<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 10-QSB

(MARK ONE)
/X/  QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE 
     ACT OF 1934 [No Fee Required]

     For the quarterly period ended June 30, 1998 or

/   /     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934 [No Fee Required]

     For the transition period from                     to                     .

     Commission file number    0-27590

               SECURITY BANK HOLDING COMPANY
(Exact name of small business issuer as specified in its charter)

          Oregon                             93-0800253.
     (State or other jurisdiction of    (I.R.S. Employer Identification No.)
     incorporation or organization)

     170 S. Second St., Coos Bay, Oregon             97420.
     (Address of Principal Executive Offices)     (Zip Code)

                          (541) 267-5356
                    (Issuer's telephone number)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.   YES    X      NO    

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

          Class                         Outstanding at July 30, 1998
     Common Stock, $5.00 par value                4,451,041


Transitional Small Business Disclosure Format (check one):  YES          NO    X
<PAGE>
================================================================================
PART I.  FINANCIAL INFORMATION
ITEM 1.   FINANCIAL STATEMENTS.

SECURITY BANK HOLDING COMPANY & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                 (Unaudited)
ASSETS                                                          June 30, 1998     Dec. 31, 1997
-------                                                         -------------     -------------
<S>                                                                <C>              <C>

Cash and cash equivalents:
  Cash and due from banks                                            $8,391           $10,087
  Federal funds sold                                                 31,052            19,165
                                                                    -------            ------
     Total cash and cash equivalents                                 39,443            29,252

Investment securities available for sale                             80,430            86,130
Loans, net                                                          135,533           136,035
Mortgage loans held for sale, at cost which approximates market       2,678             2,208
Net investment in direct financing leases                             3,088             3,056
Premises and equipment, net                                           8,138             7,111
Federal Home Loan Bank stock, at cost                                 1,933             1,840
Other assets                                                          4,631             4,600
                                                                      -----             -----
     Total assets                                                  $275,874          $270,232
                                                                   ========          ========

LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS' EQUITY
-------------------------------------------------------
Liabilities:
 Deposits:
   Demand                                                           $39,544           $31,550
   NOW accounts                                                      33,577            36,597
   Money market accounts                                             35,759            37,074
   Savings accounts                                                  20,600            20,079
   Time deposit                                                      91,429            88,541
                                                                     ------            ------
     Total deposits                                                 220,909           213,841

Securities sold under agreements to repurchase                        7,093             7,945
Short term borrowings                                                   571               583
Federal Home Loan Bank borrowings                                    14,000            16,000
Other liabilities                                                     3,116             2,532
                                                                      -----             -----
     Total liabilities                                              245,689           240,901
                                                                    -------           -------

Minority interest in subsidiary                                         929               908
Shareholders' equity:
  Nonvoting preferred stock, $5 par value.
     Authorized 5,000,000 shares; none issued                            --                --
  Voting preferred stock, $5 par value.
     Authorized 5,000,000 shares; none issued                            --                --
  Common stock, $5 par value.
     Authorized 10,000,000 shares - issued and outstanding
     4,451,041 shares in 1998(4,431,013 shares in 1997)              22,255            22,210
Surplus                                                               1,941             1,596
Retained earnings                                                     5,967             5,629
Unearned ESOP shares at cost                                        (1,332)           (1,469)
Accumulated other comprehensive income                                  425               457
                                                                        ---               ---
     Total shareholders' equity                                      29,256            28,423
                                                                     ------            ------
Total liabilities, minority interest and shareholders' equity      $275,874          $270,232
                                                                   ========          ========
</TABLE>


See accompanying notes to consolidated financial statements

<PAGE>

SECURITY BANK HOLDING COMPANY & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED - DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
                                                                    Three Months Ended  Six Months Ended
                                                                         June 30,            June 30,
                                                                         --------           --------
                                                                      1998      1997      1998      1997
                                                                      ----      ----      ----      ----
<S>                                                                  <C>       <C>       <C>       <C>

