SECURITIES AND EXCHANGE COMMISSION
                         Washington, D. C. 20549

                                FORM 10-K

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

               For the fiscal year ended December 31, 1996
                    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 28, 1997
Common stock $1.00 par value per                 403,500
 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.

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.  


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, 1995, 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 252nd and 
322nd largest Banks among 383 banks in Georgia, Citizens Bank, one of
five banking operations in Camden County, ranked the 376th largest bank
among 383 banks in Georgia and Pineland Bank, one of three banking
operations in Metter, Georgia ranked the 342nd largest bank among 383  
banks in Georgia, Sheshunoff's Banks of Georgia (1996 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 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, 1996, the Banks had correspondent relationships
with 16 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.

     The Banks are members through its correspondent bank of the AVAIL
network.  AVAIL is an organization that has established a network of
automated teller machines inside the state of Georgia.


Employees

     On December 31, 1996, the Registrant and its subsidiaries had 82 
full-time and 13 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.


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 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.  

     Risk based capital regulations were adopted by banking regulations
in 1989.  These new capital adequacy standards were phased in and became
fully effective on December 31, 1992.  Risk based capital standards
generally measure the amount of a bank's required capital in relation to
the degree of risk perceived in its assets and its off-balance sheet
exposure.  The concepts of primary and secondary capital were replaced
by Tier 1 and Tier 2 capital and a new leverage ratio requirement was
added.  The amount of risk-based capital required is calculated by
multiplying the recorded amount of each asset category and each off-
balance sheet exposure item by the appropriate risk-weighting
percentage.  Risk adjusted total assets is the total of these risk-
weighted categories.  Total required capital is the product of the risk-
adjusted total assets multiplied by the specific capital percentage
(i.e. 8% at December 31, 1996).

     Capital for purposes of the risk-based capital calculation is
divided into two categories:

     (1)  Tier 1 capital includes common shareholder equity,
     noncumulative perpetual preferred stock and minority interest;
     goodwill is subtracted.

     (2)  Tier 2 capital includes the allowance for loan and lease
     losses, qualifying perpetual preferred stock, hybrid capital
     instruments, term-subordinated debt and intermediate term preferred
     stock.  The allowance and loan losses may only be included up to an
     amount equal to 1.25% of risk adjusted total assets.  Term
     subordinated debt and intermediate term preferred stock may be
     included to a maximum of 50% of Tier 1 capital.  Finally, Tier 2
     capital may not exceed Tier 1 capital.

     Total qualifying capital, for purposes of risk-based capital
calculation, is the total of Tier 1 capital and Tier 2 capital, less
reciprocal holdings of bank capital instruments and less investments in
unconsolidated subsidiaries.

     In June 1992, the Federal Reserve Board released a proposal to add
a measure of interest rate risk to the determination of supervisory
capital adequacy.  Under the proposal, items reported on a banks balance
sheet and off-balance sheet would be reported according to maturity.  A
bank's reported position would be multiplied by duration based risk
factions and weighted according to rate sensitivity.  The objective of
this computer proposal is to determine the sensitivity of a bank to a 1%
change in interest rates.  

     In addition to risk-based capital, a leverage ratio test must be
met.  The leverage ratio is the ratio of Tier 1 capital to assets (not
risk adjusted).  The minimum leverage ratio is 3%.

     As of December 31, 1996, the banks were in compliance with these
regulations.

     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, 1996, 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
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.

     Current legislation has passed that would allow banks to branch
statewide subject to certain restriction.  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.


Recent Legislation

     Bills are presently pending before the United States Congress and
certain state legislatures and additional bills may be introduced in the
future in the Congress and the state legislatures to alter the
structure, regulation and competitive  relationships of the nation's
financial institutions.  It cannot be predicted whether or in what form
any of these proposals will be adopted or the extent to which the
business of the Banks may be affected thereby.

     More recently, the attention of the United States Congress has been
focused primarily on the need for resolution of the insolvency of the
Federal Savings and Loan Insurance Corporation ("FSLIC"), which insured
deposits maintained in most savings and loan associations and savings
banks and the need to provide appropriate structural reform to the
thrift  industry.  On August 9, 1989, President Bush signed the
Financial Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA"), which is designed to resolve these problems and which, among
other matters, fundamentally restructures the supervision and regulation
of the thrift industry and creates a special corporation to liquidate
insolvent institutions and issue $30 billion in bonds to assist in 
financing the cost of resolving  failed thrift institutions.  Under the
legislation, the FSLIC was merged administratively with the FDIC, and 
the FDIC now regulates the two deposit insurance funds for commercial
banks and thrifts.  Although the two insurance funds will not be co-
mingled, the fees that commercial banks and thrifts would pay to their
respective insurance funds will be increased.  Within certain limits,
assessments may be raised as high as .325% to prevent the insurance
funds from declining.  The FDIC will have the authority to revise the
premium for institutions in either fund in certain circumstances.  In
addition to the insurance premium increase provisions, FIRREA also
provides for these additional changes with a direct effect on commercial
banks and bank holding companies: limits on the use of brokered deposits
by capital deficient banks; the acquisition of savings and loan
associations by bank holding companies; disclosures of the bank
supervisors' assessment of community Reinvestment Act ratings for banks;
and an increase in penalties for various bank related crimes both in the
forms of fines and sentences.  It is difficult to predict the effect of
FIRREA on the operations and prospects of banks; however, the increase
in deposit insurance premiums paid by the Banks will increase the Banks
cost of funds and there can be no assurance that such cost can be passed
on to the Banks' customers.

     In the 1989 session, the Georgia legislature enacted a bill to
authorize the DBF to promulgate regulations providing for increased
securities and real estate powers for banks.  The legislation does not
detail these new powers, leaving the specifics to the DBF's discretion. 
It is not expected that the DBF will immediately grant significant new
powers or that such powers will have a great impact on the Banks.

     Effective on July 1, 1985, the Georgia General Assembly adopted
legislation that allows bank holding companies located in Georgia to own
or control banks in certain other southeastern states and allows bank
holding companies in other southeastern states to own or control banks
located in Georgia on a reciprocal basis.  Effective March 13, 1987, the
Georgia State Legislature expanded this reciprocal regional interstate
banking area to include the State of Maryland and the District of
Columbia.  The legislatures of Alabama, the District of Columbia,
Florida, Louisiana, Kentucky, Maryland, North Carolina, South Carolina,
Tennessee and Virginia have passed regional interstate banking laws
which are in effect.  The state of Mississippi approved regional
interstate banking effective January 1, 1990 with respect to holding
company entry on a reciprocal basis by holding companies located in
Georgia.  During 1994, the state of Georgia approved a measure to allow
nation wide interstate banking.  Management of the Banks do not
anticipate this new law will have any impact on their operations. 
Georgia passed state wide branching law in February, 1996 with an
effective date of July 1, 1996.  This allows banks to cross county lines
and establish branches.  It is anticipated that increased competition
will occur as a result.


Federal Deposit Insurance Corporation Improvement Act of 1991

     On December 19, 1991, the Federal Deposit Insurance Corporation
Improvement Act of 1991 (the "FDICIA") became law.  While the FDICIA
primarily addressed additional sources of funding for the Bank Insurance
Fund, which insures the deposits of commercial banks and savings banks,
it also imposed a number of new mandatory supervisory measures on
savings associations and banks.

     Standards for Safety and Soundness   FDICIA requires the federal
bank regulatory agencies to prescribe, by regulation, standards for all
insured depository institutions and depository institution holding
companies relating to: (i) internal controls, information systems and
audit systems; (ii) loan documentation; (iii) credit underwriting; (iv)
interest rate risk exposure; (v) asset growth; and (vi) compensation,
fees and benefits.  The compensation standards would prohibit employment
contracts, compensation or benefit arrangements, stock option plans, fee
arrangements or other compensatory arrangements that would provide
excessive compensation, fees or benefits or could lead to material
financial loss.  In addition, the federal banking regulatory agencies
would be required to prescribe by regulation standards specifying:  (i)
maximum classified assets-to-capital ratios; (ii) minimum earnings
sufficient to absorb losses without impairing capital; and (iii) to the
extent feasible, a minimum ratio of market value to book value for
publicly traded shares of depository institutions and depository
institution holding companies.  Final regulations implementing these
standards were promulgated by July 1, 1993 and effective by January 1,
1994.  The federal banking agencies recently adopted an advance notice
of proposed rulemaking regarding implementation of these standards.  A
recently enacted law amends certain FDICIA provisions regarding
compensation standards and several pending legislative bills would amend
certain other requirements of this section of FDICIA.  Thus, it is
uncertain whether such provisions will ever be implemented or, if
implemented by the banking agencies, it is uncertain as to how the
standards will be applied.

     Financial Management Requirements   FDICIA also imposes new
financial reporting requirements on all depository institutions with
assets of more than $150 million, their management and their independent
auditors and establishes new rules for the composition, duties and
authority of such institutions' audit committees and boards of
directors, effective in fiscal years beginning after December 31, 1992. 
Among other things, all such depository institutions were required to
prepare and make available to the public annual reports on their
financial condition and management, including statements of managements'
responsibility for the financial statements, internal controls and
compliance with certain federal banking laws and regulations relating to
safety and soundness and an assessment of the institutions' compliance
with such internal controls, laws and regulations.  The institution's
independent public accountants are required to attest to these
management assessments.  Each institution also is required to have an
audit committee composed of independent directors.  Audit committees of
large institutions (to be defined by the FDIC) would have the ability to
engage their own, independent legal counsel.

     Prompt Corrective Regulatory Action   FDICIA establishes a system
of prompt corrective action to resolve the problems of undercapitalized
institutions.  Under this system, which became effective December 19,
1992, the banking regulators are required to take certain supervisory
actions against undercapitalized institutions, the severity of which
depends upon the institution's degree of capitalization.  Generally,
subject to a narrow exception, the FDICIA requires the banking regulator
to appoint a receiver or conservator for an institution that is
critically undercapitalized.  The FDICIA authorizes the banking
regulators to specify the ratio of tangible capital to assets at which
an institution becomes critically undercapitalized and requires that
ratio be no less than 2% of assets.

     Other Deposit Insurance Reforms  FDICIA amended the Federal Deposit
Insurance Act ("FDI Act") to prohibit insured depository institutions
that are not well-capitalized from accepting brokered deposits unless a
waiver has been obtained from the FDIC.  Deposit brokers will be
required to register with the FDIC.

     FDICIA also directed the FDIC to establish a risk-based assessment
system for deposit insurance to become effective no later than January
1, 1994.  FDICIA provides that, under the risk-based system established
by the FDIC, deposit insurance assessments paid by a financial
institution are to be based on the probability that the deposit
insurance funds (i.e. BIF or SAIF) will incur a loss with respect to the
insured depository institution.  The FDIC recently established a
transitional risk-based insurance assessment system which was effective
for the semi-annual assessment period beginning January 1, 1993 and has
proposed a risk-based system to replace the transitional system. 
Furthermore, FDICIA authorizes the FDIC to privately reinsure up to 10%
of its risk of loss with respect to an institution and base its
assessment on the cost of such reinsurance.

The Tax Reform Act of 1986

     The Tax Reform Act of 1986 (the "TRA") contains several provisions
affecting banks and financial institutions, including new provisions
governing tax rates, depreciation, investment tax credits, bad debt
reserves, interest expense allocable to tax-exempt obligations, net
operating losses and a new alternative minimum tax ("AMT").  The TRA
reduced the maximum corporate income tax rate from 46% to 34% in 1988
when the provision was fully effective.  A surcharge of 5% will also
apply to income in excess of $100,000, up to a maximum surcharge of
$11,750.

