SBKC Security Bank (MM)

MACON, Ga., Oct. 18 /PRNewswire-FirstCall/ -- Security Bank Corporation (NASDAQ:SBKC) today announced record earnings and earnings per share for the third quarter of 2006. All per share figures have been adjusted for the Company's two-for-one stock split on May 27, 2005. (Logo: http://www.newscom.com/cgi-bin/prnh/20060821/CLM059LOGO) Earnings Summary Net income for the third quarter of 2006 increased 55% to a record $6.9 million, compared to $4.5 million in the third quarter of 2005. Diluted earnings per share were $0.37 versus $0.33 for the same quarter in 2005, an increase of 12.1%. For the nine months ended September 30, 2006, net income was $18.2 million or $1.08 per diluted share, an increase of 54% and 14.9%, respectively, over the comparable period a year ago. The Company's annualized returns on average tangible equity and average assets for the third quarter of 2006 were 17.13% and 1.28%, respectively, compared to 20.46% and 1.34%, respectively, for the third quarter of 2005. For the nine months ended September 30, 2006, the annualized returns on average tangible equity and average assets were 18.41% and 1.27%, respectively, versus 19.29% and 1.32% for the same period in 2005. The primary reason for the decreases in returns on average tangible equity when compared to prior periods was the Company's offering of 1,725,000 shares of common stock in May 2006. Rett Walker, Security Bank Corporation President and CEO, remarked, "We are pleased with the record third quarter results. We successfully completed the acquisition of Homestead Bank in July and continue to experience strong loan and deposit growth company wide. In addition, we are very pleased with our success in controlling expenses during the quarter, as our efficiency ratio declined to 54% for the third quarter." On July 31, 2006, the Company completed its acquisition of Homestead Bank, a community bank located in Suwanee, Georgia. Homestead Bank became Security Bank of Gwinnett County at that time. The quarter ended September 30, 2006 includes two months of operations for Security Bank of Gwinnett County and balance sheet averages for the third quarter include two months of these balances. At the date of acquisition, Homestead Bank had $309 million in assets, $236 million in loans and $236 million in deposits. Balance Sheet Loans, excluding loans held for resale, were $1.79 billion at September 30, 2006, up from $1.06 billion at September 30, 2005, an increase of 68%. Excluding acquisitions, loans increased $211.2 million or 19.9% since September 30, 2005. Total deposits were $1.83 billion at September 30, 2006, an increase of 69% from $1.09 billion at September 30, 2005. Excluding acquisitions, deposits increased $241.8 million or 22% since September 30, 2005. Total assets increased 72% to $2.31 billion at September 30, 2006, compared to $1.35 billion at September 30, 2005. Excluding acquisitions, total assets increased $266.7 million or 19.8%, compared to September 30, 2005. Shareholders' equity increased $161.9 million to $302.3 million, an increase of 115% compared to September 30, 2005. The primary reasons for the increase were the acquisitions during the period, which contributed approximately $104.7 million of the increase, and the May 2006 stock offering, which contributed $35.9 million of the increase. The remaining increase is attributable to earnings, net of dividends paid. Net Interest Income Net interest income (on a fully tax-equivalent basis) for the third quarter of 2006 was $21.7 million, an increase of 60% when compared to the third quarter of 2005. The increase is primarily the result of the continued growth in the Company's loan portfolio. The net interest margin (on a fully tax-equivalent basis) was 4.47% for the quarter ended September 30, 2006, compared to 4.43% for the comparable period one year ago