U.S. 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
For the quarterly period ended June 30, 2000 .
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Transition report under Section 13 or 15(d) of the Exchange Act
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For the transition period from to
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Commission file number 0-22553
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SECURITY BANCORP, INC.
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(Exact Name of Small Business Issuer as Specified in Its Charter)
Tennessee 62-1682697
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
306 West Main Street, McMinnville, TN 37110
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(Address of Principal Executive Offices)
(931) 473-4483
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(Issuer's Telephone Number, Including Area Code)
N/A
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(Former Name, Former Address and Former Fiscal Year, If Changed Since Last
Report)
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.
X Yes No
--- ---
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date:
436,425 shares outstanding on July 31, 2000
Transitional Small Business Disclosure Format (check one):
Yes X No
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<PAGE>
Security Bancorp, Inc. and Subsidiary
McMinnville, Tennessee
INDEX
PART I Page(s)
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FINANCIAL INFORMATION
Item 1.
Financial Statements
Consolidated Balance Sheets - (Unaudited)
as of December 31, 1999 and June 30, 2000. . . . . . . . . . . . . . 3
Consolidated Statements of Income (Unaudited)
for the three and six month periods
ended June 30, 1999 and 2000 . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Stockholders' Equity (Unaudited). . . . . . 5
for the six month period ended June 30, 2000
Consolidated Statements of Cash Flows - (Unaudited)
for the six months ended June 30, 1999 and 2000. . . . . . . . . . . 6
Notes to (Unaudited) Consolidated Financial Statements . . . . . . . 7-9
Item 2.
Management's Discussion and Analysis of
Financial Condition and Results of Operations. . . . . . . . . . .9-13
PART II.
OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . .14
Item 2. Changes in Securities and Use of Proceeds. . . . . . . . . . .14
Item 3. Defaults Upon Senior Securities. . . . . . . . . . . . . . . .14
Item 4. Submission of Matters to a Vote of Security Holders. . . . . .14
Item 5. Other Information. . . . . . . . . . . . . . . . . . . . . . .14
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . .15
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16
2
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ITEM 1. Financial Statements
Security Bancorp, Inc. and Subsidiary
Consolidated Balance Sheets
(Unaudited)
(in thousands except share information)
ASSETS December 31, June 30,
1999 2000
Cash and noninterest earning deposits $ 3,051 $ 4,864
Investment securities: Held to maturity 236 197
Available for sale 5,742 5,551
Loans receivable, net 60,189 62,926
Real estate owned 275 90
Premises and equipment, net 1,308 1,792
Federal Home Loan Bank stock 633 656
Accrued interest receivable 523 570
Prepaid expenses and other assets 247 243
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Total Assets $72,204 $76,889
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $57,455 $63,461
FHLB borrowings 6,800 5,000
Advances from borrowers for property taxes and insurance 64 364
Accrued expenses and other liabilities 296 157
Federal income taxes payable 82 84
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Total Liabilities 64,697 69,066
STOCKHOLDERS' EQUITY
Common stock (436,425 shares, $.01 par value,
issued and outstanding) 4 4
Paid-in capital 4,144 4,153
Treasury stock, at cost (244) (194)
Retained earnings 3,848 4,120
Unrealized gain on securities available for sale,
net of income taxes 25 (5)
Employee Stock Ownership Plan (ESOP) borrowing (270) (255)
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Total stockholders' equity 7,507 7,823
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Total Liabilities and Stockholders' Equity $72,204 $76,889
======= =======
The accompanying notes are an integral part of these consolidated financial
statements.