Interest income:
  Interest on loans                                                  $3,344    $3,218    $6,638    $6,187
  Interest and dividends on securities:
     Taxable                                                          1,005     1,384     2,094     2,660
     Exempt from Federal income tax                                     201       291       387       511
     Interest on time deposits-domestic financial institutions           --        --        --         5
     Dividend income on Federal Home Loan Bank stock                     36        56        76        96
     Interest on Federal funds sold                                     331        24       569        64
  Income on direct financing leases                                      70        71       140       144
                                                                         --        --       ---       ---
       Total interest income                                          4,987     5,044     9,904     9,667
                                                                      -----     -----     -----     -----
Interest expense:
  Deposits
     NOW                                                                121        82       235       162
     Money market                                                       311       307       624       598
     Savings                                                            126       127       243       250
     Time                                                             1,187     1,091     2,342     2,166
  Securities sold under agreements to repurchase                         78        71       161       128
  Short term borrowings                                                   5         6        11        12
  Federal Home Loan Bank borrowings                                     216       428       439       679
                                                                        ---       ---       ---       ---
       Total interest expense                                         2,044     2,112     4,055     3,995
                                                                      -----     -----     -----     -----

     Net interest income                                              2,943     2,932     5,849     5,672
Provision for loan losses                                                63       105       124       181
                                                                         --       ---       ---       ---
     Net interest income after provision for loan losses              2,880     2,827     5,725     5,491
                                                                      -----     -----     -----     -----

Other income:
  Service charges on deposit accounts                                   290       278       571       571
  Gain(loss) on sale/call of investments available for sale, net          3       (1)         5         2
  Loan servicing fees                                                    62        59       123       127
  Sold real estate loan fees                                            628       332     1,237       587
  Other                                                                 213       217       392       381
                                                                        ---       ---       ---       ---
     Total other income                                               1,196       885     2,328     1,668
                                                                      -----       ---     -----     -----

Other expense:
  Salaries and employee benefits                                      1,690     1,498     3,436     2,941
  Occupancy of bank premises                                            204       166       395       325
  Furniture and equipment                                               224       211       459       431
  Professional fees                                                     183       151       397       296
  FDIC assessment                                                         5         5        13        11
  Supplies                                                               79        94       169       188
  ESOP compensation                                                     168        70       335       140
  Other                                                                 497       445     1,029       873
                                                                        ---       ---     -----       ---
     Total other expense                                              3,050     2,640     6,233     5,205
                                                                      -----     -----     -----     -----  
       Income before provision for income taxes                       1,026     1,072     1,820     1,954
Provision for income taxes                                              365       357       649       642
                                                                        ---       ---       ---       ---
       Net income before minority interest                              661       715     1,171     1,312
Net (income) loss attributable to minority interest                    (12)         9      (21)        17
                                                                       ----         -      ----        --
  Net income                                                           $649      $724    $1,150    $1,329
                                                                       ====      ====    ======    ======
       Net income per share - basic                                    $.16      $.18      $.28      $.33
                                                                       ====      ====      ====      ==== 
       Net income per share - diluted                                  $.16      $.18      $.28      $.33
                                                                       ====      ====      ====      ====
</TABLE>
         See accompanying notes to consolidated financial statements

<PAGE>
SECURITY BANK HOLDING COMPANY & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED - DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                             Three Months Ended         Six Months Ended
                                                                  June 30,                  June 30,
                                                                  --------                 --------
                                                               1998      1997           1998      1997
                                                               ----      ----           ----      ----

<S>                                                           <C>       <C>           <C>        <C>
Net Income                                                    $649      $724          $1,150     $1,329

Other comprehensive income, net of income tax:

     Unrealized (loss) gain on investment securities           (1)       554            (32)        116
                                                               ---       ---            ----        ---
                                                                                                       
Comprehensive income                                          $648    $1,278          $1,118     $1,445
                                                              ====    ======          ======     ======
</TABLE>

See accompanying notes to consolidated financial statements

<PAGE>
SECURITY BANK HOLDING COMPANY & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED - DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                                    Six months ended June 30,
                                                                                        1998         1997
                                                                                        ----         ----
<S>                                                                                 <C>          <C>

