loans is based on estimates  of  the
        rate  the  Company would charge for similar such loans at  December  31,
        1999  and  1998  applied for the time period until estimated  repayment.
        The  estimated fair value for individual retirement account deposits and
        time deposits is based on estimates of the rate the Company would pay on
        such  deposits or borrowings at December 31, 1999 and 1998, applied  for
        the  time  period  until maturity.  The estimated fair value  for  other
        financial   instruments  and  off-balance-sheet  loan  commitments   are
        considered to approximate cost at December 31, 1999 and 1998.

               While  these  estimates of fair value are based  on  management's
        judgment  of  the most appropriate factors, there is no  assurance  that
        were  the  Company to have disposed of such items at December  31,  1999
        and 1998, the estimated  fair  values would


                                    F27

                              SOUTH BANKING COMPANY
                                ALMA,     GEORGIA
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999

Note 16.  Fair Value of Financial Instruments (Con't)

        necessarily  have  been achieved at that date, since market  values  may
        differ depending on various circumstances.  The estimated fair values at
        December 31, 1999 and 1998 should not necessarily be considered to apply
        at subsequent dates.

              In  addition, other assets and liabilities of the Company that are
        not  defined  as  financial instruments are not included  in  the  above
        disclosures,  such  as  property  and  equipment.   Also,  non-financial
        instruments  typically  not  recognized  in  the  financial   statements
        nevertheless  may  have  value  but  are  not  included  in  the   above
        disclosures.   These  include among other items, the estimated  earnings
        power of core deposit accounts, the earnings potential of loan servicing
        rights, the trained work force, customer goodwill and similar items.

Note 17. Regulatory Matters

            The  Company and its subsidiaries are subject to various  regulatory
        capital  requirements  administered by  the  federal  banking  agencies.
        Failure  to  meet  minimum  capital requirements  can  initiate  certain
        mandatory   -  and  possibly  additional  discretionary  -  actions   by
        regulators that, if undertaken, could have a direct material  effect  on
        the  Company's financial statements.  Under capital adequacy  guidelines
        and  the  regulatory framework for prompt corrective action, the Company
        must meet specific capital guidelines that involve quantitative measures
        of  the  Company's   assets, liabilities and  certain  off-balance-sheet
        items as calculated under regulatory accounting practices. The Company's
        capital  amounts  and  classification are also  subject  to  qualitative
        judgments by the regulators about components, risk weightings and  other
        factors.

             Quantitative  measures established by regulation to ensure  capital
        adequacy  require the Company to maintain minimum amounts and ratios  of
        total  and  Tier  I  capital (as defined in the  regulations)  to  risk-
        weighted  assets  (as  defined) and of Tier I capital  (as  defined)  to
        average  assets (as defined).  Management believes, as of  December  31,
        1999,  that  the Company and its subsidiaries meet all capital  adequacy
        requirements to which it is subject.

             As of December 31, 1999, the most recent notification from the FDIC
        categorized the Bank as well capitalized under the regulatory  framework
        for  prompt  corrective action.  To be categorized as well  capitalized,
        the   Bank  must  maintain  minimum total risk-based, Tier I risk-based,
        and  Tier  I  leverage ratios as set forth in the table.  There  are  no
        conditions  or  events since that notification that management  believes
        have changed the institution's category.

                                    F28

                              SOUTH BANKING COMPANY
                                ALMA,     GEORGIA
                          NOTES TO FINANCIAL STATEMENTS
                                DECEMBER 31, 1998


Note 17. Regulatory Matters - (Con't)

             The Company and its subsidiaries' actual capital amounts and ratios
        are also presented in the table.