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Security Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(Unaudited)
(in thousands, except per share information)
For Three Months For Six Months
Ended June 30, Ended June 30,
1999 2000 1999 2000
INTEREST INCOME:
Loans $1,179 $1,361 $ 2,333 $2,681
Investments 65 91 127 184
Interest earning deposits 28 27 38 43
----- ----- ----- -----
Total interest income 1,272 1,479 2,498 2,908
INTEREST EXPENSE:
Deposits 549 675 1,095 1,305
Advances 78 74 156 156
----- ----- ----- -----
Interest expense 627 749 1,251 1,461
Provision for loan losses 30 45 64 90
----- ----- ----- -----
Net interest income after
provision for loan losses 615 685 1,183 1,357
NON-INTEREST INCOME:
Trust department income 77 115 153 224
Deposit account fees 53 73 107 137
Other 114 98 265 179
----- ----- ----- -----
Total non-interest income 244 286 525 540
NON-INTEREST EXPENSES
Compensation 245 263 473 523
Other employee benefits 80 78 161 162
Net occupancy expense 87 671 71 138
Deposit insurance premiums 7 3 13 6
Data processing 76 84 145 176
Other 100 138 191 249
----- ----- ----- -----
Total non-interest expenses 595 633 1,154 1,254
Income before income taxes 264 338 554 643
Income tax expense 103 131 215 250
----- ----- ----- -----
Net income 161 207 339 393
Other comprehensive income,
net of tax:
(See Note 4)
Unrealized gains (losses) on
securities:
Unrealized holding
gains (losses) arising
for the three month
period, before tax $(101)
for 1999 and $(16) for
2000, and for the six
month period, before tax
$(156) for 1999 and $(30)
for 2000. (63) (10) (97) (19)
----- ----- ----- -----
Comprehensive income $ 98 $ 197 $ 242 $ 374
===== ===== ===== =====
Weighted average shares
outstanding: 393,657 400,641 392,784 399,768
Basic earnings per share $.41 $.52 $.86 $.98
The accompanying notes are an integral part of these consolidated financial
statements.
4
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SECURITY BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
(Unaudited)
(in thousands, except share information)
Unrealized
Gain
Retained on ESOP
Common Stock Paid-in Earn- Secur- Bor- Treasury
Shares Amount Capital ings ities rowing Stock Total
Balance at
12/31/99 436,425 $ 4 $4,144 $3,848 $25 $(270) $(244) $7,507
Allocation of
earned MRP
stock -- -- -- -- -- 50 50
Net Income -- -- 392 -- -- -- 392
Unrealized gain
on securities
available for
sale, net of
Income taxes -- -- -- (30) -- -- (30)
Dividend -- -- (120) -- -- -- (120)
ESOP shares
earned -- 9 -- -- 15 -- 24
--- ------ ------ --- ----- ----- ------
Balance at
6/30/00 436,425 $ 4 $4,153 $4,120 $(5) $(255) $(194) $7,823
======= === ====== ====== === ===== ===== ======
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
Security Bancorp. Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
(in thousands)
Six months Ended June 30,
1999 2000
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 339 $ 393
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 41 43
Dividend on FHLB stock (20) (23)
Provision for loan losses 64 90
(Increase) decrease in interest receivable (72) (47)
(Increase) decrease in other assets (269) 4
Increase (decrease) in accrued liabilities (23) (139)
Increase (decrease) in income taxes payable (150) (9)
Increase (decrease) in deferred taxes payable (85) 11
Sale of mortgage loans held for sale 5,996 1,974
Originations of mortgage loans held for sale (6,652) (2,031)
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Total adjustments (1,170) (127)
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Net cash provided by operating activities (831) 266
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan originations net of principal payments (703) (2,476)
Purchase of:
Available for sale - investment securities (2,978) -
Held to maturity - investment securities - -
Proceeds from maturities and repayments of:
Held to maturity - investment securities 650 -
Available for sale - investment securities 550 -
Held to maturity - mortgage-backed securities 227 39
Available for sale - mortgage-backed securities 162 125
Cash payments for the purchase of property (25) (527)
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Net cash provided (used) by investing activities (2,117) (2,839)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposit accounts 5,437 6,006
Repayment of FHLB advances - (1,800)
Payment of cash dividend - (120)
Net increase (decrease) in escrow accounts 264 300
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Net cash provided (used) by financing activities 5,701 4,386
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 2,753 1,813
CASH AND EQUIVALENTS, BEGINNING OF YEAR 2,581 3,051
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CASH AND EQUIVALENTS, END OF PERIOD $ 5,334 $ 4,864
======= =======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest expense $ 1,251 $ 1,460
Income taxes $ 340 $ 277
The accompanying notes are an integral part of these consolidated financial
statements.