and 4.52% for the second quarter of 2006. Noninterest Income and Expense Noninterest income for the third quarter of 2006 was $5.0 million versus $4.4 million for the third quarter of 2005, an increase of 13.1%. The increase is primarily attributable to an increase in service charges on deposits of approximately $431,000 resulting from organic growth of core deposits and from acquisitions during the period. Noninterest expense for the third quarter of 2006 was $14.4 million, an increase of 41% over the third quarter 2005 level of $10.3 million. The increase is primarily attributable to a $2.4 million increase in salaries and benefits, most of which is the direct result of the Company's significant growth through acquisitions completed since the third quarter of 2005. The increase is also related to occupancy and equipment expenses, which increased approximately $411,000 due to the addition of properties in connection with acquisitions since the third quarter of 2005. Compared to the third quarter of 2005, the Company's efficiency ratio improved to 54.1% from 57.1%. The efficiency ratio of the Company also improved on a linked-quarter basis, as it declined from 56.5% in the second quarter of 2006. Asset Quality Total nonperforming assets (nonaccrual, repossessed assets and other real estate owned) were 1.05% of total loans plus other real estate owned compared to 1.27% and 0.70% at the end of the second quarter of 2006 and the third quarter of 2005, respectively. Net charge-offs to average loans increased to 0.18% for the third quarter of 2006 from 0.10% in the third quarter of 2005. The allowance for loan losses was $21.5 million at September 30, 2006, up from $13.6 million at September 30, 2005. The increase in the allowance for loan losses is primarily attributable to growth in the Company's loan portfolio and the addition of $6.3 million of loss reserves in connection with the acquisitions during the period. Other Information Security Bank Corporation's management team will host a conference call to discuss these results at 8:30 AM EDT on Thursday, October 19, 2006. This call is open to all interested parties. From locations within the United States, the call-in number is 877-407-8035 (201-689-8035 from outside the United States). Please call in 10 minutes prior to the beginning of the conference call and ask for the Security Bank Corporation conference call. A recorded playback of the conference call will be available by calling 877-660-6853, (201-612-7415 from outside the United States) from approximately 12:00 PM EDT, Thursday, October 19th, until 11:59 PM EDT Thursday, October 26, 2006. The reservation numbers for this playback are Account #286 and Conference ID # 215784. This press release, including the attached selected unaudited financial tables, which are a part of this release, contains financial information determined by methods other than in accordance with generally accepted accounting principles ("GAAP"). These non-GAAP financial measures are "tangible book value" and "return on average tangible equity." Security Bank's management uses these non-GAAP measures in its analysis of Security Bank's performance. Tangible book value is defined as total equity reduced by recorded intangible assets, net of related deferred tax benefits. Tangible book value per share is defined as tangible book value divided by total common shares outstanding. This measure is important to many investors in the marketplace who are interested in changes from period to period in book value per share exclusive of changes in intangible assets. Goodwill, an intangible asset that is recorded in a purchase business combination, has the effect of increasing total book value while not increasing the tangible assets of the company. For companies such as Security Bank that have engaged in multiple business combinations, purchase accounting