UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x QUARTERLY REPORT ~~UNDER~~PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the ~~Quarterly~~quarterly ~~Period~~period ~~Ended~~ended ~~June 30~~March 31, ~~2005~~2009

¨ TRANSITION REPORT ~~UNDER~~PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the ~~Transition~~transition ~~Period~~period from to

Commission File Number 000-23261

SECURITY BANK CORPORATION

(~~Name~~Exact name of ~~Small~~registrant ~~Business~~as ~~Issuer~~specified in its ~~Charter~~ charter)

GEORGIA		58-2107916
State or Other Jurisdiction of Incorporation or Organization		(I.R.S. Employer Identification No.)
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

4219 Forsyth Road,	MACON, GEORGIA	31210
4219 Forsyth Road, Macon, Georgia	31210
(Address of Principal Executive Offices)	(Zip Code)	~~(Zip Code)~~

~~Issuer’s Telephone Number~~ (478) 722-6200

~~SAME~~(Registrant’s ASTelephone ~~ABOVE~~ Number, Including Area Code)

N/A

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

~~Check~~Indicate by check mark whether the ~~issuer~~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 ~~past~~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. x Yes ¨ No

~~APPLICABLE~~Indicate ~~ONLY~~by TOcheck mark ~~ISSUERS~~whether ~~INVOLVED~~the INregistrant ~~BANKRUPTCY~~has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). ¨ Yes ¨ No

~~PROCEEDINGS~~Indicate ~~DURING~~by ~~THE~~check ~~PRECEDING~~mark ~~FIVE~~whether ~~YEARS~~the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act).

~~Check~~Large ~~whether~~accelerated ~~the~~filer ~~registrant~~¨ ~~filed~~Accelerated ~~all~~filer ~~documents~~x ~~and~~Non-accelerated ~~reports~~filer ~~required~~¨ toSmaller bereporting ~~filed~~company ~~by Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.~~ ¨ ~~Yes ¨ No~~

~~Check~~Indicate by check mark whether the registrant is ana ~~accelerated~~shell ~~filer~~company (as defined in Rule 12b-2 of the Exchange Act) x ¨ Yes ¨ x No

~~APPLICABLE~~Indicate ~~ONLY~~the TOnumber ~~CORPORATE~~of ~~ISSUERS~~shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 12,890,961 Shares of $1 par value common stock as of August 8, 2005


Class		Outstanding at May 8, 2009
Nonvoting Common Stock, $1.00 par value		— shares
Common Stock, $1.00 par value		23,274,639 shares

DOCUMENTS INCORPORATED BY REFERENCE

SECURITY BANK CORPORATION AND SUBSIDIARIES

INDEX

	PageNumber		~~PageNumber~~
PART I	Financial Information
PART I Financial Information
ITEM 1 Financial Statements	~~ITEM 1 Financial Statements~~
		Condensed Consolidated Balance Sheets	1
Condensed Consolidated Balance Sheets at March 31, 2009 (unaudited) and December 31, 2008 (audited)	3
		Condensed Consolidated Statements of Income for the Three Months Ended June 30, 2005 and 2004	3
Condensed Consolidated Statements of Income (Loss) (unaudited) for the Three Months Ended March 31, 2009 and 2008	4
		Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended June 30, 2005 and 2004	4
Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) for the Three Months Ended March 31, 2009 and 2008	5
		Condensed Consolidated Statements of Income for the Six Months Ended June 30, 2005 and 2004	5
Consolidated Statements of Changes in Shareholders’ Equity (unaudited) for the Three Months Ended March 31, 2009 and 2008	6
		Condensed Consolidated Statements of Comprehensive Income for the Six Months Ended June 30, 2005 and 2004	6
Condensed Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2009 and 2008	7
		Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2005 and 2004	7
Notes to Condensed Consolidated Financial Statements (unaudited)	8
		Notes to Condensed Consolidated Financial Statements	8
ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
	ITEM 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations		23
ITEM 3 Quantitative and Qualitative Disclosures About Market Risk	29
	ITEM 3 Quantitative and Qualitative Disclosures About Market Risk		39
ITEM 4 Controls and Procedures	29
	ITEM 4 Controls and Procedures		41
PART II Other Information
PART II	Other Information
ITEM 1 Legal Proceedings	29
	ITEM 1 Legal Proceedings		41
ITEM 1A Risk Factors	30
ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds	~~ITEM 2 Unregistered Sales of Equity Securities and Use of Proceeds~~33		41
ITEM 3 Defaults Upon Senior Securities	~~ITEM 3 Defaults Upon Senior Securities~~33		41
ITEM 4 Submission of Matters to a Vote of Security Holders	~~ITEM 4 Submission of Matters to a Vote of Security Holders~~33		42
ITEM 5 Other Information	~~ITEM 5 Other Information~~33		43
ITEM 6 Exhibits	~~ITEM 6 Exhibits~~34		43
SIGNATURES	35		45

PART I,. ~~ITEM~~FINANCIAL 1INFORMATION

~~Financial~~ITEM ~~Information~~1. Financial Statements

SECURITY BANK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)

ASSETS

	June 30,2005(Unaudited)		December 31,2004
	March 31,2009(Unaudited)		December 31,2008
Cash and Balances Due from Depository Institutions	$	34,922	$	26,862
Cash and Due from Banks	$	34,955	$	37,216
Interest-Bearing Deposits		2,407		2,858
Federal Funds Sold		525		1,508
Federal Funds Sold		42,177		17,484
Interest-Bearing Deposits With Other Banks		251,664		275,964
Investment Securities		~~117~~390,~~157~~924		~~106~~393,~~494~~681
Federal Home Loan Bank Stock, at Cost		5,606		4,918
Federal Home Loan Bank Stock		13,765		13,662
Loans Held for Sale		7,413		7,507
Loans Receivable, Net		1,789,137		1,922,039
Loans		1,028,461		834,862
Loans Held for Sale		86,076		—
Premises and Equipment		2241,~~308~~235		1943,~~105~~215
Other Real Estate		1,467		1,991
Premises and Equipment Held For Sale		2,054		—
Goodwill		50,507		28,579
Other Real Estate		105,581		94,717
Other Assets		17,204		12,825
Core Deposit Intangible, net		3,038		3,241
Total Assets	$	1,329,629	$	1,063,485
Accrued Interest Receivable		12,701		13,457
Other Assets		54,494		47,354
Total Assets	$	2,786,149	$	2,846,054

~~The~~LIABILITIES ~~accompanying~~AND ~~notes~~SHAREHOLDERS’ ~~are~~EQUITY ~~an integral part of these condensed consolidated balance sheets.~~


	March 31, 2009 (Unaudited)			December 31, 2008
Deposits	$	2,320,616		$	2,438,136
Deposits Held by Branches to be Sold		81,853			—
Borrowed Money		289,673			300,621
Other Liabilities		28,073			22,589
Commitments and Contingencies
Shareholders’ Equity
Preferred Stock, no par value; 2,000,000 Shares Authorized, Zero Shares Issued and Outstanding in 2009 and 2008, Respectively		—			—
Nonvoting Common Stock, Par Value $1 per Share; 10,000,000 Shares Authorized, Zero Shares Issued and Outstanding in 2009 and 2008, Respectively		—			—
Common Stock, Par Value $1 per Share; 80,000,000 Shares Authorized, 23,274,639 Shares Issued and Outstanding in 2009 and 2008		23,275			23,275
Paid-In Capital		252,490			252,349
Accumulated Deficit		(212,572	)		(194,120	)
Restricted Stock – Unearned Compensation		(33	)		(41	)
Accumulated Other Comprehensive Income, Net of Tax		2,774			3,245

Total Shareholders’ Equity		65,934			84,708

Total Liabilities and Shareholders’ Equity	$	2,786,149		$	2,846,054

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

PART I, ITEM 1 (CONTINUED)

Financial Information

SECURITY BANK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

LIABILITIES AND STOCKHOLDERS’ EQUITY

	June 30,2005(Unaudited)			December 31,2004
Deposits	$	1,074,087		$	842,558
Other Borrowed Money		99,721			107,504
Other Liabilities		18,802			6,752
Stockholders’ Equity
Common Stock, Par Value $1 Per Share; Authorized 25,000,000 Shares, Issued 12,871,376 and 11,659,546 Shares, Respectively		12,871			11,660
Paid-In Capital		86,128			62,349
Retained Earnings		38,711			33,045
Restricted Stock – Unearned Compensation		(63	)		(76	)
Accumulated Other Comprehensive Income, Net of Tax		32			353
		137,679			107,331
Treasury Stock, 19,736 Shares, at Cost		(660	)		(660	)
Total Stockholders’ Equity		137,019			106,671
Total Liabilities and Stockholders’ Equity	$	1,329,629		$	1,063,485

The accompanying notes are an integral part of these condensed consolidated balance sheets.

PART I, ITEM 1 (CONTINUED)

Financial Information

SECURITY BANK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED JUNE 30

(UNAUDITED)

(IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS)

	2005		2004
Interest Income
Loans, Including Fees	$	16,996	$	12,127
Federal Funds Sold		88		16
Investment Securities		1,150		903
Other		51		11
		18,285		13,057
Interest Expense
Deposits		5,218		2,656
Federal Funds Purchased		89		30
FHLB Loans		501		360
Repurchase Agreements		36		10
Subordinated Debentures		304		211
Other		14		27
		6,162		3,294
Net Interest Income		12,123		9,763
Provision for Loan Losses		804		718
Net Interest Income After Provision for Loan Losses		11,319		9,045
Noninterest Income
Service Charges on Deposits		1,858		1,634
Other Service Charges, Commissions and Fees		—		8
Mortgage Banking Income		1,170		1,284
Other		1,286		714
		4,314		3,640
Noninterest Expense
Salaries and Employee Benefits		5,598		4,621
Occupancy and Equipment		906		855
Office Supplies and Printing		166		174
Telephone Expense		209		180
Data Processing		166		138
Marketing Expense		373		241
Other		1,908		1,737
		9,326		7,946
Income Before Income Taxes		6,307		4,739
Income Taxes		2,397		1,729
Net Income	$	3,910	$	3,010
Basic Earnings Per Share	$	.32	$	.27
Diluted Earnings Per Share	$	.32	$	.27
Dividends Per Share	$	.07	$	.06
Weighted Average Common Shares Outstanding		12,047,652		11,157,412

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

PART I, ITEM 1 (CONTINUED)

Financial Information

SECURITY BANK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE~~ INCOME (LOSS)

FOR THE THREE MONTHS ENDED ~~JUNE~~MARCH 3031

(UNAUDITED)

($ IN THOUSANDS, EXCEPT PER SHARE AND SHARE AMOUNTS)

	2005			2004
	2009				2008
Net Income	$	3,910		$	3,010
Interest Income
Other Comprehensive Income, Net of Income Tax
Loans, Including Fees	$	23,891			$	37,027
Unrealized Holding Gains (Losses)		563			(1,558	)
Investment Securities		3,307				3,269
Comprehensive Income	$	4,473		$	1,452
Federal Funds Sold and Deposits with Other Banks		146				446
		27,344				40,742
Interest Expense
Deposits		20,562				23,945
Subordinated Debentures		580				739
Federal Home Loan Bank Advances		1,114				672
Federal Funds Purchased and Repurchase Agreements		13				348
Notes Payable and Other		1,168				239
		23,437				25,943
Net Interest Income		3,907				14,799
Provision for Loan Losses		12,108				42,199
Net Interest Expense After Provision for Loan Losses		(8,201	)			(27,400	)
Noninterest Income
Service Charges on Deposits		1,915				2,287
Mortgage Origination and Related Fees		22				1,002
Securities Gains		2,626				2,034
Other		286				539
		4,849				5,862
Noninterest Expense
Salaries and Employee Benefits		6,255				8,736
Occupancy and Equipment		1,751				1,549
Foreclosed Property		4,472				1,647
FDIC Assessments		519				391
Professional Fees		1,812				654
Marketing Expense		403				405
Amortization – Core Deposit Intangible		203				246
Other		1,496				3,279
		16,911				16,907
Loss Before Income Taxes		(20,263	)			(38,445	)
Income Taxes		(1,811	)			(14,247	)
Net Loss	$	(18,452	)		$	(24,198	)
Basic Loss Per Share	$	(0.79	)		$	(1.22	)
Diluted Loss Per Share	$	(0.79	)		$	(1.22	)
Cash Dividends Per Share	$	—			$	0.09
Weighted Average Common Shares Outstanding:
Basic		23,274,639				19,813,046
Diluted		23,274,639				19,814,589

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

PART I, ITEM 1 (CONTINUED)

Financial Information

SECURITY BANK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

FOR THE ~~SIX~~THREE MONTHS ENDED ~~JUNE~~MARCH 3031

(UNAUDITED)

(DOLLARS IN THOUSANDS~~, EXCEPT PER SHARE AND SHARE AMOUNTS~~)

	2005			2004
	2009				2008
Interest Income
Net Loss	$	(18,452	)		$	(24,198	)
Loans, Including Fees	$	31,710		$	23,428
Other Comprehensive Income (Loss), Net of Income Tax
Federal Funds Sold		175			48
Losses on Securities Arising During the Period		(1,740	)			(1,181	)
Investment Securities		2,192			1,888
Reclassification Adjustment		1,707				1,322
Other		73			20
Unrealized Gains (Losses) on Securities		(33	)			141
		34,150			25,384
Change in Fair Value of Derivative Used for Cash Flow Hedge		—				719
Interest Expense
Amortization of Unrealized Gain on Termination of Cash Flow Hedge		(439	)			—
Deposits		9,218			5,337
Comprehensive Loss	$	(18,924	)		$	(23,338	)
Federal Funds Purchased		174			34
FHLB Loans		945			682
Repurchase Agreements		63			17
Subordinated Debentures		577			422
Other		22			76
		10,999			6,568
Net Interest Income		23,151			18,816
Provision for Loan Losses		1,579			1,438
Net Interest Income After Provision for Loan Losses		21,572			17,378
Noninterest Income
Service Charges on Deposits		3,455			3,110
Other Service Charges, Commissions and Fees		—			12
Securities Gains		—			10
Mortgage Banking Income		2,130			2,487
Other		2,243			1,392
		7,828			7,011
Noninterest Expense
Salaries and Employee Benefits		10,652			8,954
Occupancy and Equipment		1,752			1,648
Office Supplies and Printing		321			348
Telephone Expense		400			360
Data Processing		310			247
Marketing Expense		744			567
Securities Losses		6			—
Other		3,604			3,382
		17,789			15,506
Income Before Income Taxes		11,611			8,883
Income Taxes		4,294			3,191
Net Income	$	7,317		$	5,692
Basic Earnings Per Share	$	0.62		$	0.53
Diluted Earnings Per Share	$	0.62		$	0.51
Dividends Per Share	$	.13		$	.11
Weighted Average Common Shares Outstanding		11,861,545			10,667,894

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

PART I, ITEM 1 (CONTINUED)

Financial Information

SECURITY BANK CORPORATION AND SUBSIDIARIES

~~CONDENSED~~ CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE~~CHANGES ~~INCOME~~ IN SHAREHOLDERS’ EQUITY

FOR ~~SIX~~THE THREE MONTHS ENDED ~~JUNE~~MARCH 3031, 2009 AND 2008

(UNAUDITED)

($ IN THOUSANDS)

	2005				2004
	PreferredStock			NonvotingCommonStock			CommonShares	CommonStock		Paid-InCapital		RetainedEarnings(Deficit)			RestrictedStock-UnearnedCompensation			AccumulatedOtherComprehensiveIncome (Loss)			Total
Net Income	$	7,317			$	5,692
Balance, December 31, 2007	$	—		$	—		18,912	$	18,912	$	220,504	$	63,011		$	(39	)	$	4,305		$	306,693
Other Comprehensive Income, Net of Income Tax
Cumulative Effect of Change in Accounting Principle													(93	)								(93	)
Unrealized Holding Losses		(321	)			(1,111	)
Stock-Based Compensation Awards											57											57
Comprehensive Income	$	6,996			$	4,581
Amortization of Unearned Compensation																7						7
Shares Issued to Employee Stock Purchase Plan							11		11		60											71
Shares Issued in Rights Offering							4,311		4,311		23,823											28,134
Change in Accumulated Other Comprehensive Income																			860			860
Cash Dividends													(1,655	)								(1,655	)
Net Loss													(24,198	)								(24,198	)
Balance, March 31, 2008	$	—		$	—		23,234	$	23,234	$	244,444	$	37,065		$	(32	)	$	5,165		$	309,876
Balance, December 31, 2008	$	—		$	—		23,275	$	23,275	$	252,349	$	(194,120	)	$	(41	)	$	3,245		$	84,708
Stock-Based Compensation Awards											141											141
Amortization of Unearned Compensation																8						8
Change in Accumulated Other Comprehensive Income																			(471	)		(471	)
Net Loss													(18,452	)								(18,452	)
Balance, March 31, 2009	$	—		$	—		23,275	$	23,275	$	252,490	$	(212,572	)	$	(33	)	$	2,774		$	65,934

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

PART I, ITEM 1 (CONTINUED)

Financial Information

SECURITY BANK CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR ~~SIX~~THE THREE MONTHS ENDED ~~JUNE~~MARCH 3031

(UNAUDITED)

($DOLLARS IN THOUSANDS)

	2005			2004
	2009			2008
Cash Flows from Operating Activities
Net Income	$	7,317		$	5,692
Net Loss	$	(18,452	)	$	(24,198	)
Adjustments to Reconcile Net Income to Net Cash Provided from Operating Activities
Adjustments to Reconcile Net Loss to Net Cash Provided (Used) from Operating Activities
Depreciation		728			680
Stock-Based Compensation		141			57
Amortization and Accretion		159			89
Depreciation, Amortization and Accretion		1,808			1,155
Provision for Loan Losses		112,~~579~~108			142,~~438~~199
Securities Losses (Gains)		6			(10	)
Securities Gains		(2,626	)		(2,034	)
(Gain) Loss on Sale of Other Real Estate		(1	)		13
Loss on Sale of Other Real Estate		852			245
Unrealized Loss on Other Real Estate		33			30
Provision for Other Real Estate Losses		1,670			30
Loss on Sale of Premises and Equipment		—			5
Loss on Disposal of Assets		8			2
Loans Held for Sale		94			2,566
Loss (Gain) on Sales of Loans		508			62
Net Change in Other		8,925			(141	)
Net Change in Mortgage Loans Held for Sale		—			1,846
		18,840			10,362
Payable for Purchased Securities		—			7,998
Termination of Cash Flow Hedge		—			6,333
Net Change in Other Assets		884			(13,067	)
Net Change in Other Liabilities		531			1,585
Other, Net		(2,100	)		(2,160	)
		(4,668	)		20,053
Cash Flows from Investing Activities
Interest-Bearing Deposits with Other Banks		844			(929	)
Purchase of Investment Securities Available for Sale		(369,352	)		(207,125	)
Purchase of Investment Securities Available for Sale		(10,058	)		(33,072	)
Proceeds from Disposition of Investment Securities
Proceeds from Disposition of Investment Securities Available for Sale		10,846			26,515
Available for Sale		373,847			209,793
Held to Maturity		~~936~~—			—
Federal Home Loan Bank Stock, Net		~~308~~(104	)		~~399~~(936	)
Loans to Customers, Net		(89,469	)		(85,654	)
Loans to Customers, Net of Repayments		14,973			(37,352	)
Premises and Equipment, Net		(~~1,037~~676	)		(~~1,676~~728	)
Other Real Estate		2,349			2,918
Proceeds from Sales of Other Real Estate		6,231			5,875
Goodwill Resulting from Contingent Cash Payments		(910	)		(1,868	)
Other, Net		(382	)		672
Cash Received in Business Acquisition, Net		2,035			—
		24,537			(29,801	)
		(84,156	)		(93,367	)
Cash Flows from Financing Activities
Interest-Bearing Customer Deposits		~~117~~(30,~~291~~604	)		484,~~356~~883
Noninterest-Bearing Customer Deposits		(35,~~531~~064	)		16,~~727~~083
Dividends Paid		~~(1,592~~—	)		(1,~~204~~655	)
Federal Funds Purchased and Repurchase Agreements		(1610,~~098~~845	)		~~758~~(37,089	)
Federal Home Loan Bank Notes		1,914			6,367
Borrowed Money, Net		(900	)		829
Issuance of Common Stock		85—			1928,~~343~~205
		98,069			75,347
		(47,413	)		1,256
Net Increase (Decrease) in Cash and Cash Equivalents		32,753			(7,658	)
Net Decrease in Cash and Cash Equivalents		(27,544	)		(8,492	)
Cash and Cash Equivalents, Beginning		44314,~~346~~688			49105,~~894~~271
Cash and Cash Equivalents, Ending	$	77287,~~099~~144		$	4296,~~236~~779

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

PART I, ITEM 1 (CONTINUED)

Financial Information

SECURITY BANK CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(1) Basis of Presentation

The condensed consolidated financial statements include Security Bank Corporation (the Company) and its wholly- owned subsidiaries,: Security Interim Holding Corporation (SBKC Interim); Security Bank of Bibb County ~~(formerly~~located in Macon, Georgia; Security ~~National~~ Bank), of Houston County located in ~~Macon~~Perry, Georgia; Security Bank of ~~Houston~~Jones County ~~(formerly~~located ~~Crossroads~~in Gray, Georgia; Security Bank of ~~Georgia),~~North Metro located in ~~Perry~~ Woodstock, Georgia; Security Bank of ~~Jones~~North ~~County~~Fulton ~~(formerly~~located in Alpharetta, Georgia; Security Bank of ~~Gray)~~Gwinnett County located in ~~Gray~~Suwanee, Georgia; and Security ~~Bank~~Real ofEstate ~~North Metro~~Services, (Inc., formerly ~~SouthBank)~~Fairfield ~~located~~Financial inServices, ~~Woodstock~~Inc., ~~Georgia~~a ~~(the~~subsidiary ~~Banks)~~of Security Bank of Bibb County. The ~~financial~~term ~~statements~~“the ofBanks” collectively refers to Security Bank of Bibb County, ~~include~~Security ~~its~~Bank ~~wholly-owned~~of ~~subsidiary~~Houston County, ~~Fairfield~~Security ~~Financial~~Bank ~~Services~~of Jones County, ~~Inc~~Security Bank of North Metro, Security Bank of North Fulton and Security Bank of Gwinnett County. ~~since~~All ~~its~~significant ~~formation~~intercompany onaccounts ~~August~~have 1,been ~~2000~~eliminated in consolidation. SBKC Interim was formed for the purpose of issuing $40.0 million of subordinated notes and conducts no operations.

The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted ~~accounting~~in ~~principles~~the United States. ~~All~~The condensed consolidated balance sheet as of December 31, 2008, has been derived from audited financial statements. All adjustments consisting of normally recurring accruals that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods covered by this ~~report~~Quarterly Report on Form 10-Q have been included. The accompanying condensed consolidated financial statements should be read in conjunction with the Security Bank Corporation consolidated financial statements and related notes appearing ~~and~~ in the ~~2004~~Annual ~~annual~~Report ~~report previously filed~~ on Form 10-K for the year ended December 31, 2008.

~~Changes~~Recently in Adopted Accounting ~~Principles and Effects of New Accounting~~ Pronouncements

In December ~~2004~~2007, the ~~Financial Accounting Standards Board (~~FASB) issued ~~Statement of Financial Accounting (~~SFAS) No. ~~123R~~ 141(~~revised 2004~~R), ~~Share-Based~~Business ~~Payment~~Combinations, which ~~revises~~replaces SFAS No. 141. ~~123,~~SFAS ~~Accounting~~No. 141(R) retains ~~for~~the ~~Stock-Based~~fundamental ~~Compensation,~~requirements ~~and~~that ~~supersedes~~the ~~APB~~acquisition ~~Opinion~~method ~~No.~~of ~~25,~~accounting ~~Accounting~~be used for ~~Stock~~all ~~Issued to~~business ~~Employees.~~combinations ~~This~~and ~~statement~~that ~~focuses~~an ~~primarily~~acquirer onis ~~accounting~~identified for ~~transactions~~each inbusiness ~~which~~combination. anThe ~~entity~~scope ~~obtains~~of ~~employee~~SFAS No. 141(R) is ~~services~~broader inthan ~~share-based~~SFAS ~~payment transactions~~No. 141, ~~This~~which ~~statement~~applied ~~does~~only ~~not~~to ~~address~~business ~~the~~combinations ~~accounting~~in ~~for employee share ownership plans,~~ which ~~are~~control ~~subject~~was toobtained ~~AICPA~~by ~~Statement~~transferring ofconsideration. ~~Position~~By ~~93-6,~~applying ~~Employers’~~the ~~Accounting~~same ~~for~~method ~~Stock~~of ~~Ownership~~accounting ~~Plans.~~— ~~This~~the ~~statement~~acquisition ~~requires~~method an— ~~entity~~ to ~~recognize~~all transactions ~~the~~and ~~cost~~other ofevents ~~employee services received~~ in ~~share-based~~which ~~payment~~one ~~transactions~~entity ~~and~~obtains ~~measure the~~control ~~cost~~over onone aor ~~grant-date~~more ~~fair~~other ~~value~~businesses, of the ~~award.~~FASB ~~That~~believes ~~cost~~that SFAS No. 141(R) will beimprove ~~recognized over~~ the ~~period~~comparability ~~during~~of ~~which~~the aninformation ~~employee~~about isbusiness ~~required~~combinations toprovided ~~provide service~~ in ~~exchange for the award~~financial reports. ~~The provisions of~~ SFAS ~~123R~~ No. 141(~~revised 2004~~R) ~~are~~is effective for ~~financial statements~~business ~~issued~~combinations for which the ~~first~~acquisition ~~fiscal~~date ~~year~~is ~~beginning~~on or after ~~June 15, 2005. Effective January 1, 2002,~~ the ~~Company~~beginning ~~adopted~~of the ~~fair~~first ~~value~~annual ~~method~~reporting ofperiod ~~recording~~beginning ~~stock-based~~on ~~compensation.~~or ~~For~~after ~~this reason~~December 15, ~~the~~2008. ~~implementation~~The adoption of SFAS No. ~~123R~~ 141(~~revised 2004~~R) on ~~will~~January 1, 2009 did not have an impact on the Company’s financial statements.