6
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Security Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
1. SECURITY BANCORP, INC.
Security Bancorp, Inc. (the "Company"), a Tennessee corporation, is the
savings and loan holding company for Security Federal Savings Bank of
McMinnville, TN (the "Savings Bank"). The Savings Bank converted from a
federally chartered mutual savings bank to a federally chartered stock savings
bank effective June 30, 1997 (the "Conversion").
The consolidated financial statements included herein are for the Company and
the Savings Bank.
2. BASIS OF PREPARATION
The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-QSB and, therefore, do not include
all disclosures necessary for a complete presentation of the consolidated
balance sheets, consolidated statements of income, consolidated statements of
stockholders' equity, and consolidated statements of cash flows in conformity
with generally accepted accounting principles. However, all adjustments,
which are, in the opinion of management, necessary for the fair presentation
of the interim financial statements have been included. All such adjustments
are of a normal recurring nature. The statements of income for the three and
six month period ended June 30, 2000 are not necessarily indicative of the
results which may be expected for the entire year.
The unaudited consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and notes thereto for the
Company for the year ended December 31, 1999.
3. EARNINGS PER SHARE
Earnings per share has been computed for the three months ended June 30, 1999
and June 30, 2000 based upon weighted average common shares outstanding of
393,657 and 400,641, respectively and for the six months ended June 30, 1999
and June 30, 2000 of 392,784 and 399,768, respectively.
4. COMPREHENSIVE INCOME
The Company has adopted FASB Statement No. 130, Reporting Comprehensive
Income. Statement No. 130 requires the reporting of comprehensive income in
addition to net income from operations. Comprehensive income is a more
inclusive financial reporting methodology that includes disclosure of certain
financial information that historically has not been recognized in the
calculation of net income.
5. STOCKHOLDERS' EQUITY
In connection with the Conversion, the Company issued and sold 436,425 shares
of common stock at a price of $10.00 per share for total net proceeds of
approximately $4.1 million after
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conversion expenses of approximately $300,000. The Company retained $406,000
of the net proceeds and used the remaining net proceeds to purchase the newly
issued capital stock of the Savings Bank.
The ability of the Company to pay dividends depends primarily on the ability
of the Savings Bank to pay dividends to the Company. The Savings Bank may not
declare or pay a cash dividend if the effect thereof would cause its net worth
to be reduced below either the amounts required for the liquidation account
discussed below or the regulatory capital requirements imposed by federal and
state regulations. An annual cash dividend of 27.5 cents per share was
declared for shareholders of record as of the close of business on May 31,
2000. The cash dividend was paid on June 30, 2000 and represented the third
consecutive annual dividend since becoming a public company.
As required by the regulations of the Office of Thrift Supervision (OTS), at
the time of Conversion, the Savings Bank established a liquidation account in
an amount equal to its retained earnings as reflected in the latest balance
sheet used in the final conversion prospectus. The liquidation account is
maintained for the benefit of eligible account holders who continue to
maintain their deposit accounts in the Savings Bank after conversion. In the
event of a complete liquidation of the Savings Bank (and only in such an
event), eligible depositors who continue to maintain accounts shall be
entitled to receive a distribution from the liquidation account before any
liquidation may be made with respect to the Company's common stock.
6. EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)
As part of the Conversion discussed in Note 5, the Savings Bank established an
Employee Stock Ownership Plan (ESOP) for the benefit of all employees who have
attained the age of 21 and have been credited with at least 1000 hours of
service during a 12-month period. The ESOP borrowed approximately $349,000
from the Company and used the funds to purchase 34,914 shares of common stock
of the Company issued in the Conversion. The loan will be repaid principally
from the Company's discretionary contributions to the ESOP over a period of 10
years. On June 30, 2000, the loan had an outstanding balance of approximately
$255,000 and an interest rate of 8.50%. The loan obligation of the ESOP is
considered unearned compensation and, as such, recorded as a reduction of the
Company's stockholders' equity. Both the loan obligation and the unearned
compensation are reduced by an amount of the loan repayments made by the ESOP.
Shares purchased with the loan proceeds are held in a suspense account for
allocation among participants as the loan is repaid. Contributions to the
ESOP and shares released from the suspense account are allocated among
participants on the basis of compensation in the year of allocation. Benefits
become fully vested at the end of six years of service under the terms of the
ESOP Plan. Benefits may be payable upon retirement, death, disability, or
separation from service.
Since the Savings Bank's annual contributions are discretionary, benefits
payable under the ESOP cannot be estimated. Compensation expenses are
recognized to the extent of the fair value of shares committed to be released.
For the three and six months ending June 30, 2000, the ESOP related
compensation expense was approximately $14,000 and $28,000, respectively.
Compensation is recognized at the average fair value of the ratably released
shares during the accounting period as the employees performed services. At
June 30, 2000, the ESOP had 8,728 allocated shares and 26,186 unallocated
shares.
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The ESOP administrators have determined dividends on unallocated shares will
be used for debt service. Any allocated dividends used will be replaced with
common stock of equal value. For the purpose of computing earnings per share,
all ESOP shares committed to be released have been considered outstanding.
7. MANAGEMENT RECOGNITION PLAN AND STOCK OPTION PLAN
The Company's stockholders approved the Company's 1998 Stock Option Plan and
the Savings Bank's Management Recognition and Development Plan (the "MRP"),
effective July 1, 1998. The Stock Option Plan reserves for issuance up to
43,642 stock options to certain officers, directors, and employees either in
the form of incentive stock options or nonincentive stock options. The
exercise price of the stock options may not be less than the fair value of the
Company's stock options at date of grant. The options granted in 1998 vest at
the rate of 20% annually beginning at date of grant and will expire in 2008.
The number and weighted average fair value of the options on the grant date
was 37,095 stock options at $17.25 per share. As permitted under the
generally accepted accounting principles, grants under the plan will be
accounted for following the provisions of APB Opinion No. 25 and its related
interpretations. Accordingly, no compensation cost has been recognized for
grants made to date.
At June 30, 2000, all options that had been granted had an exercise price of
$17.25, of which 37,095 options are currently unexercisable and all options
granted are outstanding at June 30, 2000.
The Company purchased 17,457 common shares in the open market to fund the MRP
on September 9, 1998. The restricted common stock under the MRP vests at the
rate of 20% annually beginning at the date of grant. The expense related to
the vesting of the MRP was $12,000 and $24,000, respectively, for the three
and six months ended June 30, 2000.
8. ASSET QUALITY
At June 30, 2000, the Company had total nonperforming loans (i.e., loans which
are contractually past due 90 days or more) of approximately $81,000. As a
percentage of net loans receivable at June 30, 2000, nonperforming loans were
.1%. Total nonperforming assets were $171,000 or .2% of total assets at June
30, 2000.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
The following discussion and analysis is intended to assist in understanding
the consolidated financial condition and the consolidated results of
operations of the Company. References to the "Company" include Security
Bancorp, Inc. and/or Security Federal Savings Bank of McMinnville, TN, as
appropriate.
This section contains forward-looking statements that have been prepared on
the basis of the Company's best judgments and currently available information.
These forward-looking statements are inherently subject to significant
business, economic, and competitive
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uncertainties and contingencies, many of which are beyond the control of the
Company. In addition, these forward-looking statements are subject to
assumptions with respect to future business strategies and decisions that are
subject to changes. Accordingly, there can be no assurance that many of these
strategies will be implemented or, if implemented, achieve the amounts
described or within the time periods currently estimated.