requires the recording of significant amounts of goodwill related to such transactions. Return on average tangible equity is defined as earnings for the period (annualized for the quarterly period or year-to-date period, as applicable) divided by average equity reduced by average goodwill and other intangible assets, net of related deferred tax benefits. Security Bank's management includes this measure because it believes that it is important when measuring the Company's performance exclusive of the effects of goodwill and other intangibles recorded in recent acquisitions, and this measure is used by many investors as part of their analysis of Security Bank. These disclosures should not be viewed as a substitute for results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Please refer to the "Reconciliation Table" in the attached schedules for a more detailed analysis of these non-GAAP performance measures and the most directly comparable GAAP measures. About Security Bank Corporation Security Bank Corporation is a Georgia multi-bank holding company based in Macon, Bibb County, Georgia. Security Bank Corporation operates 6 community banks with banking offices located throughout middle Georgia, coastal Georgia and north metropolitan Atlanta. In addition, Security Bank Corporation operates a mortgage subsidiary, Fairfield Financial Services, Inc., with offices throughout Georgia. Security Bank Corporation common stock is traded on the NASDAQ Global Select Market under the ticker symbol "SBKC." Safe Harbor This press release contains forward-looking statements as defined by federal securities laws. Statements contained in this press release that are not historical facts are forward looking statements. These statements may address issues involving significant risks, uncertainties, estimates and assumptions made by management. Actual results could differ materially from current projections and expectations for many reasons, including without limitation, changing events and trends that have influenced Security Bank Corporation's assumptions, but are beyond Security Bank Corporation's control. Forward-looking statements are necessarily estimates reflecting the best judgment of Security Bank Corporation senior management based upon current information and involve a number of risks and uncertainties. Please refer to Security Bank Corporation's public filings with the Securities and Exchange Commission for a summary of important factors that could affect Security Bank Corporation's financial results and operations and its forward-looking statements. Security Bank Corporation does not intend to and assumes no responsibility, except as required by law, for updating or revising any forward-looking statements contained in this press release, whether as a result of new information, future events or otherwise. Security Bank Corporation Selected Consolidated Financial Data (Dollars in Thousands, except Per Share Amounts) Unaudited Quarters Ended Nine Months Ended September 30, September 30, 2006 2005 % Change 2006 2005 % Change EARNINGS SUMMARY: Net interest income (FTE) $21,694 $13,547 60.1% $57,680 $36,600 57.6% Provision for Loan Losses 1,226 624 96.5% 2,595 2,203 17.8% Noninterest Income 4,986 4,410 13.1% 14,820 12,506 18.5% Noninterest Expense 14,432 10,256 40.7% 40,927 28,051 45.9% Provision for Income Taxes 3,975 2,509 58.4% 10,500 6,803 54.3% Net Income 6,940 4,489 54.6% 18,170 11,806 53.9% PER COMMON SHARE: Basic earnings $0.38 $0.36 5.6% $1.10 $0.97 13.4% Diluted earnings 0.37 0.33 12.1% 1.08 0.94 14.9% Cash dividends declared 0.075 0.065 15.4% 0.225 0.195 15.0% Book value 15.78 10.87 45.2% 15.78 10.87 45.2% Tangible book value 8.76 6.94 26.2% 8.76 6.94 26.2% KEY PERFORMANCE RATIOS (a): Return on average tangible equity 17.13% 20.46% 18.41% 19.29% Return on average assets 1.28% 1.34% 1.27% 1.32% Efficiency ratio 