                                                       To Be Well
                                                       Capitalized Under
                                 For Capital        Prompt Corrective
                  Actual         Adequacy Purposes  Action Provisions:
              Amount   Ratio     Amount   Ratio     Amount    Ratio

As of December 31, 1999:

Total Capital
 (to Risk
 Weighted
 Assets)
 Consolidated $  17,534    12.7%    $11,002  8.0%  $   13,752   10.0%
 Subsidiary -
  Alma            6,698   12.3%       4,350  8.0%       5,438   10.0%
 Subsidiary -
  Baxley          5,808   17.0%       2,734  8.0%        3,417   10.0%
 Subsidiary -
  Kingsland       2,498   13.7%       1,456  8.0%        1,820   10.0%
 Subsidiary -
  Metter         3,384   11.0%        2,446  8.0%        3,058   10.0%


As of December 31, 1999:

Tier I Capital
 (to Risk Weighted
  Assets)
 Consolidated   $ 15,782   11.5%     $ 5,501   4.0%        8,251  6.0%
 Subsidiary -
  Alma             6,009   11.0%       2,175   4.0%        3,263   6.0%
 Subsidiary
  Baxley           5,363   15.7%       1,367   4.0%        2,050   6.0%
 Subsidiary -
  Kingsland        2,270   12.5%         728   4.0%        1,092   6.0%
 Subsidiary -
  Metter          2,999    8.3%      1,438     4.0%        1,798    6.0%


                                    F29


                              SOUTH BANKING COMPANY
                                ALMA,     GEORGIA
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999



Note 17. Regulatory Matters (Con't)


                                                     To Be
                                                     Capitalized Under
                                 For Capital         Prompt Corrective
                   Actual        Adequacy Purposes   Action Provisions:
              Amount   Ratio     Amount   Ratio      Amount     Ratio
Tier I
 Capital (to
  Average Assets)
 Consolidated    15,782   9.3%       6,820    4.0%        8,526  5.0%
 Subsidiary -
  Alma            6,009  9.2%        2,623   4.0%         3,279   5.0%
 Subsidiary -
  Baxley          5,363 12.1%        1,779   4.0%         2,224   5.0%
 Subsidiary -
  Kingsland       2,270  8.8%       1,029    4.0%         1,287   5.0%
 Subsidiary -
  Metter          2,999  8.4%        1,438   4.0%         1,798   5.0%


As of December 31, 1998:

Total Capital
 (to Risk Weighted
 Assets)
 Consolidated  $ 15,626  12.5%     $10,029    8.0%     $    N/A    N/A%
 Subsidiary -
  Alma            6,174 13.3%        3,712   8.0%         4,640   10.0%
 Subsidiary -
  Baxley          5,424 15.1%        2,881   8.0%         3,601   10.0%
 Subsidiary -
  Kingsland       2,192 14.0%        1,250   8.0%         1,562   10.0%
Subsidiary -
  Metter          3,114 11.9%        2,091    8.0%       2,614   10.0%

                                    F30


                              SOUTH BANKING COMPANY
                                ALMA,     GEORGIA
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                DECEMBER 31, 1999



Note 17. Regulatory Matters (Con't)

                                                     To Be
                                                     Capitalized Under
                                  For Capital        Prompt Corrective
                     Actual       Adequacy Purposes  Action Provisions:
                 Amount  Ratio   Amount    Ratio     Amount     Ratio

Tier I Capital
 (to Risk
  Weighted
  Assets)
 Consolidated    13,860  11.1%        5,015   4.0%         N/A    N/A %
 Subsidiary -
  Alma            5,385 11.6%         1,856  4.0%         2,784    6.0%
 Subsidiary -
  Baxley          4,972 13.8%         1,440  4.0%         2,160    6.0%
 Subsidiary -
  Kingsland       1,996 12.8%           625  4.0%           937    6.0%
 Subsidiary -
  Metter          2,785 10.6%         1,045  4.0%         1,568    6.0%


Tier I
 Capital (to
  Average Assets)
 Consolidated  $ 13,860   8.6%      $ 6,410   4.0%     $    N/A   N/A %
 Subsidiary -
  Alma            5,385  8.9%         2,478  4.0%         3,098    5.0%
 Subsidiary -
  Baxley          4,972 11.2%         1,779  4.0%         2,224    5.0%
 Subsidiary -
  Kingsland       1,996  9.3%          855   4.0%        1,069    5.0%
 Subsidiary -
  Metter          2,785  8.4%         1,329  4.0%         1,661    5.0%