     For tax years beginning after 1986, the TRA imposes an AMT on
corporations.  The tax is computed by applying a 20% tax rate to the sum
of (1) taxable income, (2) certain preference items and (3) 50% of the
excess of book income before taxes over the sum of (1) and (2).  For a
financial institution, the principal preference items result from bad
debt deductions, accelerated depreciation and interest on certain
private purpose tax exempt bonds.  The taxpayer is then required to pay
the greater of its regular tax or the AMT.  South does not expect to
incur an alternative minimum tax liability  based on its current
profitability and investment portfolio.  If the AMT is incurred as a
result of deferral preferences, a credit is generated which may be used
against regular tax in subsequent years.

     The TRA provides for disallowances of 100% of any otherwise
allowable interest expense deduction that is deemed allocable to tax-
exempt obligations acquired after August 7, 1986, except for certain
small municipal issuers.  As a result, the Banks expect to primarily
invest in taxable investment securities.

     Financial institutions with assets in excess of $500 million are no
longer permitted to use the reserve method for accounting for loan
losses for tax purposes.  South does not exceed this asset size and,
accordingly, can continue to use the reserve method.

     The TRA also eliminated investment tax credits after December 31,
1985.  As investment in premises and equipment is not significant to the
assets of South, the elimination of investment tax credits is not
perceived to materially affect the tax provision expense of South.

     The foregoing is only a summary of certain Federal income tax
changes caused by the TRA and is qualified in its entirety by reference
to the TRA.  It does not include all aspects of the TRA as it relates to
financial institutions or state, local or other tax laws.


Omnibus Budget Reconciliation Act of 1993

     The Omnibus Budget Reconciliation Act of 1993 (the "Tax Act")
continues the recent legislation affecting banks and financial
institution.  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 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.


Reigle Community Development and Regulatory Improvement Act of 1994

     The Reigle Community Development and Regulatory Improvement Act of
1994 (CDRIA) was enacted in September, 1994.  CDRIA is divided into five
titles:

     Title I.   Community Development and Consumer Protection
     Title II.  Small Business Capital Formation
     Title III. Paperwork Reduction and Regulatory Improvements
     Title IV.  Money Laundering
     Title V.   National Flood Insurance Refund

     Some of the more prominent provisions of this legislation included,
consideration of regulatory burden in the rule making process,
streamlining of regulatory requirements, call report simplification and
repeal of publication requirements, regulatory appeals reform, truth in
savings act exemption for business accounts, guidelines for examiners,
expedited procedures for forming a bank holding company and holding
company audit requirements.  Management has determined that this act
will have minimal effect on South Banking Company.


Reigle-Neal Interstate Banking and Branching Efficiency Act of 1994

     The Reigle-Neal Interstate Bank and Branching Efficiency Act of
1994 expands the rights of bank and bank holding companies to own out-
of-state banks and branches.  After September 29, 1995, bank holding
companies will be allowed to acquire banks in any state without regard
to state law.  States will be allowed to prevent holding companies from
acquiring newly opened banks. (e.g., those in existence for less than 5
years).

     Banks will also be able to merge with out-of-state banks and
establish out-of-state branches effective June 1, 1997.  States,
however, have the authority to prohibit out-of-state banks from opening
branches.


Recent and Proposed Changes in Accounting Rules

     The Financial Accounting Standards Board ("FASB") recently adopted
or issued proposals and guidelines which may have a significant impact
on the accounting practices of commercial enterprises in general and
financial institutions in particular.

     Effective for years beginning after December 15, 1993 the
Registrant was required to implement FASB 115 "Accounting for Certain
Investments in Debt and Equity Securities".  This FASB requires
securities to be classified in one of three categories:

     (1)  Held to maturity
     (2)  Trading securities
     (3)  Securities available for sale

     The Banks were required to classify all securities into one of the
three categories.  The Banks currently do not have trading accounts and
do not anticipate classifying any securities into this category.  Once
the securities are classified, FASB 115 restricts the transfer between
classification except under rare circumstances.  The affect on the banks
will primarily be in securities classified available for sale.  FASB 115
requires these securities to be market to market with unrealized gains
and losses reported as a separate amount in stockholders equity section
and excluded from earnings until realized.  Deferred taxes will be
provided in accordance with FASB 109 on the unrealized gains and losses.

     FASB 114 became effective for years beginning after December 15,
1994.  FASB 114 "Accounting by Creditors for Impairment of a Loan"
specifies how allowance for credit losses related to certain loans
should be determined.  When the FASB became effective, the Banks were
required to modify the treatment of impaired loans to discount expected
cash flows and record a valuation allowance.  The Banks did not have any
material change as a result of this FASB.

     In February 1992, the FASB issued Statement of Financial Accounting
Standards SFAS No. 109 relating to the method of accounting for deferred
income taxes.  Implementation of SFAS 109 is required for fiscal years
beginning after December 15, 1992.  SFAS No. 109 requires companies to
take into account changes in tax rates when valuing the deferred income
tax amounts recorded on the balance sheet.  The statement also requires
that deferred taxes be provided for all temporary differences between
financial statement and tax income in addition to the timing differences
in the recognition of income for financial statement and tax purposes
which were covered by prior accounting rules.  

     In December 1990, FASB issued SFAS No. 106, "Employer's Accounting
for Post-Retirement Benefits Other Than Pensions".  SFAS No. 106 focuses
principally on post-retirement health care benefits and will
significantly change the prevalent current practice of accounting for
post-retirement benefits on a cash basis to requiring accrual, during
the years that the employee renders the necessary service, of the
expected cost of providing those benefits to an employee and the
employee's beneficiaries and covered dependents.  SFAS No. 106 is
effective for fiscal years beginning after December 15, 1992, and
adoption is required on a prospective basis.  Management believes that
the provisions of SFAS No. 106 will not have a significant effect on
future results of operations.

     In December 1991, the FASB issued SFAS No. 107, "Disclosures About
Fair Value of Financial Investments".  SFAS No. 107 requires all 
entities to disclose, in financial statements or the notes thereto, the 
fair value of financial instruments, both assets and liabilities,
recognized and not recognized, in the statement of financial condition,
for which it is practicable to estimate fair value.  SFAS No. 107 is
effective for financial statements issued for years ending after
December 15, 1992, except for entities with less than $150 million in
total assets, for which it is effective in 1996.  Substantially all of
the Bank's assets and liabilities are financial instruments and, as a
result, SFAS No. 107 requires the fair value of such assets and
liabilities to be disclosed.  Because such assets and liabilities are
monetary in nature, their fair values may fluctuate significantly over
time.  The provisions of SFAS No. 107 will require certain disclosures
on the part of management, but will not have a significant effect on
future results of operations.

     In April 1992, the Accounting Standards Division of the American
Institute of Certified Public Accountants issued Statement of Position
92-3 ("SOP 92-3") "Accounting for Foreclosed Assets".  SOP 92-3 requires
all entities to value foreclosed assets held for sale at the lower of
(i) fair value minus estimated costs to sell or (ii) cost.  The bank is
in compliance with this statement of position.


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,
                               1996          1995          1994       
                                             (In Thousands)     
ASSETS
Cash and due from banks        $     5,421   $     4,348   $     3,749 
Cash in bank - interest
 bearing                             2,138           827         1,538 
Taxable investment securities       14,598         8,518         8,222 
Nontaxable investment
 securities                          1,947         1,055         1,619 
Others                                 556           273             - 
Federal funds sold and
 securities purchased under
 agreements to resell                9,593         8,023         7,883 
Loans - net                         84,023        60,641        54,042 
Other assets                         7,523         5,968         5,700 
                                                           
Total Assets                   $   125,799   $    89,653   $    82,753 
                                                           
LIABILITIES AND SHAREHOLDERS' EQUITY                       
Deposits: Demand - non-interest
           bearing             $    17,379   $    13,446   $    12,965 
          Demand - interest
           bearing                  20,380        15,211        17,378 
          Savings                    7,903         6,675         7,132 
          Time                      64,401        42,838        34,647 
Total Deposits                 $   110,063   $    78,170   $    72,122 
Federal funds purchased                343             7           167 
Other borrowed funds                 3,741         1,545         1,186 
Other liabilities                      888           408           468 
                                                           
Total Liabilities              $   115,035   $    80,130   $    73,943 
                                                           
Shareholders' equity           $    10,764   $     9,523   $     8,810 
                                                           
Total Liabilities and
 Shareholders' Equity          $   125,799   $    89,653   $    82,753 


B.  Interest Rates.  The tables below show for the periods indicated the
average amount outstanding for major categories of interest 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, 1996         
                               Average        Yield/    
                               Balance        Interest       Rate     
                                          (In Thousands)
ASSETS
Cash in banks - interest
 bearing                       $     2,138    $      119          5.57%
Loans                               84,023         9,479         11.28
Taxable investments                 14,598           879          6.02
Non-taxable investments              1,947            95          4.88
Other                                  556            28          5.03
Federal funds sold and
 securities purchased
 under agreements to resell          9,593           506          5.27

Total Interest-bearing assets  $   112,855   $    11,106          9.84%

LIABILITIES
Demand - interest bearing      $    20,380   $       579          2.84%
Savings deposits                     7,903           231          2.92
Other time deposits                 64,401         3,703          5.75
Other short term borrowing           3,741           292          7.80
Federal funds purchased                343            18          5.25

Total Interest-Bearing 
 Liabilities                   $    96,768   $     4,823          4.98%

Net interest earnings                        $     6,283              

Net yield on interest earning assets                              4.86%

                                     Year Ended December 31, 1995     
                               Average        Yield/    
                               Balance        Interest       Rate     
                                          (In Thousands)
ASSETS
Cash in banks - interest
 bearing                       $       827    $       41          4.96%
Loans                               60,641         6,996         11.54
Taxable investments                  8,518           513          6.02
Non-taxable investments              1,055            59          5.59
Other                                  273            10          3.66
Federal funds sold and
 securities purchased
 under agreements to resell          8,023           472          5.88

Total Interest-bearing
 assets                        $    79,337   $     8,091         10.20%

                                     Year Ended December 31, 1995     
                               Average        Yield/    
                               Balance        Interest       Rate     
                                          (In Thousands)
LIABILITIES
Demand - interest bearing      $    15,211   $       407          2.68%
Savings deposits                     6,675           182          2.73
Other time deposits                 42,838         2,580          6.02
Other short term borrowing           1,545           144          9.32
Federal funds purchased                  7             1           N/A

Total Interest-Bearing 
 Liabilities                   $    66,276   $     3,314          5.00%

Net interest earnings                        $     4,777              

Net yield on interest earning assets                              5.20%

                                   Year Ended December 31, 1994          
                               Average        Yield/    
                               Balance        Interest       Rate     
                                          (In Thousands)
ASSETS
Cash in banks - interest
 bearing                       $     1,538    $       65          4.22%
Loans                               54,042         5,666         10.48
Taxable investments                  8,222           437          5.32
Non-taxable investments              1,619            94          5.81
Federal funds sold and
 securities purchased
 under agreements to resell          7,883           306          3.88

Total Interest-bearing
 assets                        $    73,304   $     6,568          8.96%

LIABILITIES
Demand - interest bearing      $    17,378   $       492          2.83%
Savings deposits                     7,132           197          2.76
Other time deposits                 34,647         1,475          4.26
Other short term borrowing           1,186           101          8.52
Federal funds purchased                167             4          2.40

Total Interest-Bearing 
 Liabilities                   $    60,510   $     2,269          3.75%

Net interest earnings                        $     4,299              

Net yield on interest earning assets                              5.21%

(1) Note: Loan fees are included for rate calculation purposes.  Loan fees
included in interest amounted to approximately $723,885 in 1996, $464,456
in 1995 and $521,000 in 1994.  Non accrual loans have been included in the
average balances.