In ~~March~~December ~~2004~~2007, the ~~Financial Accounting~~FASB ~~Standards~~issued ~~Board~~SFAS No. 160, ~~ratified~~Noncontrolling ~~the~~Interests ~~consensus~~in ~~reached~~Consolidated byFinancial ~~the~~Statements— ~~Emerging~~an ~~Issues~~Amendment ~~Task~~of ~~Force~~ARB inNo. 51. ~~Issue~~SFAS ~~03-1,~~No. 160 ~~The~~amends ~~Meaning~~ARB ofNo. 51 ~~Other-Than-Temporary~~to ~~Impairment~~establish accounting and ~~Its~~reporting ~~Application~~standards tofor ~~Certain~~the ~~Investments~~noncontrolling ~~(EITF~~interest ~~03-1).~~in ~~EITF~~a subsidiary ~~03-1~~and ~~provides guidance~~ for ~~determining~~ ~~when~~the andeconsolidation ~~investment~~of isa ~~considered~~subsidiary. ~~impaired,~~SFAS ~~whether~~No. 160 ~~impairment~~clarifies isthat ~~other~~a ~~than~~noncontrolling ~~temporary,~~interest ~~and~~in ~~measurement~~a ofsubsidiary is an ~~impairment~~ownership ~~loss.~~interest Inin ~~September~~the ~~2004,~~consolidated ~~the~~entity ~~FASB~~that ~~issued~~should ~~FSP~~be ~~03-1-1~~reported ~~which~~as ~~delayed~~equity in the ~~effective~~consolidated ~~date~~financial statements. ~~for~~SFAS No. 160 changes the ~~measurement~~way ~~and recognition~~the ~~guidance~~consolidated ~~contained~~income instatement ~~paragraphs~~is ~~10–20~~presented; ofit ~~Issue~~requires ~~03-1~~consolidated ~~due~~net income to ~~additional~~be ~~proposed~~reported ~~guidance.~~at Atamounts ~~June~~that ~~30,~~include ~~2005,~~the ~~gross~~amounts ~~unrealized~~attributable ~~losses~~to onboth ~~available~~the ~~for~~parent ~~sale~~and ~~securities~~the ~~were~~noncontrolling ~~$728,000~~interest. SFAS ~~The~~No. 160 ~~Company~~also isrequires ~~continuing~~disclosure, toon ~~evaluate~~the face of the ~~impact~~consolidated statement of ~~EITF~~ ~~03-1.~~income, ~~The~~of ~~amount~~the amounts of ~~other~~consolidated ~~than~~net ~~temporary~~income ~~impairment~~attributable to bethe ~~recognized,~~parent ifand ~~any,~~to ~~will~~the benoncontrolling ~~dependent~~interest. onSFAS ~~market~~No. 160 ~~conditions,~~is ~~management’s~~effective ~~intent~~for ~~and~~annual periods ~~ability~~beginning toafter ~~hold~~December 15, ~~investments~~2008. ~~until~~The aadoption ~~forecasted~~of ~~recovery~~SFAS No. 160 on January 1, ~~and~~2009 ~~the~~did ~~finalization~~not ofhave ~~the~~an ~~proposed guidance~~impact byon the ~~FASB~~Company’s financial statements.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities— an Amendment of SFAS No. 133. SFAS No. 161 requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of, and gains and losses on, derivative instruments, and disclosures about credit-risk related contingent features in derivative agreements. SFAS No. 161 is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The adoption of SFAS No. 161 on January 1, 2009 did not have an impact on the Company’s financial statements.

~~PART~~SECURITY I,BANK ~~ITEM~~CORPORATION 1AND ~~(CONTINUED)~~SUBSIDIARIES

~~Financial~~NOTES ~~Information~~TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

~~(1)~~Recently ~~Basis~~Issued ofAccounting ~~Presentation~~Pronouncements ~~(Continued)~~

~~Changes~~In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FSP amends SFAS No. 157, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in ~~Accounting~~annual ~~Principles~~financial statements. This FSP also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. This FSP is effective for interim reporting periods ending after June 15, 2009, with early adoption permitted for periods ending after March 15, 2009 if the entity also elects to early adopt FSP FAS 157-4, Determining Fair Value When the Volume and ~~Effects~~Level of ~~New~~Activity ~~Accounting~~for the Asset or Liability Have ~~Pronouncements~~Significantly ~~(Continued)~~Decreased and Identifying Transactions That Are Not Orderly and FSP FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments. The FSP does not require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, this FSP requires comparative disclosures only for periods ending after initial adoption. Management will evaluate the impact on the Company’s financial statements upon adoption.

In ~~December~~April ~~2003~~2009, the ~~Accounting~~FASB ~~Standards Executive~~issued ~~Committee~~FSP ofFAS ~~the~~115-2 ~~American~~and ~~Institute~~FAS of124-2, ~~Certified~~Recognition ~~Public~~and ~~Accountants~~Presentation ~~issued~~of ~~AICPA~~Other –Than-Temporary ~~Statement~~Impairments. ofThis ~~Position~~FSP ~~No.~~amends 03the other-3,than-temporary ~~Accounting~~impairment ~~for~~guidance ~~Certain~~in ~~Loans~~U.S. orGAAP ~~Debt~~for ~~Securities~~debt ~~Acquired~~securities into amake ~~Transfer~~the ~~(SOP~~guidance ~~03-3),~~more tooperational ~~address~~and ~~accounting~~to ~~for differences~~improve ~~between~~ the ~~contractual~~presentation ~~cash~~and ~~flows~~disclosure of ~~certain~~other-than-temporary impairments ~~loans~~on debt and ~~debt~~equity securities ~~and~~in the ~~cash~~financial ~~flows~~statements. ~~expected~~This toFSP bedoes ~~collected~~not ~~when~~amend ~~loans~~existing orrecognition ~~debt~~and ~~securities~~measurement ~~are~~guidance ~~acquired~~related into aother-than-temporary ~~transfer~~impairments ~~and~~of ~~those~~equity ~~cash~~securities. ~~flow~~This ~~differences~~FSP ~~are~~is ~~attributable,~~effective atfor ~~least~~interim inand ~~part,~~annual toreporting ~~credit~~periods ~~quality.~~ending Asafter ~~such~~June 15, ~~SOP~~2009, ~~03-3~~with ~~applies~~early toadoption ~~such~~permitted ~~loans~~for ~~and~~periods ~~debt~~ending ~~securities~~after ~~acquired~~March 15, in2009. ~~purchase~~If ~~business~~an ~~combinations~~entity ~~and~~elects ~~does~~to ~~not~~early ~~apply~~adopt toeither ~~originated~~FSP ~~loans.~~FAS ~~The~~157-4, ~~application~~Determining ofFair ~~SOP~~Value ~~03-3~~When ~~limits~~ the ~~interest~~Volume ~~income,~~and ~~including~~Level ~~accretion~~ of ~~purchase~~Activity ~~price~~for ~~discounts~~the ~~that~~Asset ~~may~~or beLiability ~~recognized~~Have ~~for~~Significantly ~~certain~~Decreased ~~loans~~ and ~~debt~~Identifying ~~securities.~~Transactions ~~Additionally,~~That ~~SOP~~Are ~~03-3~~Not ~~requires~~Orderly, ~~that~~or ~~the~~FSP ~~excess~~FAS of115-2 ~~contractual~~and ~~cash~~FAS ~~flows~~124-2, ~~over~~Recognition ~~cash~~and ~~flows~~Presentation ~~expected to be collected (nonaccretable difference) not be recognized as an adjustment~~ of ~~yield~~Other-Than-Temporary ~~or valuation allowance~~Impairment, ~~such~~then as the ~~allowance~~entity ~~for~~must ~~loan~~also early ~~and~~adopt ~~lease~~this ~~losses~~FSP. ~~Subsequent to the initial investment~~Additionally, ~~increases~~if inan ~~expected~~entity ~~cash~~elects ~~flows~~to ~~generally~~early ~~should~~adopt bethis ~~recognized~~FSP, ~~prospectively~~it ~~through~~is ~~adjustment~~required ofto ~~the~~adopt ~~yield~~FSP ~~on the~~FAS ~~loan or debt security over its remaining life~~157-4. ~~Decreases~~The inFSP ~~expected~~does ~~cash~~not ~~flows~~require ~~should~~disclosures befor ~~recognized~~earlier asperiods ~~impairment.~~presented ~~SOP 03-3 is effective~~ for ~~loans~~comparative ~~and~~purposes ~~debt~~at ~~securities~~initial ~~acquired~~adoption. inIn periods ~~fiscal years beginning~~ after ~~December~~initial 15adoption, ~~2004,~~this ~~with~~FSP ~~early application~~requires ~~encouraged.~~comparative ~~The~~disclosures ~~Company~~only ~~adopted~~for ~~SOP~~periods ~~03-3~~ending onafter ~~January~~initial 1,adoption. ~~2005~~Management ~~and~~will ~~there~~evaluate ~~was~~the no impact toon the Company’s financial ~~condition,~~statements ~~results~~upon ~~of operations or cash flows during the six months ended June 30, 2005~~adoption.

In ~~May~~April ~~2005~~2009, the ~~Financial Accounting Standards Board (“~~FASB”) issued ~~Statement~~FSP ~~No. 154~~FAS 157-4, ~~(“SFAS~~Determining ~~No.~~Fair ~~154”)~~Value ~~“Accounting~~When ~~Changes~~the Volume and ~~Error~~Level ~~Corrections~~of -Activity Afor ~~Replacement~~the ofAsset ~~APB~~or ~~Opinion~~Liability ~~No.~~Have Significantly 20Decreased and ~~FASB~~Identifying ~~Statement~~Transactions ~~No.~~That 3Are Not Orderly.” This ~~new~~FSP ~~standard~~provides ~~replaces~~additional ~~Accounting~~guidance ~~Principles~~for ~~Board~~estimating ~~(“APB”)~~fair ~~Opinion~~value in accordance with SFAS No. 20 157, ~~“Accounting~~ ~~Changes”~~Fair Value Measurements, ~~and~~when ~~FASB~~the ~~Statement~~volume ~~No.~~and 3,level ~~“Reporting~~of activity ~~Accounting~~for ~~Changes~~the inasset ~~Interim~~or ~~Financial~~liability ~~Statements~~have significantly decreased.” ~~Among~~This ~~other~~FSP ~~changes,~~emphasizes ~~SFAS~~that ~~No.~~even ~~154~~if ~~requires~~there ~~that~~has been a ~~voluntary~~significant ~~change~~decrease in ~~accounting~~the ~~principle~~volume beand ~~applied~~level ~~retrospectively with~~of ~~all~~activity ~~prior~~for ~~period~~the ~~financial~~asset ~~statements~~or ~~presented~~liability onand ~~the~~regardless ~~new~~of ~~accounting~~the ~~principle~~valuation techniques(s) used, ~~unless~~the itobjective isof ~~impracticable~~a tofair dovalue ~~so.~~measurement ~~SFAS~~remains Nothe same. ~~154~~Fair ~~also~~value ~~provides~~is the price that ~~(1)~~would be received to sell an asset or paid to transfer a ~~change~~liability in ~~method~~an oforderly ~~depreciating~~transaction or(that ~~amortizing~~is, not a ~~long-lived~~forced ~~nonfinancial~~liquidation ~~asset~~or bedistressed sale) ~~accounted~~between market participants at the measurement date under current market conditions. This FSP is effective for asinterim aand ~~change~~annual inreporting ~~estimate~~periods ~~(prospectively)~~ending ~~that~~after ~~was~~June 15, ~~effected~~2009, byand ashall ~~change~~be inapplied ~~accounting~~prospectively. ~~principle~~Early adoption is permitted for periods ending after March 15, 2009. If an entity elects to early adopt either FSP FAS 115-2 and (FAS 124-2) ~~correction~~or ofFSP ~~errors~~FAS in107-1 ~~previously~~and ~~issued~~APB ~~financial~~28-1, ~~statements~~Interim ~~should~~Disclosures beabout ~~termed~~Fair aValue ~~“restatement.”~~of ~~The~~Financial ~~new~~Instruments, ~~standard~~the entity is ~~effective~~ ~~for~~also ~~accounting~~required ~~changes~~to ~~and~~early adopt ~~corrections~~this ofFSP. ~~errors~~Additionally, ~~made~~if inan ~~fiscal~~entity ~~years~~elects ~~beginning~~to ~~after~~early ~~December~~adopt 15this FSP, ~~2005.~~FSP ~~Security~~FAS ~~Bank~~115-2 ~~Corporation~~and FAS 124-2 also must be adopted early. The FSP does not ~~anticipate~~require disclosures for earlier periods presented for comparative purposes at initial adoption. In periods after initial adoption, this ~~revision~~FSP ~~will~~requires ~~have~~comparative adisclosures ~~material~~only ~~effect~~for periods ending after initial adoption. Management will evaluate the impact on ~~its~~the Company’s financial statements upon adoption.

~~Segment~~A ~~Reporting~~variety of other proposed or otherwise potential accounting standards are currently under study by standard-setting organizations and various regulatory agencies. Because of the tentative and preliminary nature of these proposed standards, management has not determined whether implementation of such proposed standards would be material to the Company’s consolidated financial statements.

Reportable segments are business units which offer different products and services and require different management and marketing strategies. Management of Security Bank Corporation considers that all banking operations are essentially similar within each of its subsidiaries and that there are no reportable operating segments. However, fee income from mortgage loans originated and sold to investors increased significantly with the July 2000 acquisition of Fairfield Financial Services, Inc. (Fairfield). Consolidated other income for the six-month period ended June 30, 2005 includes approximately $2,130,000 of Fairfield fee income. Such income may fluctuate significantly with increases or decreases in mortgage rates.

Reclassifications

Certain reclassifications have been made to conform prior period amounts to the current period presentation.

(2) Going Concern

The consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company sustained net losses of $18.5 million during the three months ended March 31, 2009. Due to the regulatory capital position of the Company and the Banks, certain operating restrictions have been imposed by the federal and state banking authorities as

~~PART~~ discussed I,in ~~ITEM~~Note 114. ~~(CONTINUED)~~These restrictions create an uncertainty about the Company’s ability to meet its obligations coming due in 2009. Failure to meet regulatory capital requirements may expose the Company and the Banks to additional regulatory sanctions including mandatory asset disposition and seizure.

~~Financial~~See ~~Information~~also Note 14 regarding Orders to Cease and Desist entered into by five of the Banks with the Federal Deposit Insurance Corporation (the “FDIC”) and the Georgia Department of Banking and Finance (the “Department”).

~~(2)~~The ~~Loans~~Company has retained the services of investment bankers to review all strategic opportunities available to the Company and the Banks. Additionally, the Company continues to work on reducing loans receivable and enhancing its liquidity position, most recently through the deferral of interest payments on certain borrowings. There can be no assurances that the Company’s actions referred to above will be successful. These events raise substantial doubt about the Company’s ability to continue as a going concern.

~~Loans~~(3) asBranches ofHeld ~~June~~for ~~30,~~Sale ~~2005 are comprised of the following:~~

	($ in Thousands)
Commercial	$	90,125
Real Estate-Construction		464,967
Real Estate-Other		449,625
Installment Loans to Individuals for Personal Expenditures		36,033
All Other		2,598
		1,043,348
Allowance for Loan Losses		(13,264	)
Unearned Interest and Fees		(1,623	)
	$	1,028,461

On March 30, 2009, the Company announced a definitive agreement to sell its two Glynn County branches, located in Brunswick and St. Simons Island, Georgia to The Heritage Bank (Heritage). Following the closing of the transaction, the Brunswick and St. Simons branches of Security Bank will become branch offices of Heritage. The Company plans to sell its premises and equipment and certain loans to Heritage. In addition, Heritage will assume certain deposits of the Company and will pay a premium on such deposits of approximately $1.6 million. In accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, the assets to be purchased and deposits to be assumed by Heritage Bank are classified separately in the Company’s Consolidated Balance Sheet as of March 31, 2009. The results of operations and cash flows from the branches held for sale are not material to the Company’s consolidated financial statements. The transaction is subject to regulatory approval and other closing conditions and is expected to be completed in the second quarter of 2009.

~~Loans~~(4) ~~are~~Investment ~~generally~~Securities reported at principal amount less unearned interest and fees. Impaired loans are recorded under SFAS No. 114, Accounting by Creditors for Impairment of a Loan and SFAS No. 118, Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosures. Impaired loans are loans for which principal and interest are unlikely to be collected in accordance with the original loan terms and, generally, represent loans delinquent in excess of 90 days which have been placed on nonaccrual status and for which collateral values are less than outstanding principal and interest. Small balance, homogeneous loans are excluded from impaired loans. Generally, interest payments received on impaired loans are applied to principal. Upon receipt of all loan principal, additional interest payments are recognized as interest income on the cash basis.

~~Other~~Investment ~~nonaccrual~~securities ~~loans~~as ~~are loans for which payments~~ of ~~principal~~March 31, ~~and~~2009 ~~interest~~ are ~~considered~~summarized ~~doubtful~~as offollows: ~~collection under original terms but collateral values equal or exceed outstanding principal and interest.~~

Fees and incremental direct costs associated with the loan origination process are deferred and amortized using the straight-line method as adjustments to yield over the respective loan terms.


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in Thousands)
Securities Available for Sale
Mortgage Backed	$	385,898	$	2,494	$	(572	)	$	387,820
State, County and Municipal		2,195		—		(118	)		2,077
Other Securities		1,941		23		(937	)		1,027

	$	390,034	$	2,517	$	(1,627	)	$	390,924

Investment securities as of December 31, 2008 are summarized as follows:


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
	(Dollars in Thousands)
Securities Available for Sale
Mortgage Backed	$	388,484	$	2,076	$	(367	)	$	390,193
State, County and Municipal		2,315		—		(158	)		2,157
Other Securities		1,941		25		(635	)		1,331

	$	392,740	$	2,101	$	(1,160	)	$	393,681

Unrealized holding gains, net of tax, on securities available for sale of $0.6 million have been credited to shareholders’ equity as of March 31, 2009 and December 31, 2008.

~~PART~~(5) ILoans Receivable, ~~ITEM~~Net ~~1 (CONTINUED)~~

~~Financial~~Loans ~~Information~~receivable are comprised of the following:

(3) Earnings Per Share


	March 31, 2009			December 31, 2008
	(Dollars in Thousands)
Construction, Land and Land Development	$	914,278		$	993,864
Real Estate-Other		726,288			769,344
Commercial and Industrial		143,424			157,799
Consumer		58,607			60,431
Agricultural		1,054			1,117

		1,843,651			1,982,555
Allowance for Loan Losses		(53,545	)		(59,437	)
Unearned Interest and Fees		(969	)		(1,079	)

	$	1,789,137		$	1,922,039

~~SFAS~~(6) ~~No.~~Allowance ~~128 establishes standards~~ for ~~computing~~Loan ~~and~~Losses presenting basic and diluted earnings per share. Basic earnings per share is calculated and presented based on income available to common stockholders divided by the weighted average number of shares outstanding during the reporting periods. Diluted earnings per share reflects the potential dilution that would occur if warrants and options were exercised and converted into common stock. The following presents earnings per share for the three and six months ended June 30, 2005 under the requirements of SFAS No. 128:

	Six Months EndedJune 30, 2005		Three Months Ended June 30, 2005
Basic Earnings Per Share
Net Income Per Common Share	$	0.62	$	0.32
Weighted Average Common Shares		11,861,545		12,047,652
Diluted Earnings Per Share
Net Income Per Common Share	$	0.62	$	0.32
Weighted Average Common Shares		12,181,041		12,374,075

The following table presents the Company’s loan loss experience on all loans for the periods indicated:

The assumed exercise of stock options is included in the diluted earnings per share computation using the treasury stock method and assuming an average market price for Security Bank Corporation stock of $21.2829 and $20.9963 for the three- and six-month periods ended June 30, 2005. The Company’s stock is quoted on the NASDAQ market under the symbol SBKC.


	March 31, 2009			March 31, 2008
	(Dollars in Thousands)
Balance beginning of period	$	59,437		$	31,698
Charge-Offs		(18,418	)		(24,443	)
Recoveries		418			295
Provision for Loan Losses		12,108			42,199

Balance end of period	$	53,545		$	49,749

~~Effective~~(7) ~~January~~Deposits 1, 2002, the Company adopted the fair value-based method of recording stock-based compensation contained in SFAS No. 123, Accounting for Stock-Based Compensation, which is considered the preferable accounting method for stock-based employee compensation. Prior to that date, the Company had applied the intrinsic value method permitted under SFAS No. 123, as defined in Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, in accounting for stock-based compensation plans. Accordingly, no compensation expense has been recognized for the Company’s stock option plans prior to January 1, 2002. In adopting SFAS 123, the Company is allowed to choose from three alternative transition methods. The Company elected to apply SFAS 123 prospectively to all new awards. As a result of the implementation of SFAS No. 123 in 2002 for prospective awards, $119,607 and $239,214 of compensation expense was recorded during the three and six month periods ended June 30, 2005, respectively, compared to $81,039 and $86,252 for the same periods in the prior year. Stock-based compensation awards granted in previous years will continue to be accounted for under Opinion 25.

~~During~~Components ~~the second quarter~~ of ~~2004,~~deposits ~~there~~are ~~were options granted prior to 2002 that vested. If compensation expense for these awards were determined on the basis of SFAS 123, net income and earnings per share would have been reduced~~ as ~~shown in the proforma information presented hereafter~~follows:


	March 31, 2009		December 31, 2008
	(Dollars in Thousands)
Time Deposits, $100,000 and Over	$	1,006,924	$	1,086,149
Other Time Deposits		803,363		787,266
Interest-Bearing Demand		351,859		398,425
Demand		144,000		153,006
Savings		14,470		13,290

	$	2,320,616	$	2,438,136

(8) Borrowed Money

Borrowed money is comprised of the following:


	March 31, 2009		December 31, 2008
	(Dollars in Thousands)
Federal Home Loan Bank Advances	$	189,795	$	190,695
Subordinated Debentures (Trust Preferred Securities)		41,817		41,238
Notes Payable, Net of Discount		32,062		31,844
Repurchase Agreements		25,999		36,844

Total Borrowed Money	$	289,673	$	300,621

~~PART~~In IFebruary 2009, ~~ITEM~~the 1Company received notice from the FHLB of Atlanta that the FHLB had frozen our borrowing availability for four of our banks (~~CONTINUED~~Security Bank of Bibb County, Security Bank of North Metro, Security Bank of North Fulton and Security Bank of Gwinnett County) to the amount outstanding. Advances that mature may be renewed; however, no new advances may be obtained.

~~Financial~~In ~~Information~~connection with the issuance of trust preferred securities, the Company formed trust subsidiaries. Interest income on the Company’s trusts totaled $17,274 and $22,407 for the three-month periods ended March 31, 2009 and 2008, respectively. Interest expense on the trusts totaled $579,929 and $739,461 for the three-month periods ended March 31, 2009 and 2008, respectively. During the quarter ended March 31, 2009, the Company exercised its right under all three of its subordinated debentures agreements, and the related trust preferred securities agreements to extend the interest payment periods and therefore did not make the interest payments due for the first payment periods of 2009. The Company presently anticipates that it will exercise this right on the remaining interest payments in 2009 as well.

~~(3)~~In ~~Earnings~~February ~~Per~~2009, ~~Share~~the ~~(Continued)~~Company notified the affiliates of the FSI Group, LLC that it would defer the March 31, 2009 interest payment on the Notes issued in April 2008. The deferred interest was added to the principal balance and future interest payments will be calculated on the increased principal balance.