Cash flows provided by operating activities:
Net income                                                                            $1,150       $1,329
Adjustments to reconcile net income to net cash provided by operating activities:
  Depreciation and amortization                                                          403          314
  Provision for loan losses                                                              124          180
  Origination of mortgage loans held for sale                                       (58,546)     (24,320)
  Proceeds from mortgage loans sold                                                   58,076       24,915
  Net loss on sale of fixed assets                                                        --           --
  Net gain on call of investment securities available for sale                           (1)          (2)
  Net gain on sale of investment securities available for sale                           (4)           --
  Federal Home Loan Bank stock dividend                                                 (72)         (96)
  ESOP related compensation expense                                                      454          203
  Increase in other assets                                                              (31)        (186)
  (Decrease) increase in other liabilities                                               605         (99)
                                                                                         ---         ----
          Net cash provided by operating activities                                    2,158        2,436
                                                                                       -----        -----

Cash flows from investing activities:
  Net decrease in time deposits-domestic financial institutions                           --          270
  Purchase of investment securities available for sale                              (17,302)     (18,584)
  Proceeds from sale of investment securities available for sale                       5,015           --
  Proceeds from maturities and call of investment securities available for sale       17,890        8,596
  Net loan payments (originations)                                                       378     (13,261)
  Purchase of participations                                                              --        (496)
  Additions to premises and equipment                                                (1,381)      (1,061)
  Purchase of Federal Home Loan Bank stock                                              (21)      (2,194)
  Redemption of Federal Home Loan Bank stock                                              --        1,275
  Proceeds from sale of premises and equipment                                            --           --
  Originations of direct financing leases                                              (483)      (1,253)
  Gross payments on direct financing leases                                              451        1,112
  Minority interest in subsidiary                                                         21         (17)
                                                                                          --         ----
     Net cash (used in) provided by investing activities                               4,568     (25,613)
                                                                                       -----     --------

Cash flows from financing activities:
  Net increase in deposits                                                             7,068        7,167
  (Decrease) increase in securities sold with agreements to repurchase                 (852)        1,232
  (Decrease) increase of Federal Home Loan Bank borrowings                           (2,000)       14,252
  Proceeds from issuance of common stock                                                  73           --
  Payment of dividends                                                                 (812)        (527)
  Other                                                                                 (12)           73
                                                                                        ----           --
     Net cash provided by financing activities                                         3,465       22,197
                                                                                       -----       ------
     Net increase in cash and cash equivalents                                        10,191        (980)
Cash and cash equivalents at beginning of period                                      29,252       12,609
                                                                                      ------       ------
Cash and cash equivalents at end of period                                           $39,443      $11,629
                                                                                     =======      =======

Supplemental disclosures of cash flow information:
  Cash paid during the year for:
       Interest                                                                       $4,026       $2,802
       Income taxes                                                                     $638         $673
Supplemental disclosures of investing activities:
  Unrealized gain (loss) on investment
       Securities available for sale, net of tax                                         $32         $116
  Loans transferred to other real estate owned                                           $--          $22
</TABLE>
See accompanying notes to consolidated financial statements

<PAGE>
SECURITY BANK HOLDING COMPANY & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)


(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)  Basis of Financial Statement Preparation
The accompanying consolidated financial statements have been prepared by the
Company without audit and in conformity with generally accepted accounting
principles for interim financial information.  Accordingly, certain financial
information and footnotes have been omitted or condensed.  In the opinion of
management, the consolidated financial statements include all necessary
adjustments (which are of a normal and recurring nature) for the fair
presentation of the results of the interim periods presented.  These financial
statements should be read in conjunction with the Company's audited consolidated
financial statements for the year ended December 31, 1997 included as part of
the Company's 1997 annual report to shareholders.  The results of operations for
the interim period shown in this report are not necessarily indicative of
results for any future interim period or the entire fiscal year.