(2) Non-taxable investments have not been calculated on a tax equivalent
basis, rather interest rates are calculated based on actual rates paid.

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.


1996 compared to 1995                                
                                    Increase (Decrease) Due to (1)
                               Volume        Rate          Change     
                                          (In Thousands)
Interest earned on:
Cash in banks - interest 
 bearing                       $        65   $        13   $        78
Loans                                2,698    (      215)        2,483
Taxable investments                    366             -           366
Nontaxable investments                  50    (       14))          36
Other                                   10             8            18
Federal funds sold and
 securities purchased under 
 agreement to resell                    92    (       58)           34

Total Interest-Earning Assets  $     3,281   $(      266)  $     3,015

Interest paid on:
 NOW deposits                  $       139   $        33   $       172 
 Savings deposits                       34            15            49
 Other time deposits                 1,298    (      175)        1,123
 Other borrowing                       205    (       57)          148
 Federal funds purchased                17             -            17 

Total Interest-bearing
 Liabilities                   $     1,693   $(      184)  $     1,509

Net Interest Earnings          $     1,588   $(       82)  $     1,506

(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.

1995 compared to 1994                                
                                    Increase (Decrease) Due to (1)
                               Volume        Rate          Change     
                                          (In Thousands)
Interest earned on:
Cash in banks - interest 
 bearing                       $(       30)  $         6  $(       24)
Loans                                  690           640         1,330
Taxable investments                     16            60            76
Nontaxable investments          (       33)   (        2)   (       35)
Other                                   10             -            10
Federal funds sold and
 securities purchased under 
 agreement to resell                     6           160           166 

Total Interest-Earning Assets  $       659   $       864   $     1,523 

1995 compared to 1994 (con't)                        
                                    Increase (Decrease) Due to (1)
                               Volume        Rate          Change     
                                          (In Thousands)

Interest paid on:
 NOW deposits                  $(       61)  $(       24)  $(       85)
 Savings deposits               (       13)   (        2)   (       15)
 Other time deposits                   349           756         1,105
 Other borrowing                        30            13            43
 Federal funds purchased        (        3)            -    (        3)

Total Interest-bearing
 Liabilities                   $       302   $       743   $     1,045

Net Interest Earnings          $       357   $       121   $       478

(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.

1994 compared to 1993                                
                                    Increase (Decrease) Due to (1)
                               Volume        Rate          Change     
                                          (In Thousands)
Interest earned on:
Cash in banks - interest 
 bearing                       $(       33)  $         2   $(       31)
Loans                                  523           170           693
Taxable investments             (      138)   (       40)   (      178)
Nontaxable investments          (       23)   (       16)   (       39)
Federal funds sold and
 securities purchased under 
 agreement to resell                    65            76           141 

Total Interest-Earning Assets  $       394   $       192   $       586 

Interest paid on:
 NOW deposits                  $(       15)  $        22   $         7 
 Savings deposits                       19             -            19
 Other time deposits                    26            26            52
 Other borrowing                        27            25            52
 Federal funds purchased                 4             -             4 

Total Interest-bearing
 Liabilities                   $        61   $        73   $       134

Net Interest Earnings          $       333   $       119   $       452

(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,
                               1996          1995          1994       
                                           (In Thousands)             
U. S. Treasury and other
 U. S. government agencies
 and corporations              $    12,381   $     7,634   $     5,942 
State and political
 subdivisions (domestic)             1,888         1,921         1,126 
Mortgage backed securities           1,544         1,897         2,065 
                                                           
Totals                         $    15,813   $    11,452   $     9,133 


B.  Maturities  The amounts of investment securities in each category as
of December 31, 1996 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   Yields 
Maturity:
One year or less    $ 1,180     5.33% $   190     8.66% $   342     6.37
After one year
 through five years  10,027     6.07      831     6.77      885     6.26
After five years
 through ten years    1,199     6.10      350     8.50        -        -
After ten years           -        -      500     9.05      319     6.80

Totals              $12,406     6.00% $ 1,871     7.96% $ 1,546     6.39%


(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,
                               1996          1995          1994        
                                    (In Thousands)      
Commercial, financial and
 agricultural                  $    19,565   $    14,592   $    13,229 
Real estate - mortgage              53,813        36,426        32,792 
Real estate - construction           3,798         1,767         2,347 
Installments                        11,870         8,932         8,834 
                               $    89,046   $    61,717   $    57,202 
Less - unearned income                 150            82            59 
       Reserve for possible
        losses                       1,781           994           975 
                                                           
Total Loans                    $    87,115   $    60,641   $    56,168 


B.  Maturities and Sensitivity to Changes in Interest Rates  The amount
of total loans outstanding as of December 31, 1996 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 5     Over                    
                   or Less       Years         5 years       Total     
                                      (In Thousands)                    
Types of Loans
Loans (1)          $    63,199   $    20,721   $     5,126   $   89,046

Total loans due
 after one year
 with:
 Predetermined
  interest rate                       25,847
 Floating interest
  rate                         Not available (2)

(1)  Maturities by categories are not maintained by banks; therefore,
maturity is reported in total.

(2)  Floating interest rate loans are not scheduled as to maturity since
the computer system only gives maturity of fixed loans.  Floating interest
rate loans are classified based on rate sensitivity.

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,
                               1996          1995          1994       
                                     (In Thousands)     
Loans accounted for on a
 non-accrual basis             $       553   $        46   $        56 

Loans contractually past
 due ninety days or more
 as to interest or principal
 payments                              226           276            33 

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               35             -             - 

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.

     At December 31, 1996, the company is not aware of any loans for
which payments presently are current but the borrowers are currently
experiencing financial difficulties.  Management maintains loans at each
bank under a "watch list"  for various purposes but do not believe any
losses will occur.  These loans total $476,619.

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 deter-
mined at the time that the commitment is made or line is established. 

E.  Rate Sensitivity Analysis
                              SOUTH BANKING COMPANY
                                DECEMBER 31, 1996                      
                                                                              
                            +-----------Interest Sensitive-----------+         
                                       0 -        0 -        0 -      
                                       90 Days    180 Days   365 Days 
                                                (Thousands of Dollars)
Earning Assets:
 Loans                                 $  46,691  $  54,224  $  63,199
 Investment securities                     1,367      1,973      2,681
 Interest bearing deposits                   894      1,292      1,589
 Federal funds sold and
  securities purchased under
  agreement to resell                     11,983     11,983     11,983

Total Earning Assets                   $  60,935  $  69,472  $  79,452

Supporting Sources of Fund
 Savings                               $   7,918  $   7,918  $   7,918
 Money market and NOW                     20,440     20,440     20,440
 Other time deposits                      16,271     27,826     46,413
 CD's - $100,000 or more                   3,013      6,191     11,689

Total Interest Bearing
 Deposits                              $  47,642  $  62,375  $  86,460

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

Total Supporting Sources
 of funds                              $  47,642  $  62,375  $  86,460

Interest Sensitive - interest
 earning assets less interest
 bearing liabilities                   $  13,293  $   7,097  $(  7,008

Percent of cumulative interest
 earning assets to interest bearing
 liabilities                              127.90     111.37      91.89

Interest sensitivity gap as a
 percentage of total assets                10.05       5.36   (   5.30



0 -                         0 -      
2 Years                     5 Years    Total    


$  71,583                   $  83,920  $  89,046
3,762                          13,758     15,813
1,886                           1,886      1,886



   11,983                      11,983     11,983

$  89,214                   $ 111,547  $ 118,728


$   7,918                   $   7,918  $   7,918
20,440                         20,440     20,440
50,652                         53,235     53,235
   13,319                      13,649     13,649


$  92,329                   $  95,242  $  95,242



$       -                   $       -  $  21,451


$  92,329                   $  95,242  $ 116,693



$(  3,115)                  $  16,305  $   2,035



    96.62                      117.11     101.74


 (   2.35)                      12.33       1.54

     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.
All maturities are assumed to be repaid on contract terms.  The schedule
has not assumed any prepayments or deposit run off as the history of the
bank indicates most contracts pay as scheduled.  The banks do not hold
long term mortgages; therefore, are not subject to the refinancing that
occurs as the long term interest rate fluctuates.

     The Company is asset sensitive in the short term (six months and
less) which could have a negative short term impact if interest rates
decline.  This is for a short period and the impact would not materially
effect the bank's earning as the bank changes to liability sensitive in
the 12 month horizon.

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,
                               1996          1995          1994        
                                     (In Thousands)                    
A.  Average amount of loans
     outstanding               $    84,023   $    60,641   $    54,042 
B.  Balance of reserve for
     possible loan losses at
     beginning of period       $       994   $       975   $       912 
C.  Loans charged off:                                     
     Commercial, financial
      and agricultural         $        57   $        45   $        53 
     Real estate - mortgage             30             -            16 
     Installments                      172           144            24 
                                                           
                               $       259   $       189   $        93 
D.  Recoveries of loans
     previously charged off:                                        
    Commercial, financial
      and agricultural         $       161   $         7   $        39 
     Real estate                        68            46             6 
     Installment                        45            93            57 
                                                           
                               $       274   $       146   $       102 
E.  Net loans charged off
     during period             $(       15)  $        43   $(        9)
    Additions to reserve
     charged to operating
     expense during period (1) $       201   $        62   $        54 
    Addition from bank
     acquisition                       571             -             -

                               $       772   $        62   $        54
F.  Balance of reserve for
     possible loan losses at
     end of period             $     1,781   $       994   $       975 
G.  Ratio of net loans
     charged off during the
     period to average loans
     outstanding                (     .002)         .070    (     .002)


(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.  Factors such as the bank's history, credit evaluations,
economic conditions in the local area especially as related to
agriculture, payment records and overall economic conditions are weighed
before decisions are made regarding additions to reserve.  The bank's
experience and the local economy has been good in recent years and the
banks have not been required to make substantial additions.  The current
year is up slightly as one bank required substantial additions as a
result of losses on one relatively large credit line.

(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
anticipated loan losses for the coming year are expected to be less than
prior years.  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,
                               1996          1995          1994        
                                           (In Thousands)             
Demand deposits                $    17,379   $    13,446   $    12,965 
NOW deposits                        20,380        15,211        17,378 
Savings deposits                     7,903         6,675         7,132 
Time certificates of deposits       64,401        42,838        34,647 
                                                           
Total Deposits                 $   110,063   $    78,170   $    72,122 


B.  The amounts of time certificates of deposit issued in amounts of
$100,000 or more as of December 31, 1996 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                                       $     3,013 
Over three through six months                                    3,178 
Over six through twelve months                                   5,498 
Over twelve months                                               1,960 

Total                                                      $    13,649 

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,
                               1996          1995          1994       

Return on assets (1)                  1.14%         1.28%         1.19%
Return on equity (2)                 13.29         12.08         11.22
Dividend payout ratio (3)            15.54         19.37         22.54
Equity to assets ratio (4)            8.56         10.62         10.65


(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 Bank.  The Bank does
not have branches.

