SCYT Security Bancorp Inc (PK)

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%