54.09% 57.11% 56.45% 57.12% Net interest margin (FTE) 4.47% 4.43% 4.51% 4.43% Net charge-offs to average loans 0.18% 0.10% 0.12% 0.12% BALANCE SHEET SUMMARY - END OF PERIOD Investment securities $211,005 $121,374 73.8% Loans Held for Resale 8,947 9,372 -4.5% Loans, gross 1,790,964 1,064,070 68.3% Allowance for loan losses 21,477 13,628 57.6% Total assets 2,314,913 1,345,566 72.0% Deposits 1,833,005 1,086,379 68.7% Other borrowed money 159,807 110,259 44.9% Shareholders' equity 302,273 140,408 115.3% ASSET QUALITY - END OF PERIOD Nonaccrual loans $16,946 $5,746 194.9% Loans 90 Days Past Due and Accruing - - 0.0% Other real estate owned 1,867 1,722 8.4% Total nonperforming assets 18,813 7,468 151.9% Allowance for loan losses/NPA's 114.16% 182.49% Allowance for loan losses/loans 1.20% 1.28% (a) Annualized based on number of days in the period, except efficiency ratio Security Bank Corporation Average Balance Sheet and Net Interest Income Analysis (Dollars in Thousands) Unaudited Quarter Ended Nine Months Ended September 30, 2006 September 30, 2006 Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate ASSETS Earning assets: Interest-bearing deposits and fed funds sold $38,075 $526 5.48% $34,086 $1,290 5.06% Investment securities 183,291 2,198 4.76% 159,252 5,547 4.66% Loans Held for Resale 7,015 127 7.18% 6,748 352 6.97% Loans 1,697,108 37,901 8.86% 1,510,230 96,714 8.56% Other earning assets 1,238 24 7.69% 1,238 71 7.67% Total earning assets 1,926,727 40,776 8.40% 1,711,554 103,974 8.12% Non-earning assets 230,570 202,617 Total assets $2,157,297 $1,914,171 LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Savings and interest-bearing transaction $486,099 $4,302 3.51% $435,750 $10,016 3.07% Time deposits 1,080,456 13,047 4.79% 928,040 30,641 4.41% Other borrowings 115,963 1,733 5.93% 134,178 5,637 5.62% Total interest-bearing liabil- ities 1,682,518 19,082 4.50% 1,497,968 46,294 4.13% Noninterest-bearing liabilities: Noninterest bearing deposits 172,393 164,909 Other noninterest-bearing liabilities 18,449 16,935 Total liabil- ities $1,873,360 $1,679,812 Shareholders' Equity 283,937 234,359 Total liabilities and shareholders' equity $2,157,297 $1,914,171 Interest rate spread 3.90% 3.99% Net interest income $21,694 $57,680 Net interest margin (FTE) 4.47% 4.51% Security Bank Corporation (SBKC) Selected Financial Information (Amounts in thousands, except per share data) 2006 3rd Quarter 2nd Quarter 1st Quarter Total Assets $2,314,913 $1,974,376 $1,912,841 Total Securities 211,005 163,378 146,932 Mortgage Loans held for Sale 8,947 12,201 7,776 Loans: Commercial: Real-Estate 884,417 705,072 699,215 Construction 553,296 460,131 430,585 All Other 111,075 101,740 103,396 Residential: Consumer Real-Estate 151,559 151,633 155,031 Consumer Construction 30,332 32,057 30,376 All Other Consumer 60,285 50,330 51,089 Total Loans 1,790,964 1,500,963 1,469,692 Allowance for loan losses 21,477 18,190 17,812 Other Assets: Other earning assets: 49,612 82,265 78,567 Total Earning Assets: 2,060,528 1,758,807 1,702,967 Intangibles: Goodwill 131,162 103,014 102,659 Core-Deposit 5,356 4,907 5,129 Deposits: Demand Deposits 173,129 172,023 168,235 Interest bearing deposits 1,659,876 1,403,986 1,362,149 Total Deposits 1,833,005 1,576,009 1,530,384 Fed Funds purchased & repo agreements 35,819 20,030 18,271 Other borrowed funds 123,988 112,465 125,665 Common Equity 302,273 257,780 217,641 Average Balance Sheet Total Assets $2,157,297 $1,906,800 $1,673,006 Total Securities 183,291 151,542 142,473 Mortgage Loans held for Sale 7,015 8,011 5,200 Loans: Commercial: Real-Estate 818,912 701,309 624,990 Construction 524,265 450,386 385,784 All Other 107,702 101,461 93,284 Residential: Consumer Real-Estate 151,332 153,272 157,463 Consumer Construction 30,658 30,279 20,480 All Other Consumer 64,239 58,105 52,788 Total Loans 1,697,108 1,494,812 1,334,789 