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.

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

     Note applicable.

Part II.

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

(a)  There currently is no public market for the common stock of the
Registrant.

(b)  As of March 1, 1997, there were approximately 481 holders of record
of the Registrant's common stock.

(c)  The Registrant paid an annual dividend on its common stock of $.55
per share for a total of $219,849 for fiscal 1996.


Item 6.  Selected Financial Data

                                 Years Ended December 31,              
                  1996       1995       1994       1993       1992      
                                     (In Thousands)         
Investment
 securities - HTM $   2,364  $   3,305  $   5,069  $  10,517  $  13,408
Investment          
 securities - AFS $  13,449  $   8,146  $   4,063  $       *  $       *

Federal funds
 sold             $  11,983  $  13,335  $   8,655  $   7,539  $   8,015

Net loans         $  87,115  $  60,641  $  56,168  $  49,808  $  45,134

Total assets      $ 132,291  $  97,175  $  84,477  $  78,911  $  79,904

Deposits          $ 116,693  $  84,545  $  73,783  $  69,626  $  70,753

Stockholders'
 Equity           $  11,184  $  10,048  $   8,998  $   8,316  $   7,598

Operations:
 Interest income  $  11,107  $   8,090  $   6,568  $   5,982  $   6,468 
 Interest expense     4,823      3,314      2,269      2,135      2,915 

Net Interest 
 Income           $   6,284  $   4,776  $   4,299  $   3,847  $   3,553 

Provision for 
 loan losses            202         62         53        118        224 

Net interest
 income after
 provision for
 loan losses      $   6,082  $   4,714  $   4,246  $   3,729  $   3,329 

Other income      $   1,596  $   1,371  $   1,264  $   1,251  $   1,337 

Other expenses    $   5,586  $   4,345  $   4,116  $   3,765  $   3,566 

Income before
 income taxes     $   2,092  $   1,740  $   1,394  $   1,215  $   1,100 

Item 6.  Selected Financial Data (con't)

                                 Years Ended December 31,              
                  1996       1995       1994       1993       1992      
                                     (In Thousands)         
Federal Income
 taxes            $     662  $     590  $     405  $     287  $     281

Net income before
 extraordinary 
 items            $   1,430  $   1,150  $     989  $     928  $     819 

Extraordinary
 items            $       -  $       -  $       -  $       -  $       - 

Net income        $   1,430  $   1,150  $     989  $     928  $     819 

Per Share Data:
Income after
 extraordinary
 items            $    3.54  $    2.84  $    2.44  $    2.27  $    2.01 

Net income        $    3.54  $    2.84  $    2.44  $    2.27  $    2.01 

Dividends 
 Declared         $     .55  $     .55  $     .55  $     .55  $     .55 



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 and the selected financial data presented elsewhere in this
report for an understanding of the following discussion and analysis.

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 $132,290,583 at year end 1996
from $97,174,748 at year end 1995.  The increase of $35,115,835 is
comprised of $28,018,271 in assets acquired in the acquisition of
Pineland State Bank and $7,097,564 in assets due to growth.  This growth
represents a 5.67% increase in 1996 compared to 15.03% increase in 1995. 
The increase is attributable to normal growth within the banking area
without entering into competitive situations for large deposits.  South
was able to maintain rates at a level which minimizes net interest
margin decline.  South continues to be aggressive in the markets it
operates for good core deposits.  Loan demand continues to be strong
with loans increasing $27,329,089 in 1996.  $13,576,025 of the growth
came from bank acquisition of Pineland State Bank $13,753,064 coming
from operations.  Loan demand continues to be strong as evidenced by the
18.3% internal growth in loans.  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 bank's market area has been
staple for the past three years allowing the bank to place good quality
loans on the books.  Classified loans for regulatory purposes remain at
low levels and do not represent any trends or uncertainties which
management reasonably expects will materially impact future operating
results, liquidity on capital resources or represents material credits
about which management is aware of any information which 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 certificate of deposits in
other banks, increased to $17,699,032 from $12,246,850.  Included in
this increase of $5,452,182 is $5,299,665 of securities acquired in the
Pineland State Bank acquisition.  The small increase of $152,517 from
operation 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 $11,048. 

     As the primary source of funds, aggregate deposits, increased by
$32,148,126 in 1996 compared to $10,761,700 in 1995.  The 1996 increase
includes $25,055,325 acquired in the Pineland State Bank acquisition. 
The operational increase of $7,092,801 represents a 6.47% increase for
the year compared to a 14.6% increase in 1995.  This illustrates the
efforts of the banks in good core deposit growth rather than the higher
paying time certificates.  Some of this growth was shifted from interest
paying deposits as they decreased by $2,044,207.  Rates have not
fluctuated much during the year is most of the bank's market which has
helped the bank remain competitive without drastically reducing the net
interest margin.  One of the market will experience new competition in
1997 which could have some impact on time certificate rates; however,
management does not anticipate in major shifting of deposits.

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
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.

     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
$2,466,182  and federal funds sold with daily maturities amounted to
$13,335,000 at year end 1995, an increase from prior years as the
deposit growth continues.  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 borrowing utilized as sources of cash for the purpose of
acquisition or expansion.  South's overall 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.

     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 document, and it shows the
interest sensitivity gaps for five different time intervals as of
December 31, 1996.  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 with
a manageable position.

Capital Resources

     South does not presently have commitments for significant capital
expenditures.  However, there are regulatory constraints placed on the
South's capital.  

     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.


Results of Operations
                         1996 Compared to 1995

     Net interest income is an effective measurement of how well
management has balanced the South's interest rate sensitive assets and
liabilities.  Net interest income increased by $1,507,250 of which
$1,134,158 was a result of Pineland State Bank acquisition.  The
increase, excluding bank acquisition was $373,092 or 7.8% compared to a
11.1% increase in 1995.  The primary determinants of the increase were
loans and time deposits.  As loan demand increased, funds were channeled
into higher yielding loans.  Management did not solicit high interest
deposits and was able to maintain stable cost of funds.  The shifting of
assets and liabilities was necessary to maintain level of net interest
income as net interest yield decreased to 4.96% from 4.99%.  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. 

     The provision for loan loss was $1,781,013 in 1996 of which
$603,299 came from the Pineland State Bank acquisition compared to
$994,027 in 1995.  The provision for loan losses has been sufficient to
increase the allowance for loan losses each year.  During the year 1996,
loan loss recoveries exceeded the loan charged off as management
continues to work its loan portfolio to minimize charge-offs and place
maximum efforts to collect previously charged off.

     Other income, excluding bank acquired, increased slightly from the
prior year.  Service charges increased in 1996 compared to 1995. 
Additionally, a small loss on securities occurred in 1996 as early calls
and a small number of sales resulted in a small loss.

     Operating cost, excluding bank acquired, grew at a rate of 1.68%. 
The increases are primarily personnel related as bank works hard at
controlling cost.  Decrease in FDIC fees and increased data processing
efficiency help maintain cost levels.

     Income tax expense was $662,078 in 1996 or 31.6% of net income
compared to $589,746 in 1995 or 33.9% of net income.  During the year
1993, FASB 109 was adopted by South with no material effect on its
financial statements; however, some adjustments were required.

     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 11.19% to 11.66%.  The return on assets increased from
1.03% to 1.16%.  Although these levels are within peer group ranges of
some other bank holding companies, management believes that improvement
for 1994 is realistic.

     Income tax expense was $662,078 in 1996 or 31.6% of net income
compared to $89,746 in 1995 or 33.9% of net income.  The increase in tax
free municipal bond interest in 1996 lowered the effective tax rate of
South.  During the year 1993, FASB 109 was adopted by South with no
material effect on its financial statements; however, some adjustments
were required.

     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 12.08% to 13.29%.  The return on assets decreased from
1.28% to 1.14% as the increased assets from the Pineland State Bank
acquisition effects the return on assets.

                         1995 Compared to 1994

     Net interest income is an effective measurement of how well
management has balanced the South's interest rate sensitive assets and
liabilities.  Net interest income increased by $477,147 or 11.1% in 1995
and $452,609 or 11.7% in 1994.  The primary determinants of the increase
were loans and time deposits.  As loan demand increased, funds were
channeled into higher yielding loans.  The increase in loan demand
continue to be sufficient to offset the higher paying deposit growth. 
The shifting of asset and liabilities was necessary to maintain level of
net interest income as net interest yield remain constant at 5.20%. 
With the 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
continue to attempt to improve its current position with a controlled
attempt to lengthen its maturity of interest rate sensitive liabilities.

     The provision for loan loss was $994,027 in 1995 compared to
$974,866 in 1994.  The provision for loan losses has been sufficient to
increase the allowance for loan losses each year.  Management continues
to work its loan portfolio to minimize charge-offs and place maximum
efforts to collect previously charged off.

     Other income increased slightly from the prior year.  Service
charges decreased slightly in 1995 compared to 1994.  This is an
indication of the higher balance being maintained by customers as the
economy has started to improve.  Additionally, a small gain on
securities occurred in 1994 as a small number of sales resulted in a
small gain.  Operations from data center increased as 1995 was the first
full operational year.  Sales are for one bank not owned by South. 

     Operating cost grew at a rate of 5.84%.  The increases are
primarily personnel and equipment related.  Increased demands by
regulatory agencies have required some additional personnel time and
other cost continue to increase.  The start up of the data processing
center in 1995 contributed to the increased operating cost.  1995 was
the first full year of data processing center operation and costs are
becoming more manageable than in the prior year of inception. 
Management expects the center to become more efficient as its operation
matures.

     Income tax expense was $589,746 in 1995 or 33.89% of net income
compared to $405,023 in 1994 or 29.04% of net income.  The reduction in
tax free municipal bond interest in 1995, as bonds matured or were
called, also raised the effective tax rate of South.  During the year
1993, FASB 109 was adopted by South with no material effect on its
financial statements; however, some adjustments were required.

     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 11.22% to 12.08%.  The return on assets increased from
1.19% to 1.28%.

Results of Operations
                         1994 Compared to 1993

     Net interest income is an effective measurement of how well
management has balanced the South's interest rate sensitive assets and
liabilities.  Net interest income increased by $452,609 or 11.7% in 1994
and $399,302 or 11.2% in 1993.  The primary determinants of the increase
were loans and time deposits.  As loan demand increased, funds were
channeled into higher yielding loans.  The increase in loan demand was
sufficient to offset the higher paying deposit growth.  The shifting of
asset and liabilities was necessary to maintain level of net interest
income as net interest yield increased to 5.21% from 4.99%.  With the
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. 

     The provision for loan loss was $974,866 in 1994 compared to
$911,931 in 1993.  The provision for loan losses has been sufficient to
increase the allowance for loan losses each year.  During the year 1994,
loan loss recoveries exceeded the loan charged off as management
continues to work its loan portfolio to minimize charge-offs and place
maximum efforts to collect previously charged off.

     Other income increased slightly from the prior year.  Service
charges remained level in 1994 compared to 1993.  This is an indication
of the higher balance being maintained by customers as the economy has
started to improve.  Additionally, a small loss on securities occurred
in 1993 as early calls and a small number of sales resulted in a small
loss.

     Operating cost grew at a rate of 9.31%.  The increases are
primarily personnel, data processing and regulatory in nature. 
Increased demands by regulatory agencies have required some additional
personnel time and FDIC fees and other cost continue to increase.  The
start up of the data processing center in 1994 contributed to the
increased operating cost.  Management expects the center to become more
efficient as its operation matures.