Comparison of Financial Condition at December 31, 1999 and June 30, 2000
The Company's total consolidated assets increased by approximately $4.7
million or 6.5%, from $72.2 million at December 31, 1999 to $76.9 million at
June 30, 2000. The increase in assets for the period was primarily
attributable to an increase in loans receivable and noninterest earning
deposits.
Loans receivable, net, were $62.9 million at June 30, 2000 compared to $60.2
million at December 31, 1999, a 4.6% increase. This increase was attributable
to an increase in first mortgage residential loans of $1.7 million, an
increase in commercial business and real estate loans of $400,000, and an
increase in consumer loans of $600,000.
Deposits increased $6.0 million or 10.5%, from $57.5 million at December 31,
1999 to $63.5 million at June 30, 2000. The increase in deposits was
primarily attributable to an increase in certificates of deposit and personal
checking accounts and reflects the Company's successful focus on offering full
service banking.
Comparison of Results of Operations for the Three Months Ended June 30, 1999
and 2000
Net Income. Net income for the three months ended June 30, 2000 was $207,000
compared to $161,000 for the same quarter last year, an increase of $46,000 or
28.6%. The increase resulted from an increase in net interest income offset
to a lesser degree by an increase in other expenses. The return on average
assets was 1.08% for the three months ended June 30, 2000.
Net Interest Income. Net interest income increased $70,000 or 11.4% from
$615,000 for the three months ended June 30, 1999 to $685,000 for the three
months ended June 30, 2000. The interest rate spread increased from 4.08% for
three months ending June 30, 1999 to 4.20% for the three months ending June
30, 2000 as a result of the weighted average yield on the loan portfolio
increasing while the weighted average rate of deposits and borrowings
increased at a slower rate.
Total interest income increased $207,000 or 16.3% from $1.3 million for the
three months ended June 30, 1999 to $1.5 million for the three months ended
June 30, 2000. Interest on loans increased $182,000, or 15.4% from $1.2
million for the three months ended June 30, 1999 to 1.4 million for the three
months ended June 30, 2000. The increase resulted from an $8.1 million
increase in loans outstanding substantially in residential mortgage loans,
commercial business loans, and consumer loans.
Interest expense increased $122,000, or 19.5% from $627,000 for the three
months ended June 30, 1999 to $749,000 for the three months ended June 30,
2000. The increase for the three months ending June 30, 2000 was the result
of an increase in the average balance of deposits, which were used to fund
loan demand.
Provision for Loan Losses. Provisions for loan losses are charges to earnings
to bring the total allowance for loan losses to a level considered adequate by
management to provide for
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estimated loan losses based on management's evaluation of the collectability
of the loan portfolio, including past loan loss experience, adverse situations
that may affect the borrower's ability to repay, the estimated value of any
underlying collateral, and current economic conditions. The provision for
loan losses was $45,000 for the three months ended June 30, 2000, an increase
of $15,000 from $30,000 for the three months ended June 30, 1999. Management
deemed the allowance for loan losses adequate at June 30, 2000.
Noninterest Income. Noninterest income increased $42,000, or 17.2% to
$286,000 for the three months ended June 30, 2000 from $244,000 for the three
months ended June 30, 1999. The increase was attributable to an increase in
service charges on deposit accounts and revenues from trust operations.
Noninterest Expense. Noninterest expense increased $38,000, or 6.4% to
$633,000 for the three months ended June 30, 2000 from $595,000 for the three
months ended June 30, 1999. Compensation and benefits increased to $341,000
for the three months ended June 30, 2000 from $325,000 for the three months
ended June 30, 1999 as a result of hiring additional personnel. Data
processing and other expenses increased to $222,000 for the three months ended
June 30, 2000 from $176,000 for the three months ended June 30, 1999 primarily
as a result of increased service bureau expense for the Savings Bank and data
processing for the trust department.
Income Taxes. Income tax expense for the three months ending June 30, 2000
was $131,000 compared to $103,000 for the three months ending June 30, 1999.