Other Assets: Other earning assets: 39,313 45,829 20,624 Total Earning Assets: 1,926,727 1,700,194 1,503,086 Deposits: Demand Deposits 172,393 166,941 155,181 Interest bearing deposits Savings 18,645 20,359 21,036 NOW 335,152 307,630 240,033 Money Market 132,302 103,540 127,480 Time deposits > $100,000 608,483 542,530 445,970 Time deposits < $100,000 471,973 386,389 325,379 Total Deposits 1,738,948 1,527,389 1,315,079 Fed Funds purchased & repo agreements 26,036 23,230 24,608 Other borrowed funds 89,927 102,493 136,740 Common Equity 283,937 235,731 182,219 Income Statement Interest Income $40,669 $34,214 $28,783 Interest Expense 19,082 15,142 12,070 Net Interest Income 21,587 19,072 16,713 Loan loss provision 1,226 739 630 Service charges on deposit accounts 2,387 2,335 2,104 Mortgage banking revenues 1,231 1,433 1,251 Other income 1,368 1,149 1,562 Total noninterest income 4,986 4,917 4,917 Salaries and benefits 8,497 7,804 7,762 Occupancy and equipment 1,396 1,459 1,296 Other noninterest expense 4,539 4,351 3,823 Total noninterest expense 14,432 13,614 12,881 Pre-tax earnings 10,915 9,636 8,119 Income Taxes 3,975 3,546 2,979 Net income $6,940 $6,090 $5,140 Basic earnings per share (3) $ 0.38 $ 0.36 $ 0.36 Diluted earnings per share (3) 0.37 0.36 0.35 End of period shares outstanding (3) 19,161,507 17,519,112 15,782,125 Weighted average diluted shares o/s (3) 18,971,126 16,910,380 14,784,856 Tax equivalent adjustment 107 100 101 Net interest income (FTE) 21,694 19,172 16,814 Effective Tax Rate 36.42% 36.80% 36.69% Stock and related per share data: (3) Book value $15.78 $14.71 $13.79 Tangible book value 8.76 8.66 7.08 Dividends declared per share 0.075 0.075 0.075 Other Key Ratios/Data: Return on average tangible equity (2) 17.13% 18.81% 19.92% Return on average assets (2) 1.28% 1.28% 1.25% Net interest margin (FTE) (2) 4.47% 4.52% 4.54% Efficiency ratio (FTE) 54.09% 56.51% 59.27% Tangible Equity/ Tangible Assets 7.70% 8.12% 6.19% Loan Performance Data: Nonaccrual loans $16,946 $17,269 $8,171 Loans 90 Days Past Due and Accruing - - - Other real estate owned (ORE) 1,867 1,817 2,488 Total nonperforming assets 18,813 19,086 10,659 Net charge-offs 789 361 198 Allowance for loan losses/NPA's 114.16% 95.31% 167.11% Allowance for loan losses/loans 1.20% 1.21% 1.21% NPA's/Loans plus ORE 1.05% 1.27% 0.72% Nonperforming assets/ total assets 0.81% 0.97% 0.56% Net charge-offs to average loans (1) 0.18% 0.10% 0.06% 2005 Dec. 31/YTD 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Period-End Balance Sheet Total Assets $1,662,413 $1,662,413 $1,345,566 $1,329,629 $1,116,123 Total Securities 150,986 150,986 121,374 122,763 112,703 Mortgage Loans held for Sale 5,562 5,562 9,372 7,413 6,384 Loans: Commercial: Real- Estate 609,010 609,010 418,020 423,720 412,779 Construction 334,114 334,114 316,701 309,270 232,629 All Other 95,688 95,688 137,879 126,290 69,983 Residential: Consumer Real- Estate 163,874 163,874 118,679 116,119 115,168 Consumer Construction 19,750 19,750 19,371 20,041 17,835 All Other Consumer 49,683 49,683 53,420 46,285 42,097 Total Loans 1,272,119 1,272,119 1,064,070 1,041,725 890,491 Allowance for loan losses 16,148 16,148 13,628 13,264 11,357 Other Assets: Other earning assets: 41,330 41,330 23,928 45,141 18,846 Total Earning Assets: 1,469,997 1,469,997 1,218,744 1,217,042 1,028,424 Intangibles: Goodwill 74,582 74,582 49,677 50,507 31,852 Core-Deposit 4,687 4,687 1,498 1,580 542 Deposits: Demand Deposits 156,698 156,698 137,295 121,600 115,241 Interest bearing deposits 1,134,555 1,134,555 949,084 952,487 791,833 Total Deposits 1,291,253 1,291,253 1,086,379 1,074,087 907,074 Fed Funds purchased & repo agreements 43,876 43,876 10,052 5,714 12,469 Other borrowed funds 128,265 128,265 100,207 94,007 77,707 Common Equity 179,305 179,305 140,408 137,019 110,968 Average Balance Sheet Total Assets $1,238,033 $1,353,208 $1,326,590 $1,184,441 $1,082,503 Total Securities 116,110 117,857 123,002 115,694 107,674 Mortgage Loans held for Sale 6,726 6,754 8,769 6,132 5,167 Loans: Commercial: Real- Estate 432,199 472,728 423,215 420,250 412,048 Construction 284,620 331,779 319,456 270,505 215,265 All Other 99,034 102,402 134,147 87,386 71,513 Residential: Consumer Real- Estate 116,890 119,560 117,944 115,347 114,644 Consumer Construction 18,883 19,189 19,539 18,662 18,125 All Other Consumer 45,900 45,985 50,465 44,783 42,483 Total Loans 997,526 1,091,643 1,064,766 956,933 874,078 Other Assets: Other earning assets: 16,840 17,800 17,327 18,467 13,729 Total Earning Assets: 1,137,202 1,234,054 1,213,864 1,097,226 1,000,648 Deposits: Demand Deposits 119,867 131,616 122,600 116,899 108,057 Interest bearing deposits Savings 19,969 18,648 19,646 20,821 20,782 NOW 158,264 198,465 175,373 141,396 116,830 Money Market 80,640 78,800 83,961 81,233 78,542 Time deposits > $100,000 317,143 355,908 349,889 304,208 257,372 Time deposits < $100,000 305,609 312,576 324,000 298,644 286,742 Total Deposits 1,001,492 1,096,013 1,075,469 963,201 868,325 Fed Funds purchased & repo agreements 16,295 19,704 12,224 15,899 17,256 Other borrowed funds 83,754 86,260 89,601 76,511 82,205 Common Equity 126,461 141,576 138,246 118,365 107,792 Income Statement Interest Income $78,192 $22,860 $21,444 $18,023 $15,865 Interest Expense 27,839 8,864 7,976 6,162 4,837 Net Interest Income 50,353 13,996 13,468 11,861 11,028 Loan loss provision 2,833 630 624 804 775 Service charges on deposit accounts 7,351 1,940 1,956 1,858 1,597 Mortgage banking revenues 4,539 1,040 1,333 1,207 959 Other income 4,713 1,117 1,121 1,517 958 Total noninterest income 16,603 4,097 4,410 4,582 3,514 Salaries and benefits 22,811 6,044 6,115 5,598 5,054 Occupancy and equipment 3,785 1,048 985 906 846 Other noninterest expense 12,032 3,485 3,156 2,828 2,563 Total noninterest expense 38,628 10,577 10,256 9,332 8,463 Pre-tax earnings 25,495 6,886 6,998 6,307 5,304 Income Taxes 9,310 2,507 2,509 2,397 1,897 Net income $16,185 $4,379 $4,489 $3,910 $3,407 Basic earnings per share (3) $ 1.31 $ 0.34 $ 0.36 $ 0.32 $ 0.29 Diluted earnings per share (3) 1.27 0.33 0.33 0.32 0.29 End of period shares outstanding (3) 14,386,960 14,386,960 12,911,550 12,851,640 11,755,982 Weighted average diluted shares o/s (3) 12,736,544 13,316,163 13,218,030 12,374,075 11,970,224 Tax equivalent adjustment 324 81 79 82 82 Net interest income (FTE) 50,677 14,077 13,547 11,943 11,110 Effective Tax Rate 36.52% 36.41% 35.85% 38.00% 35.77% Stock and related per share data: (3) Book value $12.46 $12.46 $10.87 $10.66 $ 9.44 Tangible book value 7.08 7.08 6.94 6.65 6.69 Dividends declared per share 0.26 0.065 0.065 0.065 0.065 Other Key Ratios/Data: Return on average tangible equity (2) 19.30% 19.15% 20.46% 19.64% 17.64% Return on average assets (2) 1.31% 1.28% 1.34% 1.32% 1.28% Net interest margin (FTE) (2) 4.46% 4.53% 4.43% 4.37% 4.50% Efficiency ratio (FTE) 57.42% 58.20% 57.11% 56.47% 57.87% Tangible Equity/ Tangible Assets 6.42% 6.42% 6.93% 6.69% 7.27% Loan Performance Data: Nonaccrual loans $6,997 $6,997 $5,746 $5,200 $5,761 Loans 90 Days Past Due and Accruing - - - 59 - Other real estate owned (ORE) 2,394 2,394 1,722 1,467 938 Total nonperforming assets 9,391 9,391 7,468 6,726 6,699 Net charge-offs 1,219 321 260 317 321 Allowance for loan losses/NPA's 171.95% 171.95% 182.49% 197.20% 169.53% Allowance for loan losses/loans 1.27% 1.27% 1.28% 1.27% 1.28% NPA's/Loans plus ORE 0.74% 0.74% 0.70% 0.64% 0.75% Nonperforming assets/ total assets 0.56% 0.56% 0.56% 0.51% 0.60% Net charge-offs to average loans (1) 0.12% 0.12% 0.10% 0.13% 0.15% 2004 Dec. 31/YTD 4th Quarter 3rd Quarter Period-End Balance Sheet Total Assets $1,063,485 $1,063,485 $1,012,647 Total Securities 111,412 111,412 115,325 Mortgage Loans held for Sale 7,507 7,507 9,363 