     Income tax expense was $405,023 in 1994 or 29.04% of net income
compared to $286,472 in 1993 or 23.6% of net income.  In 1993, South
recovered previous alternative minimum tax paid in 1991 to reduce the
overall tax bite.  The reduction in tax free municipal bond interest in
1994, as bonds matured or were called, also raised the effective tax
rate of South.  During the year 1993, FASB 109 was adopted by South with
no material effect on its financial statements; however, some
adjustments were required.

     Results of operations can be measured by various ratio analysis. 
Two widely recognized performance indicators are the return on average
equity and the return on average assets.  South's return on equity
decreased from 11.66% to 11.22%.  The return on assets increased from
1.16% to 1.19%.  Although these levels are within peer group ranges of
some other bank holding companies, management believes that improvement
for 1995 is realistic.

Nonperforming Assets

     Nonperforming assets include nonaccrual loans, accruing loans past
due 90 days or more and other real estate, which include 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.

Distribution of Nonperforming Assets
                                         1996       1995       1994     
                                                 (In Thousands)        
Non accrual loans                        $    553   $     66   $     56 
Past due 90 days still accruing               226        276         33 
Other real estate (ORE)                       346        283        661 

                                         $  1,125   $    625   $    750 
Nonperforming loans to year
 end loans                                    .87%       .54%       .16%
Nonperforming assets to year
 end loan and ORE                            1.26%      1.00%      1.31 

     The ratio of nonperforming assets has increased since 1994.  A
slight increase occurred as ORE sales declined and a subsequent
foreclosure has increased the ORE in 1994 and 1996. This increase 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.


Regulatory Matters

     During the year 1996, federal and state regulatory agencies
completed asset quality examinations at the South's subsidiary banks. 
The 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.


     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.


Impact of Accounting Change for Income Taxes and Tax Reform

     In February 1992, the FASB issued Statement of Financial Accounting
Standards SFAS No. 109 relating to the method of accounting for deferred
income taxes.  Implementation of SFAS 109 is required for fiscal years
beginning after December 15, 1992.  SFAS No. 109 requires companies to
take into account changes in tax rates when valuing the deferred income
tax amounts recorded on the balance sheet.  The statement also requires
that deferred taxes be provided for all temporary differences between
financial statement and tax income in addition to the timing differences
in the recognition of income for financial statement and tax purposes
which were covered by prior accounting rules.


Impact of Recently Issued Accounting Standards

     In June 1996, the FASB issued Statement of Financial Accounting
Standard No 125 relating to transfers and servicing of financial assets
as well as for extinguishment of liabilities.  This standard is based on
the consistent application of the financial components approach which
focuses on control.  Under such an approval after a transfer of
financial assets an entity:

        Recognized the financial and servicing assets it controls and
        the liabilities it has occurred.

        Derecognizes financial assets when control is surrendered.

        Derecognizes liabilities when extinguished.

     This FASB is effective for statement issued on or after December
31, 1996 except for selected provision.  This FASB does not affect South
Banking Company materially in any fashion as South, with minimum
exceptions, does not transfer assets to others or retain any service
rights.

     In October 1995, the FASB issued Statement of Financial Accounting
Standard No 124 relating to accounting standards for stock based
employer compensation plans.  This FASB is effective for the 1996 year;
however, South does not have any stock based compensation plans and does
not have any plans to enact such a plan in the future.


Item 8.  Financial Statements and Supplementary Data

     The following consolidated financial statements of the Registrant
and its subsidiaries are included on pages F-1 through F-36 of this
Annual report on Form 10-K.

     Consolidated Balance Sheets - December 31, 1996 and 1995

     Consolidated Statements of Income - Years ended December 31, 1996, 
       1995 and 1994

     Consolidated Statements of Changes in Stockholders' Equity - Years 
       ended December 31, 1996, 1995 and 1994

     Consolidated Statement of Cash Flow - Year ended December 31, 1996, 
      1995 and 1994

     Notes to Consolidated Financial Statements


Item 9.  Disagreement on Accounting and Financial Disclosures

     Not applicable.


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, 1995
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 (41)       President,           1978(1)(2)       11,300
                            Treasurer and              (3)    (  2.80%)
                            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 (77)        Executive Vice       1969(1)(2)      202,896
                            President, Secretary       (3)   (  50.28%)
                            and Director; Chairman
                            and Director, Alma
                            Bank; Director,
                            Banker's Data Services
                            Chairman of Board,
                            President, Citizens Bank;
                            Director Peoples Bank

Lawrence Bennett (49)      President and        1987(1)(2)        3,154
                            Director, Alma             (4)    (    .8%) 
                            Bank; Director,
                            Banker's Data Services;
                            Director, Peoples
                            Bank, Baxley; Director
                            Peoples Bank, Lyons

Charles Stuckey (49)       Director; Executive    1990(3)           200
                            Vice President,                    (   .1%)
                            Peoples Bank; Director,
                            Banker's Data 
                            Services

James W. Whiddon (52)      Director; Executive
                            Vice President and     1989(2)           66
                            Director, Citizens                 (    -%)
                            Bank; Director,
                            Banker's Data Services

Kenneth F. Wade (54)       Director; Executive     1980(1)        4,779
                            Vice President, Director           ( 1.18%)
                            and Cashier, Alma Bank;
                            Director, Banker's
                            Data Services   

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)     

John Roger (49)            Director, Executive Vice
                            President, Pineland    1996(4)            -
                            State Bank; Director;
                            Banker's Data Service

(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.


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       1996 $      - $     -  $       - $       - $     - $     - $     -
          1995   72,486       -      8,985         -       -       -       -
          1994   83,582       -     11,795         -       -       -       -


Item 11.  Management Renumeration and Transactions (con't)

                                           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 
Paul T.
Bennett
CEO       1996 $109,479 $     -   $ 22,940 $       - $     - $     - $     -
          1995   87,566       -     15,310         -       -       -       -
          1994   79,472       -     15,115         -       -       -       -

Olivia
Bennett
Secretary 1996 $168,748 $     -   $ 15,295 $       - $     - $     - $     -
          1995  100,857       -     12,200         -       -       -       -
          1994   84,223       -     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, 1995, 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.

                                              Number of      Percent of
                                              Shares Owned  Outstanding
Name                                          Beneficially   Shares    

Estate of Valene Bennett
Route 4
Alma, Georgia 31510                                175,501        43.49%

Olivia Bennett
Route 4
Alma, Georgia 31510                                 27,395         6.78%

All Executive Officers and Directors 
 as a group (7 persons)                            222,395         55.1%


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 sheet - December 31, 1996 and 1995
          (ii ) Consolidated Statement of Income - Year ended December 
                 31, 1996, 1995 and 1994
          (iii) Consolidated Statement of Stockholders' Equity - Years 
                 ended December 31, 1996, 1995 and 1994
          (iv ) Consolidated Statement of Cash Flow - Year ended       
                 December 31, 1996, 1995 and 1994

          (b)  South Banking Company (Parent Corporation Only):
          (i  ) Balance sheet - December 31, 1996 and 1995
          (ii ) Statement of Income - period ended December 31, 1996,
                 1995 and 1994
          (iii) Statement of Stockholders' Equity - Period ended       
                 December 31, 1996, 1995 and 1994
          (iv ) Statement of Cash Flow - Year ended December 31, 1996,
                 1995 and 1994

          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)  1996 Annual Report to Shareholders of South Banking 
          Company (note 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

Item 14.  Exhibits, Financial Statement Schedule and Reports on Form 8-K
Item 14(a)  1. and 3. and Item 14(d) (con't)


     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.     

                           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 26, 1997                                              
                                         Paul T. Bennett                
                                         Principal Executive, Financial
                                         and Accounting Officer and    
                                         Director         



Date:      March 26, 1997                                              
                                         Olivia Bennett                
                                         Executive Vice President and  
                                         Director       



Date:      March 26, 1997                                              
                                         Charles Stuckey               
                                         Director       


Date:      March 26, 1997                                              
                                         James W. Whiddon              
                                         Director       


Date:      March 26, 1997                                              
                                         Kenneth F. Wade
                                         Director       


Date:      March 26, 1997                                              
                                         Lawrence Bennett              
                                         Director       

Date:      March 26, 1997                                              
                                         John Rogers                   
                                         Director                      


                               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 26, 1997             By:                              
                                           Paul T. Bennett             
                                           President, Treasurer and    
                                           Director     


                       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)  1996 annual report to shareholders.

     (2)  Proxy statement for 1996 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 or that Act.


                         SOUTH BANKING COMPANY

                           ALMA,     GEORGIA

                         FINANCIAL STATEMENTS

                           DECEMBER 31, 1996




                   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 as of December 31, 1996 and 1995 and the related
consolidated statements of income, cash flows and shareholders' equity
for each of the three years in the period ended December 31, 1996. 
These financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these
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 financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
South Banking Company at December 31, 1996 and 1995 and the consolidated
results of its operations, stockholders' equity and cash flows for each
of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles.

                                  Respectfully submitted,




Waycross, Georgia                 H. H. BURNET & COMPANY, P. C.
February 12, 1997
                          SOUTH BANKING COMPANY
                            ALMA,     GEORGIA
                       CONSOLIDATED BALANCE SHEETS



                                           December 31,   December 31,
                                           1996           1995         

                                 ASSETS

Cash and due from banks                    $  6,863,559   $  3,989,564 

Deposits in other banks -                               
 interest bearing                          $  1,886,000   $    795,000 

Investment securities 
 Available for sale                        $ 13,449,288   $  8,146,274 
 Held to maturity - market value
  of $2,365,832 in 1996 and
  $3,311,955 in 1995                       $  2,363,744   $  3,305,576 

Pineland State Bank stock - at cost        $          -   $    975,141 

Georgia Bankers stock                      $    547,283   $    272,880   

Federal Home Loan Bank stock               $    247,600   $     99,900 
                                                       
Federal funds sold                         $ 11,983,000   $ 13,335,000 

Loans                                      $ 89,046,526   $ 61,717,437 
Less: Unearned discount                     (   150,457)   (    82,051)
Reserve for loan losses                     ( 1,781,013)   (   994,027))))
                                                                      
                                           $ 87,115,056   $ 60,641,359 

Bank premises and equipment                $  3,995,385   $  3,104,655 

Goodwill                                   $    364,983   $          -

Other assets                               $  3,474,685   $  2,509,399 


Total Assets                               $132,290,583   $ 97,174,748 

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

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


                                            December 31,   December 31,
                                            1996           1995       

                  LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits:  Demand - non-interest
                     bearing               $ 21,451,527   $ 14,145,230 
           Demand - interest bearing         20,440,276     17,098,343 
           Savings                            7,917,814      6,403,438 
           Time                              66,883,966     46,898,446 
                                           $116,693,583   $ 84,545,457 
Borrowing                                     3,507,279      1,976,405 
Accrued expenses and other
 liabilities                                    905,472        604,033 


Total Liabilities                          $121,106,334   $ 87,125,895 


Stockholder's Equity
Common stock $1 par value; shares 
 authorized - 1,000,000,  shares
 issued and outstanding -
 1996 and 1995 - 403,500
 and 405,283, respectively                 $    403,500   $    405,283 
Surplus                                       3,116,581      3,136,238 
Undivided profits                             7,675,216      6,464,741 
Unrealized gain (loss) on
 securities                                 (    11,048)        42,591

Total Stockholders' Equity                 $ 11,184,249   $ 10,048,853 


Total Liabilities and
 Stockholders' Equity                      $132,290,583   $ 97,174,748 

