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CITIZENS EFFINGHAM BANCSHARES, INC.

November 21, 2005

Securities and Exchange Commission

Financial Services Group

Division of Corporation Finance

100 F Street, NE

Washington, DC 20549

Attn: Mr. Mark Webb, Legal Branch Chief

    Re:

    Citizens Effingham Bancshares, Inc.

    Preliminary Form of Proxy Statement on Schedule 14A

    Schedule 13E-3 filed by Citizens Effingham Bancshares, Inc.,

                   Harry H. Shearouse, Jon G. Burns, et al.

    Filed September 30, 2005

Ladies and Gentlemen:

     On behalf of our client, Citizens Effingham Bancshares, Inc. (“Citizens Effingham” or the
“Company”), we are responding to the comments received from your office by letter dated October 27,
2005 with respect to the above-referenced Form of Proxy Statement and Schedule 13E-3. We have
restated and responded to each of your comments below. Capitalized terms used in this letter have
the meanings ascribed to them in the Schedule 14A. We have annotated the marked copy of Amendment
No. 1 to the Proxy Statement with cross-references to which comment we are responding.

Schedule 13E-3

General

    1.

    We note that you are purporting to create two classes of securities out of what is currently
a single class of common stock, for the purpose of taking the company private by causing each
“new” class to beheld by less than 300 shareholders of record. In your, response letter,
provide your legal analysis as to why the common stock and Class A preferred stock are truly
separate classes for purposes of determining eligibility to deregister under Section 12 of the
Securities Exchange Act of 1934. Also, please provide a formal opinion of counsel that your
common stock and your newly authorized preferred stock are separate classes of securities
under state law. Your response should also provide counsel’s legal analysis as to why it is
opining that your common stock and the newly authorized class of preferred stock are in fact
separate classes under state law. In this regard, the analysis should include a detailed
discussion and comparison of each feature

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November 21, 2005

Page 2

    of your common stock and the preferred stock and why the rights of each class support the
opinion of counsel. Further, the analysis should specifically address that the Series A
Preferred Stock is convertible into common stock upon a change of control.

    We have provided the requested opinion of counsel as Exhibit 1 to this letter.

    Section 12(g) of the Securities Exchange Act of 1934 (the “Act”) generally provides that
every issuer of securities shall, within 120 days after the last day of its first fiscal
year on which the corporation has total assets exceeding $1 million and a class of equity
security held by record of 500 or more persons, register such security with the U.S.
Securities and Exchange Commission (the “SEC”). For purposes of determining the
applicability of these registration requirements to corporations, Section 12(g)(5) of the
Act defines the term “class” to include all securities of a corporation which are of
substantially similar character whose holders enjoy substantially similar rights and
privileges. This definition applies to the Company pursuant to Section 15(d) which
incorporates the definitions contained in 12(g) as to 15(d) registrants.

    The Company’s common stock and Series A Preferred Stock are separate classes of securities
because they are not substantially similar in character and the holders of the Company’s
common stock and Series A Preferred Stock will not enjoy substantially similar rights and
privileges. Specifically, the Company’s common stock and Series A Preferred Stock have
substantially different rights and limitations with respect to voting, dividends and
liquidation. These differences are summarized below:

    a.

    Voting Rights: Holders of Series A Preferred Stock are entitled to vote only
upon proposals for a consolidation or merger of the Company, a share exchange, or a
sale, lease, exchange or transfer of all or substantially all of the Company’s assets
(a “Change in Control”) and upon which holders of the common stock are entitled to
vote. Such limited voting rights contrast with the unlimited voting rights afforded to
holders of the common stock, including, significantly, the right to vote on the
election of directors of the Company, the adoption of stock incentive plans, and most
charter amendments.

    b.

    Dividend Preference: Holders of Series A Preferred Stock are entitled to a
preference in the distribution of dividends, when and if declared and paid by the
Company, so that holders of the Series A Preferred Stock are entitled to receive
dividends in an amount not less than that paid on common shares prior to the receipt of
dividends by the holders of common stock.

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November 21, 2005

Page 3

    c.