This increase was the result of pre-tax income increasing for the three months
ending June 30, 2000.
Comparison of Results of Operations for the Six Months Ended June 30, 1999 and
2000.
Net Income. Net income for the six months ended June 30, 2000 was $393,000
compared to $339,000 for the six months ended June 30, 1999, an increase of
$54,000, or 15.9%. The increase resulted from an increase in net interest
income offset to a lesser degree by an increase in other expenses. The return
on average assets was 1.05% for the six months ended June 30, 2000 compared to
1.02% for the six months ended June 30, 1999.
Net Interest Income. Net interest income increased $174,000, or 14.7% to $1.4
million for the six months ended June 30, 2000 from $1.2 million for the six
months ended June 30, 1999 as a result of an increase in total interest income
that more than offset an increase in total interest expense.
Total interest income increased $410,000, or 16.4% to $2.9 million for the six
months ended June 30, 2000 from $2.5 million for the same period a year ago as
a result of an increase in the average balance of, and average yield on, loans
receivable. The average balance on loans receivable increased to $61.6
million from $54.2 million. The increase was attributable to the substantial
increase in first mortgage residential loans, commercial business, and
consumer loans.
Interest expense increased $210,000, or 16.8% to $1.5 million for the six
months ended June 30, 2000 from $1.3 million for the same period a year ago,
primarily as a result of an increase in average balances of interest-bearing
deposits which were used to fund loan demand.
Provision for Loan Losses. The provision for loan losses for the six months
ended June 30, 2000 was $90,000 compared to $64,000 for the same period a year
ago, an increase of
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$26,000. The higher provision was due to the corresponding increase in loans
outstanding. Historically, management has emphasized the company's loss
expense over other factors in establishing provisions for loan losses.
Management deemed the allowance for loan losses adequate at June 30, 2000.
Noninterest Income. Noninterest income increased $25,000, or 2.9% to $540,000
for the six months ended June 30, 2000 from $525,000 for the same period a
year ago. This increase is primarily due to revenues from trust operations of
$224,000. Additionally, noninterest income increased as a result of an
increase in service charges on deposit accounts.
Noninterest Expense. Noninterest expenses increased $100,000, or 8.7% to $1.3
million for the six months ended June 30, 2000 from $1.2 million for the six
months ended June 30, 1999. Compensation and benefits increased to $685,000
for the six months ended June 30, 2000 from $634,000 for the six months ended
June 30, 1999 primarily as a result of hiring additional personnel. Data
processing and other expenses increased to $425,000 for the six months ended
June 30, 2000 from $336,000 for the six months ended June 30, 1999 primarily
as a result of increased service bureau expense for the Savings Bank and data
processing for the trust department.
Income Tax Expense. Income tax expense for the six months ended June 30, 2000
was $250,000 compared to $215,000 for the same period a year ago. The
increase was the result of pre-tax income increasing by $89,000 for the six
months ending June 30, 2000.
Liquidity and Capital Resources. The Company's primary sources of funds are
deposits and proceeds from principal and interest payments on loans. While
maturities and scheduled amortization of loans are a predictable source of
funds, deposit flows and mortgage prepayments are greatly influenced by
general interest rates, economic conditions and competition. The Company's
primary investing activity is loan originations. The Company maintains
liquidity levels adequate to fund loan commitments, investment opportunities,
deposit withdrawals and other financial commitments. At June 30, 2000, the
Savings Bank's liquidity ratio was 11.6% (required ratio at that date was 4%
pursuant to OTS regulations). At June 30, 2000, there were no material
commitments for capital expenditures and the Company had unfunded loan
commitments of approximately $3.8 million and unfunded letters of credit of
$647,000. At June 30, 2000, management had no knowledge of any trends, events
or uncertainties that will have or are reasonably likely to have material
effects on the liquidity, capital resources or operations of the Company.
Further at June 30, 2000, management was not aware of any current
recommendations by the regulatory authorities, which, if implemented, would
have such an effect.
