Security Bancorp, Inc. Announces Third Quarter Earnings

  
    
  
  
    
      Security Bancorp, Inc. (“Company”) 
      (OTCBB: SCYT) today announced consolidated earnings for the third 
      quarter of its fiscal year ended December 31, 2008. The Company is the 
      holding company for Security Federal Savings Bank of McMinnville, 
      Tennessee (“Bank”).
    
    
      The Company recognized a net loss of $816,000, or $1.87 per share, for 
      the three months ended September 30, 2008, compared to net income of 
      $492,000, or $1.15 per share, for the same quarter last year. The loss 
      during the quarter ended September 30, 2008 was primarily attributable 
      to the significant reduction in the fair value of the Company’s 
      investment in Federal National Mortgage Association (“Fannie 
      Mae”) preferred stock. For the nine months 
      ended September 30, 2008, the Company’s net 
      income was $114,000, or $0.27 per share, compared to $1.2 million, or 
      $2.84 per share, for the same period in 2007. The decrease in net income 
      during the nine months ended September 30, 2008 also reflects the 
      reduction in the fair value of the Company’s 
      investment in Fannie Mae preferred stock.
    
    
      The reduction in the fair value of Fannie Mae preferred stock in a 
      result of the action taken by the United States Treasury in September 
      2008 to place Fannie Mae and the Federal Home Loan Mortgage Corporation 
      into conservatorship under the authority of the Federal Housing 
      Financing Agency. As of June 30, 2008, the Company owned preferred 
      equity securities issued by Fannie Mae with a book value of $2.0 
      million. At September 30, 2008, the fair value of these securities had 
      declined to $174,400.
    
    
      Net interest income after provision for loan losses for the three months 
      ended September 30, 2008 decreased $39,000, or 2.7%, but remained 
      relatively unchanged at $1.4 million, compared to the same period last 
      year. For the nine months ended September 30, 2008, net interest income 
      decreased 3.7% to $4.2 million from $4.4 million for the comparable 
      period in 2007. The decrease in net interest income was attributable to 
      the decrease in interest rates during the quarter and nine months ended 
      September 30, 2008.
    
    
      Non-interest income for the three months ended September 30, 2008 was 
      $441,000 compared to $482,000 for the same quarter of 2007, a decrease 
      of 8.5%. For the nine months ended September 30, 2008, non-interest 
      income increased $36,000, or 2.6%, but remained relatively unchanged at 
      $1.4 million, compared to the comparable period in 2007. The decreases 
      during the quarter ended September 30, 2008 were attributable to 
      decreases in the trust service fee income and the gains on sales of 
      loans. The increases during the nine months ended September 30, 2008 
      were attributable to an overall increase in the trust service fee income 
      and the gains on sales of loans.
    
    
      Non-interest expense for the three months ended September 30, 2008 was 
      $3.0 million compared to $1.1 million for the same quarter of 2007. For 
      the nine months ended September 30, 2008, non-interest expense increased 
      to $5.4 million from $3.8 million for the comparable period in 2007. The 
      increase during the quarter and the nine months ended September 30, 2008 
      was attributable to the significant reduction in the fair value of the 
      Company’s investment in Fannie Mae preferred 
      stock.
    
    
      Consolidated assets of the Company were $134.7 million at September 30, 
      2008, compared to $144.2 million at December 31, 2007. The 6.6% decrease 
      in assets is attributable to a decrease in public funds held in deposits 
      at the Bank and a corresponding reduction in the Bank’s 
      investment securities. Loans receivable, net, increased from $97.2 
      million at December 31, 2007 to $103.4 million at September 30, 2008. 
      The 6.4% increase in loans receivable was primarily a result of an 
      increase in commercial secured loans.
    
    
      The provision for loan losses decreased 45.5% to $36,000 for the three 
      months ended September 30, 2008 from $66,000 for the same quarter last 
      year. For the nine months ended September 30, 2008, the provision for 
      loan losses decreased 27.0% to $97,000 from $133,000 for the same period 
      in 2007. Non-performing assets decreased 28.6% from $525,000 at December 
      31, 2007 to $375,000 at September 30, 2008. Non-performing assets to 
      total assets were 0.28% at September 30, 2008, compared to 0.36% at 
      December 31, 2007.
    
    
      Investment and mortgage-backed securities available-for-sale decreased 
      from $31.4 million at December 31, 2007 to $20.6 million at September 
      30, 2008. The 34.4% decrease was a result of the maturities and calls of 
      securities.
    