    Liquidation Preference: Holders of Series A Preferred Stock are entitled to a
preference in the distribution of assets of the Company in the event of any
liquidation, dissolution or winding-up of the Company, whether voluntary or
involuntary, equal to the greater of the book value per share or the amount per share
to be paid to common shareholders. Holders of the Company’s common stock are only
entitled to receive, after the prior rights of creditors and holders of the Series A
Preferred Stock are satisfied, a ratable share of any remaining assets of the Company
available for distribution.

    The SEC has agreed that two types of stock which differ in liquidation preference and voting
rights are not of the same class. In a No-Action letter, the SEC concurred with Motorola,
Inc.’s view that its common stock (which had a $2.00 liquidation preference) and its Class A
common stock (which had a 4-to-1 voting edge over the common stock) were not the same class
of securities under Section 12(g)(5). Motorola, Inc., SEC No-Action Letter, Fed. Sec. L.
Rep. (CCH) ¶78,703 (December 30, 1971). Similarly, the Company’s common stock and Series A
Preferred Stock should not be considered to be of the same “class” of stock because the
Series A Preferred Stock has a liquidation preference and limited voting rights compared to
the common stock. The Company’s Series A Preferred Stock also contains a dividend
preference to the common stock. We believe these are all substantial differences in the
rights and preferences in the two classes of stock.

    The SEC has agreed that different voting rights is enough to create separate classes of
stock. At the request of Crawford and Company, the SEC agreed that the lack of voting
rights of one class of security precluded the holders of that class from enjoying
substantially similar rights and privileges as holders of an otherwise identical class of
stock that could vote. Crawford and Company, SEC No-Action Letter, Fed. Sec. L. Rep. (CCH)
¶ 79,673 (April 19, 1991). The holders of nonvoting stock in Crawford had voting rights
with respect to (1) certain merger, share exchange, reclassification or recapitalization
transactions; (2) amendments to the company’s articles of incorporation affecting their
voting rights; and (3) matters they were entitled to vote upon pursuant to Georgia law. Id.
Our preferred stockholders will be able to vote in limited circumstances, including
immediately prior to the closing of a Change in Control, much like the nonvoting stock in
Crawford.

    While the Company is replacing one security with another that is convertible into common
shares, the classes are not substantially similar, nor will the holders of each class of
stock share substantially similar rights and privileges. The SEC has concluded that when
one class of security has the right to convert into another class of security, the former
class of security should not be considered to be in the same class as the latter security.
Town and Country, No-Action Letter, 1971 WL 7606 (March 11, 1971). The SEC has maintained
that the language of Section 15(d) does

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November 21, 2005

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    not indicate that a company’s common stock and warrants to purchase shares of such common
stock should be considered the same class of security. Town and Country, No-Action Letter,
1971 WL 7606 (March 11, 1971). Id.

    Given the differing character of the two classes of securities and the different rights and
privileges afforded to holders of the Series A Preferred Stock as compared to holders of the
common stock, the two securities do not constitute the same “class” of securities for
purposes of Section 12(g)(5) of the Act.

    Analysis Under Georgia Law

    Pursuant to the Georgia Business Corporation Code (the “Code”), the board of directors of a
Georgia corporation has the authority to determine the preferences, limitations and relative
rights of any class of the corporation’s stock. O.C.G.A § 14-2-602. The distinguishing
designations of separate classes of stock must be prescribed in the corporation’s articles
of incorporation. O.C.G.A § 14-2-601. Section 14-2-601 of the Code provides:

    “... unless such class is divided into a series, all shares of a class must
have preferences limitations, and relative rights identical with those of
other shares of the same class; provided, however, that any of the voting
powers, designations, preferences, rights, qualifications, limitations, or
restrictions of or on the shares of a class, or the holders thereof, may be
made dependent upon facts ascertainable outside the articles of
incorporation... if the manner in which the facts shall operate upon the voting
powers, designations, preferences, rights, qualifications, limitations, or
restrictions of or on the shares, or the holders thereof, is clearly and
expressly set forth in the articles of incorporation.” O.C.G.A § 14-2-601.

    The Code does not provide any standard for minimum differences that separate classes of
stock must have to qualify as distinct classes and allows the rights of a class to change
if the articles of incorporation clearly describe the circumstances in which such rights
will change. The Company’s board of directors is proposing an amendment to the Company’s
articles of incorporation that will create a new class of preferred stock with rights and
privileges defined by the amended articles of incorporation. Under Georgia law, the new
class of stock will be separate and distinct from the Company’s common stock.