	Six Months Endedas of June 30				Three Months Endedas of June 30
	2005		2004		2005		2004
Net Income
As Reported	$	7,317	$	5,692	$	3,910	$	3,010
Proforma		7,317		5,638		3,910		2,956
Basic Earnings Per Share
As Reported		0.62		0.53		0.32		0.27
Proforma		0.62		0.53		0.32		0.27
Diluted Earnings Per Share
As Reported		0.62		0.51		0.32		0.27
Proforma		0.62		0.51		0.32		0.26

(9) Share-Based Compensation Plans

~~(4)~~A ~~Allowance~~summary of option transactions for ~~Loan~~the ~~Losses~~three months ended March 31, 2009 follows:

The allowance method is used in providing for losses on loans. Accordingly, all loan losses decrease the allowance and all recoveries increase it. The provision for loan losses is based on factors which, in management’s judgment, deserve current recognition in estimating possible loan losses. Such factors considered by management include growth and composition of the loan portfolio, economic conditions and the relationship of the allowance for loan losses to outstanding loans.


	Shares Under Incentive Stock Options	Weighted Average Exercise Price		Aggregate Intrinsic Value		Weighted- average Remaining Contractual Life
Outstanding, December 31, 2008	1,454,499	$	18.23
Granted	—		—
Forfeited	—		—
Exercised	—		—

Outstanding, March 31, 2009	1,454,499	$	18.23	$	—	6.82

Eligible to be Exercised, March 31, 2009	462,443	$	14.43	$	—	4.48

An(10) ~~allowance~~Earnings ~~for~~(Loss) ~~loan~~Per ~~losses~~Share is maintained for all impaired loans. Provisions are made for impaired loans upon changes in expected future cash flows or estimated net realizable value of collateral. When determination is made that impaired loans are wholly or partially uncollectible, the uncollectible portion is charged off.

Due to the net loss in 2009, basic shares were used to calculate diluted loss per share. Adding common stock equivalents to the denominator would result in anti-dilution. For the three months ended March 31, 2009, the effects of the assumed exercise of 1.5 million stock options and 6.1 million stock warrants were excluded from the calculation of diluted loss per share because they would have an anti-dilutive effect.

The following presents loss per share for the three months ended March 31:


	2009			2008
Basic Loss Per Share
Net Loss Per Common Share	$	(0.79	)	$	(1.22	)

Weighted Average Common Shares		23,274,639			19,813,046


Diluted Loss Per Share
Net Loss Per Common Share and Common Equivalent Share	$	(0.79	)	$	(1.22	)

Weighted Average Common Shares and Common Stock Equivalents		23,274,639			19,814,589

The assumed exercise of stock options is included in the diluted earnings per share computation using the treasury stock method and assuming an average market price for the Company’s stock of $7.4202 for the three-month period ended March 31, 2008. The Company’s stock is quoted on the Nasdaq Global Select Market under the symbol SBKC.

~~PART I, ITEM 1~~ (~~CONTINUED~~11) Regulatory Matters

~~Financial~~Quantitative ~~Information~~measures established by regulation to ensure capital adequacy require the Company and the Banks to maintain minimum amounts and ratios of total and Tier I capital to risk-weighted assets, and of Tier I capital to average assets. The amounts and ratios as defined in regulations are presented hereafter.

~~(4)~~The ~~Allowance~~Company’s ~~for~~and ~~Loan Losses~~Banks’ ~~(Continued)~~actual ratios as of March 31, 2009 are as follows:

The following table presents the Company’s loan loss experience on all loans for the three months ended June 30:


	Tier 1 Capital Ratio		Total Capital Ratio		Leverage Ratio
Minimum Ratio for Adequately Capitalized	4.00	%	8.00	%	4.00	%
Minimum Ratio for Well Capitalized	6.00	%	10.00	%	5.00	%

Security Bank Corporation (Consolidated)	4.00	%	7.89	%	2.87	%
Security Bank of Bibb County	5.59	%	6.86	%	4.48	%
Security Bank of Houston County	8.77	%	10.03	%	5.10	%
Security Bank of Jones County	9.18	%	10.43	%	5.77	%
Security Bank of North Metro	2.73	%	4.00	%	1.98	%
Security Bank of North Fulton	7.09	%	8.35	%	4.38	%
Security Bank of Gwinnett County	1.50	%	2.79	%	1.12	%

	($ in Thousands)
	2005			2004
Allowance for Loan Losses, April 1	$	11,357		$	9,612
Charge-Offs
Commercial, Financial and Agricultural		(147	)		(32	)
Real Estate - Mortgage		(59	)		(126	)
Consumer		(200	)		(295	)
		(406	)		(453	)
Recoveries
Commercial, Financial and Agricultural		10			57
Real Estate - Mortgage		1			44
Consumer		78			118
		89			219
Net Charge-Offs		(317	)		(234	)
SouthBank Acquisition		1,420			—
Provision for Loan Losses		804			718
Allowance for Loan Losses, June 30	$	13,264		$	10,096
Ratio of Net Charge-Offs to Average Loans		(0.03	)%		(0.03	)%

At March 31, 2009, the Banks’ respective regulatory capital levels met the criteria of the following categories, subject to the regulatory capital provisions included in the Orders to Cease and Desist:

•

Well Capitalized – Security Bank of Houston County and Security Bank of Jones County;

•

Adequately Capitalized – Security Bank of North Fulton;

•

Undercapitalized – Security Bank of Bibb County;

•

Significantly Undercapitalized – Security Bank of North Metro; and

•

Critically Undercapitalized – Security Bank of Gwinnett County

See Note 14 regarding the Orders to Cease and Desist entered into by five of the Banks with the FDIC and the Department.

(12) Derivative Financial Instruments

On June 29, 2007, the Company executed an interest rate swap with an aggregate notional amount of $100.0 million, which was accounted for as a cash flow hedge. The Company’s objective in using the derivative was to add stability to interest income and to manage the Company’s exposure to adverse changes in interest rates. The interest rate swap agreement, with a maturity date of July 1, 2010, effectively converts the variable interest receipts on $100.0 million of prime-based loans to a fixed rate of 8.145% plus any credit spread, if applicable, over the life of the agreement.

The interest rate swap was terminated in March 2008 and the $6.3 million received upon termination is included in other comprehensive income (loss) and is being amortized to earnings, as interest income over the remaining term of the hedged item. The cash received as a result of the termination is classified, in the statement of cash flows, in the same category as the cash flows relating to the items being hedged.

(13) Fair Value of Financial Instruments

Effective January 1, 2008, the Company adopted FASB Statement No. 157, Fair Value Measurements (SFAS No. 157), which provides a framework for measuring fair value under generally accepted accounting principles. SFAS No. 157 applies to all financial elements that are being measured and reported on a fair value basis.

~~PART~~Assets I,Measured ~~ITEM~~at 1Fair ~~(CONTINUED)~~Value on a Recurring Basis

~~Financial~~The ~~Information~~following table presents the fair value measurements of assets measured at fair value on a recurring basis as of March 31, 2009, aggregated by the level in the fair value hierarchy within which those measurements fall.

(4) Allowance for Loan Losses (Continued)


	Quoted Market Prices in active markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Investment Securities Available for Sale	$	—	$	390,924	$	—

~~The~~Assets ~~following~~and ~~table~~Liabilities ~~presents~~Measured ~~the~~at ~~Company’s~~Fair ~~loan~~Value ~~loss experience~~ on ~~all~~a ~~loans~~Nonrecurring ~~for~~Basis ~~the six months ended June 30:~~

	($ in Thousands)
	2005			2004
Allowance for Loan Losses, January 1	$	10,903		$	9,407
Charge-Offs
Commercial, Financial and Agricultural		(300	)		(49	)
Real Estate – Mortgage		(198	)		(496	)
Consumer		(368	)		(635	)
		(866	)		(1,180	)
Recoveries
Commercial, Financial and Agricultural		51			61
Real Estate – Mortgage		9			45
Consumer		168			325
		228			431
Net Charge-Offs		(638	)		(749	)
SouthBank Acquisition		1,420			—
Provision for Loan Losses		1,579			1,438
Allowance for Loan Losses, June 30	$	13,264		$	10,096
Ratio of Net Charge-Offs to Average Loans		(0.07	)%		(0.10	)%

The following table presents the fair value measurements of assets and liabilities measured at fair value on a nonrecurring basis as of March 31, 2009, aggregated by the level in the fair value hierarchy within which those measurements fall.

(5) Derivative Financial Instruments


	Quoted Market Prices in active markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
	(In thousands)
Assets
Loans Held For Sale	$	86,076	$	—	$	—
Impaired Loans		—		236,402		—
Premises and Equipment Held For Sale		2,054		—		—
Other Real Estate		—		105,581		—

	$	88,130	$	341,983	$	—


Liabilities
Deposits Held by Branches to be Sold	$	81,853	$	—	$	—

OnThe ~~July~~assets ~~1, 2003, the Company adopted SFAS No. 149, Amendment of Statement No. 133 on Derivative Instruments~~ and ~~Hedging~~liabilities ~~Activities.~~associated ~~This~~with ~~statement~~the ~~requires~~pending ~~that~~sale ~~all~~transaction ~~derivatives~~with beThe ~~recognized~~Heritage asBank ~~assets~~are included ~~or liabilities~~ in the ~~balance~~table ~~sheet~~above ~~and measured~~ at fair value., ~~Loan~~which ~~commitments~~is ~~related~~equal to ~~the~~ ~~origination~~book orvalue. ~~acquisition~~These ofamounts ~~mortgage~~are ~~loans~~considered ~~that~~Level ~~will~~1, beas ~~held~~the ~~for~~fair ~~sale~~value ~~must~~is beequal ~~accounted~~to ~~for~~the assales ~~derivative instruments~~price.

(14) Subsequent Events

Orders to Cease and Desist with Banks

In April 2009, five of the Banks, Security Bank of Bibb County, Security Bank of Gwinnett County, Security Bank of Jones County, Security Bank of North Metro and Security Bank of Houston County entered into an Order to Cease and Desist (the “Orders”) with the FDIC and the Department. The final Orders are specific to each Bank, but contain many similar provisions and requirements, some of which are summarized below. The summary descriptions of the Orders set forth below are qualified in their entirety by the actual Orders, which are filed as Exhibits 10.1 through 10.5 to the Current Report on Form 8-K, as filed April 24, 2009, and are incorporated by reference herein in their entirety.

Under the terms of the Orders, each of the Banks referenced above has agreed, among other things, to some or all of the following provisions:

•

Increase participation of the Board of Directors in the affairs of the Bank and establish a Board committee to oversee the Bank’s compliance with the Order.

•

Have and retain qualified management.

~~PART~~• I,Increase ~~ITEM~~and 1maintain ~~(CONTINUED)~~capital levels.

~~Financial~~• ~~Information~~Review the adequacy of the allowance for loan and lease losses (“ALLL”) and establish a comprehensive policy for determining the adequacy of the ALLL.

~~(5)~~• ~~Derivative~~Review, ~~Financial~~revise ~~Instruments (Continued)~~and adopt a written liquidity, contingency funding and funds management policy; implement adequate models for managing liquidity; and calculate monthly the liquidity and dependency ratios for Board review.

~~The~~• ~~Company~~Take ~~enters~~specified ~~into~~actions commitments to originate loans whereby the interest rate on the loan is determined prior to funding (rate-lock commitments). Rate-lock commitments on mortgage loans that are intended to be sold are considered to be derivatives. Accordingly, such commitments, along with ~~related fees~~regard ~~received from potential borrowers, are~~ to bebrokered ~~recorded at fair value in derivative assets or liabilities, with changes in fair value recorded in the net gain or loss on sale of mortgage loans~~deposits. Fair value is based on fees currently charged to enter into similar agreements, and for fixed-rate commitments also considers the difference between current levels of interest rates and the committed rates. The Company has not recorded rate-lock commitments as derivative assets or liabilities as of June 30, 2005 as the effects did not have a material effect on the consolidated financial statements.

~~(6)~~• ~~Investment~~Refrain ~~Securities~~from paying cash dividends without the prior written consent of the FDIC.

~~The~~• ~~Company records~~Take ~~investment~~specific ~~securities~~actions ~~under~~to ~~SFAS~~reduce ~~No. 115, Accounting for Certain Investments in Debt and Equity Securities. In accordance with~~ the ~~provisions~~level of ~~SFAS~~assets ~~No. 115, the Company elected to classify securities individually as either available for sale or held to maturity. Securities~~ classified ~~as held to maturity are recorded at amortized cost~~“Substandard. ~~Those classified as available for sale are adjusted to market value through a tax-effected increase or reduction in stockholders’ equity.~~ ”

~~Investment~~• ~~securities~~Refrain asfrom ofextending ~~June~~any 30additional credit to, ~~2005~~or ~~are~~for ~~summarized~~the asbenefit ~~follows:~~ of, any borrower who has a loan or other extension of credit from the Bank that has been charged off or classified in a certain specified manner and is uncollected.

	AmortizedCost		GrossUnrealizedGains		GrossUnrealizedLosses			Fair Value
	($ in Thousands)
Securities Available for Sale
U.S. Treasuries	$	503	$	2	$	—		$	505
U.S. Government Agencies
Mortgage Backed		67,291		232		(530	)		66,993
Other		34,504		30		(190	)		34,344
State, County and Municipal		14,170		512		(8	)		14,674
Other Securities		191		—		—			191
	$	116,659	$	776	$	(728	)	$	116,707
Securities Held to Maturity
State, County and Municipal	$	450	$	—	$	9		$	459

•

Revise, adopt, and implement a written lending, underwriting and collection policy and adopt and implement a policy limiting the use of loan interest reserves.

~~Unrealized~~• ~~holding~~Take ~~gains,~~specified ~~net~~actions ~~of tax, on securities available for sale in the amount of $32,000 have been credited~~ to ~~stockholders’~~reduce ~~equity~~certain asconcentrations of ~~June 30, 2005~~credit.

•

Prepare and submit to its supervisory authorities its written strategic plan consisting of long-term goals and strategies.

•

Eliminate and/or correct all violations of law, regulations and contraventions of FDIC Statements of Policy as discussed in applicable reports and take all necessary steps to ensure future compliance.

•

Furnish quarterly progress reports to the banking regulators.

Withdrawal of TARP Application

On November 14, 2008, the Company filed an application to participate in the Capital Purchase Program administered by the U.S. Department of the Treasury under the Troubled Asset Relief Program. Because of the issuance of the Orders and the changes in the Capital Purchase Program, the Company withdrew its application to participate in the Capital Purchase Program on April 23, 2009.

Written Agreement with the Federal Reserve Bank of Atlanta

On May 6, 2009, Security Bank Corporation and Security Interim Holding Corporation (the “Companies”) entered into a Written Agreement with the Federal Reserve Bank of Atlanta (the “Federal Reserve”) and the Georgia Department of Banking and Finance (the “Department”). The Written Agreement contains several provisions intended to increase the financial soundness of the Companies so that the Companies may serve as a source of strength to the Banks.

The summary description of the Written Agreement set forth below is qualified in its entirety by the actual Written Agreement, which is attached as Exhibit 10.6 and is incorporated by reference herein.

Under the terms of the Written Agreement, each of the Companies has agreed to the following provisions (among others detailed in the Written Agreement):

•

Submit a written plan to strengthen risk management practices and assist the Banks in meeting the requirements of supervisory actions imposed on them by their federal or state regulators.

•

Refrain from paying dividends or receiving dividends from the Banks without the prior written approval of the Federal Reserve and the Department.

•

Refrain from making payments of interest or principal on subordinated debt or trust preferred securities without the prior written approval of the Federal Reserve and the Department.

•

Refrain from incurring, increasing or guaranteeing any debt without the prior written approval of the Federal Reserve and the Department.

•

Submit a written plan to maintain sufficient capital at the Companies and each of the Banks.

•

Refrain from increasing or imposing any new fees on the Banks without prior written approval of the Federal Reserve.

•

Furnish quarterly progress reports to the regulators.

The restrictions and reporting obligations under the Written Agreement are similar to the restrictions placed on the Banks pursuant to the previously reported enforcement actions. The Written Agreement supersedes the Board Resolution passed by the Board of Directors in February 2008.

~~PART~~ITEM I,2. ~~ITEM~~Management’s 1Discussion ~~(CONTINUED)~~and Analysis of Financial Condition and Results of Operations

~~Financial~~The ~~Information~~following narrative presents management’s discussion and analysis of the Company and its subsidiaries’ financial condition and results of operations as of and for the three-month periods ended March 31, 2009 and 2008. The historical financial statements of the Company are set forth elsewhere herein. This discussion should be read in conjunction with those financial statements and the other financial information included in this Quarterly Report on Form 10-Q.

~~(7)~~Forward-Looking ~~Borrowed~~Statements ~~Money~~

~~Borrowed~~This ~~money~~Quarterly isReport ~~comprised~~on Form 10-Q contains or incorporates by reference statements that are “forward-looking statements” within the meaning of Section 27A of the ~~following~~Securities Act of 1933, as amended (the Securities Act) and Section 21E of ~~June~~the 30Securities Exchange Act of 1934, ~~2005:~~as amended (the Exchange Act). Forward-looking statements discuss future expectations, describe future plans and strategies, contain projections of results of operations or of financial condition or state other forward-looking information. Forward-looking statements are generally identifiable by the use of forward-looking terminology such as “anticipate,” “assume,” “believe,” “continue,” “could,” “would,” “endeavor,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,” “plan,” “potential,” “predict,” “project,” “seek,” “should,” “target,” “will” and other similar words and expressions of future intent.

	($ in Thousands)
Advances under the Blanket Agreement for Advances and Security Agreement with the Federal Home Loan Bank (FHLB) have maturities in varying amounts through March 23, 2011 and interest rates ranging from 1.74 percent to 4.55 percent. Residential first mortgage loans, commercial real estate loans and investment securities are pledged as collateral for the FHLB advances.	$	72,300
Advances under the line of credit with The Bankers Bank mature March 21, 2015 with interest rates on $14 million at prime minus 100 basis points and $3 million at prime minus 50 basis points. All shares of stock owned by the Company in Security Bank of Bibb County and Security Bank of Houston County are pledged as collateral on the line of credit. The Company had available line of credit totaling $17,000,000, of which $13,850,000 was available.		3,150
During the fourth quarter of 2002, the Company formed a subsidiary whose sole purpose was to issue Trust Preferred Securities through a pool sponsored by FTN Financial Capital Markets. The Trust Preferred Securities have a maturity of 30 years and are redeemable after five years with certain exceptions. At June 30, 2005, the floating-rate securities had a 6.34 percent interest rate, which will reset quarterly at the three-month LIBOR rate plus 3.25 percent. The Trust Preferred Securities are recorded as subordinated debentures on the consolidated balance sheets, but, subject to certain limitations, qualify as Tier 1 capital for regulatory purposes.		18,557
Federal Funds Purchased		—
Securities Sold Under Agreement to Repurchase		5,714
Total Borrowed Money	$	99,721

Our ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Although we believe that the expectations reflected in such forward-looking statements are based on reasonable assumptions, our actual results and performance could differ materially from those set forth in the forward-looking statements. Factors that could cause actual results and performance to differ from those expressed in our forward-looking statements we make or incorporate by reference in this Quarterly Report on Form 10-Q include, but are not limited to:

~~Maturities~~• the effects of ~~all~~the ~~FHLB~~current ~~and~~global ~~The~~economic ~~Bankers Bank~~crisis, ~~advances~~including, ~~for~~without ~~each~~limitation, the dramatic deterioration of real estate values, the ~~ensuing~~subprime ~~years~~mortgage, ~~are~~credit and liquidity markets, as ~~follows:~~well as the Federal Reserve’s actions with respect to interest rates, may lead to a further deterioration in credit quality, thereby requiring continued increases in our provision for loan losses, or a reduced demand for credit, which will continue to negatively impact our earnings;

Year	Amount
2005	$	16,150
2006		29,150
2007		17,000
Thereafter		13,150
	$	75,450

•

the imposition of enforcement orders, capital directives or other enforcement actions by our regulators, including restrictions and limitations placed on the Banks pursuant to the Orders;

•

possible changes in trade, monetary and fiscal policies, as well as legislative and regulatory changes, including changes in accounting standards and banking, securities and tax laws and regulations and governmental intervention in the U.S. financial system, as well as changes affecting financial institutions’ ability to lend and otherwise do business with consumers;

•

increases in our nonperforming assets, or our inability to recover or absorb losses created by such nonperforming assets;

•

our ability to effectively manage liquidity risk, interest rate risk and other market risk, credit risk and operational risk

•

our ability to manage negative developments and disruptions in the credit and lending markets, including the impact of the ongoing credit crisis on our business and on the businesses of our customers as well as other financial institutions with which we have commercial relationships;

•

the continuation of the recent unprecedented volatility in the credit markets and overall economy;

•

possible changes in the quality or composition of our loans or investment portfolios, including further adverse developments in the real estate markets, the borrowers’ industries or in the repayment ability of individual borrowers or issuers;

•

changes in the interest rate yield curve such as flat, inverted or steep yield curves, or changes in the interest rate environment that impact interest margins and may impact prepayments on the mortgage-backed securities portfolio;

•

our ability to manage fluctuations in the value of assets and liabilities and off-balance sheet exposure so as to maintain sufficient capital and liquidity to support our business;

•

the failure of our assumptions underlying the establishment of allowances for loan losses and other estimates, or dramatic changes in those underlying assumptions or judgments in future periods, that, in either case, render the allowance for loan losses inadequate or require that further provisions for loan losses be made;

•

unexpected outcomes of existing or new litigation;

~~PART~~• I,the ~~ITEM~~threat 1or ~~(CONTINUED)~~occurrence of war or acts of terrorism and the existence or exacerbation of general geopolitical instability and uncertainty;

~~Financial~~• ~~Information~~management’s ability to develop and execute plans to effectively respond to the Orders and any unexpected events in the future; and

~~(7)~~• ~~Borrowed~~other ~~Money~~factors and information contained in this Quarterly Report on Form 10-Q and other reports that we file with the Securities and Exchange Commission (~~Continued~~SEC) under the Exchange Act.

OnThe ~~December~~cautionary ~~31,~~statements ~~2003,~~in ~~the~~this ~~Company~~Quarterly ~~retroactively~~Report ~~implemented~~on ~~FASB Interpretation~~Form ~~No.~~10-Q ~~46R,~~also ~~Consolidation~~identify ofimportant ~~Variable~~factors ~~Interest~~and possible ~~Entities,~~events anthat ~~interpretation~~involve ofrisk ~~ARB~~and ~~No.~~uncertainties ~~51,~~that ~~resulting~~could incause ~~the~~our ~~deconsolidation~~actual ofresults ~~Security~~to ~~Bank~~differ ~~Statutory~~materially ~~Trust~~from I.those ~~The~~contained ~~implementation~~in ofthe ~~this~~forward-looking ~~interpretation~~statements. ~~resulted~~These inforward-looking ~~SBKC’s $557,000~~statements ~~investment~~speak inonly ~~the~~as ~~common equity~~ of the ~~trust~~date ~~being~~on ~~included~~which in the ~~consolidated~~statements were ~~balance~~made. ~~sheets~~We asdo ~~other~~not ~~assets~~intend, and ~~the~~undertake ~~interest~~no ~~income~~obligation, ~~and~~to ~~interest~~update ~~expense~~or ~~received~~revise ~~from~~any ~~and~~forward-looking ~~paid~~statements tocontained ~~the~~in ~~trust,~~this ~~respectively,~~Quarterly ~~being~~Report ~~included~~on inForm ~~the consolidated~~10-Q, ~~statements~~whether ~~of income~~ as ~~interest~~a ~~income~~result ~~and~~of ~~interest~~differences ~~expense.~~in ~~The~~actual ~~increase~~results, tochanges ~~other~~in ~~interest~~assumptions ~~income~~or ~~and~~changes ~~interest~~in other ~~expense~~factors ~~totaled~~affecting ~~$17,099~~such ~~and $12~~statements,~~429~~ except as ofrequired ~~June~~by ~~30, 2005 and 2004, respectively~~law.

~~(8)~~Readers ~~Deposits~~should carefully review all disclosures we file from time to time with the SEC.

~~Components~~Unless indicated otherwise, references in this Quarterly Report on Form 10-Q to “we,” “us,” “our,” “SBKC” or the “Company” refer to Security Bank Corporation and its consolidated subsidiaries, Security Interim Holding Corporation, Security Bank of ~~deposits~~Bibb asCounty, Security Bank of ~~June~~Houston 30County, ~~2005~~Security Bank of Jones County, Security Bank of North Metro, Security Bank of North Fulton and Security Bank of Gwinnett County. Together, the consolidated subsidiary banks are referred to as ~~follows:~~“the Banks.”