(b)  Net Income Per Share
Basic and diluted net income per share are based on the weighted average number
of common shares outstanding during each period, with diluted including the
effect of potentially dilutive common shares.  For the quarter and six months
ended June 30, 1998 and 1997, the weighted average number of common shares
outstanding did not include 384,784 and 455,824 shares respectively, held by the
Company's ESOP as these shares have not been allocated to participant accounts,
nor have they been committed to be released.  The following table presents
information relating to the weighted average number of common shares outstanding
for all periods presented for both basic and diluted net income per share
calculations:

                                       Three months             Six months
                                      ended June 30,           ended June 30,
                                      --------------           --------------
                                     1998       1997          1998       1997
                                     ----       ----          ----       ----

Weighted average shares - basic   4,063,441   3,975,118    4,061,797 3,975,118

Potential dilution of stock options  33,569      45,168       34,476    45,168
                                     ------      ------       ------    ------
                                                                                
Weighted average shares - diluted 4,097,010   4,020,286    4,096,273 4,020,286
                                  =========   =========    ========= =========



(c)  Comprehensive Income
In June 1997, the FASB issued Statement of Financial Accounting Standards No.
130 (SFAS No. 130), Reporting Comprehensive Income. SFAS No. 130 establishes
standards for reporting and displaying comprehensive income and its components
in general-purpose financial statements.  Comprehensive income includes net
income and several other items that current accounting standards require to be
recognized outside of net income. SFAS No. 130 is effective for fiscal years and
interim periods beginning after December 15, 1997.  The Company adopted SFAS No.
130 in 1998.


(d)  Reclassifications
Certain amounts previously recorded on the December 31, 1997 and June  30, 1997
consolidated financial statements have been reclassified to conform to the
classifications on the June 30, 1998 consolidated financial statements.


<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.


FOR THE THREE MONTHS ENDED JUNE  30, 1998 AND 1997

GENERAL.   Net income decreased to $649,000 for the three months ended June 30,
1998 from $724,000 for the same period in 1997, a 10% decrease.  The decrease in
net income is mostly attributable to an increase in other expense incurred in
conjunction with the Company's expansion strategy.  

NET INTEREST INCOME.   Net interest income before the provision for loan loss
increased $11,000 or .4% for the three months ended June 30, 1998 over the same
period in 1997.  Of the net increase of $11,000, an increase in volume accounted
for an increase in net interest income of $199,000, while a decrease in rates
earned accounted for a decrease in net interest income of $188,000.  Average
interest earning assets increased $3.1 million, while average costing
liabilities increased $4.2 million.

PROVISION FOR LOAN LOSSES.   The loan loss provision during the three month
period ended June 30, 1998, was $63,000 and $105,000 for the same period in
1997.  Net charge-offs during the three month  periods were $119,000 and $77,000
for 1998 and 1997, respectively.

Management believes the loan loss provision maintains the reserve for loan
losses at an appropriate level.  The reserve for loan losses was $1,389,000 at
June 30 1998, as compared to $1,402,000 at June 30 1997.  The Company's ratio of
reserve for loan losses to total loans was .97% at June 30, 1998, compared to
1.02% at June 30, 1997.

Non-performing assets (defined as loans on non-accrual status, 90 days or more
past due, and other real estate owned) were $886,000 and $940,000 at June 30,
1998 and 1997, respectively.  Management believes the loans are adequately
secured and that no significant losses will be incurred.

OTHER INCOME.   Other income increased 35.1% to $1,196,000 for the three months
ended June 30 1998 as compared to $885,000 for the same period in 1997.  The
increase in other income is due primarily to an increase in sold real estate
loan fees.  The Company has experienced strong sold loan activity, resulting
from the low interest rate environment and the increase in refinance activity.


OTHER EXPENSE.   Other expense (including ESOP Compensation expense as discussed
below) increased 15.5% to $3,050,000 for the three months ended June 30, 1998
compared to $2,640,000 for the same period in 1997.  Salaries and employee
benefits, the largest non-interest expense, increased $192,000 or 12.8%.
Approximately $113,000 of the increase in salaries is related to increased
mortgage operations, which resulted in $296,000 increased sold loan fee income.
In addition, deferred compensation plan expense increased $70,000.

The increase in professional fees resulted primarily from an increase in
directors fees, attributed to the formation of separate boards for each of the
corporate entities within the expanding Holding Company.