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

                          SOUTH BANKING COMPANY
                            ALMA,     GEORGIA
                    CONSOLIDATED STATEMENTS OF INCOME

                                    

                            Year Ended     Year Ended     Year Ended  
                            December 31,   December 31,   December 31,
                            1996           1995           1994         

Interest Income
Interest and other
 fees on loans              $  9,479,255   $  6,995,954   $  5,666,373 
Interest on deposits - 
 interest bearing                119,366         40,904         65,241 
Interest on federal
 funds sold                      506,525        472,289        305,906 
Interest on investment
 securities:
 U. S. Treasury                  186,697         99,131        113,783 
 U. S. Government agencies       541,881        273,579        218,222 
 Mortgage backed securities      150,011        140,159        104,969 
 State and municipal                    
  subdivisions                    95,350         58,584         94,106 
Other securities                  27,623          9,893              - 

Total Interest Income       $ 11,106,708   $  8,090,493   $  6,568,600 


Interest Expense
Interest on deposits        $  4,512,373   $  3,167,719   $  2,164,062 
Interest - other borrowing       310,713        146,402        105,313 

Total Interest Expense      $  4,823,086   $  3,314,121   $  2,269,375 

Net interest income         $  6,283,622   $  4,776,372   $  4,299,225 
Provision for loan losses        201,589         62,200         53,500 

Net interest income after
 provision for loan losses  $  6,082,033   $  4,714,172   $  4,245,725 


Other Operating Income
Service charge on deposits  $  1,163,935   $    955,791   $    987,131 
Commission on insurance           84,843         63,154         57,169 
Other income                     216,645        163,583        213,965 
Securities gains (losses)    (    15,708)        21,591          6,000 
Data processing fees             146,598        167,267              - 

Total Other Operating
 Income                     $  1,596,313   $  1,371,386   $  1,264,265 



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

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

                                    

                            Year Ended     Year Ended     Year Ended  
                            December 31,   December 31,   December 31,
                            1996           1995           1994        
                                                       
Other Operating Expenses
Salaries                    $  2,064,313   $  1,558,381  $   1,474,463 
Profit sharing and other
 personnel expenses              518,962        355,822        228,776 
Occupancy expense of bank
 premises                        368,854        269,909        300,586 
Furniture and equipment
 expense                         559,194        422,129        242,214 
Stationery and supplies          165,697        136,568        124,885 
Data processing                  478,104        428,979        449,325 
Director fees                    143,040        103,436        101,405 
Other real estate expenses        31,751         30,856              - 
Other expenses                 1,256,029      1,039,355      1,193,946 

Total Other Operating
 Expenses                   $  5,585,944   $  4,345,435   $  4,115,600 

Income before income taxes  $  2,092,402   $  1,740,123   $  1,394,390 
Applicable income taxes          662,078        589,746        405,523 


Net Income                  $  1,430,324   $  1,150,377   $    988,867 

Per share earnings based
 on weighted average
 outstanding shares:

 Weighted average
  outstanding shares             403,811        405,283        405,351 

Net income before
 extraordinary items        $       3.54   $       2.84   $       2.44 


Net Income Per Share        $       3.54   $       2.84   $       2.44 


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

                          SOUTH BANKING COMPANY
                            ALMA,     GEORGIA
                    STATEMENT OF STOCKHOLDERS' EQUITY


                                                                Unrealized 
                                                                Gain     
 
                                                                (Loss) on 

                                                                Securities
                        Total       
                         Common                      Undivided  Available 
                        Stockholders             '
                         Stock         Surplus       Profits    for Sale 
                        Equity      
Balance,
 December 31, 1993       $   405,583   $ 3,139,238   $ 4,771,292$        
-                        $ 8,316,113
 Net income                        -             -       988,867-988,867
 Cash dividends                    -             -    (  222,906-)( 
222,906)
 Redemption of shares     (      300)   (    3,000)            --(   
3,300)
 Unrealized gain
  (loss) on securities 
  available for sale               -             -             - (  
80,997)                   (   80,997)

Balance,
 December 31, 1994       $   405,283   $ 3,136,238   $ 5,537,253$(  
80,997)                  $ 8,997,777
 Net income                        -             -     1,150,377-1,150,377
 Cash dividends                    -             -    (  222,889)-(  
222,889                            )
 Unrealized gain
 (loss) on securities
 available for sale                -             -             -   
123,588                      123,588

Balance,
 December 31, 1995       $   405,283   $ 3,136,238   $ 6,464,741$   
42,591                   $10,048,853
 Net income                        -             -     1,430,324-1,430,324
 Cash dividends                    -             -    (  219,849)-( 
219,849                            )
 Unrealized gain
  (loss) on securities
  available for sale               -             -             -(  
53,639)                   (   53,639             )
 Redemption of shares     (    1,783)   (   19,657)            -         
-                         (   21,440             )
 
Balance,
 December 31, 1996       $   403,500   $ 3,116,581   $ 7,675,216$(  
11,048)                  $11,184,249

The accompanying note is an integral part of these financial statements.
                          SOUTH BANKING COMPANY
                            ALMA,     GEORGIA
                  CONSOLIDATED STATEMENT OF CASH FLOWS


                            Year Ended     Year Ended     Year Ended  
                            December 31,   December 31,   December 31,
                            1996           1995           1994         

Cash Flows From Operating
 Activities:
 Net income                 $  1,430,324   $  1,150,377   $    988,867 
 Add expenses not
  requiring cash:                       
  Provision for depreciation
   and amortization              462,180        420,747        370,378 
  Provision for loan losses      201,589         62,200         53,500 
  Provision for loss on ORE       41,044         28,110         20,184 
 Bond portfolio losses
  (gains)                         15,734    (    21,827)   (     4,000)
 (Gain ) loss on sale of
  premises & equipment            14,957    (     1,657)             - 
 Gain on sale of other
  real estate owned          (     5,342)   (    17,718)   (     8,696)
 Increase (decrease) in
  taxes payable              (    16,610)   (   123,457)       128,798 
 Increase (decrease) in
  interest payable                57,433        287,865         60,772 
 Increase (decrease) in
  other liabilities               49,749         36,870    (    17,769)
 (Increase) decrease in
  interest receivable        (   272,411)   (    73,925)   (    32,245)
 Decrease (increase) in 
  prepaid expenses                48,322         53,186         16,910 
 (Increase) decrease in
  other assets               (   119,537)   (   224,305)   (   143,099)
 Recognition of unearned
  loan income                     29,180         21,887    (     7,688)
 
Net Cash Provided From
 Operating Activities       $  1,936,612   $  1,598,353   $  1,425,912 


Cash Flows From Investing
 Activities:
 Proceeds from sales of
  investment securities -
  available for sale        $  4,506,015   $    979,156   $          - 
 Proceeds from maturities
  of securities held to
  maturity                     1,635,361      2,533,844      1,459,013 



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

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


                            Year Ended     Year Ended     Year Ended  
                            December 31,   December 31,   December 31,
                            1996           1995           1994         

Cash Flows From Investing
 Activities: (con't)
 Purchase of securities
  held to maturity          $(   498,738)  $( 1,596,546)  $( 2,036,708))
 Proceeds from maturity of
  securities available for
  sale                         3,302,652        786,703      2,844,514 
 Net loans to customers      (13,911,298)   ( 4,694,955)   ( 6,841,156)
  Purchase of securities
  available for sale         ( 9,479,898)   ( 4,849,104)   ( 1,016,502)
 Purchase of premises and
  equipment                  (   423,377)   (   273,546)   ( 1,011,428)) 
 Proceed from sale of
  premises and equipment          18,850          4,911              - 
 Proceeds from sale of
  other real estate owned        258,140        385,215        248,439 
 Purchase of Pineland
  Bank stock                 ( 1,839,937)   (   975,141)             - 
 Purchase of FHLB stock      (   147,700)   (    99,900)             - 
 Cash and cash equivalents
  received in bank
  acquisition                  8,773,744              -              -
                                        
Net Cash Provided from 
 Investing Activities       $( 7,806,186)  $( 7,799,363)  $( 6,353,828)


Cash Flows From Financing
 Activities:
 Net increase (decrease) in
  demand deposits, NOW and
  money markets             $  2,858,872   $  1,141,372  $     414,207 
 Net increase in savings
  and time deposits            4,334,112      9,620,328      3,743,262 
 Proceeds from borrowing       2,000,000        825,000        650,000 
 Payments on borrowing       (   469,126)   (   140,833)   (   107,762)
 Dividends paid              (   219,849)   (   222,889)   (   222,906)
 Payments to retire stock    (    21,440)             -    (     3,300)
 Lap                                   -              -              -

Net Cash Provided From
 Financing Activities       $  8,482,569   $ 11,222,978   $  4,473,501 



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

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


                            Year Ended     Year Ended     Year Ended  
                            December 31,   December 31,   December 31,
                            1996           1995           1994         

Net increase (decrease) in
 cash and cash equivalents  $  2,612,995   $  5,021,968  $(    454,415)

Cash and Cash Equivalents
 at Beginning of Year         18,119,564     13,097,596     13,552,011 


Cash and Cash Equivalents
 at End of Year             $ 20,732,559   $ 18,119,564   $ 13,097,596 

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

                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                     NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996



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 and 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.

              Material estimates that are particularly susceptible to
         significant change relate to the determination of the allowance
         for losses on loans and the valuation of foreclosed real 


                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                     NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996



Note 1.  Significant Accounting Policies (con't)

         (d)  Use of Estimates (con't)

         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 adopted FASB 115 effective January 1, 1994.  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.



                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                     NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996



Note 1.  Significant Accounting Policies (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.

         f. Loans Receivable:

              Loans receivable that management has the intent and
         ability to hold for the foreseeable future or until maturity or
         pay-off are reported at their outstanding principal adjusted
         for any charge-offs, the allowance for loan losses, and any
         deferred fees or costs on originated loans and unamortized
         premiums or discounts on purchased loans.

              Loan origination fees and certain direct origination costs
         are capitalized and recognized as an adjustment of the yield of
         the related loan.

               The accrual of interest on impaired loans is discontinued
         when, in management's opinion, the borrower may be unable to
         meet payments as they become due.  When interest accrual is
         discontinued, all unpaid accrued interest is reversed. 
         Interest income is subsequently recognized only to the extent
         cash payments are received. 

         (g)  Allowances for Loan Losses:

              The allowance for loan losses is increased by charges to
         income and decreased by charge-offs (net of recoveries). 
         Management's periodic evaluation of the adequacy of the
         allowance is based on the Bank's past loan loss experience,
         known and inherent risks in the portfolio, adverse situations
         that may affect the borrower's ability to repay, the estimated
         value of any underlying collateral, and current economic
         conditions.

         (h)  Premises and Equipment:

              Premises and equipment are stated at cost, less
         accumulated depreciation and amortization.  The provision for
         depreciation and amortization is computed generally by the
         straight-line method.

                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                     NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996



Note 1.  Significant Accounting Policies (con't)


         (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
         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

              Deferred tax assets and liabilities are reflected at
         currently enacted 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 FASB recently
         issued pronouncement on accounting for income taxes which
         require a change to the liabilities method for accounting for
         deferred taxes.  The statement includes several other
         provisions that may affect the bank's accounting for income
         taxes and allows restatement of as many years as deemed
         appropriate.  The bank adopted the new statement which required
         a cumulative effect adjustment of $97,693 in 1993.