	$ in Thousands
Demand	$	121,600
Interest-Bearing Demand		255,632
Savings		20,339
Time, $100,000 and Over		353,284
Other Time		323,232
	$	1,074,087

Overview

~~Brokered~~Security ~~deposits~~Bank Corporation was incorporated on February 10, 1994 for the purpose of becoming a bank holding company. We are ~~third-party~~subject ~~time~~to extensive federal and state banking laws and regulations, including the Bank Holding Company Act of 1956, as amended, and the bank holding company laws ~~deposits~~of ~~placed~~Georgia. byWe orown ~~through~~six subsidiary banks—Security Bank of Bibb County, Security Bank of Houston County, Security Bank of Jones County, Security Bank of North Metro, Security Bank of North Fulton and Security Bank of Gwinnett County. We also own Security Real Estate Services, Inc. (SRES), an interim real estate and development lender, which functions as an operating subsidiary of Security Bank of Bibb County. Through 2007, we offered land acquisition and development and construction loans from SRES, but SRES no longer offers these loans. SRES did continue to originate residential mortgage loans until the ~~assistance~~fourth quarter of a2008, ~~deposit~~when ~~broker~~we contracted with Envoy Mortgage, an independent residential mortgage company based in Houston, Texas, to offer mortgage loans to our customers. As part of ~~June~~the 30agreement, ~~2005,~~all employees of SRES’s traditional residential mortgage origination business were retained by Envoy Mortgage and continue to originate mortgages in the Company’s offices. ~~had~~The ~~$215~~Banks are also subject to various federal and state banking laws and regulations. SBKC Interim,~~538~~ a wholly owned subsidiary of Security Bank Corporation,~~000~~ was formed in ~~brokered~~April ~~deposits~~2008 ~~compared~~for tothe purpose of issuing $~~125~~40.0 million of subordinated notes and conducts no operations. On March 30,~~387~~ 2009,~~000~~ atthe ~~December~~Company 31announced a definitive agreement to sell two Glynn County branches, ~~2004~~located in Brunswick and St. Simons Island, to The Heritage Bank. Following the closing of the transaction, the Brunswick and St. Simons branches of Security Bank of Bibb County would become branch offices of The Heritage Bank. The transaction is subject to regulatory approval and other closing conditions and is expected to be completed in the second quarter of 2009.

~~(9)~~The ~~Stockholders’~~Banks ~~Equity~~each operate as a separate legal entity under the corporate umbrella of the Company. As a result, each Bank has its own board of directors and management comprised of persons known in the local community in which each Bank operates. We provide significant assistance and oversight to the Banks in areas such as budgeting, marketing, human resource management, credit administration, operations and funding.

InAs ~~1999, the board~~ of ~~directors of Security Bank Corporation adopted an incentive stock option plan which authorizes 250~~March 31,~~000~~ ~~shares~~2009 towe behad ~~granted~~388 ~~to certain officers and key~~ employees. ~~Those~~on ~~officers and key employees are granted the right to purchase shares of common stock at~~ a ~~price~~full-time ~~representing~~equivalent ~~the market value of the stock at the date of the option grant~~basis. In May 1999, 147,000 options were granted at the price of $9.25 per share and an additional 20,000 options were granted at $8.97 per share in September 1999. An additional 51,000 options were granted at $6.50 per share in August 2000 under this same plan. Option holders may exercise in accordance with a vesting schedule beginning with 20 percent the first year and increasing 20 percent each year thereafter such that 100 percent of granted options may be exercised by the end of the fifth year.

Like most financial institutions, our profitability depends largely upon net interest income, which is the difference between the interest received on earning assets, such as loans and investment securities, and the interest paid on interest-bearing liabilities, principally deposits and borrowings. Our results of operations are also affected by our provision for loan losses; noninterest expenses, such as salaries, employee benefits and occupancy expenses; and noninterest income, such as mortgage loan fees and service charges on deposit accounts.

~~PART~~Recent I,Events ~~ITEM 1 (CONTINUED)~~

~~Financial~~As ~~Information~~a result of these unprecedented and difficult times, the regulatory capital level of our Banks has decreased significantly and our sources of funding have diminished. Currently, the Company is making all efforts to retain and increase its capital ratios and liquidity. As part of those efforts, in the first quarter of 2009, we exercised our rights under all three of our trust preferred securities agreements to extend the interest payment periods and therefore did not make the payments due for the first payment periods of 2009. We presently anticipate that we will exercise this right on the remaining interest payments in 2009 as well. Also, in February 2009, the Company notified the affiliates of the FSI Group, LLC that it would defer the March 31, 2009 interest payment on the Notes issued in April 2008. The deferred interest was added to the principal balance and future interest payments will be calculated on the increased principal balance.

~~(9)~~In ~~Stockholders’~~addition, ~~Equity~~the Company has retained the services of investment bankers to review all strategic opportunities available to the Company and the Banks. As ~~(Continued)~~part of such plan of action, in January 2009, the Company applied to the FDIC to consolidate its six banking charters into a single banking charter. Subsequent to the filing of the application, the Company received notice that several of our Banks were undercapitalized as of December 31, 2008. In April 2009, we withdrew the application to consolidate our banking charters.

~~During~~Several ~~the first quarter~~ of ~~2002,~~ the ~~board~~Banks ofare ~~directors~~subject ~~of Security~~to ~~Bank~~Section 337 ~~Corporation~~of ~~adopted~~the aFDIC ~~performance-based~~Rules ~~incentive~~and ~~stock option plan~~Regulations. Under this ~~plan~~section, ~~210,000~~these ~~options~~banks ~~were~~may ~~granted~~no inlonger ~~May 2002 at $9.75 per share~~accept, ~~15,000~~renew ~~were~~or ~~granted~~rollover atmaturing ~~$11~~brokered deposits.40 inDuring ~~November~~the ~~2002,~~quarter anended ~~additional 10~~March 31,~~000~~ ~~options were granted at $11.75 in December 2002 and an additional 7~~2009,~~000~~ ~~options were granted at~~ $1666.501 million in ~~August~~brokered ~~2003.~~deposits ~~The~~matured ~~nonforfeitable~~which ~~provisions~~decreased ~~for~~our ~~these~~liquidity ~~options are two-tiered~~position. ~~Options~~During in the ~~first~~remainder ~~tier~~of ~~are~~2009, ~~nonforfeitable~~another ~~over~~$603.4 ~~three~~million ~~years based on a 12 percent increase~~ in ~~earnings~~brokered ~~per~~deposits ~~share~~will ~~over the base year diluted earnings per share of $0~~mature.52 ~~each year.~~ If ~~the~~we ~~maximum~~are ~~diluted~~unable ~~earnings~~to ~~per~~replace ~~share~~these ofmatured ~~$0.72~~brokered ~~is reached during the three-year period~~deposits, ~~the~~then ~~nonforfeitable~~our ~~shares are doubled. Under the~~liquidity ~~second~~position ~~tier,~~will ~~additional~~be ~~shares~~negatively ~~shall~~and ~~become~~severely ~~nonforfeitable~~impacted ~~for~~and ~~two~~we ~~executive~~likely ~~officers~~will ~~based~~not onbe ~~the~~able ~~same requirements except the diluted earnings per share must increase 15 percent a year~~ to afund ~~maximum~~our ofoperations ~~$0.78~~in ~~during~~ the ~~three-year period~~future. ~~The first year of nonforfeiture for this plan is based on the Company’s performance for 2001. One-third of the nonforfeitable options vest on each anniversary of the stock option agreements.~~

~~During~~In April 2009, five of our Banks entered into Orders with the ~~second~~FDIC ~~quarter~~and the Department. The Orders set forth requirements for the Banks to take actions to address capital levels and lending policies, and place restrictions on the issuance of ~~2004~~dividends by the Banks to the Company and restrictions on brokered deposits, among other items. Four of the ~~board~~Orders entered into by Security Bank of ~~directors~~Gwinnett County, Security Bank of Bibb County, Security Bank ~~Corporation~~of ~~adopted~~Jones ~~another~~County ~~performance-based~~and ~~incentive~~Security ~~stock option~~Bank ~~plan~~of North Metro, ~~which~~assert ~~calls~~that ~~for~~the Banks ~~adjustments~~are: operating with a Board that has failed to ~~earnings~~provide ~~per~~adequate ~~share~~supervision ~~based~~over onand direction to the ~~impact~~management of the ~~2004~~Bank; ~~common~~operating ~~stock~~with ~~offering.~~management ~~Under~~whose ~~this~~policies ~~plan,~~and ~~436,000~~practices ~~options~~are ~~were~~detrimental ~~granted~~to inthe ~~May~~Bank ~~2004~~and atjeopardize ~~$15.71~~the ~~per~~safety ~~share.~~of ~~The~~its deposits; ~~nonforfeitable~~operating ~~provisions~~with ~~for~~a ~~these~~large ~~options~~volume ~~are two-tiered.~~of ~~Options~~poor inquality ~~the~~loans; ~~first-tier~~following ~~are~~hazardous ~~nonforfeitable~~lending ~~over~~and ~~three~~tax ~~years~~collection ~~based~~policies onand practices; operating in such a 12manner ~~percent~~as ~~increase~~to inproduce ~~adjusted~~operating ~~earnings~~losses; ~~per~~operating ~~share~~with ~~over~~inadequate ~~the~~equity ~~base~~capital ~~year~~in ~~diluted~~relation ~~earnings~~to the volume and quality of ~~$0.96.~~assets Ifheld by the ~~maximum~~Bank; ~~adjusted~~operating ~~diluted~~with ~~earnings~~inadequate ~~per~~provisions ~~share~~for ofliquidity ~~$1.35~~and ~~is reached~~funds ~~during~~management; ~~the~~operating ~~three-year~~with ~~period~~inadequate allowance for loan and lease losses; and operating in violation of laws and/or regulations, ~~the~~and ~~nonforfeitable~~in contravention ~~shares~~of ~~are~~statements ~~doubled~~of policy. The ~~Under~~fifth ~~the~~Order ~~second~~entered ~~tier,~~into ~~additional~~by ~~shares~~Security ~~shall~~Bank ~~become~~of ~~nonforfeitable~~Houston ~~for~~County ~~three~~asserts ~~executive~~that ~~officers~~the ~~based~~Bank onis: operating with inadequate supervision and direction over the ~~same~~financial ~~requirements~~affairs ~~except~~of the ~~adjusted~~Bank; ~~diluted~~operating ~~earnings~~with ~~per~~an ~~share~~inadequate ~~must~~level ~~increase~~of 15capital ~~percent~~based aupon ~~year~~the tolevel aof ~~maximum~~risk identified; operating with an excessive volume of ~~$1.46~~assets ~~during~~subject ~~the~~to ~~three-year~~adverse ~~period.~~classification, ~~The~~resulting ~~first~~from ~~year~~engaging ofin ~~nonforfeiture~~inadequate ~~for~~credit ~~this~~administration ~~plan~~and isunderwriting ~~based~~practices; onoperating with ~~the~~an ~~Company’s~~excessive ~~performance~~volume of ~~2004.~~credit ~~One-third~~concentrations which reflect a lack of diversity in the ~~nonforfeitable~~loan ~~options~~portfolio; ~~vest~~operating onwith ~~each anniversary~~an excessive volume of ~~the~~nonearning ~~stock~~assets; ~~option~~operating ~~agreements~~with marginal liquidity; and engaging in violations of applicable federal and state regulations.

InThe ~~June~~Orders ~~2005,~~entered into by Security Bank of Jones County and Security Bank of North Metro require the ~~Company~~Banks ~~granted~~to ~~15,000~~increase ~~options~~their capital to ana ~~officer~~minimum atTier ~~$20~~1 Capital Ratio of 8.090% ~~per~~and ~~share~~a minimum Total Risk Based Capital Ratio of at least 10.0% within 30 days of the effective date of the Order. The ~~grant~~Orders ~~has~~entered ~~not~~into ~~yet~~by ~~been~~Security ~~approved~~Bank of Bibb County and Security Bank of Gwinnett County require the Banks to increase their capital to a minimum Tier 1 Capital Ratio of 8.0% within 30 days of the effective date of the Order. The Order entered into by Security Bank of Houston County requires the ~~board~~Bank to increase its capital to a minimum Tier 1 Capital Ratio of ~~directors~~8.0% within 90 days of the effective date of the Order. Each Bank consented to the Orders without admitting to or denying the allegations.

APursuant ~~summary~~to the Orders, the Banks have created a Directors Committee to ensure compliance with the Orders and report to the Board of ~~option~~Directors. In addition, ~~transactions~~each ~~for~~Bank is required to provide a quarterly written progress report to the ~~six~~Department ~~months~~and ~~ended~~the ~~June~~FDIC 30detailing the form and manner of any actions taken and the results of such actions, ~~2005~~to ~~follows:~~secure compliance with the Orders.

		Incentive StockOptions
Outstanding, December 31, 2004		801,000
Granted		15,000
Canceled		—
Exercised		—
Outstanding, June 30, 2005		816,000
Eligible to be Exercised, June 30, 2005		180,088

Under the terms of the Written Agreement, each of the Companies has agreed to the following provisions (among others detailed in the Written Agreement):

•

Submit a written plan to strengthen risk management practices and assist the Banks in meeting the requirements of supervisory actions imposed on them by their federal or state regulators.

•

Refrain from paying dividends or receiving dividends from the Banks without the prior written approval of the Federal Reserve and the Department.

•

Refrain from making payments of interest or principal on subordinated debt or trust preferred securities without the prior written approval of the Federal Reserve and the Department.

•

Refrain from incurring, increasing or guaranteeing any debt without the prior written approval of the Federal Reserve and the Department.

•

Submit a written plan to maintain sufficient capital at the Companies and each of the Banks.

•

Refrain from increasing or imposing any new fees on the Banks without prior written approval of the Federal Reserve.

•

Furnish quarterly progress reports to the regulators.

The restrictions and reporting obligations under the Written Agreement are similar to the restrictions placed on the Banks pursuant to the previously reported enforcement actions.

Liquidity Plan

Our Liquidity Task Force continues to meet weekly to review liquidity-related issues such as forecasted sources and uses of funds, loan pipelines, deposit pricing and deposit and borrowing maturities, among others. The Company’s investment portfolio

~~PART~~ provides Ia ready means to raise cash if liquidity needs arise. As of March 31, ~~ITEM~~2009, 1we ~~(CONTINUED)~~held $390.9 million in bonds at current market value in our available for sale portfolio with $298.7 million or 76% pledged to secure various public funds deposits, federal funds lines and repurchase agreements and for other purposes.

~~Financial~~We ~~Information~~have established multiple borrowing sources to augment our funds management. Borrowing capacity exists through the membership of our Banks in the FHLB program. Our Banks have also established overnight borrowing lines for federal funds purchased through various correspondent banks. At March 31, 2009, the Company had availability from these borrowing sources of $91.5 million. In February 2009, the Company received notice from the FHLB of Atlanta that the FHLB had frozen our borrowing availability for four of our Banks (Security Bank of Bibb County, Security Bank of North Metro, Security Bank of North Fulton and Security Bank of Gwinnett County) to the amount outstanding. Advances that mature may be renewed; however, no new advances may be obtained.

~~(9)~~Financial ~~Stockholders’ Equity~~Condition ~~(Continued)~~

~~Also~~At ~~during~~March 31, ~~the second quarter of 2004~~2009, ~~stockholders~~our ~~of Security~~total ~~Bank~~assets ~~Corporation~~were ~~approved the 2004 Employee Stock Purchase Plan~~$2.79 ~~One~~billion ~~hundred~~compared ~~thousand~~to ~~shares have been reserved for issuance under this plan~~$2.85 ~~Through~~billion ~~payroll~~at ~~deductions~~December 31, ~~eligible employees may specify withholdings of a minimum of $10 and maximum of $300 per payroll period~~2008. The ~~purchase~~decrease ~~price~~in oftotal assets ~~shares~~compared ~~under~~to ~~this~~December 31, ~~plan~~2008 is 85primarily ~~percent~~due ofto ~~the~~decreases ~~fair~~in ~~market~~loans ~~value~~receivable, ofinterest-bearing ~~the~~deposits ~~stock~~with onother ~~the~~banks ~~first~~and ~~day~~investment ofsecurities ~~the~~offset ~~offer~~by ~~period.~~increases ~~The fair market value of the stock will reset on the first day of each subsequent quarter during the offer period. Participation~~ in ~~the~~other ~~plan~~real ~~began~~estate inand ~~August~~other ~~2004~~assets.

~~The~~Assets Federal Reserve Board measures capital adequacy for bank holding companies by using a risk-based capital framework and by monitoring compliance with minimum leverage ratio guidelines. The minimum ratio of total risk-based capital to risk-adjusted assets is 8 percent, of which 4 percent must be Tier 1 capital. In addition, the Federal Reserve Board has established minimum leverage ratio guidelines for bank holding companies. Those guidelines provide for a minimum leverage ratio of 3 percent for financial institutions that meet certain criteria, including that they maintain the highest regulatory rating. All other financial institutions are required to maintain a leverage ratio of 4 percent.

The ~~Company’s~~composition ~~actual ratios as~~ of ~~June~~our ~~30,~~assets ~~2005~~is ~~are~~ as follows:

	Actual
(In Thousands)	March 31,2009		December 31,2008		$ Change				% Change
	Security Bankof Bibb County		Security Bankof Houston County		Security Bankof Jones County			Security Bankof North Metro			Security BankCorporation(Consolidated)
Cash and Due From Banks	$	34,955	$	37,216	$	(2,261	)		-6.1	%
Tier 1 Capital Ratio	9.41	%	9.48	%	11.62	%		9.92	%		8.98	%
Federal Funds Sold		525		1,508		(983	)		-65.2	%
Total Capital Ratio	10.47		10.72		12.88			11.02			10.12
Interest-Bearing Deposits With Other Banks		251,664		275,964		(24,300	)		-8.8	%
Leverage Ratio	9.39		8.44		9.03			8.91			9.09
Investment Securities		390,924		393,681		(2,757	)		-0.7	%
Federal Home Loan Bank Stock		13,765		13,662		103			0.8	%
Loans Receivable, Net		1,789,137		1,922,039		(132,902	)		-6.9	%
Loans Held For Sale		86,076		—		86,076			100.0	%
Premises and Equipment		41,235		43,215		(1,980	)		-4.6	%
Premises and Equipment Held For Sale		2,054		—		2,054			100.0	%
Other Real Estate		105,581		94,717		10,864			11.5	%
Core Deposit Intangible, net		3,038		3,241		(203	)		-6.3	%
Accrued Interest Receivable		12,701		13,457		(756	)		-5.6	%
Other Assets		54,494		47,354		7,140			15.1	%
	$	2,786,149	$	2,846,054	$	(59,905	)		-2.1	%

~~(10)~~Cash ~~Noncash~~and ~~Investing~~Cash ~~Activities~~ Equivalents

~~Noncash~~The ~~investing~~decrease ~~activities~~of $27.5 million is due primarily to the reduction in deposit balances related to maturing brokered deposits and deteriorating economic conditions, offset by the proceeds from the sale of other real estate. See the Condensed Consolidated Statement of Cash Flows for a detail of the ~~six~~sources and uses of cash and cash equivalents during the three months ended ~~June~~March 31, 302009 ~~are as~~and ~~follows:~~2008.

		2005			2004
Acquisition of Real Estate through Loan Foreclosure		$	1,905,000		$	1,368,000

Investment Securities

The composition of the investment securities portfolio reflects our investment strategy of maintaining an appropriate level of liquidity while providing a relatively stable source of revenue. The investment securities portfolio also provides a balance to interest rate risk and credit risk in other categories of the balance sheet while providing a vehicle for the investment of available funds, furnishing liquidity, and supplying securities to pledge as required collateral for certain deposits.

During the three-month period ended March 31, 2009, in an effort to maintain capital levels, the Company sold U.S. Government Agency securities and reinvested the proceeds into similar U.S. Government Agency securities. Compared to December 31, 2008, investment securities remained relatively consistent, as the balance decreased $2.8 million or 0.7%. At March 31, 2009 and December 31, 2008, the securities portfolio accounted for approximately 14.0% and 13.8%, respectively, of total assets.

The investment securities portfolio primarily consists of U.S. Government sponsored agency mortgage-backed securities, non-agency mortgage-backed securities, and municipal securities. Mortgage-backed securities rely on the underlying pools of mortgage

~~PART~~ loans Ito provide a cash flow of principal and interest. Substantially all of our mortgage-backed and collateralized mortgage obligation bonds are Government National Mortgage Association issued and we do not have any bonds secured by subprime mortgages. The actual maturities of these securities will differ from the contractual maturities because loans underlying the securities may prepay. Decreases in interest rates will generally cause an acceleration of prepayment levels. In a declining interest rate environment, ~~ITEM~~we 1may ~~(CONTINUED)~~not be able to reinvest the proceeds from these prepayments in assets that have comparable yields. In a rising rate environment, the opposite occurs. Prepayments tend to slowdown and the weighted average life extends. This is referred to as extension risk which can lead to lower levels of liquidity due to the delay of timing of cash receipts and can result in the holding of a below market yielding asset for a longer time period.

~~Financial~~Loans ~~Information~~Receivable, Net

Loans receivable, net (11including loans held for sale) ~~Other~~decreased ~~Comprehensive~~approximately ~~Income~~$46.8 million from December 31, 2008. Due to the substantial decline in real estate markets and the overall economy, we continue to significantly slow the growth of our loan portfolio. Furthermore, the Company’s commitment to reduce the level of nonperforming assets in its loan portfolio has also contributed to the decline in the loan balance.

~~For~~Assets ~~the~~Held ~~six~~For ~~months~~Sale ~~ended June 30, 2005, other comprehensive income is comprised of the following:~~

	Before Tax			Tax Effect			Net of Tax
	($ in Thousands)
Unrealized Loss on Securities
Losses Arising During the Year	$	(495	)	$	(170	)	$	(325	)
Reclassification Adjustment		6			2			4
Net Unrealized Loss	$	(489	)	$	(168	)	$	(321	)

The balances of $86.1 million and $2.1 million represent the loans and premises and equipment, respectively, to be sold to The Heritage Bank in conjunction with the sale of our two Glynn County branches, located in Brunswick and St. Simons Island.

~~(12)~~Risk ~~Acquisition~~Elements ofand ~~Assets~~ Allowance for Loan Losses (ALL)

OnNonperforming ~~July~~assets ~~31,~~consist ~~2000, Security Bank~~ of ~~Bibb~~nonaccrual ~~County~~loans, ~~purchased~~loans ~~the~~90 ~~assets~~days ~~of Group~~past ~~Financial~~due ~~Southeast~~and ~~(dba~~accruing ~~Fairfield~~and ~~Financial)~~other inreal ~~a business combination accounted for as a purchase. The assets were placed in a newly formed subsidiary of Security Bank of Bibb County incorporated as Fairfield Financial Services~~estate, ~~Inc. Fairfield~~which ~~Financial~~ is ~~primarily engaged in residential~~ real estate ~~mortgage~~acquired ~~lending~~through foreclosure inand ~~the state of Georgia~~repossession. ~~The~~Nonperforming ~~results~~assets ofincreased ~~operations~~significantly ofto ~~Fairfield~~$390.9 ~~Financial~~million ~~are~~or ~~included in the accompanying consolidated financial statements since the date of acquisition~~14.0% ~~The initial purchase price approximated $1,400,000, which consists~~ of ~~approximately~~total ~~$1,000,000~~assets inat ~~cash and 64~~March 31,~~690~~ ~~shares~~2009 ofcompared ~~Security~~to ~~Bank Corporation stock valued at~~ $~~388,140 at closing~~327.3 ~~The~~million ~~initial~~or ~~cost~~11.5% of ~~the~~total ~~acquisition exceeded the fair value of the~~ assets ofat ~~Fairfield Financial by $988,000. The excess is recorded as goodwill and was amortized on the straight-line method over 10 years through~~ December 31, ~~2001~~2008. ~~As a result of the issuance of SFAS No. 142, the goodwill is no longer amortized but is reviewed for impairment.~~

The ~~Asset~~following ~~Purchase~~table ~~Agreement provides~~presents ~~for~~our ~~additional~~nonperforming ~~contingent~~assets ~~payments~~as of ~~purchase price for years ended 2001-2005 based on~~ the ~~earnings~~dates ofindicated: Fairfield Financial Services, Inc. The additional payments, if any, are to be payable in cash and stock. Cash payments for 2004 were equated to 30 percent of Fairfield Financial Services, Inc.’s earnings for the year. Stock payments for 2004 were based on 70 percent of 2004 earnings utilizing a specific formula for determining number of shares. The number of shares issued during any year cannot exceed 150,000. The maximum number of shares under the agreement cannot exceed 600,000 for years 2001-2005. All additional payments of cash and stock will be charged to goodwill. If Fairfield Financial sustains losses, no additional purchase price payments are due. The contingent payment made in 2005 as a result of 2004 earnings is a combination of cash and stock totaling approximately $3,273,000.


