SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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                                    FORM 8-K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

       Date of Report (date of earliest event reported) : October 28, 1997

                           FLAG Financial Corporation
             (Exact name of registrant as specified in its charter)

    Georgia                         0-24532                          58-2094179
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(State of Incorporation)        (Commission File                   (IRS Employer
                                      Number)                     Identification
                                                                         Number)

101 North Greenwood St., P.O. Box 3007
         LaGrange, Georgia                                              30240
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(Address of principal executive offices)                             (Zip code)


        Registrant's telephone number, including are code: (706) 845-5000







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Item 5.      Other Events

         On October 28, 1997, the Registrant  entered into an Agreement and Plan
of Merger (the "Merger Agreement") with Middle Georgia Bankshares, Inc. ("Middle
Georgia"),  pursuant to which Middle  Georgia  agreed to merge with and into the
Registrant.  Attached hereto is the press release  regarding the announcement of
the merger



Item 7.  Financial Statements, Pro Forma Financial Information and Exhibits

         (c) Exhibits. The following exhibits are filed as part of this report:


99.1 Press release, dated October 28, 1997, issued by the Registrant.






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                                                       EXHIBIT INDEX

Exhibit
Number                              Description

99.1                       Press release, dated October 28, 1997






                                                         SIGNATURE


     Pursuant to the  requirements of Section 12 of the Securities  Exchange act
of 1934,  the  Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.

Dated:   October 28, 1997


                                            FLAG Financial Corporation

                                              /s/ Ellison C. Rudd
                                            By   Ellison C. Rudd,
                                            Chief Financial Officer



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                                                        FOR IMMEDIATE RELEASE

For further information contact:
FLAG Financial Corporation-John S. Holle (706/845-5005)
Middle Georgia Bankshares, Inc.-J. Daniel Speight, Jr. (912/268-2056)

         FLAG FINANCIAL CORPORATION AND MIDDLE GEORGIA BANKSHARES, INC.
                              ANNOUNCE COMBINATION

(October 28, 1997) FLAG Financial  Corporation,  parent company of First Federal
Savings Bank of LaGrange,  Georgia,  and Middle Georgia Bankshares,  Inc. (MGB),
parent company of Citizens Bank, Vienna,  Georgia, today announced the execution
of a definitive agreement to combine their two operations by means of a tax-free
merger. The transaction will be accounted for as a pooling of interests.

The proposed combination is subject to final due diligence,  regulatory approval
and  approval by the  shareholders  of both  corporations.  The  combination  is
projected  to be completed  at the end of the first  quarter of 1998.  Under the
terms of the proposed  agreement,  shareholders of MGB will receive 15.75 shares
of FLAG  Financial  Corporation  common  stock  for  each  share  of MGB.  Total
outstanding   shares  of  FLAG   Financial   Corporation   will   increase  from
approximately 2,037,000 to approximately 3,049,300 at closing.

John  S.  Holle,   Chairman  and  Chief  Executive  Officer  of  FLAG  Financial
Corporation, commented: "This combination represents the joining together of two
extremely  competent  and  complementary  organizations.  Over the past  several
years, FLAG has been aggressively  restructuring its balance sheet by increasing
its commercial  and consumer  lending and decreasing its reliance on traditional
one-to-four-family  mortgages.  The ability to combine our operations with those
of a first-quality  commercial banking organization like MGB, particularly given
their  traditional   emphasis  on  high  earnings   multiples,   technology  and
specialized lending opportunities, is a unique opportunity for FLAG."

Dan Speight,  Chief Executive  Officer of MGB,  stated:  "This  combination will
provide the  management  team of the combined  organization  with an outstanding
holding company that will create an innovative vision for the future. John Holle
and I have worked  together on a number of  committees  and boards over time. We
share a common view of the importance of customer service, community involvement
and the  people  we work  with.  We plan to grow in size  and  profitability  by
emphasizing  the local touch and  creating  an  atmosphere  of support  from the
holding  company  to our  respective  banks.  Our  shared  vision  should  be an
attractive  alternative to other similarly situated financial  institutions.  We
are excited at the prospect of being able to work  together to enhance value for
our shareholders."

Under the terms of the proposed combination, the Board of Directors of FLAG will
be  restructured  to include five members of the existing  Board of Directors of
FLAG and two members of the existing  Board of  Directors of MGB.  John S. Holle
will be Chairman  of the Board of the  resulting  organization,  and Dan Speight
will become President and Chief Executive  Officer of FLAG. Mr. Holle continued,
"In banking today, there are few assets as valuable as human capital. We are not
only increasing our size by fifty percent,  but we are  dramatically  increasing
our management  depth and breadth by integrating  Dan Speight and members of his
team into the Holding Company structure.  This is a true merger of peers, one in
which we believe the whole will greatly exceed the sum of the parts."

FLAG Financial  Corporation,  which is based in LaGrange along the I-85 corridor
in west  central  Georgia,  had assets at  September  30, 1997 of  $238,463,000,
deposits of  $177,639,000,  loans of $160,131,000 and net income for the quarter
of $502,000.  First Federal  Savings Bank of LaGrange has five  offices,  all of
which are located in LaGrange, Troup County, Georgia. Middle Georgia Bankshares,
Inc.,  based in Unadilla,  Georgia  along the I-75 corridor just south of Macon,
Georgia,  had  assets  at  September  30,  1997  of  $119,948,000,  deposits  of
$104,488,000,  loans of $86,597,000  and net income for the quarter of $320,000.
Citizens Bank has offices in Vienna, Unadilla, Pinehurst,  Byromville and, as of
June 6, 1997, Montezuma, Georgia. Citizens Bank anticipates opening an office in
Oglethorpe,  Georgia,  by year end. The  Montezuma and  Oglethorpe  offices were
acquired from Wachovia Bank. In addition to their full-service  banking offices,
First Federal has a full-service  mortgage operation,  which includes a mortgage
production office in Columbus, Georgia, operating as Piedmont Mortgage Services,
and Citizens Bank has a consumer  lending office.  On a combined pro forma basis
at  September  30,  1997,  the  organization  would  have had  total  assets  of
$358,411,000, deposits of $282,127,000 and loans of $246,728,000. Both financial
institutions  are  recipients  of The Quality  Service  Award given by Community
Bankers  Association of Georgia,  in recognition of outstanding service provided
to customers and the community.

Mr.   Speight,   commenting  on  the   operational   strength  of  the  combined
organization,  noted:  "The combined  organization  will have greater  financial
strength  and depth than either bank could  achieve  independently  in the short
term.  This  combination  will  allow us to  expand  our  product  lines and our
geographic scope.  Though both institutions are oriented to the major interstate
corridors through central Georgia,  each lending market has differing strengths,
providing greater asset diversification for the combined organization.  Our goal
is to be able to put this  greater  financial  strength to work to build a great
community-based banking organization."

Shares of FLAG  trade on the  NASDAQ  National  Market  System  under the symbol
"FLAG."