                                     F31



                     SOUTH BANKING COMPANY
                   (PARENT CORPORATION ONLY)

                         ALMA, GEORGIA

                      FINANCIAL STATEMENTS

                       DECEMBER 31, 1999


                                       F32


                        REPORT OF INDEPENDENT ACCOUNTANTS


Board of Directors
South Banking Company
Alma, Georgia 31510

     Under date of March 1, 2000, we reported on the consolidated balance sheets
of  South  Banking Company, as of December 31, 1999 and 1998,  and  the  related
statements of income, cash flows and stockholders' equity for the three years in
the period ended December 31, 1999.

      In  connection  with  our  examination of the aforementioned  consolidated
financial  statements, we also audited the accompanying balance  sheets  (Parent
Corporation Only) as of December 31, 1999 and 1998 and the related statements of
income, cash flows and stockholders' equity for each of the three years  in  the
period   ended   December  31,  1999.   These  financial  statements   are   the
responsibility of the company's management.  Our responsibility is to express an
opinion on the financial statements based on our audit.

      We  conducted  our  audit in accordance with generally  accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable  assurance  about whether the consolidated financial  statements  are
free  of  material misstatement.  An audit includes examining, on a test  basis,
evidence  supporting  the amounts and disclosures in the financial   statements.
An  audit also includes assessing the accounting principles used and significant
estimates  made  by  management,  as well as evaluating  the  overall  financial
statement  presentation.  We believe that our audits provide a reasonable  basis
for our opinion.

      In our opinion, the financial statements referred to above present fairly,
in  all  material  respects, the financial position  of  South  Banking  Company
(Parent  Corporation Only) as of December 31, 1999 and 1998, and the results  of
its operations, stockholders' equity and its cash flows for the three years then
ended in conformity with generally accepted accounting principles.

                                    Respectfully submitted,


March 1, 2000                       H. H. BURNET & COMPANY, P. C.



                                       F33

                         SOUTH BANKING COMPANY
                       (PARENT CORPORATION ONLY)
                             ALMA, GEORGIA
                             BALANCE SHEETS


                                               December 31,  December 31   ,
                                             1999          1998

                                 ASSETS
Cash and due from banks
 Interest bearing                            $   479,315   $   547,372
 Non-interest bearing                             47,869        23,830
Investment in bank's subsidiaries             16,672,228    15,682,810
Investment in nonbank subsidiaries              315,416        240,925
Investment-Habersham Bank Corp.-available
 for sale                                        295,104       300,000
Investment-Nexity Financial-available for sale   250,000             -
Other assets                                      26,161        40,165
Prepaid income taxes                                   -       145,937
Due from subsidiaries                             105,762             -
Total Assets                                 $18,191,855   $16,981,039

                  LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable                            $       186    $       186
Other liabilities                                      -             -
Accrued income taxes                              21,653             -
Notes payable                                  2,360,000     2,750,000
Due to subsidiaries                                    -        24,166
Total Liabilities                            $ 2,381,839   $ 2,774,352

Stockholders' Equity
Common stock of $1 par value;
 authorized 1,000,000 shares;
 issued and outstanding, 1999 and 1998
 399,500 and 399,500, respectively           $   399,500   $   399,500
Surplus                                        3,070,831     3,070,831
Undivided profits                              12,520,614   10,651,788
Accumulated other comprehensive income         (  180,929)      84,568

Total Stockholders' Equity                   $15,810,016   $14,206,687

Total Liabilities and Stockholders' Equity   $18,191,855   $16,981,039

The accompanying note is an integral part of these financial statements.


