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CORRESP
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      Four Oaks Fincorp Correspondence

    October
      6, 2005

    Via
      EDGAR and Facsimile (202-772-9208)

    Donald
      Walker

    Senior
      Assistant Chief Accountant

    Division
      of Corporation Finance

    Securities
      and Exchange Commission

    100
      F
      Street, N.E.

    Washington,
      D.C. 20549-0306

    Re:
      Four Oaks Fincorp, Inc.

    Form
      10-K for the fiscal year
      ended

    December
      31, 2004

    Forms
      10-Q for quarterly periods ended

    March
      31, 2005 and June 30, 2005

    Dear
      Mr.
      Walker:

    This
      letter responds to your comment
      letter of September 23, 2005 regarding the above-referenced filings made by
      Four
      Oaks Fincorp, Inc. (the “Company”) with the Securities and Exchange Commission
      (the “Commission”). This letter includes the comment from your letter in bold
      with the Company’s response set forth immediately below.

              1.

              You
                disclose that an outstanding interest rate swap agreement used to
                hedge
                variable rate loans requires the company to make payment at a variable
                rate determined by a specified index (prime) in exchange for receiving
                payments at a fixed rate. The prime rate is not included in the definition
                of benchmark interest rate and therefore may not be designated as
                the
                hedged risk in a hedge of interest rate risk. Refer to paragraph
                17 of
                Appendix A of SFAS 138 Basis For Conclusions (Unamended) and tell
                us how
                you determined that hedge accounting under SFAS 133/138 was appropriate.

    We
      manage
      our interest rate risk relating to prime-based loans using cash flow hedging
      instruments, not interest rate risk hedging instruments. Pursuant to FASB’s
      Statement 133 Implementation Issue No. G25 (“No. G25”), we follow the
      first-payments received technique for our cash flow hedges, which allows hedge
      accounting for payments made at a variable rate determined by a specified index
      (prime) in exchange for receiving payments at a fixed rate as long as the
      hedging relationship meets all other conditions in SFAS 133/138. Therefore,
      considering and utilizing all components otherwise required by SFAS 133/138,
      we
      have relied on No. G25 as a basis for hedge accounting to limit the variability
      in cash flows, primarily from interest receipts, from our variable rate
      loans.

    Both
      the
      interest rate swap agreement used to hedge our variable rate loans and the
      variable rate loans are based on the national prime rate set forth in the Wall
      Street Journal. We use the first-payments-received technique for identifying
      the
      hedged cash flows from our variable prime-rate based loans for our rolling
      portfolio of prepayable interest-earning loans. On a quarterly basis, we
      determine whether we have at least the notional amount of the swap of those
      prime-rate based loans outstanding through the period of the interest rate
      swap,
      even though the composition of these loans are likely to change due to
      prepayments, defaults and additional lending. Replacement of loans within the
      portfolio may involve loans existing at, or after, the inception of the hedging
      relationship. The loans that we identify share the same risk exposure for which
      they are designated as being hedged.

    We
      report
      all changes in the fair value of interest rate swaps designated as instruments
      that hedge the variability of cash flows associated with variable rate loans
      in
      other comprehensive income. During the referenced time periods, these hedges
      were 100% effective, and there was no component of the derivative instruments’
      gain or loss which was excluded from the assessment of hedge
      effectiveness.

    As
      a
      result of your comment and to clarify our approach, we plan to include the
      following revised derivative footnote in our future periodic reports (derived
      from the December 31, 2004 Form 10-K footnote I, page 47):

    “The
      Company originates variable rate loans for its loan portfolio. These loans
      expose the Company to variability in cash flows, primarily from interest
      receipts due to changes to interest rates. If interest rates increase, interest
      income increases. Conversely, if interest rates decrease, interest income
      decreases. Management believes it is prudent to limit the variability of a
      portion of its cash flows on variable rate loans. As a result, the Company
      generally hedges a portion of its variable-rate receipts. To meet this
      objective, management enters into interest rate swap agreements whereby the
      Company receives fixed rate payments and makes variable rate payments during
      the
      contract period.”

     *
      *    *    *    *

    As
      requested in your September 23, 2005
      letter, the Company acknowledges that:

            ·

              the
                Company is responsible for the adequacy and accuracy of the disclosure
                in
                the filing;

            ·

              Staff
                comments or changes to disclosure in response to Staff comments do
                not
                foreclose the Commission from taking any action with respect to the
                filing; and

            ·

              the
                Company may not assert Staff comments as a defense in any proceeding
                initiated by the Commission or any person under the federal securities
                laws of the United States.

    If
      we can
      be of further assistance in facilitating your review of the above responses,
      please do not hesitate to contact me by phone (919) 963-1130 or email
      (nswise@fouroaksbank.com).

                Sincerely,

                Nancy
                  S. Wise

                Executive
                  Vice President and

                Chief
                  Financial Officer

    cc:
       Jason L. Martinez, Esq.

Margaret
      N. Rosenfeld, Esq.