Given the increase in refinance activity as discussed above, the Company
experienced a $42,000 increase in early payoffs on mortgage servicing rights,
which is reflected as a component of other expense.


ESOP COMPENSATION EXPENSE.  The Company sponsors an Employee Stock Ownership
Plan (ESOP), a leveraged employee-retirement benefit plan which owns
approximately 22% of the common stock of the Company.

The ESOP owns 964,504 shares of the Company's common stock, of which 579,720 are
allocated to plan participants.  The remaining 384,784 shares are unallocated,
and will be allocated over the remaining debt service period.  The current ESOP
debt of $1,858,000 is to be extinguished over the next six years, ending in
2003.  As the debt is paid, shares are released for allocation. The release of
shares is comprised of shares released through dividends on allocated shares,
and shares released through compensation expense (a non-cash charge to the
income statement).  Compensation expense is calculated by multiplying the shares
released as compensation by the average share price of the Company's common
<PAGE>
stock for the year.  Two components of shareholders' equity are also affected.
There is a reduction in unearned ESOP shares at cost, and an increase in surplus
at the difference between the fair market value and the cost of the shares,
thereby off-setting the compensation expense and resulting in no impact on
shareholders' equity. As shares are released, they are considered outstanding
for the purposes of calculating earnings per share and book value per share.

In 1997, the average share price was $12.14, a 47% increase over the average
price in 1996 of $8.24.  This significant price appreciation has caused the
compensation charge to increase proportionately, well beyond the originally
planned 7% of eligible salaries.  The resulting non-cash charge to earnings for
the fiscal year 1997 of $716 represented 22% of eligible salaries, and the
charge in 1996 of $459 was 17% of eligible salaries.

Because of the growing impact on the Company's earnings, in 1997, the Company
requested a Private Letter Ruling (PLR) from the Internal Revenue Service (IRS)
to extend the repayment of the debt, thereby reducing the number of shares being
released each year.  This would return the retirement benefit to the originally
planned levels.  In the second quarter of 1997, the Company had accrued ESOP
compensation expense assuming the PLR would be received, at $70,000 for the
second quarter of 1997.

In December 1997, the Company received a preliminary response from the IRS
indicating that it would not be ruling in favor of the PLR request.  After
further discussion with the IRS in January 1998, the IRS removed the preliminary
decline status pending development of guidelines concerning debt extension
requests.  The IRS has indicated a six month time frame to draft these
guidelines.  As such, the Company has accrued ESOP compensation expense for the
second quarter of 1998 in accordance with the existing ESOP debt structure.

At this time, the Company is aware of three possible scenarios regarding the
timing of the release of the remaining unallocated shares, as follows:

  Option 1.    Follow the current debt amortization, the remaining unallocated
          shares will be released over the next six years,

  Option 2.    Upon notification of a favorable PLR, extend the debt four years
          and release the remaining unallocated shares over the next ten years.
          Note the actual extension period and number of shares released would
          be dependent upon the provisions allowed by the IRS, or

  Option 3.    Shorten the ESOP tax year, permitting the Company to accelerate
          the debt and release all remaining unallocated shares during 1998.

The following table presents the release of the remaining unallocated shares
under the three possible options under consideration by the Company:
<TABLE>
<CAPTION>
             Year    Option 1  Option 2  Option 3
             ----    --------  --------  --------
            <S>      <C>       <C>       <C>

             1998 ..  71,910    47,520   384,784
             1999 ..  74,675    41,839     ---
             2000 ..  53,823    40,766     ---
             2001 ..  57,334    40,359     ---
             2002 ..  61,489    39,117     ---
             2003 ..  65,553    37,821     ---
             2004 ..   ---      35,024     ---
             2005 ..   ---      35,891     ---
             2006 ..   ---      35,090     ---
             2007 ..   ---      31,357     ---
                     -------   -------   -------
            Total .. 384,784   384,784   384,784
                     =======   =======   =======
</TABLE>
If the PLR is approved by the IRS, the Company would likely revise the debt
repayment schedule as described in Option 2.  The Company may consider Option 3
to lower the burden of compensation expense for future years.  Option 3 may be
considered regardless of the outcome of the PLR request and regardless of any
subsequent debt extension.  If Option 3 were selected, a non-recurring non-cash
<PAGE>
charge would be incurred in 1998, which would substantially lower earnings and
may result in a loss for the year.  Because the expense is based on the average
market value of the Company's common stock for the year, it is not possible to
accurately determine the final amount of charge if Option 3 were followed.
However, no final response has been received regarding the PLR and the Company
has made no determination other than to currently accrue compensation expense in
accordance with Option 1, resulting in an expense for the quarter of $168,000.


FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997

GENERAL.   Net income decreased to $1,150,000 for the six months ended June 30,
1998 from $1,329,000 for the same period of 1997, a 13.5% decrease. The decrease
in net income is mostly attributable to an increase in other expense incurred in
conjunction with the Company's expansion strategy.

NET INTEREST INCOME.   Net interest income before the provision for loan loss
increased $177,000 or 3.1% for the six months ended June 30, 1998 over the same
period in 1997. Of the net increase of $177,000, an increase in volume accounted
for an increase in net interest income of $477,000, while a decrease in rates
earned accounted for a decrease in net interest income of $300,000.  Average
interest earning assets increased $12.1 million, while average costing
liabilities increased $12.1 million.

PROVISION FOR LOAN LOSSES.   The loan loss provision during the six month period
ended June 30, 1998, was $124,000 and $181,000    for the same period in 1997.
Net charge-offs during the six month  periods were $164,000 and $114,000 for
1998 and 1997, respectively.

OTHER INCOME.   Other income increased 39.6% to $2,328,000 for the six months
ended June 30 1998 as compared to $1,668,000 for the same period in 1997.  The
increase in other income is due primarily to an increase in sold real estate
loan fees.  The Company has experienced strong sold loan activity, resulting
from the low interest rate environment and the increase in refinance activity.

OTHER EXPENSE.   Other expense (including ESOP Compensation expense as discussed
previously) increased 19.8% to $6,233,000 for the six months ended June 30, 1998
compared to $5,205,000 for the same period in 1997.  Salaries and employee
benefits, the largest non interest expense, increased $495,000 or 16.8%.
Approximately $287,000 of the increase in salaries is related to increased
mortgage operations, which resulted in $650,000 increased sold loan fee income.
In addition, deferred compensation plan expense increased $140,000.

The increase in professional fees resulted primarily from an increase in
directors fees, attorney fees and accountant counseling, of which all are
attributed to the expansion strategy of the Company.

Given the increase in refinance activity as discussed above, the Company
experienced a $91,000 increase in early payoffs on mortgage servicing rights,
which is reflected as a component of other expense.


ESOP COMPENSATION EXPENSE. In the first six months of 1997, the Company had
accrued ESOP compensation expense assuming the PLR (discussed previously) would
be received, at $140,000 for the first six months of 1997.  The Company has
accrued ESOP compensation expense for the six months ended June 30, 1998 in
accordance with the existing ESOP debt structure, resulting in expense of
$335,000.


FINANCIAL CONDITION
Total assets have increased $5.6 million to $275.9 million at June 30, 1998,
from $270.2 million at December 31, 1997.

Net loans and leases remained constant at $141.3 million at June 30, 1998.  The
Company normally experiences a cyclical lack of growth during this period, as
commercial borrowers are less active this time of the year in the use of their
lines of credit.  An additional factor contributing to the constant level of
loans was the active residential real estate market.  As loans held in the
portfolio were refinanced due to lower interest rates, the Company chose to sell
<PAGE>
these loans into the secondary market.  This choice was necessitated due to the
inherent interest rate risk associated with these loans and the historically
lower yields they provide.

The low interest rate environment has resulted in increased calls on callable
agency investment securities, and has accelerated repayments on mortgage backed
investment securities.  Due to the flat yield curve, the Company has taken a
defensive posture and retained the majority of these funds in Federal funds
sold, resulting in the increase of $11.9 million from December 31, 1997.  At the
time a more typical positive slope to the yield curve occurs, the Company will
increase the maturities.  Until that time, the Company does not believe
extending maturities is adequately rewarding.