    According to the amended articles of incorporation, holders of Series A Preferred Stock will
have the same voting rights as holders of the common stock if the Company proposes to enter
a transaction that will result in a Change in Control and the preferred shares will convert
into common shares immediately prior to a

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Page 5

    Change in Control. Given the broad discretion that the board of directors has in creating
and defining the relative rights of separate classes of stock under Georgia law, the number
of record holders of the Company’s common stock will be reduced by the number of
shareholders who receive shares of Series A Preferred Stock for all of the shares of common
stock that they own prior to the reclassification.

    2.

    Please confirm to us, in a supplemental response, that the information statement will be sent
or given at least 20 calendar days prior to the meeting date.

    We confirm that the information statement will be sent at least 20 calendar days prior to
the meeting date.

    3.

    Please clarify what you mean by (how you calculate) book value per share of preferred stock.

    The book value of the common shares prior to the Reclassification and the book value of the
common equivalent shares (which includes the Series A Preferred Stock) is the same. The
book value per share of the Series A Preferred Stock is calculated by dividing the dollar
amount of the shareholders’ equity by the number of outstanding common equivalent shares.

Shareholder Letter

    4.

    Here, on the cover page, and the summary term sheet section, prominently disclose that
current common security holders that opt to receive the newly authorized preferred stock will
receive no additional compensation, will lose their ability to vote their, shares, will
receive even less liquid securities, and will lose the benefits of holding Section 12
registered securities. Provide the same disclosure in each place in the proxy statement where
you discuss what security holders subject to the reclassification, receiving preferred stock
will receive.

    We have revised the proxy statement as requested.

    5.

    Here, on the cover, page, and the summary term sheet section, highlight that shareholders who
hold 500 or fewer shares of common stock and who will receive Series A Preferred Stock in this
reclassification can instead elect to receive cash for their shares by exercising appraisal
rights. Please state that this is the only manner in which to receive cash for such holders.
This disclosure should be accompanied by a brief explanation of how to exercise appraisal
rights, and in particular, that. Georgia law apparently permits the exercise of dissenters
rights by simply notifying the company within a set period of time, both before and after the
reclassification, which obligates the company to pay the dissenting shareholder “fair value”
for the shares, plus accrued interest. Disclose what

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November 21, 2005

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    amount the company believes is fair value, or discuss how it will determine that value by
outlining the factors and the methodology it will use to calculate. Provide the same
disclosure in each place in the proxy statement where you discuss what the holders subject
to the reclassification will receive along with a cross-reference to the discussions of
dissenters’ rights.

    We have revised the proxy statement as requested.

Important Notices

    6.

    Please move this section to later in the filing. The proxy statement should begin with the
Summary Term Sheet.

    We have revised the proxy statement as requested.

    7.

    Please delete the first paragraph. It is not material to the matter that is the subject of
the proxy statement.

    We have revised the proxy statement as requested.

    8.

    Please delete the final sentence in the second paragraph. You cannot condition acceptance of
the proxy statement on anything.

    We have revised the proxy statement as requested.

Summary Term Sheet, page 1

    9.

    It is your responsibility to summarize accurately. Please delete the sentence about
qualification in entirety by reference. You can direct investors to read the entire proxy
statement for fuller discussions.

    We have revised the proxy statement as requested.

    10.

    Revise the “Dividend Rights” subsection to disclose the last dividend declared and paid
during the last two years. We note from your disclosure on page 41 that Citizens Effingham
paid cash dividends of $256,000 in 2004 and no dividends in 2003.

    We have revised the proxy statement as requested.

Securities and Exchange Commission

November 21, 2005

Page 7

Reasons for the Reclassification, page 4

    11.

    In this section more specifically discuss the reasons for the particular structure. That is,
why did the board choose a method of going private that results in unaffiliated security
holders receiving unregistered securities with no voting rights?

    We have revised the proxy statement as requested.

Fairness of the Reclassification Transaction Board Recommendation, page 4

    12.

    Please state the board’s belief as to fairness of the Rule 13e-3 transaction as required by
Item 1014(a) of Regulation M-A, as opposed to the fairness of the reclassification. You should
make the corresponding change throughout the document.

    We have revised the proxy statement as reques