(In Thousands)	March 31, 2009		December 31, 2008
Nonaccrual Loans	$	285,308	$	232,436
Loans 90 Days Past Due and Accruing		—		146
Other Real Estate		105,581		94,717

Total Nonperforming Assets	$	390,889	$	327,299

The increase in nonperforming assets is primarily attributable to the unprecedented economic and credit conditions that began in late summer of 2007 and has continued through the first quarter of 2009. A significant portion of the loan portfolios of our metropolitan Atlanta Banks and SRES is concentrated in loans to residential builders and developers. With the significant slowing of home and land sales, the prices of homes and land have declined precipitously. Therefore, many of our customers who develop and sell residential real estate cannot service their loans because they are not generating any revenue.

At March 31, 2009, the 10 largest nonaccrual loans comprise $126.7 million or 44.4% of the total. Of these 10 loans, six are residential development loans, three are commercial real estate loans and one loan is mixed use. A detail of the activity in nonperforming loans for the three-month periods ended March 31, 2009 and 2008 is as follows:


(In Thousands)	2009			2008
Nonaccrual loans at beginning of period	$	232,436		$	50,635
Activity during the period:
Additions, net		91,417			173,600
Foreclosures		(19,142	)		(13,567	)
Charge-offs, net		(18,000	)		(24,148	)
Principal collections		(1,403	)		—

Nonaccrual loans at end of period	$	285,308		$	186,520

At March 31, 2009, the 10 largest other real estate owned properties comprise $43.8 million or 41.5% of the total. Six of these properties are residential in nature, three of the properties are mixed use, and one property is commercial. Of total other real

~~PART~~ estate Iowned, ~~ITEM~~the largest component is residential lots at 37.1% ~~(CONTINUED)~~followed by single family homes at 26.6%, raw land at 33.3% and commercial property at 3.0%. A detail of the activity in other real estate for the three-month periods ended March 31, 2009 and 2008 is as follows:

Financial Information


(In Thousands)	2009			2008
Other real estate at beginning of period	$	94,717		$	28,175
Activity during the period:
Foreclosures		19,142			13,567
Sales		(6,701	)		(5,779	)
Provisions for loss		(1,670	)		—
Other		93			(214	)

Other real estate at end of period	$	105,581		$	35,749

Our management assesses the adequacy of the ALL quarterly. This assessment includes procedures to estimate the allowance and test the adequacy and appropriateness of the resulting balance. The ALL consists of two components: (121) a ~~Acquisition~~specific amount representative of ~~Assets~~identified credit exposures that are readily predictable by the current performance of the borrower and underlying collateral (~~Continued~~SFAS No. 114 component); and (2) a general amount based upon historical losses that is then adjusted for various stress factors representative of various economic factors and characteristics of the loan portfolio (SFAS No. 5 component). Even though the ALL is composed of two components, the entire ALL is available to absorb any credit losses.

OnWe ~~October~~establish ~~25,~~the ~~2002,~~specific ~~Security~~amount ~~Bank~~by ~~Corporation~~examining ~~executed~~impaired ~~a definitive~~loans. ~~agreement~~Under togenerally ~~acquire~~accepted ~~all~~accounting ~~outstanding~~principles, ~~shares~~we ofmay measure the ~~Bank~~loss ofeither ~~Gray located in Gray~~ by (~~Jones County~~1), the ~~Georgia.~~observable ~~The~~market ~~stockholders~~price of the ~~Bank~~loan; ofor ~~Gray~~(2) the ~~received~~present ~~$15,000,000~~value ~~in cash and 3,142,000 common shares~~ of ~~the~~expected ~~Company~~future incash aflows ~~business combination~~discounted ~~accounted for as a purchase. The merger was approved~~ at the ~~Company~~loan’s ~~annual~~effective ~~meeting~~interest onrate; ~~May~~or ~~29,~~(3) the ~~2003~~fair ~~and~~value ~~closed~~of onthe ~~May~~collateral ~~30,~~if ~~2003.~~the ~~Results~~loan ofis ~~operations~~collateral ~~for~~dependent. Because the ~~Bank~~majority of ~~Gray~~our ~~are~~impaired ~~included~~loans inare ~~the~~collateral ~~consolidated~~dependent, ~~financial~~nearly ~~statements~~all ~~since that~~of ~~date.~~our ~~The~~specific ~~acquisition~~allowances ~~was~~are ~~made~~calculated ~~for~~based ~~the~~on ~~purpose of increasing~~ the ~~Company’s~~fair ~~market~~value ~~share~~of in the ~~middle Georgia area~~collateral.

~~The~~We ~~excess~~establish ofthe general amount by taking the ~~purchase~~remaining ~~price~~loan ~~over~~portfolio ~~book~~(excluding ~~value~~those ~~has~~impaired ~~been~~loans ~~allocated~~discussed toabove) with allocations based on historical losses in the ~~fair~~total ~~value~~loan portfolio. The calculation of ~~premises~~the general ~~and~~amount ~~equipment,~~is then subjected to stress factors that are somewhat subjective. The amount due to stress testing attempts to correlate the ~~fair~~historical ~~value~~loss ofrates ~~deposits~~with current economic factors and ~~core~~current ~~deposits~~risks ~~intangibles~~ in the ~~amounts~~portfolio. The stress factors consist of: $(1~~,168,000,~~) economic ~~$2,044,983~~factors ~~and~~including ~~$855,809,~~such ~~respectively.~~matters Asas ofchanges ~~June~~in ~~30,~~the ~~2005,~~local ~~$340,830~~or ofnational economy; (2) the ~~deposit~~depth ~~premium~~or ~~was~~experience ~~accreted~~in tothe ~~interest~~lending ~~expense.~~staff; ~~The~~(3) any ~~Company~~concentrations ~~amortized~~of ~~$8,833~~credit of(such ~~the~~as ~~premises~~commercial ~~and~~real ~~equipment~~estate) ~~premium~~in ~~and~~any ~~$85,581~~particular industry ofgroup; (4) new banking laws or regulations; (5) the ~~core deposit~~credit ~~intangibles~~grade ~~during~~of the ~~six~~loans ~~months~~in ~~ended~~our ~~June~~unsecured ~~30,~~consumer ~~2005.~~loan ~~Goodwill~~portfolio; ofand ~~$20,864,180~~(6) additional ~~was~~risks ~~recorded~~resulting asfrom athe ~~result~~level of ~~this~~speculative ~~acquisition~~real estate loans in the portfolio. After ~~The~~we ~~goodwill~~assess ~~will~~the ~~not~~applicable befactors, ~~deductible~~we ~~for~~evaluate ~~tax~~the ~~purposes~~remaining amount based on management’s experience.

~~On January 19~~Finally, ~~2005,~~we ~~the~~compare ~~Company executed a definitive agreement to acquire SouthBank, a community bank located in Woodstock, Georgia. The~~the ~~stockholders~~level of ~~SouthBank~~the ~~received~~ALL ~~$9,659,994~~with inhistorical ~~cash~~trends and ~~1,121,372~~peer ~~common~~information ~~shares~~as ofa ~~the~~reasonableness ~~Company’s common stock~~test. ~~The~~Management ~~acquisition~~then ~~was~~evaluates ~~executed~~the onresult ~~May 31, 2005. Results~~ of ~~operations~~the ~~for~~procedures ~~SouthBank~~performed, ~~are~~including ~~included in~~ the ~~consolidated~~result ~~financial statements~~of ~~since~~our ~~that~~testing, ~~date.~~and ~~The~~makes ~~acquisition~~a ~~was~~conclusion ~~made~~regarding ~~for~~ the ~~purpose~~appropriateness of ~~expanding~~ the ALL ~~Company’s~~in ~~operations~~its ~~into the fast-growing north metropolitan Atlanta area~~entirety.

~~The~~In ~~excess~~assessing the adequacy of the ~~purchase~~ALL, ~~price~~we ~~over~~also ~~book~~rely ~~value~~on ~~has~~an ~~been~~ongoing ~~allocated~~independent credit administration review process. We undertake this process both to ascertain whether there are loans in the ~~fair~~portfolio ~~value~~whose credit quality has weakened over time and to assist in our overall evaluation of ~~core~~the ~~deposits~~risk ~~intangibles~~characteristics of ~~$1,093,981~~the entire loan portfolio. ~~The~~Our credit administration ~~Company~~review ~~amortized~~process ~~$13,024~~includes the judgment of management, the ~~core~~input ~~deposit~~of ~~intangibles~~our ~~during~~internal ~~the~~loan ~~six~~review ~~months~~function ~~ended~~and ~~June~~reviews ~~30,~~that ~~2005.~~may ~~Goodwill~~have ofbeen ~~$18,754,357~~conducted ~~was~~by ~~recorded~~bank asregulatory aagencies ~~result~~as part of ~~this~~their ~~acquisition~~usual examination process. The ~~goodwill~~Credit ~~will~~Quality ~~not~~Committee, bewhich is ~~deductible~~a ~~for~~committee ~~tax~~comprised ~~purposes~~of members of the Boards of Directors of the Company and its subsidiaries, regularly reviews the ALL process and results.

~~Following~~Other isAssets ~~a condensed balance sheet showing fair values of the assets acquired and the liabilities assumed as of the date of acquisition:~~

Cash, Due from Bank and Federal Funds Sold	$	12,677,273
Investment Securities		14,051,844
Loans, Net		107,837,573
Premises and Equipment		2,902,522
Core Deposit Intangible		1,093,981
Goodwill Arising in the Acquisition		18,754,357
Other Assets		1,061,923
Deposits		(118,110,954	)
Other Liabilities		(7,779,603	)
	$	32,488,916

Other Assets increased largely as a result of increases in income taxes receivable (due to our operating losses) and prepaid regulatory fees resulting from substantial increases in FDIC fees.

~~PART~~Liabilities ~~I, ITEM 1 (CONTINUED)~~

~~Financial~~The ~~Information~~composition of liabilities is as follows:

(12) Acquisition of Assets (Continued)


(In Thousands)	March 31, 2009		December 31, 2008		$ Change			% Change
Deposits	$	2,320,616	$	2,438,136	$	(117,520	)	-4.8	%
Deposits Held by Branches to be Sold		81,853		—		81,853		100.0	%
Borrowed Money		289,673		300,621		(10,948	)	-3.6	%
Other Liabilities		28,073		22,589		5,484		24.3	%

	$	2,720,215	$	2,761,346	$	(41,131	)	-1.5	%

~~Following~~Deposits ~~are proforma amounts assuming that the acquisition was made on January 1, 2004:~~

	Six Months EndedJune 30,				Three Months EndedJune 30,
	2005		2004		2005		2004
Interest Income	$	37,561	$	27,486	$	19,837	$	14,155
Net Income		7,576		5,341		3,973		2,999
Earnings Per Share
Basic	$	0.64	$	0.50	$	0.33	$	0.27
Diluted		0.62		0.49		0.32		0.26

The decrease in total deposits (including deposits held by branches to be sold) of approximately $35.7 million is due primarily to the decrease in interest bearing demand accounts of $35.8 million and a decrease in brokered deposits of $66.1 million, offset by an increase in wholesale certificates of deposit of $69.8 million. The decrease in interest-bearing demand balances is due primarily to economic conditions, as funds are being drawn more frequently by account holders to meet obligations. The increase in wholesale certificates of deposit and decrease in brokered deposits are related to the undercapitalized regulatory capital status of several of the Banks. Per applicable regulatory guidelines, these banks may not accept, renew or rollover brokered deposits, which has resulted in the decrease in brokered certificates of deposit and increase in the use of wholesale certificates of deposit. The deposits held by branches to be sold balance of $81.9 million represents the deposits to be assumed by The Heritage Bank in conjunction with the sale of our two Glynn County branches, located in Brunswick and St. Simons Island.

~~(13)~~Further ~~Restricted~~discussion ~~Stock-Unearned Compensation~~of our use of brokered and wholesale certificates of deposit is included in the Liquidity section of this discussion.

InBorrowed ~~2003,~~Money the board of directors of Security Bank Corporation adopted a restricted stock grant plan which awards certain executive officers common shares of the Company. The maximum number of shares which may be subject to restricted stock awards is 10,000. During 2003, all 10,000 shares were issued under this plan. The shares are recorded at fair market value (on the date granted) as a separate component of stockholders’ equity. The cost of these shares is being amortized against earnings using the straight-line method over five years (the restriction period).

~~(14)~~The ~~Stock~~decrease ~~Split~~in borrowed money is primarily related to a $10.8 million decrease in repurchase agreements. The Company utilizes these sources as necessary to meet funding needs. At the request of the Federal Reserve Bank of Atlanta, in February 2008 our Board of Directors approved a resolution stating that we will not incur additional debt at the holding company without the prior written approval of the Federal Reserve Bank of Atlanta.

InOther ~~May~~Liabilities 2005, the Company’s board of directors approved a two-for-one split of the Company’s common stock, payable on May 27, 2005 in the form of a 100% stock dividend to shareholders of record on May 16, 2005. All share and per share amounts have been adjusted for the stock split.

The increase in other liabilities is largely a result of decreases in accrued expenses.

Equity

At March 31, 2009, total equity was $65.9 million or 2.4% of total assets compared to $84.7 million or 3.0% of total assets as of December 31, 2008. The decrease in equity is due primarily to the net loss of $18.5 million incurred during the quarter ended March 31, 2009.

At the request of the Federal Reserve Bank of Atlanta, in February 2008 our Board of Directors passed a resolution stating that we will not declare or pay any dividends to our shareholders without the prior written approval of the Federal Reserve Bank of Atlanta. In addition, pursuant to the Orders, five of our Banks may not pay cash dividends without the prior written consent of the FDIC and the Department.

Results of Operations

Net Loss

Net loss for the three-month periods ended March 31, 2009 and 2008 was $18.5 million or $0.79 diluted loss per share compared to $24.2 million or $1.22 diluted loss per share, respectively. The decrease in the net loss for the three-month period ended March 31, 2009 is primarily attributable to a decrease in the provision for loan losses of $30.1 million offset by reductions in net interest income and income tax benefit of $10.9 million and $12.4 million, respectively.

Net Interest Income

The net interest margin of the Company was 0.60% for the three-month period ended March 31, 2009 compared to 2.33% for the same three-month period of the preceding year. Total interest income decreased to $27.4 million for the three-month period ended March 31, 2009, from $40.8 million during the comparable prior year period. The decrease in total interest income is due primarily to a $13.0 million decrease in interest generated from loans receivable, which resulted from a 180 basis point decline in the yield on these assets and a decrease in the average balance of $238.4 million. The decline in the yield on loans receivable is the result of rate

~~PART~~ decreases Iof 400 basis points during 2008 and forfeited interest from nonperforming assets and reversal of interest on nonaccrual loans, ~~ITEM~~which reduced the yield by 77 and 22 basis points, respectively. The decrease in the average loan balance is related to the Company’s commitment to reduce the level of nonperforming assets in its loan portfolio. Total interest expense decreased $2.5 million to $23.4 million as a result of a decrease of $3.4 million in interest expense on deposits, offset by an increase of $0.9 million in the interest expense on borrowed funds.

~~Financial~~The ~~Information~~average cost of interest-bearing deposits decreased by 84 basis points and the average balance increased by $153.4 million. Time deposits, the largest category of deposits, increased by $284.3 million primarily due to the increased use of brokered and internet-based certificates of deposit. These types of deposits historically have provided a means of generating deposits to meet our funding needs, but our access to this funding source may be limited in the future. The increase in the average balance of time deposits is offset with a 100 basis-point decrease resulting from market interest rate decreases during 2008.

~~SECURITY~~The ~~BANK~~average ~~CORPORATION~~balance ~~AND~~of ~~SUBSIDIARIES~~interest-bearing demand accounts decreased $130.9 million, with a corresponding decline in the cost of such deposits of 104 basis points related to market interest rate decreases during 2008.

~~MANAGEMENT’S~~The ~~DISCUSSION~~interest ~~AND~~expense ~~ANALYSIS~~on OFborrowed ~~FINANCIAL~~funds during the first quarter of 2009 increased by $0.9 million when compared to the corresponding period in 2008. This increase is related to an increase of $120.6 million in the average balance of borrowed funds offset by a decrease of 64 basis points in the average costs of borrowings. The increase in the average balance is related to the $40.0 million of subordinated notes issued in April 2008 and an increase in the average balance of FHLB advances of $77.0 million borrowed in an effort to bolster on-balance sheet liquidity. The decrease in the average cost of these borrowings is the result of a 100 basis point decline in the cost of FHLB advances, and a 296 basis point decrease in the cost of repurchase agreements, related to market rate decreases during 2008. These cost decreases are offset by the cost of the subordinated notes.

CONDITION AND RESULTS OF OPERATIONS

The following narrative presents management’s discussion and analysis of Security Bank Corporation and Subsidiaries (SBKC’s) financial condition and results of operations as of and for the three- and six-month periods ended June 30, 2005 and 2004. The historical financial statements of SBKC are set forth elsewhere herein. This discussion should be read in conjunction with those financial statements and the other financial information included in this report.

Overview

SBKC is a Georgia corporation formed to act as a bank holding company for Security Bank of Bibb County (formerly Security National Bank) (SB-Bibb) under the federal Bank Holding Company Act of 1956, as amended, and the bank holding company laws of Georgia. SBKC was incorporated on February 10, 1994 at the instruction of management of SB-Bibb. At a special meeting of the stockholders of SB-Bibb on August 2, 1994, the stockholders of SB-Bibb voted in favor of a plan reorganization and agreement of merger pursuant to which SB-Bibb became a wholly-owned subsidiary of SBKC. The reorganization was effective on June 30, 1994, as a result of which the shares of common stock of SB-Bibb then issued and outstanding were converted into shares of the common stock of SBKC. SB-Bibb has operated as a wholly-owned subsidiary of SBKC since that time, although the functions and business of SB-Bibb, its board of directors, staff and physical office locations underwent no changes as a result of the reorganization.

SB-Bibb is a state-chartered bank that engages in the commercial banking business primarily in Bibb County, Georgia. SB-Bibb commenced operations on November 4, 1988. The bank operates eight full-service banking offices and one-limited service office in Macon, Georgia. The bank also operates one full-service banking office in Brunswick, Georgia. On March 1, 1999, the bank converted its banking charter from a national to a state charter, and changed its name from Security National Bank to Security Bank of Bibb County.

On August 8, 1998, SBKC acquired a 100 percent interest in Crossroads Bancshares, Inc., the parent holding company of Crossroads Bank of Georgia in Perry and Warner Robins, Georgia. The two companies merged in a pooling of interest stock swap transaction. The parent company of Crossroads Bank was subsequently dissolved. On June 3, 1999, Crossroads Bank changed its name to Security Bank of Houston County (SB-Houston) and now operates as a wholly-owned subsidiary of SBKC, with four full-service banking offices in Perry and Warner Robins.

On July 31, 2000, SB-Bibb purchased the assets of Group Financial Southeast (dba Fairfield Financial) in a business combination accounted for as a purchase. The assets were placed in a newly formed subsidiary of SB-Bibb incorporated as Fairfield Financial Services, Inc. (Fairfield). The purchase transaction involved a combination of SBKC stock and cash consideration. Fairfield is a well-established real estate mortgage lending company with a number of production locations throughout Georgia and the Southeast, including offices in Macon, Warner Robins, Columbus, Richmond Hill, Rincon, Gray, Pooler, Woodstock, Brunswick, and St. Simons Island. The Company functions as a subsidiary of SB-Bibb.

~~PART~~The I,following ~~ITEM~~table 2represents ~~(CONTINUED)~~the effective yields and costs of funds for the three-month periods ended March 31:

Financial Information


	2009						2008
*(Dollars in thousands)*	Average Balances		Income/ Expense		Yields/ Rates		Average Balances		Income/ Expense		Yields/ Rates
Assets
Interest-Earning Assets
Loans, Net of Unearned Income	$	1,955,732	$	23,891	4.95	%	$	2,194,092	$	36,935	6.75	%
Mortgage Loans Held for Sale		—		—	—			5,896		92	6.26
Investment Securities-Taxable		398,987		3,282	3.34			288,514		3,176	4.42
Investment Securities- Tax-Exempt, Tax Equivalent Basis		2,085		38	7.48			7,881		143	7.28
Interest-Bearing Deposits With Other Banks		292,048		125	0.17			4,042		35	3.47
Federal Funds Sold		8,724		4	0.19			49,966		389	3.12
Other Interest-Earning Assets		1,238		17	5.57			1,238		22	7.13

Total Interest-Earning Assets		2,658,814		27,357	4.17			2,551,629		40,792	6.41

Noninterest-Earning Assets		187,659						266,993

Total Assets	$	2,846,473					$	2,818,622


Liabilities and Shareholders’ Equity
Interest-Bearing Liabilities:
Interest-Bearing Deposits:
NOW, Money Market and Savings	$	377,679	$	1,655	1.78	%	$	508,552	$	3,575	2.82	%
Time Deposits		1,921,980		18,907	3.99			1,637,728		20,370	4.99

Total Interest-Bearing Deposits		2,299,659		20,562	3.63			2,146,280		23,945	4.47


Borrowings:
FHLB Advances		189,865		1,114	2.38			71,312		672	3.78
Subordinated Debentures		41,325		580	5.69			41,238		739	7.19
Federal Funds Purchased and Repurchase Agreements		32,641		13	0.16			44,745		348	3.12
Notes Payable and Other		31,921		1,168	14.84			17,829		239	5.38

Total Borrowings		295,752		2,875	3.94			175,124		1,998	4.58

Total Interest-Bearing Liabilities		2,595,411		23,437	3.66			2,321,404		25,943	4.48

Noninterest-Bearing Liabilities		172,670						183,583
Shareholders’ Equity		78,392						313,635

Total Liabilities and Shareholders’ Equity	$	2,846,473					$	2,818,622

Interest Rate Spread					0.51	%					1.93	%

Net Interest Income			$	3,920					$	14,849

Net Interest Margin					0.60	%					2.33	%

~~Overview~~The ~~(Continued)~~following table provides a detailed analysis of the changes in interest income and interest expense due to changes in rate and volume for the three months ended March 31, 2009 compared to the three months ended March 31, 2008. Changes in the average balances outstanding for interest earning assets and interest bearing liabilities are volume changes and changes in the interest rates earned and paid on such assets and liabilities are rate changes. Changes resulting from a combination of changes in volume and rate have been included in the rate changes.

On May 30, 2003, SBKC acquired all outstanding shares of the Bank of Gray located in Gray, Georgia. The two companies merged in a business combination accounted for as a purchase. The stockholders of the Bank of Gray received a combination of SBKC stock and cash consideration. On the acquisition date the Bank of Gray officially changed its name to Security Bank of Jones County (SB-Jones).

On May 31, 2005, SBKC acquired SouthBank, a community bank located in Woodstock, Georgia. The stockholders of SouthBank received a combination of SBKC stock and cash consideration. On the acquisition date SouthBank officially changed its name to Security Bank of North Metro (SB-North Metro).

As of June 30, 2005, SBKC had 342 employees on a full-time equivalent basis.

Substantially all of the business of SBKC is conducted through its four subsidiary banks. Each bank offers a full range of lending services including the specialized Fairfield mortgage subsidiary, deposit products, Internet banking, automated teller machines, safe deposit boxes, credit cards, night depositories, and other services for the convenience of its customers, who mainly reside in Bibb, Jones, Houston and Cherokee Counties.

SBKC’s net income for the three-month and six-month periods ended June 30, 2005 was $3,910,000 or $0.32 diluted earnings per share and $7,317,000 or $0.62 diluted earnings per share, respectively, compared to $3,010,000 or $0.27 and $5,692,000 or $0.51 in the same periods of the preceding year. The increase in net income for the three-month and six-month periods ended June 30, 2005 primarily relates to the growth in the loan portfolio and core deposits in addition to the Company’s success in maintaining interest margins and controlling expenses.

Annualized return on average assets of 1.29 percent and 1.22 percent was recorded for the six-month periods ended June 30, 2005 and 2004. Return on average equity of 12.95 percent was recorded for the six-month period ended June 30, 2005 compared to 13.34 percent for the same period in 2004.

At June 30, 2005, total assets were $1,329,629,000 compared to $1,063,485,000 at December 31, 2004. At June 30, 2004, total assets were $993,038,000 compared to $911,269,000 at December 31, 2003. Total interest-earning assets increased $231,087,000 or 23 percent to $1,217,042,000 at June 30, 2005 from $985,582,000 at December 31, 2004. The increases in total assets and interest-earning assets compared to December 31, 2004 are primarily due to increases in loan volumes, mainly in real estate–construction loans. The increase in assets from December 31, 2004 is primarily attributable to the addition of $167,151,000 of assets acquired from SouthBank.