Loans: Commercial: Real-Estate 406,654 406,654 402,458 Construction 192,181 192,181 155,400 All Other 71,081 71,081 61,039 Residential: Consumer Real-Estate 115,470 115,470 115,503 Consumer Construction 18,953 18,953 17,088 All Other Consumer 41,426 41,426 40,833 Total Loans 845,765 845,765 792,321 Allowance for loan losses 10,903 10,903 10,465 Other Assets: Other earning assets: 20,898 20,898 14,076 Total Earning Assets: 985,582 985,582 931,085 Intangibles: Goodwill 28,579 28,579 28,579 Core-Deposit 585 585 628 Deposits: Demand Deposits 119,545 119,545 109,136 Interest bearing deposits 723,013 723,013 682,066 Total Deposits 842,558 842,558 791,202 Fed Funds purchased & repo agreements 21,811 21,811 20,972 Other borrowed funds 85,693 85,693 89,840 Common Equity 106,671 106,671 104,154 Average Balance Sheet Total Assets $972,091 $1,027,551 $994,605 Total Securities 103,896 113,085 105,948 Mortgage Loans held for Sale 6,955 6,455 7,429 Loans: Commercial: Real-Estate 399,341 405,831 417,861 Construction 141,240 175,867 143,811 All Other 61,297 62,406 61,193 Residential: Consumer Real-Estate 114,399 115,952 112,151 Consumer Construction 17,849 18,158 16,768 All Other Consumer 41,148 42,564 41,914 Total Loans 775,274 820,778 793,698 Other Assets: Other earning assets: 10,457 9,061 10,208 Total Earning Assets: 896,582 949,379 917,283 Deposits: Demand Deposits 105,695 111,249 106,740 Interest bearing deposits Savings 19,299 19,620 20,029 NOW 81,385 93,356 78,070 Money Market 85,886 80,011 88,879 Time deposits > $100,000 195,271 223,083 204,094 Time deposits < $100,000 293,068 289,686 296,809 Total Deposits 780,604 817,005 794,621 Fed Funds purchased & repo agreements 10,871 13,423 9,791 Other borrowed funds 80,024 84,631 80,812 Common Equity 94,453 105,184 101,958 Income Statement Interest Income $53,926 $14,717 $13,824 Interest Expense 14,373 4,135 3,669 Net Interest Income 39,553 10,582 10,155 Loan loss provision 2,819 852 529 Service charges on deposit accounts 6,450 1,704 1,636 Mortgage banking revenues 4,931 1,019 1,425 Other income 3,452 1,426 627 Total noninterest income 14,833 4,149 3,688 Salaries and benefits 18,629 4,916 4,759 Occupancy and equipment 3,365 851 866 Other noninterest expense 10,314 2,844 2,581 Total noninterest expense 32,308 8,611 8,206 Pre-tax earnings 19,259 5,268 5,108 Income Taxes 6,940 1,851 1,898 Net income $12,319 $3,417 $3,210 Basic earnings per share (3) $1.10 $0.29 $0.28 Diluted earnings per share (3) 1.07 0.29 0.27 End of period shares outstanding (3) 11,639,810 11,639,810 11,625,170 Weighted average diluted shares o/s (3) 11,482,830 11,922,292 11,837,508 Tax equivalent adjustment 359 89 91 Net interest income (FTE) 39,912 10,671 10,246 Effective Tax Rate 36.04% 35.14% 37.16% Stock and related per share data: (3) Book value $9.16 $9.16 $8.96 Tangible book value 6.68 6.68 6.46 Dividends declared per share 0.22 0.055 0.055 Other Key Ratios/Data: Return on average tangible equity (2) 18.76% 17.90% 17.50% Return on average assets (2) 1.27% 1.32% 1.28% Net interest margin (FTE) (2) 4.45% 4.47% 4.44% Efficiency ratio (FTE) 59.02% 58.10% 58.89% Tangible Equity/Tangible Assets 7.51% 7.51% 7.64% Loan Performance Data: Nonaccrual loans $6,214 $6,214 $5,909 Loans 90 Days Past Due and Accruing - - - Other real estate owned (ORE) 1,991 1,991 1,857 Total nonperforming assets 8,205 8,205 7,766 Net charge-offs 1,323 414 160 Allowance for loan losses/NPA's 132.88% 132.88% 134.75% Allowance for loan losses/loans 1.29% 1.29% 1.32% NPA's/Loans plus ORE 0.97% 0.97% 0.98% Nonperforming assets/ total assets 0.77% 0.77% 0.77% Net charge-offs to average loans (1) 0.17% 0.20% 0.08% (1) Annualized (2) The actual number of days in the period were used to annualize income (3) Adjusted for 2-for-1 stock split effective May 27, 2005 2006 3rd Quarter 2nd Quarter 1st Quarter Reconciliation Table- GAAP to non-GAAP: Book