`UNITED STATES
                                        SECURITIES AND EXCHANGE COMMISSION
                                              WASHINGTON, D.C. 20549

                                                     FORM 10-K

[X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

                                     For the fiscal year ended December 31, 2006

                                                        or

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

                               For the transition period from _________ to __________

Commission file number: 000-50224

                                           SECURITY CAPITAL CORPORATION
                   ----------------------------------------------------------------------------
                              (Exact Name of Registrant as specified in its Charter)

                  MISSISSIPPI                                                   64-0681198
  --------------------------------------------------------------    -------------------------------------------
       (State or Other Jurisdiction of                                (I.R.S. Employer Identification Number)
       Incorporation or Organization)

295 Highway 6 West/P. O. Box 690, Batesville, Mississippi                              38606
---------------------------------------------------------            -------------------------------------------
       (Address of principal executive offices)                                     (Zip Code)

Registrant's Telephone Number:     (662) 563-9311
                              ---------------------------

                               Securities registered under Section 12(b) of the Act:

                                                                        Name of Each Exchange on
             Title of Each Class                                            Which Registered
             -------------------                                        ------------------------

                  None                                                           None
--------------------------------------------------           --------------------------------------------------

                            Securities registered pursuant to section 12(g) of the Act:

                                                                        Name of Each Exchange on
             Title of Each Class                                            Which Registered
             -------------------                                        ------------------------

         Common Stock, $5 par value                                               None
--------------------------------------------------           --------------------------------------------------`

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`Indicated by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act.

         YES [ ]   NO [X]

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the
Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past
90 days.

         YES [X]   NO [  ]

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405 of Regulation S-K is not contained
herein,  and will not be contained,  to the best of  registrant's  knowledge,  in definitive  proxy or  information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is a large accelerated filer, or a non-accelerated filer.  See
definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act.  (Check one):

         Large accelerated filer  [   ]            Accelerated filer [X ]            Non-accelerated filer [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

         Yes [   ]       No [ X ]

Based on the stockholders of record on December 31, 2006, the aggregate market value of the voting stock held by
nonaffiliates of the Registrant was $82.0 million.

Indicate the number of shares outstanding of each of the Registrant's classes of common stock, as of the latest
practicable date.

               Class                                              Outstanding at December 31, 2006
               -----                                              --------------------------------

   Common stock ($5.00 par value)                                         2,744,070 Shares


                                        DOCUMENTS INCORPORATED BY REFERENCE

         Portions of the following documents are incorporated by reference into Parts III of the Form 10-K
report: Proxy Statement dated April 6, 2007.`

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`CROSS REFERENCE INDEX

                                                                                                               Page
PART I

Item 1       Business.............................................................................................2
Item 1A      Risk Factors........................................................................................10
Item 1B      Unresolved Staff Comments...........................................................................10
Item 2       Properties..........................................................................................15
Item 3       Legal Proceedings...................................................................................17
Item 4       Submission of Matters to a Vote of Security Holders.................................................17

PART II

Item 5       Market for the Registrant's Common Equity, Related Stockholder Matters and
             Issuer Purchases of Equity Securities...............................................................17
Item 6       Selected Financial Data.............................................................................18
Item 7       Management's Discussion and Analysis of Financial Condition and Results of
             Operations..........................................................................................20
Item 7A      Quantitative and Qualitative Disclosures about Market Risk..........................................41
Item 8       Financial Statements and Supplementary Data.........................................................42
Item 9       Changes in and Disagreements with Accountants on Accounting and Financial Disclosure    ............76
Item 9A      Controls and Procedures ............................................................................76
Item 9B      Other Information...................................................................................78

PART III

Item 10      Directors and Executive Officers of the Registrant..................................................78
Item 11      Executive Compensation..............................................................................78
Item 12      Security Ownership of Management and Related Stockholder Matters....................................78
Item 13      Certain Relationships and Related Transactions......................................................78
Item 14      Principal Accounting Fees and Services .............................................................78

Part IV

Item 15      Exhibits and Financial Statement Schedules..........................................................79

____________
* Information called for by Part III (Items 10 through 14) is incorporated by reference to the Registrant's Proxy
Statement dated April 6, 2007.`

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General Development and
Structure of Business

Security Capital Corporation is a
one-bank holding company and has two subsidiaries, First Security Bank and Batesville
Security Building Corporation.

As a bank holding company, Security
Capital Corporation engages in the business of banking through its sole banking subsidiary
and may engage in certain non-banking activities closely related to banking and may own
certain other business corporations that are not banks, subject to applicable laws and
regulations. Security Capital Corporation is not currently engaging in non-bank
activities, and does not own any business corporations except for Batesville Security
Building Corporation and has no current plans to engage in non-bank activities or own any
other business corporations.