PART I, ITEM 2 (CONTINUED)


	Changes From March 31, 2008 to March 31, 2009
	Volume			Rate			Net Change
	(Dollars in Thousands)
Interest Income
Loans, Net of Unearned Income	$	(3,968	)	$	(9,076	)	$	(13,044	)
Mortgage Loans Held For Sale		(91	)		(1	)		(92	)
Investment Securities - Taxable		1,203			(1,097	)		106
Investment Securities - Tax-Exempt		(104	)		(1	)		(105	)
Interest-Bearing Deposits With Other Banks		2,466			(2,376	)		90
Federal Funds Sold and Other		(318	)		(72	)		(390	)

Total Interest Income		(812	)		(12,623	)		(13,435	)


Interest Expense
NOW, Money Market and Savings		(910	)		(1,010	)		(1,920	)
Time Deposits		3,497			(4,960	)		(1,463	)
Borrowings
FHLB Advances		1,105			(663	)		442
Subordinated Debentures		2			(161	)		(159	)
Federal Funds Purchased and Repurchase Agreements		187			(522	)		(335	)
Notes Payable and Other		1,105			(176	)		929

Total Interest Expense		4,986			(7,492	)		(2,506	)

Net Interest Income	$	(5,798	)	$	(5,131	)	$	(10,929	)

~~Financial~~Provision ~~Information~~for Loan Losses

~~Financial~~We ~~Condition~~establish a provision for loan losses, which is charged to operations, in order to maintain the allowance for loan losses at a level, which is deemed to be appropriate by management. The amount of this provision is based upon an assessment of prior loss experience, the volume and type of lending presently being conducted by the Company, industry standards, past due loans, economic conditions of the Company’s market area and other factors related to the collectibility of the loans in our loan portfolio.

~~Cash~~The ~~and~~following ~~Cash~~table presents ~~Equivalents~~our loan loss experience on all loans for the three-month periods ended March 31:

Cash and due from banks and interest-bearing deposits increased approximately $7,609,000 or 25 percent to $37,329,000 at June 30, 2005 from $29,720,000 at December 31, 2004. Federal funds sold increased by $24,693,000 to $42,177,000 at June 30, 2005 from $17,484,000 at December 31, 2004. The causes of these changes are most evident in the analysis of cash flows from investing activities, which reports cash inflows of $2,035,000 and $2,349,000 from the acquisition of SouthBank and the sale of other real estate owned, respectively.


	2009			2008
Balance, beginning of period	$	59,437		$	31,698
Charge-Offs
Construction, Land and Land Development		(16,326	)		(23,586	)
Commercial, Financial and Agricultural		(262	)		(331	)
Real Estate – Other		(1,323	)		(247	)
Consumer		(507	)		(279	)

		(18,418	)		(24,443	)


Recoveries
Construction, Land and Land Development		67			3
Commercial, Financial and Agricultural		105			68
Real Estate – Other		66			50
Consumer		180			174

		418			295

Net Charge-Offs		(18,000	)		(24,148	)

Provision for Loan Losses		12,108			42,199

Balance, end of period	$	53,545		$	49,749

~~Investment~~As ~~Securities~~a result of the dramatic changes in our real estate markets, we incurred net charge-offs of $18.0 million and $24.1 million during the three-month periods ended March 31, 2009 and 2008, respectively. The allowance for loan losses on March 31, 2009 was 2.78% of loans receivable compared to 3.00% at December 31, 2008.

~~Investment~~Although ~~securities~~management ~~have~~utilizes ~~increased~~its ~~$10,663,000~~best orjudgment ~~10.0~~in ~~percent~~providing ~~since~~for ~~December~~inherent 31losses in our loan portfolio, ~~2004~~there can be no assurance that we ~~when~~will ~~investment~~not ~~securities~~have ~~totaled~~to ~~$106,494,000.~~increase Asthe provision for loan losses in the future as a result of ~~June~~future ~~30,~~increases ~~2005,~~in ~~investment~~nonperforming ~~securities~~loans ~~were~~or ~~$117,157,000~~for other reasons which could adversely affect our results of operations. In ~~connection~~addition, ~~with~~various ~~the~~regulatory ~~acquisition~~agencies, as an integral part of ~~SouthBank~~their examination process, ~~the~~periodically ~~Company~~review ~~added~~the ~~$13,298,000~~allowance infor ~~investment~~loan ~~securities~~losses. ~~Our~~Such ~~Company’s~~agencies ~~investment~~may ~~in securities~~require isus ~~largely~~to ~~comprised~~recognize additions to the allowance for loan losses based on their judgments of ~~U.S.~~information ~~Government~~that ~~Agency~~is ~~securities~~available to them at the time of their examination.

Loans Receivable, Net

Loans receivable, excluding loans held for sale, were $1,041,725,000 at June 30, 2005, an increase of $195,960,000 or 23 percent (46 percent on an annualized basis) from $845,765,000 at December 31, 2004.

As a result of the SouthBank acquisition, loans increased $117,321,000. Excluding SouthBank, loans increased $78,639,000 or 9.3 percent. Our Company continues to experience good growth in its loan portfolio, particularly in real estate construction loans. Loans held for sale decreased $94,000 or 1.3 percent from $7,507,000 at December 31, 2004 to $7,413,000 at June 30, 2005, primarily as a result of a decline in mortgage refinance activity.

Nonperforming Assets

Our Company’s total nonperforming assets were $6,726,000 or 0.51 percent of total assets at June 30, 2005 compared to $8,205,000 or 0.77 percent at December 31, 2004. Nonperforming loans decreased $955,000 or 15.4 percent to $5,259,000 from $6,214,000 at December 31, 2004. The amount of other real estate owned that was held by our Company on June 30, 2005 totaled $1,467,000, a decrease of $524,000 since December 31, 2004.

The following table presents our nonperforming assets as of June 30, 2005:

	($ in Thousands)
Impaired and Other Nonaccrual Loans	$	5,200
Loans Past Due 90 Days or More and Still Accruing Interest		59
Restructured Loans not Included in the Above		—
Total Nonperforming Loans		5,259
Other Real Estate Owned		1,467
Total Nonperforming Assets	$	6,726

~~PART~~Noninterest I,Income ~~ITEM~~and 2Expense ~~(CONTINUED)~~

~~Financial~~The ~~Information~~composition of noninterest income for the first quarters of 2009 and 2008 are as follows:

Financial Condition (Continued)


(In Thousands)	Three Months Ended March 31,
(In Thousands)	2009		2008		$ Change			% Change
Service Charges on Deposits	$	1,915	$	2,287	$	(372	)	-16.3	%
Mortgage Origination and Related Fees		22		1,002		(980	)	-97.8	%
Securities Gains		2,626		2,034		592		29.1	%
Other		286		539		(253	)	-47.0	%

	$	4,849	$	5,862	$	(1,013	)	-17.3	%

~~Deposits~~The decrease of $1.0 million or 17.3% in noninterest income is due primarily to the following:

~~Total~~• ~~deposits~~decrease ~~increased $231,529,000 or 27 percent (55 percent on an annualized basis) from $842,558,000 at December 31, 2004 to $1,074,087,000 at June 30, 2005. The SouthBank acquisition accounted for $127,683,000~~ of ~~the increase. Excluding SouthBank, deposits increased~~ $~~103,846,000 or 12~~0.3 ~~percent.~~million ~~This increase is due to an increase of $41,843,000~~ in ~~interest-bearing~~bounce ~~demand~~protection accounts and $62,342,000 in brokered certificates of deposit. Further discussion of our Company’s use of brokered and wholesale certificates of deposit is included in the liquidity and capital adequacy section of this discussion. fees;

~~Borrowed~~• ~~Money~~decrease of $0.1 million in commission fees earned by CFS Wealth Management, LLC (CFS) professionals. The Company sold CFS during the first quarter of 2008 and therefore did not generate any fees during 2009;

~~Borrowed~~• ~~money~~reduction ~~totaled~~in ~~$99,721,000~~mortgage asoriginations ofand ~~June~~related ~~30,~~fees ~~2005,~~generated aby ~~decrease~~SRES of 7$1.20 ~~percent (14~~million.~~5 percent~~ onSRES anceased ~~annualized~~originating ~~basis)~~residential ~~since~~mortgage ~~December~~loans ~~31,~~in ~~2004 when borrowed money totaled $107,504,000. Borrowings from~~ the ~~FHLB~~fourth ~~amounted~~quarter ~~to $72,300,000 or 73 percent~~ of total borrowed money as of June 30, 2005. Management utilized the majority of these borrowings to fund additional loan requests. A line of credit at The Bankers Bank, with available credit totaling $17,000,000, had an outstanding balance of $3,150,000 at June 30, 2005. This line of credit is primarily used to provide capital injections as necessary to our subsidiary banks. 2008;

~~Subordinated~~• ~~debentures, issued~~loss ~~December~~on ~~2002,~~the ~~had~~termination anof ~~outstanding~~our ~~balance~~relationship with CFS of $~~18,557,000~~0.5 ~~The~~million ~~proceeds~~incurred ~~from~~during the ~~offering~~first ~~were~~quarter ~~used to retire holding company debt and to fund the acquisition~~ of ~~the Bank of Gray~~2008. ~~The~~There ~~subordinated~~were ~~debentures~~no ~~are~~such ~~included~~charges induring ~~borrowed funds on~~ the ~~consolidated~~first ~~balance~~quarter ~~sheets,~~of ~~but~~2009; ~~subject to certain limitations, qualify as Tier 1 capital for regulatory capital purposes.~~ and

~~Equity~~• increase in gain on sales of securities of $0.6 million

AtThe ~~June~~composition ~~30, 2005, total equity was $137,019,000 or 10.3 percent~~ of ~~total~~noninterest ~~assets~~expense ~~compared~~for ~~to $106,671,000 or 10.0 percent of total assets as of December 31, 2004. Total equity increased $30,348,000, primarily as a result of~~ the ~~issuance~~first ofquarters ~~1,121,372 shares~~ of ~~common~~2009 ~~stock at a cost of $22,245,000~~ and ~~the~~2008 ~~stock~~are ~~portion~~as offollows: the 2004 contingent payment for the July 31, 2000 acquisition of Fairfield Financial Services of approximately $2,363,000. The remaining increase is due to the retention of net income during the period, net of dividends paid.

Results of Operations


(In Thousands)	Three Months Ended March 31,
(In Thousands)	2009		2008		$ Change			% Change
Salaries and Employee Benefits	$	6,255	$	8,736	$	(2,481	)	-28.4	%
Occupancy and Equipment		1,751		1,549		202		13.0	%
Foreclosed Property		4,472		1,647		2,825		171.5	%
FDIC Assessments		519		391		128		32.7	%
Professional Fees		1,812		654		1,158		177.1	%
Marketing		403		405		(2	)	-0.5	%
Amortization-Core Deposit Intangible		203		246		(43	)	-17.5	%
Other		1,496		3,279		(1,783	)	-54.4	%

	$	16,911	$	16,907	$	4		0.0	%

~~Net~~Noninterest ~~Income~~expense was consistent when compared to the first quarter of 2008. Changes in the various expense categories include:

~~Our~~• ~~Company’s~~decrease ~~net~~of ~~income~~$2.5 ~~increased~~million 29in ~~percent~~salaries toand ~~$7,317,000~~employee ~~for the~~benefits ~~six~~due ~~months~~to ~~ended~~reductions ~~June~~of: ~~30,~~$1.1 ~~2005,~~million ~~compared~~in salaries due to ~~$5,692,000~~our ~~recorded~~reduction in force of approximately 23% during the ~~comparable~~second ~~prior~~half ~~period.~~of ~~The~~2008, ~~increase~~$0.3 million in ~~net~~mortgage ~~income~~loan iscommissions ~~primarily~~ due to ~~the~~exiting ~~increase~~that inline ~~average~~of ~~total~~business ~~loans~~during ~~from~~the ~~$743,305,000~~fourth atquarter ~~June~~of ~~30,~~2008; ~~2004~~$0.3 tomillion ~~$915,505,000~~in atbonus ~~June~~and ~~30, 2005,~~incentive ~~coupled~~plan ~~with~~expense resulting from the Company’s ~~success~~decreased infinancial ~~maintaining~~performance; ~~its~~and a net ~~interest~~reduction ~~margin~~of $0.8 million in other compensation costs, including 401k expense ($0.3 million) and ~~controlling~~group ~~expenses~~insurance ($0.3 million);

•

increase of $2.8 million in foreclosed property expense, which includes fees and expenses of legal counsel and other professionals, as a result of the increase in OREO from the first quarter 2008 levels to first quarter 2009 levels. We expect this elevated level of foreclosed property expenses to continue as we work through our problem assets;

•

increase of $1.2 million in professional fees due largely to higher legal costs resulting from increased litigation and claims with borrowers, guarantors and co-lenders in connection with loans and loan participations. The increase in professional fees is also related to amounts paid to investment bankers and other organizations in connection with our capital raising initiatives; and

~~PART~~• Idecrease in other noninterest income resulting from the reversal of liability of $0.9 million during the first quarter of 2009. In 2008, ~~ITEM~~we 2accrued ~~(CONTINUED)~~for a potential legal settlement that was subsequently settled at no cost to the Company in 2009.

~~Financial~~Income ~~Information~~Taxes

~~Results~~Income oftax ~~Operations~~benefit totaled $1.8 million and $14.2 million for the three-month periods ended March 31, 2009 and 2008, respectively. The effective tax ~~(Continued)~~rates for the 2009 and 2008 quarters were approximately 8.9% and 37.1%, respectively. The effective tax rate has historically been at or just below the maximum corporate federal and state income tax rates due to the relatively small percentage of tax-free investments carried on the consolidated balance sheets. The lower effective rate in 2009 results from the impairment of our deferred tax assets which reduces the tax benefit from our pretax loss.

~~Net~~Capital ~~Interest~~Adequacy ~~Income~~

The ~~annualized~~Federal ~~net~~Reserve ~~interest~~Board measures ~~margin~~capital ofadequacy ~~the~~for ~~Company,~~bank ~~net~~holding ~~interest~~companies ~~income divided~~ by ~~average earning~~using ~~assets,~~a ~~was~~risk-based ~~4.48~~capital ~~percent~~framework ~~for~~and ~~the~~by ~~six-month~~monitoring ~~period~~compliance ~~ended~~with ~~June~~minimum ~~30,~~leverage ~~2005~~ratio ~~compared to 4~~guidelines.44 ~~percent~~The ~~for~~minimum ~~the~~ratio ~~same six-month period~~ of ~~the~~total ~~preceding~~risk-based ~~year.~~capital ~~Our~~to ~~Company~~risk-adjusted ~~has~~assets ~~been~~is ~~successful~~8%, inof ~~maintaining~~which 4% ~~its~~must ~~margins~~be ~~despite~~Tier ~~the~~1 ~~downward~~capital. ~~pressure~~Our ~~on margins~~total inrisk-based ~~the~~capital ~~industry~~ratio aswas ~~a whole~~7.89% ~~SBKC’s~~at ~~success~~March 31, is2009. ~~the~~Our ~~result~~Tier of1 ~~our~~risk-based ~~Company’s~~capital ~~effective~~ratio ~~use~~was of4.00% ~~external~~at ~~debt and noncore deposits~~March 31, ~~coupled with focused marketing efforts to grow low-cost core deposits~~2009.

~~Total~~In ~~interest~~addition, ~~income~~the ~~increased~~Federal toReserve ~~$18,285,000~~Board ~~and~~has ~~$34,150,000~~established minimum leverage ratio guidelines for ~~the~~bank ~~three-month~~holding ~~and six-month~~companies. ~~periods~~Those ~~ended~~guidelines ~~June~~provide ~~30,~~for ~~2005,~~a ~~respectively,~~minimum ~~from~~leverage ~~$13,057,000~~ratio ~~and~~of ~~$25,384,000~~3% ~~during~~for ~~the~~financial ~~comparable~~institutions ~~prior~~that ~~year~~meet certain ~~periods~~criteria, ~~respectively.~~including ~~The~~that ~~increase~~they ismaintain the ~~result~~highest regulatory rating. All other financial institutions are required to maintain a leverage ratio of ~~continued~~4%. ~~growth~~Our inleverage ~~the~~ratio ~~Company’s~~was ~~loan~~2.87% ~~portfolio~~at March 31, 2009.

~~Total~~The ~~interest~~Federal ~~expense~~Deposit ~~increased~~Insurance 67Corporation ~~percent~~Improvement ~~for~~Act ~~the~~established ~~six~~minimum ~~months~~capital ~~ended~~requirements ~~June~~for ~~30,~~all ~~2005~~depository ~~compared~~institutions and imposes tosignificant restrictions on the ~~prior~~operations ~~period~~of ~~ended~~a ~~June~~bank ~~30,~~that ~~2004~~is not at least adequately capitalized. ~~The~~A ~~increase~~depository isinstitution’s ~~primarily~~capital ~~due~~tier towill andepend ~~increase~~upon where its capital levels are in ~~average~~relation ~~interest~~to various other capital measures that include a risk-~~bearing~~based ~~liabilities~~capital ofmeasure, 21a ~~percent~~leverage ~~compared~~ratio tocapital ~~the~~measure ~~prior~~and ~~period~~other factors. Under regulations adopted, ~~most~~for ofan ~~which~~institution ~~was~~to be “well capitalized,” it must have a ~~result~~total risk-based capital ratio of ~~the~~at ~~SouthBank~~least ~~acquisition.~~10%, ~~The~~a ~~increase~~Tier in1 risk-based ~~interest~~capital ~~expense~~ratio isof ~~primarily~~at least 6% and a ~~result~~Tier 1 leverage ratio of at least 5%. Also, the ~~rising~~institution ~~interest~~may ~~rate~~not ~~environment~~be assubject ~~apparent~~to inany ~~the~~specific ~~following~~capital ~~rate-volume~~order ~~analysis~~or directive.

•

Well Capitalized – Security Bank of Houston County and Security Bank of Jones County;

•

Adequately Capitalized – Security Bank of North Fulton;

•

Undercapitalized – Security Bank of Bibb County;

•

Significantly Undercapitalized – Security Bank of North Metro; and

•

Critically Undercapitalized – Security Bank of Gwinnett County

Banks that are not “well capitalized” can be subject to higher rates for FDIC insurance and other restrictions and limitations.

Under Section 29 of the FDIA and Section 337.6 of the FDIC Rules and Regulations, several of our Banks may not accept, renew or rollover brokered deposits. As such, the payment of these deposits will greatly diminish the liquidity position of the Company and raise substantial doubt about our ability to continue as a going concern. For additional information on our liquidity management and position, please see the Liquidity section below.

Liquidity

Primarily through the actions of our Banks, we manage our liquidity to ensure adequate cash flow for deposit withdrawals, credit commitments and repayments of borrowed funds. Liquidity needs are met through loan repayments, cash flows received from pay downs on mortgage-backed securities, net interest and fee income and the sale or maturity of existing assets. In addition, liquidity is continuously provided through the acquisition of new deposits, the renewal of maturing deposits and external borrowings. Management regularly monitors deposit flow and evaluates alternate pricing structures to retain and grow deposits as needed. Historically, to the extent needed, traditional local deposit funding sources are supplemented by the use of FHLB borrowings, brokered deposits and other wholesale deposit sources outside our immediate market area, including an Internet-based national certificate of deposit service.

As discussed in the preceding paragraphs, because several of our Banks cannot accept, renew or rollover brokered deposits, paying off these deposits as they mature will greatly diminish the liquidity position of the Company. As a result, we may not be able to fund our business operations in the future.

Our Liquidity Task Force (LTF) continues to meet weekly to review liquidity-related issues such as forecasted sources and uses of funds, loan pipelines, deposit pricing and deposit and borrowing maturities, among others. Our Liquidity Contingency Plan establishes Early Warning Indicators that result from predetermined levels of and changes in various funding sources and ratios that incorporate those sources. We have built up our liquidity to a level that exceeds our current needs because of brokered deposits that

~~PART~~ will Imature during 2009, ~~ITEM~~the 2freeze ~~(CONTINUED)~~on our FHLB borrowing and the negative publicity surrounding both the banking industry and the Company. The banking industry has come under significant scrutiny due to government funding through the Emergency Economic Stabilization Act of 2008 and TARP. The Company has endured adverse publicity due to our increasing levels of nonperforming assets, goodwill impairment during 2008, significant drop in stock price during 2008 and our net loss in 2008. Due to the limitations on the use of brokered deposits as a funding source discussed previously our liquidity will be adversely and significantly affected, and we may not be able to fund our operations or continue as a going concern. Additionally, the current volatility and disruptions in the capital markets will impact the Company’s ability to access alternative liquidity sources in the same manner as the Company had in the past.

~~Financial~~The ~~Information~~Company’s investment portfolio provides a ready means to raise cash if liquidity needs arise. As of March 31, 2009 we held $390.9 million in bonds at current market value in our available for sale portfolio with $298.7 million or 76% pledged to secure various public funds deposits, federal funds lines and repurchase agreements and for other purposes.

~~Results~~Management ofcontinues ~~Operations~~to emphasize programs to generate local core deposits as our primary funding source. The ~~(Continued)~~stability of our core deposit base is an important factor in our liquidity position. A large percentage of the deposit base is comprised of accounts of individuals and small businesses with comprehensive banking relationships and limited volatility.

~~Net~~At ~~Interest~~March ~~Income~~31, ~~(Continued)~~2009 and December 31, 2008, our Banks had $1.00 billion and $1.09 billion, respectively, in certificates of deposit of $100,000 or more. These larger deposits represented 43% and 48% of respective total interest-bearing deposits. Management seeks to monitor and control the use of these larger certificates, which tend to be more volatile in nature, to ensure an adequate supply of funds as needed. The Company compares relative interest costs to attract local core relationships to the cost associated with market rates of interest on various external deposit sources to help minimize our overall cost of funds.

~~The~~In ~~following~~response ~~table~~to ~~represents~~rate ~~the~~decreases ~~effective~~on ~~yields~~time deposits and ~~costs~~reduced ofdemand deposit balances, our Banks have increased deposit sources with brokered ~~funds~~deposits ~~for~~and wholesale certificates of deposit. As of March 31, 2009 and December 31, 2008 the ~~six-month~~Banks ~~periods~~reported ~~ended~~$1.05 ~~June~~billion, ~~30:~~or 44% of total deposits and $798.2 million, or 33% of total deposits in brokered and wholesale certificates of deposit, respectively.

	2005							2004
($ in thousands)	AverageBalances			Income/Expense		Yields/Rates		AverageBalances			Income/Expense		Yields/ Rates
Assets
Interest-Earning Assets
Loans, Net of Unearned Income
Taxable	$	915,505		$	31,549	6.95	%	$	743,305		$	23,224	6.28	%
Loans Held for Sale		5,649			161	5.75			6,968			204	5.89
Total Loans		921,154			31,710	6.94			750,273			23,428	6.28
Investment Securities
Taxable		96,720			317	0.66			81,956			1,527	3.75
Tax-Exempt, Tax Equivalent Basis		14,964			2,039	27.48			16,319			547	6.74
Total Investment Securities		111,684			2,356	4.25			98,275			2,074	4.24
Interest-Bearing Deposits in Other Banks		3,973			56	2.84			1,428			9	1.27
Federal Funds Sold		11,569			174	3.03			9,293			48	1.04
Other Interest-Earning Assets		557			17	6.15			557			12	4.33
Total Interest-Earning Assets		1,048,937			34,313	6.60			859,826			25,571	5.98
Noninterest-Earning Assets Cash		29,880							24,581
Allowance for Loan Losses		(11,545	)						(9,535	)
Other Assets		66,159							58,232
Total Noninterest-Earning Assets		84,494							73,278
Total Assets	$	1,133,431						$	933,104
Liabilities and Stockholders’ Equity
Interest-Bearing Liabilities
Interest-Bearing Deposits
Interest-Bearing Demand and Savings	$	229,802		$	1,497	1.31		$	183,159		$	590	0.65
Other Time		573,483			7,721	2.71			469,845			4,748	2.03
Total Interest-Bearing Deposits		803,285			9,218	2.31			653,004			5,338	1.64
Other Interest-Bearing Liabilities
Debt		60,800			967	3.21			58,767			758	2.59
Subordinated Debentures		18,557			577	6.27			18,557			422	4.57
Funds Purchased and Securities Under Agreement to Repurchase		16,577			237	2.88			10,135			51	1.01
Total Other Interest-Bearing Liabilities		95,934			1,781	3.74			87,459			1,231	2.83
Total Interest-Bearing Liabilities		899,219			10,999	2.47			740,463			6,569	1.78
Noninterest-Bearing Liabilities and Stockholders’ Equity
Demand Deposits		112,479							102,395
Other Liabilities		8,696							4,911
Stockholders’ Equity		113,037							85,335
Total Noninterest-Bearing Liabilities and Stockholders’ Equity		234,212							192,641
Total Liabilities and Stockholders’ Equity	$	1,133,431						$	933,104
Interest Rate Spread						4.13	%						4.20	%
Net Interest Income				$	23,314						$	19,002
Net Interest Margin						4.48	%						4.44	%

We have established multiple borrowing sources to augment our funds management. Borrowing capacity exists through the membership of our Banks in the FHLB program. Our Banks have also established overnight borrowing lines for federal funds purchased through various correspondent banks. At March 31, 2009, the Company had availability from these borrowing sources of $91.5 million. In February 2009, the Company received notice from the FHLB of Atlanta that the FHLB had frozen our borrowing availability for four of our Banks (Security Bank of Bibb County, Security Bank of North Metro, Security Bank of North Fulton and Security Bank of Gwinnett County) to the amount outstanding. Advances that mature may be renewed; however, no new advances may be obtained.