              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 a eight year period.

                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                     NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996



Note 1.  Significant Accounting Policies (con't)

         (l)  Earnings Per Share

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

         (m)  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, 1996, 1995 and 1994 for interest was $4,765,653,
         $3,026,256 and $2,187,432, respectively.  Total income tax
         payments during 1996, 1995 and 1994 were $727,000, $666,401 and
         $287,000, respectively.


Note 2.  Investment Securities

              The amortized cost and estimated market values of
         investments in debt securities are as follows:

                                 Gross        Gross                   
                     Amortized   Unrealized   Unrealized    Fair      
                     Cost        Gains        Losses        Value      
Securities available
 for sale -
December 31, 1996:
 U.S. Government
  and agency
  securities        $10,411,873  $    27,035  $    57,721  $10,381,187
 State and municipal
  securities          1,575,173       16,883          734    1,591,322
 Mortgage backed
  securities          1,478,983        3,945        6,149    1,476,779

Totals              $13,466,029  $    47,863  $    64,604  $13,449,288

December 31, 1995:
 U.S. Government
  and agency
  securities         $5,150,304  $    36,239  $     6,588   $5,179,955
 State and municipal
  securities          1,521,554       13,605            -    1,535,159
 Mortgage backed
  securities          1,409,879       21,281            -    1,431,160

Totals               $8,081,737  $    71,125  $     6,588   $8,146,274

                          SOUTH BANKING COMPANY
                            ALMA,     GEORGIA
                      NOTES TO FINANCIAL STATEMENTS
                            DECEMBER 31, 1996



Note 2.  Investment Securities (con't)

                                 Gross        Gross                   
                     Amortized   Unrealized   Unrealized    Fair      
                     Cost        Gains        Losses        Value     
Securities to be
 held to maturity -

December 31, 1996:
 U.S. Government
  and agency
  securities        $ 2,000,103  $     2,081  $     5,726  $ 1,996,458
 State and municipal
  securities            296,420        5,104            -      301,524
 Mortgage backed
  securities             67,221          680           51       67,850

Totals              $ 2,363,744  $     7,865  $     5,777  $ 2,365,832


December 31, 1995:
 U.S. Government
  and agency
  securities         $2,453,740  $    10,798  $    11,039   $2,453,499
 State and municipal
  securities            386,148        6,875            -      393,023
 Mortgage backed
  securities            465,688        1,167        1,422      465,433

Totals               $3,305,576  $    18,840  $    12,461   $3,311,955


              Gross realized gains on sales and losses of available-for-
         sale securities were $9,941 and $25,677 in 1996, respectively
         and $21,483 and  $344, respectively  for 1995 and  $6,000 and
         $-0-, respectively in 1994.

              Assets, principally securities carried at approximately
         $6,833,268 at December 31, 1996 and $3,972,330 at December 31,
         1995, were pledged to secure public deposits and for other
         purposes required or permitted by law.

              The scheduled maturities of securities to be held to
         maturity and securities available for sale at December 31, 1996
         were as follows:


                           SOUTH BANKING COMPANY
                             ALMA,     GEORGIA
                       NOTES TO FINANCIAL STATEMENTS
                             DECEMBER 31, 1996



Note 2.  Investment Securities (con't)

                        Securities to be        Securities              
                        Held to Maturity        Available for Sale      
                        Amortized               Amortized  
                        Cost        Fair Value  Cost         Fair Value 
     Due in one year
      or less           $  852,281  $  853,604  $   860,525  $   861,976
     Due from one year
      to five years      1,364,977   1,362,521   10,384,296   10,360,556
     Due from five years
      to ten years         100,000     101,067    1,449,008    1,447,040
     Due after ten years    46,486      48,640      772,200      779,716

                        $2,363,744  $2,365,832  $13,466,029  $13,449,288


          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.


Note 3.  Loans

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

                                             1996          1995        
         Commercial, financial and
          agricultural                       $19,565,455   $14,591,725 
         Real estate - mortgage               53,813,217    36,426,397 
         Real estate - construction            3,798,037     1,767,423 
         Installment and consumer             11,869,817     8,931,892   
           Total Loans                       $89,046,526   $61,717,437 
         Less: Unearned discount              (  150,457)   (   82,051))
               Reserve for loan losses        (1,781,013)   (  994,027))

         Loans, net                          $87,115,056   $60,641,359 


              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 substan-
         tially 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
         

                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                     NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996



Note 3.  Loans (con't)

         of collectibility.  The aggregate dollar amount of these loans
         was $789,805 and $525,535 at December 31, 1996 and 1995. 
         During 1996, $339,414 of new loans were made, and repayments
         totaled $155,298.


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,
                               1996          1995          1994        
         Balance at beginning 
          of period            $   994,027   $   974,866   $   911,931 
         Additions:  Provision 
          charged to operating 
          expenses             $   201,589   $    62,200   $    53,500 
         Balance from bank
          acquisition              570,707             -             -

                               $   772,296   $    62,200   $    53,500
         Deductions: Loans
          charged off          $   259,264   $   189,371   $    92,986 
          Less: recoveries         273,954       146,332       102,421 

                               $(   14,690)  $    43,039   $(    9,435)
         Balance at end of
          period               $ 1,781,013   $   994,027   $   974,866 


              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 $185,865 and $17,970 were
         transferred to foreclosed real estate in 1996 and 1995,
         respectively.

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

                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                     NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996


Note 5.  Deposits

              The aggregate amount of short-term jumbo CDs, each with a
         minimum denomination of $100,000, was approximately $13,545,616
         in 1996 and $9,268,553 in 1995.

              At December 31, 1996, the scheduled maturities of CDs are
         as follows:

                    1997                    $ 58,241,940
                    1998                       6,668,651
                    1999                       1,629,536
                    2000                         343,839
                    2001 and thereafter                -

                                            $ 66,883,966

Note 6.  Premises and Equipment

          A summary of the account:
                                             Year Ended    Year Ended 
                                             December 31,  December 31,
                                             1996          1995        
     Land                                    $   448,149   $   393,148 
     Buildings                                 2,914,115     2,345,562 
     Furniture and equipment                   3,581,514     3,306,840 
                                             $ 6,943,778   $ 6,045,550 
     Less:  Accumulated depreciation           2,948,393     2,940,895 

                                             $ 3,995,385   $ 3,104,655 
                                    
          Depreciation expense was $516,629 in 1996, $418,618 in 1995,
     and $315,743 in 1994.


Note 7.  Borrowings

          Data relating to borrowing is as follows:

                                             Year Ended    Year ended 
                                             December 31,  December 31,
                                             1996          1995        
     Parent company -

      Line of credit loan in the amount
       of $3,675,000 for the purpose of
       refinancing existing loan and the
       acquisition of Pineland Bank stock.
       Interest only due until 1-31-97 at

                          SOUTH BANKING COMPANY
                            ALMA,     GEORGIA
                      NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996



Note 7.  Borrowings (con't)
                                             Year Ended    Year ended 
                                             December 31,  December 31,
                                             1996          1995        
     Parent company - (con't)

       which time annual payment of 10%
       of original loan will be payable 
       over ten years.  Interest accrues
       at the prime rate basis and is
       paid quarterly.                       $         -   $ 1,500,000

      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.                                  3,150,000             - 


     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.                       357,279       476,405


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

                    1997                    $    480,000
                    1998                         480,000
                    1999                         447,279
                    2000                         350,000
                    2001 and thereafter          350,000


Note 8.  Income Taxes

          Income tax expense (benefit) was $662,078 for 1996, (an
     effective rate of 31.6%), $589,746 for 1995 (an effective rate of
     33.9%) and $405,523 for 1994 (an effective rate of 29.1%). The
     actual expense for 1996, 1995 and 1994 differs from the "expected"
     tax expense for those years (computed by applying the federal
     corporate rate of 34% as follows:



                          SOUTH BANKING COMPANY
                            ALMA,     GEORGIA
                      NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996



Note 8.  Income Taxes (con't)

                               1996          1995          1994       
     Computed "expected"
      tax expenses             $   711,417   $   591,642   $   474,093 
     Alternative minimum tax             -             -             -
     Decrease resulting from:
      Surtax exemption                   -             -             - 
     Tax exempt interest
      on securities and loans   (   63,613)   (   39,927)   (   42,804)
     Other, net                     14,274        38,031    (   25,766)

                               $   662,078   $   589,746   $   405,523 


          The current and deferred amounts of these tax provisions were
     as follows:
                               1996          1995          1994        

         Current               $   764,797   $   481,329   $   425,551 
         Deferred               (  102,719)      108,417    (   20,028)

                               $   662,078   $   589,746   $   405,523 


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

                                             December 31   December 31,,
                                             1996          1995       
         Net unrealized appreciation on 
          securities available for sale      $     5,691   $(   21,942)
         Depreciation                         (  256,484)   (  160,633)
         Deferred loan fees                       51,203        25,417 
         Allowance for credit losses             321,666       140,801 
         Other                                    15,926         6,768 
         Purchase accounting treatment        (   59,297)            - 

         Net deferred tax asset (liability)  $    78,705   $(    9,589)


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 50% of employee contributions for 1996, 1995
         and 1994.  The expense to the Company for 1996, 1995 and 1994
         was $37,009, $32,256 and $29,457, respectively.


                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                     NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996



Note 10. 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, 1996 the Company had $1,746,000 in
         outstanding standby letters of credit.

         Loan Commitments.  As of December 31, 1996, the Company had
         commitments outstanding to extend credit totaling $9,776,570. 
         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 11.  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.

         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. 
                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                     NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996


Note 11.  Financial Instruments (con't)

         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 1996, 1995 or 1994.


Note 12. 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, 1996, the maximum amount
         available for transfer from the Bank to the Company in the form
         of loans approximated 20% of consolidated net equity.


Note 13.  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, 1996 was approximately
         $-0-.

                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                     NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996



Note 14.  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, 1996, $1,130,596 is carried in other assets
         related to this arrangement.


Note 15.  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, 1996 and 1995.  Items which are not
         financial instruments are not included.

                                                        1996           
                                              Carrying     Estimated  
                                              Amount       Fair Value 
        Cash and due from financial
         institutions                         $ 6,863,559  $ 6,863,559
        Interest earning balances with
         financial institutions                 1,886,000    1,886,000
        Federal funds                          11,983,000   11,983,000
        Securities available for sale          13,449,288   13,449,288
        Securities held to maturity             2,363,744    2,365,832
        Federal Home Loan Bank stock              247,600      247,600
        Georgia Bankers Bank - stock              547,283      586,000
        Loans - net of allowances              87,115,056   86,967,948
        Demand and savings deposits            42,683,587   42,683,587
        Time deposits                          66,883,966   67,045,456

                                                       1995           
                                              Carrying     Estimated  
                                              Amount       Fair Value 
        Cash and due from financial
         institutions                         $ 3,989,564  $ 3,989,564
        Interest earning balances with
         financial institutions                   795,000      795,000

                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                     NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996



Note 15.  Fair Value of Financial Instruments (con't)
                                                       1995           
                                              Carrying     Estimated  
                                              Amount       Fair Value 

        Federal funds                         $13,335,000  $13,335,000
        Securities available for sale           8,146,274    8,146,274
        Securities held to maturity             3,305,576    3,311,955
        Federal Home Loan Bank stock               99,900       99,900
        Georgia Bankers Bank - stock              272,880      307,500
        Loans - net of allowances              60,641,359   59,901,705
        Demand and savings deposits            37,647,011   37,647,011
        Individual retirement account 
         deposits                               6,573,568    6,669,710
        Time deposits                          40,324,878   40,720,301

             For purposes of the above disclosures of estimated fair
        value, the following assumptions were used as of December 31,
        1996 and 1995.  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,
        1996, 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, 1996, applied for
        the tie 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, 1996, 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,
        1996.