Security Capital Corporation was
incorporated on September 16, 1982 for the purpose of acquiring First Security Bank and
serving as a one-bank holding company.

First Security Bank was originally
chartered under the laws of the State of Mississippi on October 25, 1951.

Batesville Security Building
Corporation, the nonbank subsidiary, was chartered under the laws of the State of
Mississippi on June 23, 1971, for the purpose of acquiring real estate; to hold, improve,
develop, operate, manage, mortgage, sell, exchange and lease and to generally deal and
manage real estate and personal property. Batesville Security Building Corporation is a
wholly owned subsidiary of Security Capital Corporation which has been inactive in the
past years but in 2004 reactivated its operations by investing in new leasehold
improvements.

Security Capital Corporations
home or principal office is located at 295 Highway 6 West, Batesville, Mississippi, 38606.
The telephone of the home or principal office is (662) 563-9311. First Security
Banks website is www.firstsecuritybk.com

Operations

Security Capital Corporation, through
First Security Bank, engages in a wide range of banking activities, including accepting
demand deposits, accepting savings and time deposit accounts, making secured and unsecured
loans to corporations, individuals and others, issuing credit cards, issuing and
processing ATM cards and debit cards, issuing commercial and standby letters of credit,
originating mortgage loans, and providing personal and corporate trust services.

Security Capital Corporations
lending services include commercial, real estate, installment, credit card loans, merchant
accounts receivable loans, student loans, and agricultural loans. Revenues from Security
Capital Corporations Lending activities constitute the largest component of Security
Capital Corporations operating revenues.

At December 31, 2006, the loan
portfolio totaled $326,658 constituting 81.91% of the earning assets of $398,824. Security
Capital Corporations loan personnel have the authority to extend credit under
guidelines established and approved by the Board of Directors. Any aggregate credit which
exceeds the authority of the loan officer or a combination of several authority limits is
forwarded to the Loan Committee for approval. The Loan Committee is comprised of various
Bank Directors, including the Chairman.

Security Capital Corporations
primary lending areas are the counties of Desoto, Panola, Quitman and Tunica in the State
of Mississippi. Security Capital Corporation may extend credit to borrowers out of the
primary lending area but on a limited basis in which the risk is low and/or a relationship
may exist with the borrower and an industry or a development in the primary lending area.

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`The following tables provide demographic information for Desoto, Panola, Quitman and Tunica counties,
and for the State of Mississippi:

                                                      POPULATION

                                 2000               1990               1980               1970
                                 ----               ----               ----               ----

DeSoto                          107,199             67,910             53,930             35,885

Panola                           34,274             29,996             28,164             26,829

Quitman                          10,117             10,490             12,636             15,888

Tunica                            9,277              8,164              9,652             11,854

Mississippi                   2,844,658          2,573,216          2,520,698          2,216,994


SOURCE: Center for Population Studies, University of Mississippi


                                                      PER CAPITA INCOME

                                 2004           2003           2002            2001           2000
                                 ----           ----           ----            ----           ----

DeSoto                          $29,318       $28,713         $28,251         $27,679        $26,070

Panola                           20,017        19,173          18,331          18,238         17,186

Quitman                          19,482        17,933          15,256          16,820         14,717

Tunica                           19,567        19,325          16,823          18,444         17,327

Mississippi                      24,518        23,466          22,511          21,950         21,005

SOURCE: United States Department of Commerce, Bureau of Economic Analysis


                                          MEDIAN AGE

                                 2000                       1990
                                 ----                       ----

DeSoto                           33.7                       31.5

Panola                           33.0                       30.1

Quitman                          31.8                       30.1

Tunica                           30.6                       25.3

SOURCE: Center for Population Studies, University of Mississippi`

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Panola County and Quitman County are
rural areas, in which agriculture and industry play a big part in the economy. Desoto
County and Tunica County have a different economic structure. The growth and composition
of Desoto County has been dictated, primarily, by the outflow from Memphis, Tennessee,
seeking residential living developments as well as locations for retail businesses and
other commercial developments outside the Memphis city limits. Tunica Countys
economy is dependent on the gaming industry to provide employment and to provide resources
for the operation of the county. The numerous casinos in the Tunica area employ residents
from the surrounding counties and residents from the States of Tennessee and Arkansas.

Security Capital Corporation has in
the past and intends to continue to make most types of real estate loans including but not
limited to single and multi-family housing, farm loans, residential and commercial
construction loans and loans for commercial real estate.