The current economic situation in the United States and our current liquidity level and potential negative impacts on liquidity discussed above, in addition to the Orders entered into by the Banks, raise substantial doubt about our ability to continue as a going concern for the foreseeable future.

Interest Rate Risk Management

The management of interest rate risk is the primary goal of our ALCO Committee. We attempt to achieve consistent growth in net interest income while limiting volatility from changes in interest rates. Management seeks to accomplish this goal by balancing the maturity and repricing characteristics of various assets and liabilities. ALCO meets regularly and has responsibility for approving asset/liability management policies, formulating and implementing strategies to improve balance sheet positioning and/or earnings, and reviewing our interest rate sensitivity.

To help us manage fluctuations in our net interest income, we use simulation modeling to estimate the impact on net interest income of both the current level of market interest rates and for changes to the current level of market interest rates. We measure the projected changes in market interest rates in terms of rate “shifts” of plus or minus 100, 200 and 300 basis points over the current levels of market interest rates. We assume rate shifts occur ratably over a 12-month measurement horizon. We base projected pricing for maturing and repricing assets and liabilities upon actual pricing experience over the period immediately preceding the projection period. We believe that our elevated levels of nonperforming assets will continue to have an adverse impact on our net interest margin through 2009 and we have included these levels in our modeling.

~~PART~~Off-Balance I,Sheet ~~ITEM~~Arrangements ~~2 (CONTINUED)~~

~~Financial~~In ~~Information~~the normal course of business, we are a party to financial instruments with off-balance sheet risk to meet the financing needs of our customers. These financial instruments primarily include unfulfilled loan commitments and standby letters of credit. Our exposure to credit loss in the event of nonperformance by the counter party to the financial instrument for unfulfilled loan commitments and standby letters of credit is represented by the contractual notional amount of those instruments. We use the same credit policies in making commitments and conditional obligations as we do for on-balance sheet transactions. We include loan commitments and letters of credit in our projections for future liquidity and capital requirements.

~~Results~~Unfulfilled loan commitments are arrangements to lend to a customer as long as there is no violation of ~~Operations~~any ~~(Continued)~~condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee. Historically, many commitments expire without being drawn upon; therefore, the following total commitment amounts are not necessarily indicative of future funding requirements. Unfulfilled loan commitments as of March 31, 2009 and December 31, 2008 approximated $163.4 million and $188.8 million, respectively.

~~Net~~Standby ~~Interest~~letters ~~Income~~of ~~(Continued)~~credit are conditional commitments issued by us to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers, and letters of credit are collateralized when deemed necessary. We had commitments under financial and performance standby letters of credit of $10.9 million as of March 31, 2009 and $11.5 million as of December 31, 2008.

~~The~~Critical ~~following~~Accounting ~~table~~Estimates provides a detailed analysis of the changes in interest income and interest expense due to changes in rate and volume for the six months ended June 30, 2005 compared to the six months ended June 30, 2004.

~~Rate/Volume~~The ~~Analysis~~accounting principles we follow and our methods of applying these principles conform with accounting principles generally accepted in the United States and with general practices within the banking industry. In connection with the application of those principles, we have made judgments and estimates which, in the case of the determination of our ALL, intangible assets, income taxes and stock-based compensation have been critical to the determination of our financial position and results of operations. See Provision for Loan Losses section included herein and Critical Accounting Policies section included in our Annual Report on Form 10-K for the year ended December 31, 2008.

	Changes From 2004 to 2005 (1)
	Volume			Rate			NetChange
	($ in Thousands)
Interest Income
Loans, Net	$	5,365		$	2,917		$	8,282
Investment Securities
Taxable		277			(1,487	)		(1,210	)
Tax-Exempt		(46	)		1,538			1,492
Total Investment Securities		231			51			282
Interest-Bearing Deposits in Other Banks		16			31			47
Funds Sold		12			114			126
Other Interest-Earning Assets		—			5			5
Total Interest Income		5,624			3,118			8,742
Interest Expense
Interest-Bearing Demand and Savings Deposits		151			756			907
Time Deposits		1,053			1,920			2,973
Other Interest-Bearing Liabilities
Funds Purchased and Securities Under Agreement to Repurchase		33			153			186
Subordinated Debentures		—			155			155
Other Debt		26			183			209
Total Interest Expense		1,263			3,167			4,430
Net Interest Income	$	4,361		$	(49	)	$	4,312

ITEM 3.

Quantitative and Qualitative Disclosures About Market Risk

~~(1)~~The ~~Changes~~information inconcerning ~~net~~quantitative ~~interest~~and ~~income~~qualitative ~~for~~disclosures ~~the~~about ~~periods,~~market ~~based~~risk onis ~~either~~included ~~changes~~ in ~~average~~Part ~~balances or changes in average rates for interest-earning assets and interest-bearing liabilities~~I, ~~are~~Item 2 ~~shown on this table~~above. ~~During~~See ~~each~~“Management’s ~~year~~Discussion ~~there are numerous~~ and ~~simultaneous~~Analysis ~~balance~~of ~~and~~Financial ~~rate~~Condition ~~changes; therefore, it is not possible to precisely allocate the changes between balances~~ and ~~rates.~~Results ~~For the purpose~~ of ~~this~~Operations- ~~table,~~Liquidity and ~~changes~~Interest ~~that~~Rate ~~are~~Risk ~~not exclusively due to balance changes or rate changes have been attributed to rates~~Management.”

ITEM 4.

Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our disclosure controls and procedures in accordance with Rule 13a-15 under the Securities Exchange Act of 1934. Based on their evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that our disclosure controls and procedures are effective.

There were no changes in our internal controls over financial reporting or in other factors that materially affected, or are reasonably likely to materially affect internal control over financial reporting subsequent to the date of this evaluation.

PART II. OTHER INFORMATION

ITEM 1.

Legal Proceedings

The Company and its subsidiaries are parties to various legal proceedings arising from the normal course of business. During the last several years, the Company and its subsidiaries have financed several residential real estate projects. Many of these loans have been sold, or participated, either in whole or in part to several different banks primarily in the state of Georgia. As the residential real estate market has experienced a growing depression and the local and national economies have suffered during 2008 and 2009, the Company has experienced an increase in the number of ordinary course lawsuits that fall into two general categories:

Participant Suits. These suits and assertions include: breach of obligations and duties under the participation agreement, specific performance, negligence/intentional breach of covenant of good faith and fair dealings, failure to manage the loan in accordance with that standard of care applicable to lending institutions. These suits have been filed in the Superior Court of Bibb County. The plaintiffs are asking that we buy back their loans and pay legal and other costs. The Company believes these suits have no merit, and we are vigorously defending them.

Borrower Counter-Claims. These suits and assertions include: fraudulent inducement, constructive fraud, negligent misrepresentation, and economic duress, breach of contract, promissory estoppel, and fraud in the inducement of

~~PART~~contractual Irelationships. These suits have been filed in various state courts in Georgia and Florida. These suits have been brought by borrowers whose loans have become nonperforming and the Company is attempting to foreclose on the underlying collateral and/or enforce the borrowers’ guarantees. The Company believes these suits have no merit, ~~ITEM~~and 2we ~~(CONTINUED)~~are vigorously defending them.

~~Financial~~It ~~Information~~is possible that an unfavorable resolution of one or more of such litigation proceedings could in the future materially affect our liquidity, consolidated financial position and/or results of operations.

~~Results~~ITEM of1A. ~~Operations (Continued)~~Risk Factors

~~Net~~In ~~Interest~~addition ~~Income~~to ~~(Continued)~~other information set forth in this Quarterly Report on Form 10-Q, the risk factors discussed in Item 1A to Part 1 of our Annual Report on Form 10-K for the year ended December 31, 2008 contain valuable information concerning factors that could materially affect our business, financial condition or future results. The risks described in our Annual Report on Form 10-K are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

~~The~~Five ~~following~~of ~~table~~our ~~represents~~Banks have stipulated to Cease and Desist Orders with the ~~effective~~Department ~~yields~~and the FDIC and ~~costs~~we ~~of funds~~have ~~for~~entered into a Written Agreement with the ~~three-month~~Federal ~~periods~~Reserve ~~ended~~Bank ~~June~~of ~~30:~~Atlanta, which place significant restrictions on our operations.

	2005							2004
($ in thousands)	AverageBalances			Income/Expense		Yields/Rates		AverageBalances			Income/Expense		Yields/ Rates
Assets
Interest-Earning Assets
Loans, Net of Unearned Income
Taxable	$	956,933		$	16,909	7.09	%	$	773,250		$	12,014	6.25	%
Loans Held for Sale		6,132			87	5.69			7,650			113	5.94
Total Loans		963,065			16,996	7.08			780,900			12,127	6.25
Investment Securities
Taxable		100,912			1,073	4.26			79,611			720	3.64
Tax-Exempt, Tax Equivalent Basis		14,782			158	4.29			16,359			277	6.81
Total Investment Securities		115,694			1,231	4.27			95,970			997	4.18
Interest-Bearing Deposits in Other Banks		6,154			42	2.74			1,471			5	1.37
Federal Funds Sold		11,756			88	3.00			6,522			16	0.99
Other Interest-Earning Assets		557			9	6.48			557			6	4.33
Total Interest-Earning Assets		1,097,226			18,366	6.71			885,420			13,151	5.97
Noninterest-Earning Assets
Cash		28,764							23,287
Allowance for Loan Losses		(12,001	)						(9,809	)
Other Assets		70,452							59,569
Total Noninterest-Earning Assets		87,215							73,047
Total Assets	$	1,184,441						$	958,467
Liabilities and Stockholders’ Equity
Interest-Bearing Liabilities
Interest-Bearing Deposits
Interest-Bearing Demand and Savings	$	243,450		$	899	1.48		$	189,619		$	307	0.65
Other Time		602,852			4,318	2.87			473,274			2,351	2.00
Total Interest-Bearing Deposits		846,302			5,217	2.47			662,893			2,658	1.61
Other Interest-Bearing Liabilities
Debt		57,954			516	3.57			59,335			386	2.62
Subordinated Debentures		18,557			304	6.57			18,557			211	4.57
Funds Purchased and Securities Under Agreement to Repurchase		15,899			125	3.15			14,448			39	1.09
Total Other Interest-Bearing Liabilities		92,410			945	4.10			92,340			636	2.77
Total Interest-Bearing Liabilities		938,712			6,162	2.63			755,233			3,294	1.75
Noninterest-Bearing Liabilities and Stockholders’ Equity
Demand Deposits		116,899							104,558
Other Liabilities		10,465							5,672
Stockholders’ Equity		118,365							93,004
Total Noninterest-Bearing Liabilities and Stockholders’ Equity		245,729							203,234
Total Liabilities and Stockholders’ Equity	$	1,184,441						$	958,467
Interest Rate Spread						4.08	%						4.22	%
Net Interest Income				$	12,204						$	9,857
Net Interest Margin						4.46	%						4.48	%

Under applicable laws, the FDIC, as our deposit insurer, and the Department as our chartering authority, have the ability to impose substantial sanctions, restrictions and requirements on us if they determine, upon examination or otherwise, violations of laws with which we must comply, or weaknesses or failures with respect to general standards of safety and soundness. Applicable law prohibits disclosure of specific examination findings by the institution, although formal enforcement actions are routinely disclosed by the regulatory authorities.

As a result of recent examinations, the Department and the FDIC, issued the Banks the Orders. In April 2009, each Bank stipulated to the Orders. The Orders set forth requirements for the Banks to take actions to address capital levels and lending policies, and place restrictions on the issuance of dividends by the Banks to the Company and restrictions on brokered deposits, among other items. Four of the Orders entered into by Security Bank of Gwinnett County, Security Bank of Bibb County, Security Bank of Jones County and Security Bank of North Metro, state that the Banks are: operating with a Board that has failed to provide adequate supervision over and direction to the management of the Bank; operating with management whose policies and practices are detrimental to the Bank and jeopardize the safety of its deposits; operating with a large volume of poor quality loans; following hazardous lending and tax collection policies and practices; operating in such a manner as to produce operating losses; operating with inadequate equity capital in relation to the volume and quality of assets held by the Bank; operating with inadequate provisions for liquidity and funds management; operating with inadequate allowance for loan and lease losses; and operating in violation of laws and/or regulations, and in contravention of statements of policy. The fifth Order entered into by Security Bank of Houston County states that the Bank is: operating with inadequate supervision and direction over the financial affairs of the Bank; operating with an inadequate level of capital based upon the level of risk identified; operating with an excessive volume of assets subject to adverse classification, resulting from engaging in inadequate credit administration and underwriting practices; operating with an excessive volume of credit concentrations which reflect a lack of diversity in the loan portfolio; operating with an excessive volume of nonearning assets; operating with marginal liquidity; and engaging in violations of applicable federal and state regulations. Each Bank consented to the Orders without admitting to or denying the allegations.

The Orders entered into by Security Bank of Jones County and Security Bank of North Metro require the Banks to increase their capital to a minimum Tier 1 Capital Ratio of 8.0% and a minimum Total Risk Based Capital Ratio of at least 10.0% within 30 days of the effective date of the Order. The Orders entered into by Security Bank of Bibb County and Security Bank of Gwinnett County require the Banks to increase their capital to a minimum Tier 1 Capital Ratio of 8.0% within 30 days of the effective date of the Order. The Order entered into by Security Bank of Houston Country requires the Bank to increase its capital to a minimum Tier 1 Capital Ratio of 8.0% within 90 days of the effective date of the Order.

In the event we are in material non-compliance with the terms of the Orders and the Written Agreement, our regulators have the authority to subject us to the terms of more restrictive enforcement orders, to impose civil money penalties on us and our directors and officers, and to remove directors and officers from their positions. In addition, due to the imposition of the Orders and the Written Agreement, we will be subject to heightened scrutiny by regulatory authorities and could suffer damage to our reputation in the marketplace.

An inability to improve our regulatory capital position could adversely affect our operations and future prospects.

Our success and ongoing viability is dependent on our ability to raise sufficient capital or reduce our assets to improve our regulatory capital position. At March 31, 2009, one of our subsidiary Banks was classified as “undercapitalized,” one of our subsidiary Banks was classified as “significantly undercapitalized” and one of our subsidiary Banks was classified as “critically undercapitalized,” which restricts our operations.

~~PART~~Our Iability to comply with the regulatory capital provisions of the Orders is contingent on current and future economic conditions and on our financial performance, ~~ITEM~~which 2will ~~(CONTINUED)~~require us to raise additional capital. Capital market conditions are currently unfavorable, and we do not anticipate any material improvement in these markets in the near term. If we are unable to raise sufficient amounts of capital, our financial condition and future prospects will be materially and adversely affected and further regulatory actions may be implemented, including ultimately placing our subsidiary banks in receivership or conservatorship.

~~Financial~~If ~~Information~~our allowance for loan losses is not sufficient to cover actual loan losses, we will incur additional losses.

~~Results~~The market value of ~~Operations~~the ~~(Continued)~~real estate securing our loans as collateral has been significantly and adversely affected by the deteriorating economy and unfavorable changes in economic conditions in our market areas and may be further adversely affected in the future. As of March 31, 2009, approximately 89% of our loans receivable were secured by real estate. As a result of a difficult real estate market, we have increased our allowance from $49.7 million as of March 31, 2008 to $53.5 million as of March 31, 2009. We expect to continue to increase our allowance in 2009; however, we can make no assurance that our allowance will be adequate to cover future loan losses given current and future market conditions.

~~Net~~Pursuant ~~Interest~~to ~~Income~~the ~~(Continued)~~Orders, five of our Banks are required to review the adequacy of our allowance for loan and lease losses on a quarterly basis. In addition, federal and state regulators periodically review our allowance for loan losses and may require us to increase our allowance for loan losses or recognize further loan charge-offs, based on judgments different than those of our management. Any increase in our allowance for loan losses or loan charge-offs as required by these regulatory agencies would have a negative effect on our operating results and capital position.

The following table provides a detailed analysis of the changes in interest income and interest expense due to changes in rate and volume for the three months ended June 30, 2005 compared to the three months ended June 30, 2004.

Rate/Volume Analysis

	Changes From 2004 to 2005 (1)
	Volume			Rate			NetChange
	($ in Thousands)
Interest Income
Loans, Net	$	2,844		$	2,025		$	4,869
Investment Securities
Taxable		194			159			353
Tax-Exempt		(27	)		(92	)		(119	)
Total Investment Securities		167			67			234
Interest-Bearing Deposits in Other Banks		16			21			37
Funds Sold		13			59			72
Other Interest-Earning Assets		—			3			3
Total Interest Income		3,040			2,175			5,215
Interest Expense
Interest-Bearing Demand and Savings Deposits		88			504			592
Time Deposits		647			1,320			1,967
Other Interest-Bearing Liabilities
Funds Purchased and Securities Under Agreement to Repurchase		4			82			86
Subordinated Debentures		—			93			93
Other Debt		(9	)		139			130
Total Interest Expense		730			2,138			2,868
Net Interest Income	$	2,310		$	37		$	2,347

(1) Changes in net interest income for the periods, based on either changes in average balances or changes in average rates for interest-earning assets and interest-bearing liabilities, are shown on this table. During each year there are numerous and simultaneous balance and rate changes; therefore, it is not possible to precisely allocate the changes between balances and rates. For the purpose of this table, changes that are not exclusively due to balance changes or rate changes have been attributed to rates.

~~PART I,~~ ITEM 2. ~~(CONTINUED)~~Unregistered Sales of Equity Securities and Use of Proceeds

~~Financial Information~~ None.

~~Results~~ITEM of3. ~~Operations (Continued)~~Defaults Upon Senior Securities

~~Provision~~None. ~~for Loan Losses~~

~~Our~~ITEM ~~Company establishes a provision for loan losses, which is charged to operations, in order to maintain the allowance for loan losses at a level which is deemed to be appropriate by management~~4. ~~The~~Submission ~~amount~~ of ~~this~~Matters provision is based upon an assessment of prior loss experience, the volume and type of lending presently being conducted by the Company, industry standards, past due loans, economic conditions of the Company’s market area and other factors related to ~~the~~a ~~collectibility~~Vote of ~~the~~Security Company’s loan portfolio. For the three- and six-month periods ended June 30, 2005, the provision for loan losses totaled $804,000 and $1,579,000, respectively, compared to $718,000 and $1,438,000 for the same periods ended June 30, 2004. Holders

Although management utilizes its best judgment in providing for inherent losses, there can be no assurance that our Company will not have to increase its provision for loan losses in the future as a result of future increases in nonperforming loans or for other reasons which could adversely affect our Company’s results of operationsNone. ~~In addition, various regulatory agencies, as an~~ integral part of their examination process, periodically review the allowance for loan losses. Such agencies may require our Company to recognize additions to the allowance for loan losses based on their judgments of information that is available to them at the time of their examination.

~~Noninterest~~ITEM ~~Income~~5. ~~and~~Other ~~Expense~~ Information

~~Noninterest~~On ~~income~~May 6, ~~for the six months ended June 30~~2009, ~~2005 totaled~~Security ~~$7,828,000~~Bank ~~compared~~Corporation toand ~~$7,011,000~~Security ~~for~~Interim Holding Corporation (the ~~comparable~~“Companies”) ~~prior~~entered ~~period.~~into ~~Mortgage~~a ~~origination~~Written ~~fees~~Agreement ~~for~~with the ~~six~~Federal ~~months~~Reserve ~~ended~~Bank ~~June~~of ~~30,~~Atlanta ~~2005~~(the ~~totaled~~“Federal ~~$2,130,000~~Reserve”) ~~compared~~and ~~to $2,487,000 for~~ the ~~comparable~~Georgia ~~prior~~Department ~~period.~~of ~~This~~Banking ~~decrease~~and ~~was~~Finance ~~primarily due to~~ (the ~~decline in mortgage refinance activity~~“Department”). ~~Service~~The ~~charges~~Written onAgreement ~~deposits~~contains ~~increased~~several ~~11.1~~provisions ~~percent~~intended ~~for~~to increase the ~~six-month~~financial ~~period~~soundness ~~ended~~of ~~June~~the ~~30,~~Companies ~~2005~~so ~~compared~~that to the ~~prior~~Companies ~~period~~may ~~ended~~serve ~~June~~as ~~30,~~a ~~2004.~~source ~~The~~of ~~increase~~strength isto ~~primarily~~the ~~in fees generated from our courtesy overdraft product for protection from bounced checks~~Banks.

~~Noninterest~~The ~~expenses increased~~summary ~~$2,283,000~~description orof ~~14.8 percent for~~ the ~~six~~Written ~~months~~Agreement ~~ended~~set ~~June~~forth ~~30,~~below ~~2005 over the same period in 2004. The increase~~ is ~~primarily~~qualified ~~attributable to a $1,698,000 increase~~ in ~~salaries~~its ~~and~~entirety ~~employee~~by ~~expense related to~~ the ~~Company’s~~actual ~~continued growth.~~Written ~~The inclusion of one month of SouthBank’s operating results added $258~~Agreement,~~000~~ towhich ~~noninterest~~is ~~expense~~attached ~~during~~as Exhibit and ~~the~~is ~~six~~incorporated ~~months~~by ~~ended~~reference ~~June 30, 2005~~herein.

~~Income~~Under ~~Taxes~~the terms of the Written Agreement, each of the Companies has agreed to the following provisions (among others detailed in the Written Agreement):

~~Income~~• ~~tax~~Submit ~~expense~~a ~~totaled~~written ~~$4,294,000~~plan ~~for~~to ~~the~~strengthen ~~six-month~~risk ~~period~~management ~~ended~~practices ~~June~~and ~~30,~~assist ~~2005, compared to $3,191,000 for~~ the ~~same~~Banks ~~period ended June 30, 2004. These amounts resulted~~ in meeting the ~~effective~~requirements ~~tax rates~~ of ~~approximately~~supervisory ~~37 percent~~actions ~~and~~imposed 36on ~~percent~~them ~~for~~by ~~2005~~their ~~and~~federal ~~2004, respectively. The effective tax rate has historically been at~~ or ~~just below the maximum corporate federal and~~ state ~~income tax rates due to the relatively small percentage of tax-free investments carried on the consolidated balance sheets~~regulators.

•

Refrain from paying dividends or receiving dividends from the Banks without the prior written approval of the Federal Reserve and the Department.

•

Refrain from making payments of interest or principal on subordinated debt or trust preferred securities without the prior written approval of the Federal Reserve and the Department.

•

Refrain from incurring, increasing or guaranteeing any debt without the prior written approval of the Federal Reserve and the Department.

•

Submit a written plan to maintain sufficient capital at the Companies and each of the Banks.

•

Refrain from increasing or imposing any new fees on the Banks without prior written approval of the Federal Reserve.

•

Furnish quarterly progress reports to the regulators.

The restrictions and reporting obligations under the Written Agreement are similar to the restrictions placed on the Banks pursuant to the previously reported enforcement actions.

~~PART I,~~ ITEM 26. ~~(CONTINUED)~~ EXHIBITS

~~Financial~~(a) ~~Information~~The following is a list of exhibits including items incorporated by reference:

Results of Operations (Continued)


Exhibit No		Description
3.1		Amended and Restated Articles of Incorporation, (incorporated by reference to Exhibit 3.1 to registrant’s Form 8-K (File No. 000-23261) filed with the SEC on December 30, 2008).

3.2		Amended and Restated Bylaws (incorporated by reference to Exhibit 3.2 to registrant’s Form 10-Q (File No. 000-23261) filed with the SEC on August 8, 2008).

10.1		Order to Cease and Desist between Security Bank of Bibb County and the Federal Deposit Insurance Corporation and the Georgia Department of Banking and Finance (incorporated by reference as Exhibit 10.1 to the registrant’s Form 8-K (File No. 000-23261), filed on April 24, 2009).

10.2		Order to Cease and Desist between Security Bank of Gwinnett County and the Federal Deposit Insurance Corporation and the Georgia Department of Banking and Finance (incorporated by reference as Exhibit 10.2 to the registrant’s Form 8-K (File No. 000-23261), filed on April 24, 2009).

10.3		Order to Cease and Desist between Security Bank of Jones County and the Federal Deposit Insurance Corporation and the Georgia Department of Banking and Finance (incorporated by reference as Exhibit 10.3 to the registrant’s Form 8-K (File No. 000-23261), filed on April 24, 2009).

10.4		Order to Cease and Desist between Security Bank of North Metro and the Federal Deposit Insurance Corporation and the Georgia Department of Banking and Finance (incorporated by reference as Exhibit 10.4 to the registrant’s Form 8-K (File No. 000-23261), filed on April 24, 2009).

10.5		Order to Cease and Desist between Security Bank of Houston County and the Federal Deposit Insurance Corporation and the Georgia Department of Banking and Finance (incorporated by reference as Exhibit 10.5 to the registrant’s Form 8-K (File No. 000-23261), filed on April 24, 2009).