    
      Deposits increased $4.0 million, or 3.9%, from $104.0 million at 
      December 31, 2007 to $108.0 million at September 30, 2008. The increase 
      was primarily attributable to an increase in money market and 
      certificate of deposit account balances.
    
    
      Stockholders’ equity at September 30, 2008 
      was $14.5 million, or 10.8% of total assets, compared to $14.9 million, 
      or 10.4% of total assets, at December 31, 2007.
    
    
      Safe-Harbor Statement
    
    
      Certain matters in this News Release may constitute forward-looking 
      statements within the meaning of the Private Securities Litigation 
      Reform Act of 1995. These forward-looking statements may relate 
      to, among others, expectations of the business environment in which the 
      Company operates and projections of future performance. These 
      forward-looking statements are based upon current management 
      expectations, and may, therefore, involve risks and uncertainties. The 
      Company’s actual results, performance, or 
      achievements may differ materially from those suggested, expressed, or 
      implied by forward-looking statements as a result of a wide range of 
      factors including, but not limited to, the general business environment, 
      interest rates, competitive conditions, regulatory changes, and other 
      risks.
    
    
      
        
           
        
      
      
        
          SECURITY BANCORP, INC.CONSOLIDATED FINANCIAL 
          HIGHLIGHTS(unaudited) (dollars in thousands)
        
      
      
        
          OPERATING DATA
        
        
          Three months ended

          
            Sept 30,
          
        
        
           
        
        
          Nine months ended

          
            Sept 30,
          
        
      
      
        
           
        
        
          2008
        
        
          2007
        
        
           
        
        
          2008
        
        
          2007
        
      
      
        
          Interest income
        
        
          $2,105
        
        
          $2,502
        
        
           
        
        
          $6,552
        
        
          $7,518
        
      
      
        
          Interest expense
        
        
          666
        
        
          994
        
        
           
        
        
          2,242
        
        
          3,008
        
      
      
        
          Provision for loan losses
        
        
          36
        
        
          66
        
        
           
        
        
          97
        
        
          133
        
      
      
        
          Net interest income after provision for loan losses
        
        
          1,403
        
        
          1,442
        
        
           
        
        
          4,213
        
        
          4,377
        
      
      
        
          Non-interest income
        
        
          441
        
        
          482
        
        
           
        
        
          1,411
        
        
          1,375
        
      
      
        
          Non-interest expense
        
        
          3,032
        
        
          1,113
        
        
           
        
        
          5,390
        
        
          3,768
        
      
      
        
          Income (loss) before income tax expense
        
        
          (1,188)
        
        
          811
        
        
           
        
        
          234
        
        
          1,984
        
      
      
        
          Income (loss) tax expense (benefit)
        
        
          (372)
        
        
          319
        
        
           
        
        
          120
        
        
          772
        
      
      
        
          Net income (loss)
        
        
          $(816)
        
        
          $492
        
        
           
        
        
          $114
        
        
          $1,212
        
      
      
        
        
        
        
        
        
        
           
        
        
        
        
        
      
      
        
          FINANCIAL CONDITION DATA
        
        
          At Sept 30, 2008
        
        
           
        
        
          At December 31, 2007
        
      
      
        
          Total assets
        
        
          $134,709
        
        
           
        
        
          $144,248
        
      
      
        
          Investment and mortgage backed securities available-for-sale
        
        
          20,620
        
        
           
        
        
          31,431
        
      
      
        
          Investment and mortgage backed securities held-to-maturity
        
        
          -0-
        
        
           
        
        
          -0-
        
      
      
        
          Loans receivable, net
        
        
          103,407
        
        
           
        
        
          97,191
        
      
      
        
          Deposits
        
        
          107,994
        
        
           
        
        
          103,988
        
      
      
        
          FHLB advances
        
        
          3,000
        
        
           
        
        
          7,000
        
      
      
        
          Stockholders' equity
        
        
          14,528
        
        
           
        
        
          14,940
        
      
      
        
          Non-performing assets
        
        
          375
        
        
           
        
        
          525
        
      
      
        
          Non-performing assets to total assets
        
        
          0.28%
        
        
           
        
        
          0.36%
        
      
      
        
          Allowance for loan losses
        
        
          1,145
        
        
           
        
        
          1,198
        
      
      
        
          Allowance for loan losses to total loans receivable
        
        
          1.10%
        
        
           
        
        
          1.22%