Security Bancorp, Inc. Announces Third Quarter Earnings

MCMINNVILLE, Tenn., Nov. 09, 2016 (GLOBE NEWSWIRE) — Security Bancorp, Inc. (“Company”) (OTCBB:SCYT), the holding company for Security Federal Savings Bank of McMinnville, Tennessee,  today announced consolidated earnings for the third quarter of its fiscal year ended December 31, 2016.

Net income for the three months ended September 30, 2016 was $348,000, or $0.90 per share, compared to $252,000, or $0.68 per share, for the same quarter last year. For the nine months ended September 30, 2016, the Company’s net income was $992,000, or $2.57 per share, compared to $880,000, or $2.35 per share, for the same period in 2015.  The increase in earnings was the result of increases in net interest income and non-interest income offset by an increase in non-interest expense.

For the three months ended September 30, 2016 net interest income increased $132,000, or 9.8% to $1.5 million from $1.4 million for the same period in 2015.  For the nine months ended September 30, 2016, net interest income increased $288,000, or 7.1%, to $4.4 million from $4.1 million for the same period in 2015.  The increase in net interest income for the three and nine months ended September 30, 2016 was primarily the result of an increase in interest income on loans and investments as well as a reduction in the interest expense on customer deposits.  Net interest income after provision for loan losses for the three months ended September 30, 2016 was $1.5 million, an increase of $213,000, or 16.9%, from the same period in the previous year.  For the nine months ended September 30, 2016, net interest income after provision for loan losses increased $495,000, or 13.1%, to $4.3 million from $3.8 million for the same period in 2015.  The primary reason for the increases during the three and nine months ended September 30, 2016 was an increase in net interest income as well as a decrease in the provision for loan losses.

Non-interest income for the three months ended September 30, 2016 was $445,000 compared to $422,000 for the same quarter of 2015, an increase of $23,000, or 5.5%.   For the nine months ended September 30, 2016, non-interest income remained unchanged from the same period in 2015 at $1.3 million. The increase during the quarter was primarily attributable to an increase in the income from the gains on sales of loans.

Non-interest expense for the three months ended September 30, 2016 was $1.4 million, an increase of $74,000, or 5.7%, from $1.3 million for the same period in 2015.  For the nine months ended September 30, 2016, non-interest expense was $4.1 million, an increase of $276,000, or 7.3%, from $3.8 million for the same period in 2015.  The increases during the three and nine months ended September 30, 2016 were attributable to increases in employee expense and occupancy expense.

Consolidated assets of the Company were $185.9 million at September 30, 2016, compared to $187.3 million at December 31, 2015.  The $1.4 million, or 0.7%, decrease in assets is primarily attributable to a decrease in investments.  Loans receivable, net, increased $5.0 million, or 4.0%, to $130.9 million at September 30, 2016 from $125.9 million at December 31, 2015.  The increase in loans receivable was primarily attributable to an increase in commercial real estate loans.

The provision for loan losses decreased $81,000, or 89.0%, to $10,000 for the three months ended September 30, 2016 from $91,000 for the comparable period in 2015.  The provision for loan losses was $78,000 for the nine months ended September 30, 2016 compared to $285,000 in the comparable period in 2015, a decrease of $207,000, or 72.6%. The decrease in the provision during the three and nine months ended September 30, 2016 is the result of improved asset quality and recoveries on loans during the year.

Non-performing assets decreased $1.3 million, or 63.9%, to $722,000 at September 30, 2016 from $2.0 million at December 31, 2015.  The decrease is attributable to a reduction in non-accrual loans. Based on its analysis of delinquent loans, non-performing loans and classified loans, management believes that the Company’s allowance for loan losses of $1.5 million at September 30, 2016 was adequate to absorb known and inherent risks in the loan portfolio at that date.  At September 30, 2016 the allowance for loan losses to non-performing assets was 206.09% compared to 64.96% at December 31, 2015.

Investment and mortgage-backed securities available-for-sale decreased $3.4 million, or 8.9%, to $34.8 million at September 30, 2016, compared to $38.2 million at December 31, 2015.  The decrease is attributable to the reduction of investments to fund loan growth. There were no investment and mortgage-backed securities held-to-maturity at September 30, 2016 and December 31, 2015.

Deposits decreased $1.4 million, or 0.9%, to $161.2 million at September 30, 2016 from $162.7 million at December 31, 2015.  The decrease was primarily attributable to decreases in NOW accounts and money market accounts. Repurchase agreements were $3.6 million at September 30, 2016 compared to $4.8 million at December 31, 2015, a decrease of $1.2 million, or 24.1%.

Stockholders’ equity increased $838,000, or 4.6%, to $19.2 million, or 10.3% of total assets at September 30, 2016 compared to $18.3 million, or 9.8%, of total assets, at December 31, 2015.

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.

Contact: Joe H. Pugh President & Chief Executive Officer (931) 473-4483