Value per share $15.78 $14.71 $13.79 Effect of intangible assets per share (7.02) (6.05) (6.71) Tangible book value $8.76 $8.66 $7.08 Equity $302,273 $257,780 $217,641 Intangible assets 136,518 107,921 107,788 Less tax effect of Core-Deposit (38%) (2,035) (1,865) (1,949) Tangible equity $167,790 $151,724 $111,802 Assets $2,314,913 $1,974,376 $1,912,841 Intangible assets 134,483 106,056 105,839 Tangible assets $2,180,430 $1,868,320 $1,807,002 Equity/Assets 13.06% 13.06% 11.38% Effect of intangible assets -5.36% -4.94% -5.19% Tangible Equity/Tangible Assets 7.70% 8.12% 6.19% Average Equity $283,937 $235,731 $182,219 Average Intangible assets 125,227 107,763 79,313 Less tax effect of Core-Deposit (38%) (2,006) (1,918) (1,754) Average tangible equity $160,716 $129,886 $104,660 Net Income (a) $27,534 $24,427 $20,846 Return on average tangible equity 17.13% 18.81% 19.92% 2005 Dec 31/YTD 4th Quarter 3rd Quarter 2nd Quarter 1st Quarter Reconciliation Table- GAAP to non-GAAP: Book Value per share $12.46 $12.46 $10.87 $10.66 $9.44 Effect of intangible assets per share (5.38) (5.38) (3.93) (4.01) (2.75) Tangible book value $7.08 $7.08 $6.94 $6.65 $6.69 Equity $179,305 $179,305 $140,408 $137,019 $110,968 Intangible assets 79,269 79,269 51,175 52,087 32,394 Less tax effect of Core-Deposit (38%) (1,781) (1,781) (569) (600) (206) Tangible equity $101,817 $101,817 $89,802 $85,532 $78,780 Assets $1,662,413 $1,662,413 $1,345,566 $1,329,629 $1,116,123 Intangible assets 77,488 77,488 50,606 51,487 32,188 Tangible assets $1,584,925 $1,584,925 $1,294,960 $1,278,142 $1,083,935 Equity/Assets 10.79% 10.79% 10.43% 10.31% 9.94% Effect of intangible assets -4.36% -4.36% -3.50% -3.61% -2.67% Tangible Equity/ Tangible Assets 6.42% 6.42% 6.93% 6.69% 7.27% Average Equity $126,461 $141,576 $138,246 $118,365 $107,792 Average Intangible assets 43,025 51,446 51,782 38,851 29,649 Less tax effect of Core-Deposit (38%) (429) (571) (587) (337) (206) Average tangible equity $83,865 $90,701 $87,051 $79,851 $78,349 Net Income (a) $16,185 $17,373 $17,810 $15,685 $13,817 Return on average tangible equity 19.30% 19.15% 20.46% 19.64% 17.64% 2004 Dec 31/YTD 4th Quarter 3rd Quarter Reconciliation Table- GAAP to non-GAAP: Book Value per share $9.16 $9.16 $8.96 Effect of intangible assets per share (2.48) (2.48) (2.50) Tangible book value $6.68 $6.68 $6.46 Equity $106,671 $106,671 $104,154 Intangible assets 29,164 29,164 29,207 Less tax effect of Core-Deposit (38%) (222) (222) (239) Tangible equity $77,729 $77,729 $75,186 Assets $1,063,485 $1,063,485 $1,012,647 Intangible assets 28,942 28,942 28,968 Tangible assets $1,034,543 $1,034,543 $983,679 Equity/Assets 10.03% 10.03% 10.29% Effect of intangible assets -2.52% -2.52% -2.65% Tangible Equity/Tangible Assets 7.51% 7.51% 7.64% Average Equity $94,453 $105,184 $101,958 Average Intangible assets 29,295 29,660 29,234 Less tax effect of Core-Deposit (38%) (505) (411) (249) Average tangible equity $65,663 $75,935 $72,973 Net Income (a) $12,319 $13,594 $12,770 Return on average tangible equity 18.76% 17.90% 17.50% (a) The actual number of days in the period were used to annualize income Financial Highlights Construction/A&D Portfolio ($000's) Amount (As of 9/30/06) % of Portfolio Total Loans $1,790,964 100.0% Construction and A&D $799,199 44.6% Residential $345,487 19.3% Construction $205,093 11.4% A&D $140,394 7.8% Commercial $453,712 25.3% Construction $104,304 5.8% A&D $349,408 19.5% http://www.newscom.com/cgi-bin/prnh/20060821/CLM059LOGO http://photoarchive.ap.org/ DATASOURCE: Security Bank Corporation CONTACT: Rett Walker, Chief Executive Officer, +1-478-722-6220, or Jim McLemore, Chief Financial Officer, +1-478-722-6243, Media inquiries, Tom Woodbery, Marketing Director, +1-478-722-6117, all of Security Bank Corporation Web site: http://www.securitybank.net/

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