Major classifications of loans were
as follows:

`December 31,
                                                            --------------------------
                                                              2006             2005
                                                              ----             ----
                                                                  (in thousands)

Commercial, financial and agricultural                      $ 38,349         $ 30,826
Real estate - construction and development                   105,545           86,404
Real estate - mortgage                                       153,525          149,602
Installment loans to individuals                              26,858           28,833
Other                                                          2,381            2,280
                                                            --------         --------
                                                             326,658          297,945
Less allowance for loan losses                                (4,334)          (3,899)
                                                            --------         --------
                                                            $322,324         $294,046
                                                            ========         ========`

The success of the loan portfolio is
not dependent on a single borrower or group of borrowers. The large loans of the loan
portfolio are defined as those loans with a balance of $387,000 and over. As of December
31, 2006, the loan portfolio totals $326.7 million of which the large lines total $135
million representing 108 borrowers.

Security Capital Corporation provides
a wide range of personal and corporate trust and trust-related services which includes
serving as executor of estates, as trustee under testamentary and inter vivos trusts and
various pension and other employee benefit plans, as guardian of the estates of minors and
incompetents, as escrow agent under various agreements, as transfer agent and paying agent
of registered bond issues, and as custodian for assets invested. In addition, the Trust
Department of First Security Bank offers a variety of investment tools which includes a
money management and financial planning program that uses the skills and abilities of a
Certified Financial Planner and a Certified Retirement Services Professional among other
specialists who are within the employment of First Security Bank and the Trust Department.

In 1998, Security Capital Corporation
began an expansion to new market areas for the banking operation of First Security Bank.
In October of 1998, First Security Banking locations at Como, Mississippi, and Crenshaw,
Mississippi, were purchased from First Tennessee Bank. In July of 1999, Planters Bank in
Tunica was purchased from First Tennessee Bank. In December of 1995, a loan production
office opened in Desoto County in the city of Olive Branch. In June of 1997, the loan
production office extended to a full service bank branch but with a small facility and a
small staff. In October of 2001, First Security Banks operation in Olive Branch
moved to a newly constructed building with features of four drive-thru lanes and a total
square footage of 7,000 to accommodate the projected growth in that area. In January 2001,
a loan production office officially opened in Desoto County in the city of Hernando. On
July 1, 2002, the operation in Hernando moved from a loan production facility to a newly
constructed building, a sister to the Olive Branch building, providing full banking
services. In August of 2003, a branch was opened in the town of Pope. In 2005, First
Security Bank continued its expansion in the Desoto County area with the opening of a new
branch in Southaven. Construction was completed in July of 2006 on a new facility for the
Robinsonville banking location. The facility for a new full-service branch on the corner
of Goodman Road and Pleasant Hill Road in Desoto County was ready for occupancy at the end
of September of 2006. Each of the newly constructed buildings represents state of the art
facilities and will meet the needs of the staff and the level of customer activity. To
better serve the customers in the northern Panola County, an additional location in Sardis
was opened in October of 2006. The Security Capital Corporation has offered ATM services
for numerous years and began in 1995 running its own ATMs. Today, First
Security Bank provides ATM services at twenty-five locations, fifteen of which are not
located on bank property. First Security Bank, also, provides the customer with 24 hours a
day, 7 days a week, access to their account balances and activity through a telephone
banking product called First Line. Initiated in October of 2002, First Security Bank
offered internet banking, called First Teller, to accommodate those customers desiring
through technology to review their accounts activity and images of the activity, if
applicable, and pay their bills from anywhere in the world.

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Employees

On December 31, 2006, First Security
Bank had 190 full-time equivalent employees.

Supervision and
Regulation

Security Capital Corporation and
First Security Bank are subject to state and federal banking laws and regulations which
impose specific requirements or restrictions on and provide for general regulatory
oversight with respect to virtually all aspects of operations. These laws and regulations
are generally intended to protect depositors, not shareholders. To the extent that the
following summary describes statutory or regulatory provisions, it is qualified in its
entirety by reference to the particular statutory and regulatory provisions. Any change in
applicable laws or regulations may have a material effect on the business and prospects of
Security Capital Corporation. Beginning with the enactment of the Financial Institutions
Reform, Recovery and Enforcement Act of 1989 (FIRREA) and following with
Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) and the
Gramm-Leach-Bliley Act of 1999 (the Financial Services Modernization Act),
numerous additional regulatory requirements have been placed on the banking industry in
the past several years, and additional changes have been proposed. The operations of
Security Capital Corporation and First Security Bank may be affected by legislative
changes and the policies of various regulatory authorities. Security Capital Corporation
is unable to predict the nature or the extent of the effect on its business and earnings
that fiscal or monetary policies, economic control, or new federal or state legislation
may have in the future.

Security Capital Corporation is a
bank holding company within the meaning of the federal Bank Holding Company Act of 1956
(the BHCA).