                                  F34


                              SOUTH BANKING COMPANY
                            (PARENT CORPORATION ONLY)
                                  ALMA, GEORGIA
                               STATEMENT OF INCOME

                              Year Ended      Year Ended    Year Ended
                              December 31,    December 31,  December  31,
                              1999            1998          1997
Income
Dividends from bank
 subsidiaries                 $   977,614    $   926,568   $   893,272
Miscellaneous income                  682          1,484           500
Interest income                    18,431         21,158        19,276
Management fees                   102,000        102,000       101,500
Dividends - other                  10,091              -             -

Total Income                  $ 1,108,818    $ 1,051,210    $ 1,014,548
Expenses
Salaries                      $    79,300    $    75,467    $    73,157
Amortization                       13,526         13,526         15,421
Interest                          212,684        235,182        260,532
Professional fees                  33,045         22,621         15,358
Other                              63,109         75,277         84,542

Total  Expenses               $   401,664    $   422,073  $    449,010
Income before income taxes
 and equity in undistributed
 income (loss) of subsidiaries$   707,154    $   629,137  $    565,538
Provision (credit) for
 income taxes                 (    95,172)    (  105,360)   (  110,776)

Income before equity in
 undistributed income in
 subsidiaries                $    802,326    $   734,497   $   676,314

Equity in undistributed
 income of bank subsidiaries $  1,251,684    $ 1,135,934   $   914,669
Equity in undistributed
 income (loss) of nonbank
 subsidiaries                      74,491         59,165    (   44,672)
                             $  1,326,175    $ 1,195,099   $   869,997
Net Income                   $  2,128,501    $ 1,929,596   $ 1,546,311


    The accompanying note is an integral part of these financial statements.

                                       F35


                              SOUTH BANKING COMPANY
                            (PARENT CORPORATION ONLY)
                                  ALMA, GEORGIA
                           STATEMENT OF INCOME (con't)


                              Year Ended      Year Ended    Year Ended
                              December 31,    December 31,  December 31,
                              1999            1998          1997

Other Comprehensive Income
 before tax
Unrealized  gain  on securities $(  402,268) $     61,798   $    83,074
Other Comprehensive Income
  before  tax                   $(  402,268) $     61,798   $    83,074

Income tax expenses related
 to items of other
 comprehensive income            (  136,771)       21,011        28,245


Other comprehensive income,
  net  of  tax                  $(  265,497) $     40,787   $    54,829

Comprehensive  income           $ 1,863,004  $  1,970,383   $ 1,601,140

Per share data based on
 weighted outstanding shares:

  Weighted average
   outstanding                    399,500        399,500       400,501


Net Income                    $      5.33    $      4.83   $      3.86


    The accompanying note is an integral part of these financial statements.

                                       F36



                              SOUTH BANKING COMPANY
                            (PARENT CORPORATION ONLY)
                                  ALMA, GEORGIA
                        STATEMENT OF STOCKHOLDERS' EQUITY


                     Common                      Undivided
                     Stock         Surplus       Profits

Balance,
 December 31, 1996   $   403,500   $  3,116,581  $ 7,675,216
 Net income                   -              -     1,546,311
 Cash dividends               -              -   (   239,681)
 Unrealized gain
  (loss) on securities
  available for sale           -              -            -
Redemption of shares  (    4,000)  (     45,750)           -

Balance,
 December 31, 1997   $   399,500   $  3,070,831  $ 8,981,846
 Net income                    -              -    1,929,596
 Cash dividends                -              -   (  259,654)
 Unrealized gain
  (loss) on securities
   available for sale          -              -            -
 Redemption of shares          -              -            -

Balance,
 December 31, 1998   $   399,500   $  3,070,831  $10,651,788
 Net income                    -              -    2,128,501
 Cash dividends                -              -   (  259,675)
 Unrealized gain
  (loss) on securities
   available for sale         -              -            -

Balance,
 December 31, 1999   $   399,500   $  3,070,831  $12,520,614


    The accompanying note is an integral part of these financial statements.