The Company is not subject to any separate regulatory capital requirements.
The Savings Bank exceeded all of its regulatory capital requirements at June
30, 2000 with the following regulatory capital ratios:
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Security Federal Savings Bank
(Unaudited)
As of June 30, 2000 Actual For Capital Categorized as
Adequacy Purposes "Well Capitalized"
Amount Ratio Amount Ratio Amount Ratio
Total Capital
(to risk weighted
assets) $ 8,160 15.52% $ 4,206 8.00% $ 5,258 10.00%
Tier I Capital
(to risk weighted
assets) 7,498 14.26 2,103 4.00 3,155 6.00
Tier 1 Capital
(to adjusted total
assets) 7,498 9.75 2,307 3.00 3,844 5.00
Tangible Capital
(to tangible assets) 7,498 9.75 1,153 1.50 N/A ---
As categorized under the OTS Prompt Corrective Action Provisions.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
From time to time, the Company and any subsidiaries may be a party to various
legal proceedings incident to its or their business. At June 30, 2000, there
were no legal proceedings to which the Company or any subsidiary was a party,
or to which of any of their property was subject, which were expected my
management to result in a material loss.
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
None
Item 3. Defaults Upon Senior Securities
-------------------------------
None
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Annual meeting of Stockholders of Security Bancorp, Inc. was held on April
19, 2000. The results of the vote on the election of directors, the first
proposal presented at the meeting, is as follows:
The following individuals were elected as directors, each to serve for a
three-year term:
FOR WITHHELD
-------------------- --------------------
Number Number
of Votes Percentage of Votes Percentage
-------- ---------- -------- ----------
Earl H. Barr 251,854 99.1 2,200 .9
-------- ---------- -------- ----------
Dr. John T. Mason, III 251,854 99.1 2,200 .9
-------- ---------- -------- ----------
The results of the vote on the approval of the appointment of Housholder,
Artman and Associates, P.C. as independent auditors for the fiscal year ending
December 31, 2000, the second proposal presented at the meeting, is as
follows:
FOR 253,585 Shares 99.8%
------- ------
AGAINST 0 Shares 0.0%
------- ------
ABSTAIN 469 Shares 0.2%
------- ------
Item 5. Other Information
-----------------
None
14
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Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
Exhibits
--------
3.1 Charter of Security Bancorp, Inc.*
3.2 Bylaws of Security Bancorp, Inc.*
10.1 Employment Agreement with Joe H. Pugh**
10.2 Severance Agreement with John W. Duncan**
10.3 Severance Agreement with Ray Talbert**
10.4 Severance Agreement with Kenneth W. Smith*****
10.5 Severance Agreement with Shannon L. Haston*****
10.6 Security Federal Savings Bank of McMinnville, TN
401(k) Plan*
10.7 Security Federal Savings Bank of McMinnville, TN
Employee Stock Ownership Plan***
10.8 Security Bancorp, Inc. Management Recognition and
Development Plan****
10.9 Security Bancorp, Inc. 1998 Stock Option Plan****
27 Financial Data Schedule
No reports on Form 8-K were filed during the quarter ended June 30,
2000.
---------------------
* Incorporated by reference to Registrant's Registration
Statement on Form SB-2, as amended (File No. 333-6670)
** Incorporated by reference to Registrant's Form 10-QSB for the quarter
ended September 30, 1997.
*** Incorporated by reference to Registrant's Form 10-KSB for the year
ended December 31, 1997.
**** Incorporated by reference to Registrant's Annual Meeting Proxy
Statement dated March 16, 1998.
***** Incorporated by reference to Registrant's Form 10-KSB for the year
ended December 31, 1998.
15
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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.
Security Bancorp, Inc.
Date: August 11, 2000 By /s/ Joe H. Pugh
Joe H. Pugh
President and Chief Executive Officer
Security Bancorp, Inc.
Date: August 11, 2000 By /s/ John W. Duncan
John W. Duncan
Chief Financial Officer
16
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