10.6*		Written Agreement between Security Bank Corporation, Security Interim Holding Corporation, the Federal Reserve Bank of Atlanta and the Banking Commissioner of the State of Georgia.

31.1*		Certificate of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2*		Certificate of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1*		Certificate of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

~~Liquidity~~* ~~and~~Filed ~~Capital Adequacy~~ herewith

Stockholders’ equity increased to $137,019,000 due to the SouthBank acquisition, the retention of earnings, net of dividends paid and additional stock purchases. Unrealized gains on investment securities available for sale net of taxes totaled $32,000 at June 30, 2005. It is management’s intention to continue paying a reasonable return on stockholders’ investment while retaining adequate earnings to allow for continued growth.

The Federal Reserve Board measures capital adequacy for bank holding companies by using a risk-based capital framework and by monitoring compliance with minimum leverage ratio guidelines. The minimum ratio of total risk-based capital to risk-adjusted assets is 8 percent, of which 4 percent must be Tier 1 capital. Our Company’s total risk-based capital ratio was 10.12 percent at June 30, 2005. Our Company’s Tier 1 risk-based capital ratio was 8.98 percent at June 30, 2005.

In addition, the Federal Reserve Board has established minimum leverage ratio guidelines for bank holding companies. Those guidelines provide for a minimum leverage ratio of 3 percent for financial institutions that meet certain criteria, including that they maintain the highest regulatory rating. All other financial institutions are required to maintain a leverage ratio of 4 percent. Our Company’s leverage ratio was 9.09 percent at June 30, 2005.

The Federal Deposit Insurance Corporation Improvement Act (FDICIA) established minimum capital requirements for all depository institutions and established five capital tiers: “well capitalized,” “adequately capitalized,” “under-capitalized,” “significantly under-capitalized” and “critically under-capitalized.” FDICIA imposes significant restrictions on the operations of a bank that is not at least adequately capitalized. A depository institution’s capital tier will depend upon where its capital levels are in relation to various other capital measures that include a risk-based capital measure, a leverage ratio capital measure and other factors. Under regulations adopted, for an institution to be well capitalized, it must have a total risk-based capital ratio of at least 10 percent, a Tier 1 risk-based capital ratio of at least 6 percent and a Tier 1 leverage ratio of at least 5 percent. Also, the institution may not be subject to any specific capital order or directive.

At June 30, 2005, each of the subsidiary banks were in compliance with established guidelines.

SBKC, primarily through the actions of its subsidiary banks, engages in liquidity management to ensure adequate cash flow for deposit withdrawals, credit commitments and repayments of borrowed funds. Needs are met through loan repayments, net interest and fee income and the sale or maturity of existing assets. In addition, liquidity is continuously provided through the acquisition of new deposits, the renewal of maturing deposits and external borrowings.

PART I, ITEM 2 (CONTINUED)

Financial Information

Results of Operations (Continued)

Liquidity and Capital Adequacy (Continued)

Each week, management monitors deposit flow and evaluates alternate pricing structures to retain and grow deposits. To the extent needed to fund loan demand, traditional local deposit funding sources are supplemented by the use of FHLB borrowings, brokered deposits and other wholesale deposit sources outside the immediate market area. High volumes and activity in mortgage and construction lending at the Fairfield subsidiary since its acquisition in 2000 have required higher levels of sophistication and tracking to ensure adequate liquidity throughout the organization. Internal policies have been updated to monitor the use of various core and non-core funding sources, and to balance ready access with risk and cost. Through various asset/liability management strategies, a balance is maintained among goals of liquidity, safety and earnings potential. Internal policies that are consistent with regulatory liquidity guidelines are monitored and enforced by the banks. Our Company’s Asset Liability Committee (ALCO) meets on a weekly basis to monitor liquidity, funding, interest rate risk and other asset-liability management related issues.

The investment portfolio provides a ready means to raise cash without loss if liquidity needs arise. As of June 30, 2005, SBKC held $116,707,000 in bonds (excluding FHLB stock), at current market value in the available for sale portfolio. At December 31, 2004, the available for sale bond portfolio totaled $104,110,000. Only marketable investment grade bonds are purchased. Although most of the banks’ bond portfolios are encumbered as pledges to secure various public funds deposits, repurchase agreements, and for other purposes, management can restructure and free up investment securities for a sale if required to meet liquidity needs.

Management continually monitors the relationship of loans to deposits as it serves as a proxy for SBKC’s liquidity posture. SBKC had ratios of loans and loans for sale to deposits of 97.7 percent as of June 30, 2005 and 101.3 percent at December 31, 2004. Management employs alternative funding sources when deposit balances will not meet loan demands. The ratios of loans and loans for sale to all funding sources (excluding Trust Preferred Securities) at June 30, 2005 and December 31, 2004 were 90.8 percent and 91.6 percent, respectively. Management continues to emphasize programs to generate local core deposits as our Company’s primary funding sources. The stability of the banks’ core deposit base is an important factor in SBKC’s liquidity position. A heavy percentage of the deposit base is comprised of accounts of individuals and small business with comprehensive banking relationships and limited volatility. At June 30, 2005 and December 31, 2004, the banks had $353,284,000 and $233,516,000 in certificates of deposit of $100,000 or more. These larger deposits represented 33 percent and 28 percent of respective total deposits. Management seeks to monitor and control the use of these larger certificates, which tend to be more volatile in nature, to ensure an adequate supply of funds as needed. Relative interest costs to attract local core relationships are compared to market rates of interest on various external deposit sources to help minimize the Company’s overall cost of funds.

PART I, ITEM 2 (CONTINUED)

Financial Information

Results of Operations (Continued)

Liquidity and Capital Adequacy (Continued)

Local market deposit sources proved insufficient to fund the strong loan growth trends at the Fairfield Financial subsidiary over the past several years. SBKC’s banks supplemented deposit sources with brokered deposits. As of June 30, 2005, the banks reported $215,538,000, or 20 percent of total deposits, in brokered certificates of deposit attracted by external third parties. Additionally, the banks use external wholesale or Internet services to obtain out-of-market certificates of deposit at competitive interest rates when funding is needed.

To plan for contingent sources of funding not satisfied by both local and out-of-market deposit balances, SBKC and its subsidiaries have established multiple borrowing sources to augment their funds management. SBKC has an unsecured line of credit, and borrowing capacity also exists through the membership of the Federal Home Loan Bank program. The banks have also established overnight borrowing for Federal Funds Purchased through various correspondent banks. Management believes the various funding sources discussed above are adequate to meet the Company’s liquidity needs in the future without any material adverse impact on operating results.

Contractual Obligations

As of June 30, 2005, we are contractually obligated under long-term agreements as follows:

	Payments Due by Period
Contractual Obligations	Total		Less Than 1Year		1-3 Years		3-5 Years		More Than 5 Years
Federal Home Loan Bank Advances	$	72,300,000	$	32,050,000	$	30,250,000	$	—	$	10,000,000
Correspondent Bank Line of Credit		3,150,000		—		—		—		3,150,000
Subordinated Debentures		18,557,000		—		—		—		18,557,000
Operating Leases		1,092,738		288,313		448,151		203,645		152,629
Deferred Compensation		212,085		—		—		—		212,085
	$	95,311,823	$	32,338,313	$	30,698,151	$	203,645	$	32,071,714

The FHLB Advances consists of two separate programs. The first program is a Blanket Agreement for Advances and Security Agreement with the FHLB, under which our subsidiaries have pledged residential first-mortgage loans and investment securities as collateral to secure available lines of credit. The second program allows for advances under a Warehouse Line secured by our loans held for sale.

PART I, ITEM 2 (CONTINUED)

Financial Information

Results of Operations (Continued)

Contractual Obligations (Continued)

The Correspondent Bank Line of Credit is with the Bankers Bank in Atlanta, Georgia. The line is secured with the common stock of Security Bank of Bibb County (and indirectly the stock of Fairfield Financial as its subsidiary) and Security Bank of Houston County and is primarily used to provide capital injections to the subsidiaries.

Subordinated Debentures relate to the December 2002 offering of trust preferred securities, the proceeds of which were used to retire holding company debt and to fund the acquisition of Security Bank of Jones County. Other bank facilities are leased under operating leases included in the preceeding table.

Deferred Compensation Plans are maintained by two of our subsidiary banks. These plans are for specific officers to defer current compensation until termination, retirement, death or an unforeseeable emergency. The contracts were initially funded through the purchase of life insurance policies.

In February 2005, the Company entered into a contract for $432,000 to construct the interior of its St. Simons Island branch, which opened on August 4, 2005. As of June 30, 2005, the Company had paid $198,000 under the contract.

During March 2005, the Company entered into an agreement for $487,000 for the construction of an operations center in Gray, Georgia, to be used by Security Bank of Jones County. As of June 30, 2005, the Company had paid $162,000 with respect to the contract.

Off-Balance Sheet Arrangements

Our Company, in the normal course of business, is a party to financial instruments with off-balance sheet risk to meet the financing needs of its customers. These financial instruments primarily include unfulfilled loan commitments and standby letters of credit. Our Company’s exposure to credit loss in the event of nonperformance by the counter party to the financial instrument for unfulfilled loan commitments and standby letters of credit is represented by the contractual notional amount of those instruments. Our Company uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet transactions.

Unfulfilled loan commitments are arrangements 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. Historically, many commitments expire without being drawn upon; therefore, the following total commitment amounts are not necessarily indicative of future funding requirements. Unfulfilled loan commitments as of June 30, 2005 and December 31, 2004 approximated $333,795,000 and $233,136,000 respectively.

Standby letters of credit are conditional commitments issued by our Company to guarantee the performance of a customer to a third party. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loans to customers, and letters of credit are collateralized when deemed necessary. Our Company has commitments under financial standby letters of credit of $3,490,000 as of June 30, 2005 and $2,266,000 as of December 31, 2004 and commitments under performance standby letters of credit of $9,368,000 and $7,672,000 for the corresponding periods.

PART I, ITEM 2 (CONTINUED)

Financial Information

Results of Operations (Continued)

Critical Accounting Estimates

The accounting principles we follow and our methods of applying these principles conform with accounting principles generally accepted in the United States and with general practices within the banking industry. In connection with the application of those principles, we have made judgments and estimates which, in the case of the determination of our allowance for loan losses (ALL), goodwill and stock-based compensation have been critical to the determination of our financial position and results of operations.

Allowance for Loan Losses (ALL)

Our management assesses the adequacy of the ALL prior to the end of each calendar quarter. This assessment includes procedures to estimate the allowance and test the adequacy and appropriateness of the resulting balance. The ALL consists of two portions: (1) an allocated amount representative of specifically identified credit exposure and exposures readily predictable by historical or comparative experience; and (2) an unallocated amount representative of inherent loss that is not readily identifiable. Even though the ALL is composed of two components, the entire ALL is available to absorb any credit losses.

We establish the allocated amount separately for three tiers:

• substandard loans with specific allocations based on collateral exposure;

• loans based on 5 different credit ratings (watch list, other assets specifically mentioned, substandard, doubtful and loss) with allocations based on historical losses per rating category; and

• the rest of the loan portfolio with allocations based on historical losses in the total portfolio.

We base the allocation for unique loans primarily on risk-rating grades assigned to each of these loans as a result of our loan management and review processes. We then assign each risk-rating grade a loss ratio, which is determined based on the experience of management, discussions with banking regulators and our independent loan review process.

The unallocated amount is particularly subjective and does not lend itself to exact mathematical calculation. The unallocated amount represents estimated inherent credit losses which may exist, but have not yet been identified, as of the balance sheet date. In estimating the unallocated amount, we apply two stress factors. The first stress factor consists of economic factors including such matters as changes in the local or national economy, the depth or experience in the lending staff, any concentrations of credit in any particular industry group and new banking laws or regulations. The second stress factor is based on the credit grade of the loans in our unsecured loan portfolio. After we assess applicable factors, we evaluate the aggregate unallocated amount based on our management’s experience.

PART I, ITEM 2 (CONTINUED)

Financial Information

Results of Operations (Continued)

Allowance for Loan Losses (ALL) (Continued)

We then test the resulting ALL balance by comparing the balance in the ALL with historical trends and peer information. Our management then evaluates the result of the procedures performed, including the result of our testing, and makes a conclusion regarding the appropriateness of the balance of the ALL in its entirety. The directors’ loan committee reviews the assessment prior to the filing of quarterly and annual financial information.

In assessing the adequacy of the ALL, we also rely on an ongoing independent loan review process. We undertake this process both to ascertain whether there are loans in the portfolio whose credit quality has weakened over time and to assist in our overall evaluation of the risk characteristics of the entire loan portfolio. Our loan review process includes the judgment of management, the input from our independent loan reviewer, who is not an employee of ours, and reviews that may have been conducted by bank regulatory agencies as part of their usual examination process.

Goodwill

Effective January 1, 2002, the SFAS No. 142, Goodwill and Other Intangible Assets, was adopted. In accordance with this statement, goodwill and intangible assets deemed to have indefinite lives no longer are being amortized but will be subject to impairment tests. Other intangible assets, primarily core deposits, will continue to be amortized over their estimated useful lives. In 2002, the required impairment testing of goodwill was performed and no impairment existed as of the valuation date, as the fair value of our net assets exceeded their carrying value. If for any future period we determine that there has been impairment in the carrying value of our goodwill balances, we will record a charge to our earnings, which could have a material adverse effect on our net income.

Stock-Based Compensation

In accordance with SFAS No. 148, Accounting for Stock-Based Compensation, management has elected to expense the value of stock options. We utilize the Black-Scholes model in determining the fair value of the stock options. The model takes into account certain estimated factors such as the expected life of the stock option and the volatility of the stock. The expected life of the stock option is a function of the vesting period of the grant, the average length of time similar grants have remained outstanding and the expected volatility of the underlying stock. Volatility is a measure of the amount by which a price has fluctuated or is expected to fluctuate during a period.

PART I, ITEM 2 (CONTINUED)

Financial Information

Results of Operations (Continued)

Other Information

In connection with its planned combinations with R.J. Reynolds Tobacco Co., Brown & Williamson Tobacco Corp. (B&W) announced plans in October 2003 to close its plant in Macon, Georgia. The plant closing is currently projected to occur over the next 9-15 months. The plant currently employs approximately 2,100 workers. The Macon MSA has a nonagricultural employment base of approximately 148,000, or approximately 1.4 percent of the total. We cannot quantify the potential impact of the plant’s closure on the local economy, but believe the impact will be substantial. We are currently reviewing the potential impact of the closure on our results of operations and financial condition, including the potential impact on credit quality. Management believes there are a number of factors that will reduce or mitigate the impact of the closure on our results of operations and financial conditions. We have extensive operations in markets outside of Macon in Houston, Jones and Glynn Counties, Georgia. These counties are currently experiencing significant growth. In addition, the lending operations of Fairfield are in large measure geographically dispersed outside the Macon market area.

Forward Looking Statements

Within these financial statements we have included certain “forward looking statements” concerning the future operations of the Company. It is management’s desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. This statement is for the express purpose of availing the Company of the protections of such safe harbor with respect to all “forward looking statements” contained in our financial statements. We have used “forward looking statements” to describe the future plans and strategies including our expectations of the Company’s future financial results. Management’s ability to predict results or the effect of future plans and strategy is inherently uncertain. Factors that could affect results include interest rate trends, competition, the general economic climate in the middle Georgia area, the southeastern United States region and the country as a whole, loan delinquency rates and changes in federal and state regulations. These factors should be considered in evaluating the “forward looking statements,” and undue reliance should not be placed on such statements.

PART I, ITEM 3

Quantitative and Qualitative Disclosures About Market Risk

SBKC’s financial performance is impacted by, among other factors, interest rate risk and credit risk. SBKC does not use derivatives to mitigate credit risk, relying instead on a loan review process and the provision for loan losses. See Provision for Loan Losses herein.

The management of interest rate risk is the primary goal of SBKC’s asset/liability management function. SBKC attempts to achieve consistent growth in net interest income while limiting volatility from changes in interest rates. Management seeks to accomplish this goal by balancing the maturity and repricing characteristics of various assets and liabilities. SBKC’s asset/liability mix is sufficiently balanced so that the effect on net interest income of interest rate moves in either direction is not expected to be significant over time.

PART I, ITEM 3 (CONTINUED)

Quantitative and Qualitative Disclosures About Market Risk (Continued)

Interest Rate Sensitivity

	June 30, 2005
	Assets and Liabilities Repricing Within
($ in Thousands)	3 Monthsor Less			4 to 12Months			Subtotal 1 Year			1 to 5Years			Over 5Years			Total
Earning Assets
Interest-Bearing Due from Banks	$	2,407		$	—		$	2,407		$	—		$	—		$	2,407
Federal Funds Sold		42,177			—			42,177			—			—			42,177
Investment Securities		784			3,670			4,454			77,888			40,421			122,763
Loans, Net of Unearned Income		594,967			156,369			751,336			273,404			16,985			1,041,725
Other Earning Assets		7,413			—			7,413			—			557			7,970
Total Interest Earning Assets		647,748			160,039			807,787			351,292			57,963			1,217,042
Interest-Bearing Liabilities
Interest-Bearing Demand Deposits (1)		255,632			—			255,632			—			—			255,632
Savings (1)		20,339			—			20,339			—			—			20,339
Time Deposits		153,309			360,267			513,576			162,940			—			676,516
Federal Funds Purchased, Repurchase Agreements and Demand Notes to US Treasury		5,714			—			5,714			—			—			5,714
Other Borrowings		5,300			30,900			36,200			26,100			13,150			75,450
Subordinated Debentures		18,557			—			18,557			—			—			18,557
Total Interest-Bearing Liabilities		458,851			391,167			850,018			189,040			13,150			1,052,208
Interest Sensitivity Gap	$	188,897		$	(231,128	)	$	(42,231	)	$	162,252		$	44,813		$	164,834
Cumulative Interest Sensitivity Gap	$	188,897		$	(42,231	)	$	(42,231	)	$	120,021		$	164,834		$	164,834
Cumulative Interest Sensitivity Gap as a Percentage of Total Interest Earnings Assets		15.52	%		(3.47	)%		(3.47	)%		9.86	%		13.54	%
Cumulative Interest Sensitive Assets as a Percentage of Cumulative Interest Sensitive Liabilities		141.17	%		95.03	%		95.03	%		111.55	%		115.67	%

(1) Interest-bearing Demand and Savings Accounts for repricing purposes are considered to reprice within six months or less.

PART I, ITEM 4

Controls and Procedures

After evaluating the Company’s disclosure controls and procedures designed to ensure that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934 (the Act) is recorded, processed, summarized and reported within the time period specified by the Act, the Chief Executive Officer, H. Averett Walker, and Chief Financial Officer, James R. McLemore, Jr. have concluded that the Company’s controls are effective in accumulating and communicating the information to the Company’s management as appropriate to allow timely decisions regarding disclosures. This evaluation was conducted as of the end of the period covered by this report. In addition, there have been no significant changes in the Company’s internal controls or other factors that could significantly affect these controls subsequent to the dates of Mr. Walker’s and Mr. McLemore’s evaluations, and there have been no corrective actions with regard to significant deficiencies or material weaknesses.

PART II

Other Information

ITEM 1

Legal Proceedings

Not Applicable.

ITEM 2

Unregistered Sales of Equity Securities and Use of Proceeds

Not Applicable.

ITEM 3

Defaults Upon Senior Securities

Not Applicable.

PART II (CONTINUED)

Other Information

ITEM 4

Submission of Matters to a Vote of Security Holders

The annual shareholders meeting of the Company was held on April 28, 2005. At the annual meeting, the following matters were submitted to a vote:

(I) Proposal No. 001-P – Election of Directors

	For	Withheld
Edward M. Beckham	4,763,122	121,536
Alford C. Bridges	4,786,988	97,670
Thad G. Childs, Jr.	4,541,538	343,120
John W. Ramsey	4,524,969	359,689
Robert M. Stalnaker	4,803,657	81,001
Richard W. White, Jr.	4,786,988	97,670

(II) Proposal No. 002-M – Approve the amendment to the Articles of Incorporation of Security Bank Corporation to increase the authorized number of common shares from ten million shares to twenty-five million shares.

For		Against		Abstain
4,550,245		322,408		12,005

PART II (CONTINUED)

Other Information

ITEM 5

Other Information

Not Applicable.

ITEM 6 EXHIBITS

(a) The following is a list of exhibits including items incorporated by reference

3.1		Articles of Incorporation (incorporated by reference to Exhibit 3(a) to the registrant’s Registration Statement on Form S-4 (File No. 33-80076), filed with the Commission on June 13, 1994).
3.2		Amendment to Articles of Incorporation, as amended (incorporated by reference to Exhibit 3.2 to the registrant’s Registration Statement on Form S-4 (File No. 333-49977) filed with the Commission on April 13, 1998).
3.3		Bylaws, as amended (incorporated by reference to Exhibit 3.2 to SBKC’s Registration Statement on Form S-4 (File No. 333-49977) filed with the Commission on April 13, 1998).
4.1		See Exhibits 3.1, 3.2, 3.3 and 3.4 for provisions of Articles of Incorporation and Bylaws, as amended, which define the rights of its shareholders.
4.2		Form of Stock Certificate (incorporated herein by reference as Exhibit 4.1 to the registrant’s Registration Statement on Form S-4 (File No. 333-49977) filed with the Commission on April 13, 1998).
4.3		SNB Bancshares, Inc. 2003 Restricted Stock Bonus Plan (incorporated by reference as Exhibit 4.1 to the Registrant’s Form S-8 Registration Statement filed on June 17, 2004, File No. 333-116592).
4.4		Security Bank Corporation 2004 Omnibus Stock Ownership and Long Term Incentive Plan (incorporated by reference as Appendix B to the Registrant’s Definitive Proxy Statement filed on April 25, 2004, File No. 000-23261).
4.5		Security Bank Corporation 2004 Employee Stock Purchase Plan (incorporated by reference as Appendix D to the Registrant’s Definitive Proxy Statement filed on April 25, 2004, File No. 000-23261).
10.1		1996 Incentive Stock Option Plan (incorporated by reference as Exhibit 10(c) to the registrant’s Form SB-2 (File No. 333-11371) filed with the Commission on September 4, 1996).
10.2		1999 Incentive Stock Option Plan (incorporated by reference as Appendix to the Registrant’s Definitive Proxy Statement (File No. 000-23261) filed on March 30, 1999).

PART II (CONTINUED)

Other Information

ITEM 6 EXHIBITS (Continued)

10.3		2002 Incentive Stock Option Plan (incorporated by reference as Appendix A to the Registrant’s Definitive Proxy Statement (File No. 000-23261) filed on March 15, 2002).
10.4		Employment Agreement with H. Averett Walker dated January 1, 2002 (incorporated herein by reference as Exhibit 10.4 to SBKC’s Registration Statement on Form S-4 (File No. 333-103554) filed with the Commission on March 3, 2003).
10.5		Employment Agreement with Richard A. Collinsworth dated January 1, 2002 (incorporated herein by reference as Exhibit 10.5 to SBKC’s Registration Statement on Form S-4 (File No. 333-103554) filed with the Commission on March 3, 2003).
10.6		Employment Agreement with James R. McLemore, Jr. dated December 1, 2002 (incorporated herein by reference as Exhibit 10.6 to SBKC’s Registration Statement on Form S-4 (File No. 333-103554) filed with the Commission on March 3, 2003).
10.7		Asset Purchase Agreement (Fairfield Financial) (incorporated by reference as Exhibit 2 to registrant’s Form 10-Q (Commission File No. 000-23261) filed on August 10, 2000).
10.8		Employment Agreement between Security Bank Corporation, Security Interim Bank and Thad G. Childs, Jr. dated May 30, 2003 (incorporated herein by reference as Exhibit 10.7 to SBKC’s Registration Statement on Form S-4 (File No. 333-103554) filed with the Commission on March 3, 2003).
10.9		2004 Omnibus Stock Ownership and Long Term Incentive Plan (incorporated by reference as Appendix B to the registrant’s definitive proxy Statement (File No. 000-23261) filed with the Commission March 25, 2004).
10.10		2004 Employee Stock Purchase Plan (incorporated by reference as Appendix D to the registrant’s definitive proxy Statement (File No. 000-23261) filed with the Commission March 25, 2004).
11.1		Statement of Computation of Net Income Per Share.
31.1		Certificate of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certificate of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certificate of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of ~~Section~~ Section 13 or 15(d) of the Securities Exchange Act of 1934, Security Bank Corporation has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized:.

SECURITY BANK CORPORATION /s/ Tony E. Collins Tony E. Collins President and Chief Executive Officer (Principal Executive Officer) Date: May 11, 2009 /s/ James R. McLemore James R. McLemore Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) Date: May 11, 2009

~~/s/~~34 ~~H. Averett Walker H. Averett Walker Chief Executive Officer Date: August 8, 2005 /s/ Holly L. McDowell Holly L. McDowell Principal Accounting Officer Date: August 8, 2005~~

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