                                       F37

                     Accumulated
                     Other              Total
                                        Comprehensive Stockholders'
                                        Income            Equity

Balance,
 December 31, 1996   $   ( 11,048)      $   11,184,249
 Net income                      -            1,546,311
 Cash dividends                 -           (  239,681)
Unrealized gain
  (loss) on securities
  available for sale        54,829               54,829
Redemption of shares             -           (   49,750)

Balance,
 December 31, 1997    $     43,781         $ 12,495,958
 Net income                      -            1,929,596
 Cash dividends                  -          (   259,654)
 Unrealized gain
  (loss) on securities
   available for sale       40,787               40,787
 Redemption of shares            -                    -

Balance,
 December 31, 1998    $     84,568         $ 14,206,687
 Net income                      -            2,128,501
 Cash dividends                  -          (   259,675)
 Unrealized gain
  (loss) on securities
  available for sale   (   265,497)         (   265,497)

Balance,
 December 31, 1999    $   (180,929)        $ 15,810,016



                          SOUTH BANKING COMPANY
                        (PARENT CORPORATION ONLY)
                              ALMA, GEORGIA
                         STATEMENT OF CASH FLOWS


                                Year Ended   Year Ended     Year Ended
                                 December 31,  December 31, December 31,
                                1999          1998          1997
Cash Flows From Operating
 Activities:
 Net income                     $ 2,128,501   $ 1,929,596   $ 1,546,311
 Add expenses not requiring
  cash:
 Depreciation and
   amortization                       17,649      20,697         27,358
 Undistributed earnings of
    subsidiaries                   (1,326,175) (1,195,099)   (   869,997)
Increase (decrease) in
    accounts  payable                       -           -             -
Increase (decrease) in
  other liabilities                       -             -             -
 Increase (decrease) in
   accrued  income  taxes              21,652           -             -
(Increase) decrease in
  other assets                    (    1,979)   (      435)       14,865
 (Increase) decrease in
   prepaid income taxes               145,937       34,474     ( 125,506)
Increase (decrease) in
   due from subsidiary-taxes       (  129,928)  (   39,565)       48,418

Net Cash Provided by Operating
 Activities                     $   855,657   $   749,668   $   641,449
Cash Flows From Investing
 Activities:
Purchase of equipment                     -            -     (    2,307)
Purchase of Nexity Financial
   Stock                          (  250,000)         -              -
Purchase of C B Financial
   Stock                                   -    (  300,000)           -

Net Cash Used by Investing
 Activities                      $(  250,000) $ (  300,000)  $(    2,307)






The accompanying note is an integral part of these financial statements.

                                   F38




                         SOUTH BANKING COMPANY
                       (PARENT CORPORATION ONLY)
                             ALMA, GEORGIA
                    STATEMENT OF CASH FLOWS (con't)



                               Year Ended    Year Ended    Year Ended
                                 December 31,  December 31,  December 31,
                               1999          1998          1997

Cash Flows From Financing
 Activities:
 Payments on note payable
  bank                           $(  390,000)  $(  350,000) $(  350,000    )
 Proceeds from notes payable
  to banks                                 -       300,000           -
 Dividends paid                   (  259,675)   (  259,654)   (  239,681   )

Redemption of common stock                 -             -    (   49,750
)

Net Cash Provided (Used)
 by Financing Activities         $(  649,675)  $(  309,654)  $(  639,431)

Net increase (decrease) in
 cash and cash equivalents       $(   44,018)  $   140,014    $(     289)

Cash and cash equivalents at
 beginning of year                   571,202       431,188       431,477

Cash and Cash Equivalents
 at end of year                  $   527,184   $   571,202   $   431,188


The accompanying note is an integral part of these financial statements.

                                   F39


                          SOUTH BANKING COMPANY
                        (PARENT CORPORATION ONLY)
                              ALMA, GEORGIA
                      NOTES TO FINANCIAL STATEMENTS



(A)  Summary of Significant Accounting Policies

     General  -The following notes to the financial statements of  South
          Banking   Corporation,  formed  on  July  28,  1981,   (parent
          corporation  only)  (the  corporation)  includes   only   that
          information  which is in addition to information presented  in
          the   consolidated   financial   statements   and   notes   to
          consolidated financial statements.

     Investment in subsidiaries - The corporation reports its investment
     in  the  common  stock of its subsidiaries at  its  equity  in  the
     net assets of the subsidiaries.

     Organization  costs - Organization costs have   been   deferred  and
     are
           being  amortized on a straight-line basis over  a  period  of
     five years.

                                   F40