             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, 1996, the estimated fair values would
        necessarily have been achieved at that date, since market values
        may differ depending on various circumstances.  The estimated
        fair values at December 31, 1996 should not necessarily be
        considered to apply at subsequent dates.

                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                     NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996



Note 15.  Fair Value of Financial Instruments (con't)

             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 16.  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, 1996, that the Company and its
        subsidiaries meet all capital adequacy requirements to which it
        is subject.

             As of December 31, 1996, 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.


                          SOUTH BANKING COMPANY
                            ALMA,     GEORGIA
                      NOTES TO FINANCIAL STATEMENTS
                            DECEMBER 31, 1996



Note 16. 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, 1996:

Total Capital
 (to Risk Weighted
 Assets)
 Consolidated  $ 11,955  12.4%   $    7,714   8.0%    $     N/A   N/A%
 Subsidiary -
  Alma            5,262  15.7         2,685   8.0         3,357   10.0
 Subsidiary -
  Baxley          4,542  14.1         2,574   8.0         3,217   10.0
 Subsidiary -
  Kingsland       1,873  16.3           918   8.0         1,147   10.0
 Subsidiary -
  Metter          2,626  14.2         1,483   8.0         1,854   10.0

Tier I Capital
 (to Risk Weighted
  Assets)
 Consolidated  $ 10,763  11.2%     $  3,857   4.0%    $     N/A    N/A%
 Subsidiary -
  Alma            4,841  14.4         1,342   4.0         2,014    6.0
 Subsidiary -
  Baxley          4,138  12.9         1,287   4.0         1,930    6.0
 Subsidiary -
  Kingsland       1,742  15.2           459   4.0           688    6.0
 Subsidiary -
  Metter          2,390  12.9           741   4.0         1,113    6.0

Tier I Capital (to
  Average Assets)
 Consolidated  $ 10,763   8.3%     $  4,305   4.0%     $    N/A    N/A%
 Subsidiary -
  Alma            4,841  10.0         1,929   4.0         2,411    5.0
 Subsidiary -
  Baxley          4,138  10.6         1,557   4.0         1,946    5.0
 Subsidiary -
  Kingsland       1,742  12.2           569   4.0           711    5.0
 Subsidiary -
  Metter          2,390   8.8         1,082   4.0         1,352    5.0

                         SOUTH BANKING COMPANY
                           ALMA,     GEORGIA
                     NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 1996


Note 17. Acquisitions

               On January 11, 1996, South Banking Company consummated an
          agreement to acquire the stock of Pineland State Bank for
          cash.  The total acquisition cost was $2,745,716.  Funding for
          the acquisition was through a loan from Georgia Bankers Bank.




                      SOUTH BANKING COMPANY
                    (PARENT CORPORATION ONLY)

                        ALMA,     GEORGIA

                      FINANCIAL STATEMENTS

                        DECEMBER 31, 1996



                   REPORT OF INDEPENDENT ACCOUNTANTS


Board of Directors
South Banking Company
Alma, Georgia 31510

     Under date of February 12, 1997, we reported on the consolidated
balance sheets of South Banking Company, as of December 31, 1996 and
1995, and the related statements of income, cash flows and 
stockholders' equity for the three years in the period ended December
31, 1996.

     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, 1996 and
1995 and the related statements of income, cash flows and stockholders'
equity for each of the three years in the period ended December 31,
1996.  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 audits 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, 1996 and
1995, and the results of its operations, stockholders' equity and their
cash flows for the three years then ended in conformity with generally
accepted accounting principles.

                                  Respectfully submitted,



Waycross, Georgia                 H. H. BURNET & COMPANY, P. C.
February 12, 1997
                          SOUTH BANKING COMPANY
                        (PARENT CORPORATION ONLY)
                            ALMA,     GEORGIA
                             BALANCE SHEETS


                                             December 31,  December 31,
                                             1996          1995       

                                 ASSETS
Cash and due from banks                                 
 Interest bearing                            $   418,716   $   290,640 
 Non-interest bearing                             12,761       301,582 
Investment in bank's subsidiaries             13,536,590     9,724,449 
Investment in nonbank subsidiaries               226,431       177,408 
Investment - Pineland State Bank - at cost             -       975,141 
Other assets                                      98,449        17,314 
Costs in excess of book value                      1,896         8,620 
Due from subsidiaries - income taxes                   -        10,150 
Prepaid income taxes                              54,905        45,793 
                                                           
Total Assets                                 $14,349,748   $11,551,097 


                  LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable                             $       186   $     2,244 
Other liabilities                                      -             - 
Accrued income taxes                                   -             - 
Notes payable                                  3,150,000     1,500,000 
Due to subsidiaries                               15,313             - 
                                                                      
Total Liabilities                            $ 3,165,499   $ 1,502,244 

                                                           
Stockholders' Equity                                       
Common stock of $1 par value;                              
 authorized 1,000,000 shares;
 issued and outstanding, 1996 and 1995
 $403,500 and 405,283, respectively          $   403,500   $   405,283 
Surplus                                        3,116,581     3,136,238 
Undivided profits                              7,675,216     6,464,741 
Unrealized gain (loss) on securities
 available for sale (net)                     (   11,048)       42,591 
                                                           
Total Stockholders' Equity                   $11,184,249   $10,048,853 
                                                           
Total Liabilities and Stockholders' Equity   $14,349,748   $11,551,097 


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

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

                                          
                               Year Ended    Year Ended    Year Ended 
                               December 31   December 31,  December 31,,
                               1996          1995          1994        
Income
Dividends from bank                                     
 subsidiaries                  $   854,987   $   773,430   $   543,805 
Miscellaneous income                   845             -             - 
Interest income                     32,841        11,692         6,690 
Management fees                    101,000        79,400        79,200 
                                          
Total Income                   $   989,673   $   864,522   $   629,695 
                                          
Expenses             
Salaries                       $    65,000   $    73,163   $    56,746 
Amortization                        24,346         6,726         6,726 
Interest                           256,725        87,051        56,954 
Professional fees                   15,150        46,079        16,084 
Other                               67,014        49,527        40,560 
                                          
Total Expenses                 $   428,235   $   262,546   $   177,070 
                                          
Income before income taxes               
 and equity in undistributed
 income (loss) of subsidiaries $   561,438   $   601,976   $   452,625 
                                          
Provision (credit) for                    
 income taxes                   (   99,798)   (   57,665)   (   27,700))
                                          
Income before equity in                   
 undistributed income in                  
 subsidiaries                  $   661,236   $   659,641   $   480,325 

Equity in undistributed
 income of bank subsidiaries   $   720,064   $   440,715   $   597,787 
Equity in undistributed
 income (loss) of nonbank
 subsidiaries                       49,024        50,021    (   89,245)
                                      
                               $   769,088   $   490,736   $   508,542 


Net Income                     $ 1,430,324   $ 1,150,377   $   988,867 
                         


The accompanying note is an integral part of these financial statements.
                          SOUTH BANKING COMPANY
                        (PARENT CORPORATION ONLY)
                            ALMA,     GEORGIA
                    STATEMENT OF STOCKHOLDERS' EQUITY

                                                            
                     Common                      Undivided  
                     Stock         Surplus       Profits    
Balance,
 December 31, 1993   $   405,583   $ 3,139,238   $ 4,771,292
 Net income                    -             -       988,867
 Cash dividends                -             -    (  222,906)
 Redemption of shares (      300)   (    3,000)            -
 Unrealized gain
  (loss) on securities 
  available for sale           -             -             -

Balance,
 December 31, 1994   $   405,283   $ 3,136,238   $ 5,537,253
 Net income                    -             -     1,150,377
 Cash dividends                -             -   (  222,889)
 Unrealized gain
 (loss) on securities
 available for sale            -             -             -

Balance,
 December 31, 1995   $   405,283   $ 3,136,238   $ 6,464,741
 Net income                    -             -     1,430,324
 Cash dividends                -             -   (  219,849)
 Unrealized gain
  (loss) on securities
  available for sale           -             -             -
 Redemption of shares (    1,783)   (   19,657)            -

Balance,
 December 31, 1996   $   403,500   $ 3,116,581   $ 7,675,216
                                
Unrealized 
Gain       
(Loss) on  
Securities          Total       
Available          Stockholders'

for Sale             Equity     

$         -          $ 8,316,113
-                        988,867
-                     (  222,906)
-                     (    3,300)


 (   80,997)          (   80,997)


$(   80,997)         $ 8,997,777
-                      1,150,377
-                    (  222,889)


    123,588              123,588


$    42,591          $10,048,853
-                      1,430,324
-                    (  219,849)


(   53,639)          (   53,639)
          -          (   21,440)


$(   11,048)         $11,184,249              

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

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


                               Year Ended    Year Ended    Year Ended 
                               December 31,  December 31,  December 31,
                               1996          1995          1994       

Cash Flows From Operating
 Activities:
 Net income                    $ 1,430,324   $ 1,150,377   $   988,867 
 Add expenses not requiring
  cash
  Depreciation and
   amortization                     36,088        13,501        12,938 
 Undistributed earnings of
  subsidiaries                  (  769,088)   (  490,736)   (  508,542)
 Increase (decrease) in 
  accounts payable              (    2,058)   (      172)          172 
 Increase (decrease) in
  other liabilities                      -             -    (      427)
 Increase (decrease) in
  accrued income taxes                   -    (   77,665)   (    9,068)
 Increase (decrease) in
  other assets                      17,802    (    4,155)   (      473)
 Increase (decrease) in 
  prepaid income taxes               9,112    (   45,793)            - 
 Increase (decrease) in
  due from subsidiary - taxes   (   25,463)      141,781             - 
                                          
Net Cash Used in Operating
 Activities                    $   696,717   $   687,138   $   483,467 


Cash Flows From Investing
 Activities:
 Basis in investments sold     $         -   $         -   $         - 
 Contribution to equity in
  bank subsidiary               (  400,000)            -    (  125,000)
  Purchase of equipment         (   26,236)            -             - 
  Purchase of Pineland State
   Bank                         (1,839,937)   (  975,141)            - 

Net Cash Used in Investing
 Activities                    $(2,266,173)  $(  975,141)  $(  125,000)



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

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



                               Year Ended    Year Ended    Year Ended 
                               December 31,  December 31,  December 31,
                               1996          1995          1994       

Cash Flow From Financing
 Activities:
 Payments on note payable                 
  bank                         $(  350,000)  $         -   $(   75,000)
 Proceeds from notes payable
  to banks                       2,000,000       825,000             - 
 Dividends paid                 (  219,849)   (  222,889)   (  222,906)
 Increase (decrease) in due
  to subsidiaries                        -             -             - 
 Redemption of common stock     (   21,440)            -    (    3,300)

Net Cash Provided (Used)
 from Financing Activities     $ 1,408,711   $   602,111   $(  301,206)
Net increase (decrease) in
 cash and cash equivalents     $(  160,745)  $   314,108   $    57,261 
Cash and cash equivalents at
 beginning of year                 592,222       278,114       220,853 

Cash and Cash Equivalents
 at End of Year                $   431,477   $   592,222   $   278,114 


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

                         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.