The increase in premises and equipment during the first six months of 1998
results from expansion activities underway by the Company.  An increase of
$375,000 represents a land purchase for the planned de novo expansion of a new
community bank in Springfield, Oregon.  The remaining additions represent costs
incurred for the construction of two new branches of Security Bank in Coos
County.

Deposit growth has continued for the first six months of 1998, increasing $7.1
million to $220.9 million at June 30, 1998, compared to $213.8 million at
December 31, 1997.  The growth in 1998 has been predominantly in non-interest
bearing demand deposits.  The ratio of interest-bearing deposits to total
deposits decreased from 85.2% at December 31, 1997, to 82.1% at June 30, 1998.

The Company is a member of the Federal Home Loan Bank of Seattle.  This
membership allows the Company access to low cost, long-term funding otherwise
unavailable.  Since December 31, 1997, the Company has not utilized this
funding, and repaid a $2.0 million advance in the first quarter of 1998, leaving
the balance at $14 million as of June 30, 1998.


LIQUIDITY
Liquidity enables the Company to meet the withdrawals of its depositors and the
borrowing needs of its loan customers.  The Company maintains its liquidity
position through maintenance of cash resources and a stable core deposit base.
A further source of liquidity is the Company's ability to borrow funds.  The
Company maintains three unsecured lines of credit totaling $11.0 million for the
purchase of funds on an overnight basis.  As discussed above, the Company is
also a member of the Federal Home loan Bank which provides a secured line of
credit in the amount of $55.4 million, and other funding opportunities for
liquidity and asset/liability matching.  Over the past four years these lines
have been used periodically.  As of June 30, 1998 no funds were borrowed under
the Company's unsecured lines of credit and $14 million was borrowed from the
Federal Home Loan Bank.  Interest rates charged on the lines are determined by
market factors.  The Company's liquidity has been stable and adequate over the
past several years.  Short-term deposits have continued to grow and excess
investable cash is invested on a short term basis into Federal funds sold.  The
Company's primary source of funds is consumer deposits and commercial accounts.
These funds are not subject to significant movements as a result of changing
interest rates and other economic factors, and therefore enhance the Company's
long term liquidity.


CAPITAL RESOURCES
Beginning in 1990, federal regulators required the calculation of Risk-based
Capital.  This is an analysis that weights balance sheet and off-balance sheet
items for their inherent risk.  It requires minimum standards for Risk-based
Capital by Capital Tier.  Full implementation of this analysis was required in
1992, requiring a minimum total Risk-based Capital ratio of 8.00%, a minimum
Tier 1 Capital Ratio of 4.00% and a minimum Leverage Capital Ratio of 3.00%.

At June 30, 1998, the Company's estimated regulatory capital ratios were as
follows:  Total Risk-based Capital Ratio of 17.42%, Tier 1 Capital Ratio of
16.63% and Leverage Capital Ratio of 10.65%.  This was compared to 17.40%,
16.56% and 10.11% for total Risk-based Capital Ratio, Tier 1 Capital Ratio and
Leverage Capital Ratio, respectively, at December 31, 1997.  If the Company were
fully leveraged, further growth would be restricted to the level attainable
through generation and retention of net income unless the Company were to seek
additional capital from outside sources.

<PAGE>
PART II.  OTHER INFORMATION

ITEM 1.   LEGAL PROCEEDINGS.

          None.


ITEM 2.   CHANGES IN SECURITIES.

          Not applicable.


ITEM 3.   DEFAULTS UPON SENIOR SECURITIES.

          Not applicable.


ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.

          None.


ITEM 5.   OTHER INFORMATION.

          Not applicable.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K.

     (a)  Exhibits.
          The following exhibit is being filed herewith:
          Exhibit 27     Financial Data Schedule

     (b)  Reports on Form 8-K.
          None.





<PAGE>
SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.


DATED:    July 30, 1998.

                              SECURITY BANK HOLDING COMPANY


                              By:  /s/ Charles D. Brummel        
                                 --------------------------------
                                Charles D. Brummel
                                President and Chief Executive Officer