The BHCA: Under the BHCA, Security
Capital Corporation is subject to periodic examination by the Federal Reserve and is
required to file periodic reports of its operations and such additional information as the
Federal Reserve may require. Security Capital Corporations and First Security
Banks activities are limited to banking, managing or controlling banks, furnishing
services to or performing services for its subsidiaries, and engaging in other activities
that the Federal Reserve determines to be so closely related to banking or managing or
controlling banks as to be a proper incident thereto.

Investments, Control, and Activities:
With certain limited exceptions, the BHCA requires every bank holding company to obtain
the prior approval of the Federal Reserve before (i) acquiring substantially all the
assets of any bank, (ii) acquiring direct or indirect ownership or control of any voting
shares of any bank if after such acquisition it would own or control more than 5% of the
voting shares of such bank (unless it already owns or controls the majority of such
shares), or (iii) merging or consolidating with another bank holding company.

In addition, and subject to certain
exceptions, the BHCA and the Change in Bank Control Act, together with regulations
thereunder, require Federal Reserve approval (or, depending on the circumstances, no
notice of disapproval) prior to any person or company acquiring control of a
bank holding company, such as Security Capital Corporation. Control is conclusively
presumed to exist if an individual or company acquires 25% or more of any class of voting
securities of the bank holding company. Control is rebuttably presumed to exist if a
person acquires 10% or more but less than 25% of any class of voting securities and either
Security Capital Corporation has registered securities under Section 12 of the Exchange
Act or no other person owns a greater percentage of that class of voting securities
immediately after the transaction. The regulations provide a procedure for challenge of
the rebuttable control presumption.

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Under the BHCA, a bank holding
company is generally prohibited from engaging in, or acquiring direct or indirect control
of more than 5% of the voting shares of any company engaged in nonbanking activities,
unless the Federal Reserve Board, by order or regulation, has found those activities to be
so closely related to banking or managing or controlling banks as to be a proper incident
thereto. Some of the activities that the Federal Reserve Board has determined by
regulation to be proper incidents to the business of a bank holding company include making
or servicing loans and certain types of leases, engaging in certain insurance and discount
brokerage activities, performing certain data processing services, acting in certain
circumstances as a fiduciary or investment or financial adviser, owning savings
associations, and making investments in certain corporations or projects designed
primarily to promote community welfare.

The Federal Reserve Board has imposed
certain capital requirements on bank holding companies under the BHCA, including a minimum
leverage ratio and a minimum ratio of qualifying capital to risk-weighted
assets. These requirements are described below under Capital Regulations.
Subject to its capital requirements and certain other restrictions, Security Capital
Corporation may borrow money to make a capital contribution to First Security Bank, and
such loans may be repaid from dividends paid from First Security Bank to Security Capital
Corporation (although the ability of First Security Bank to pay dividends is subject to
regulatory restrictions as described below in Dividends under Item 5).
Security Capital Corporation is also able to raise capital for contribution to First
Security Bank by issuing securities without having to receive regulatory approval, subject
to compliance with federal and state securities laws.

Source of Strength and
Cross-Guarantee: In accordance with Federal Reserve Board policy, Security Capital
Corporation is expected to act as a source of financial strength to First Security Bank
and to commit resources to support First Security Bank in circumstances in which Security
Capital Corporation might not otherwise do so. Under the BHCA, the Federal Reserve Board
may require a bank holding company to terminate any activity or relinquish control of a
nonbank subsidiary (other than a nonbank subsidiary of a bank) upon the Federal Reserve
Boards determination that such activity or control constitutes a serious risk to the
financial soundness or stability of any subsidiary depository institution of the bank
holding company. Further, federal bank regulatory authorities have additional discretion
to require a bank holding company to divest itself of any bank or nonbank subsidiary if
the agency determines that divestiture may aid the depository institutions financial
condition.

State and FDIC Regulation: First
Security Bank is subject to regulation and periodic examinations by the FDIC and the State
of Mississippi Department of Banking and Consumer Finance. These regulatory authorities
examine such areas as reserves, loan and investment quality, management policies,
procedures and practices and other aspects of operations. These examinations are designed
for the protection of the Banks depositors, rather than their stockholders. In
addition to these regular examinations, the Company and the Banks must furnish periodic
reports to their respective regulatory authorities containing a full and accurate
statement of their affairs.

FDICIA: All insured institutions must
undergo regular on-site examinations by their appropriate banking agency. The cost of
examinations of insured depository institutions and any affiliates may be assessed by the
appropriate agency against each institution or affiliate as it deems necessary or
appropriate. Insured institutions are required to submit annual reports to the FDIC and
the appropriate agency (and state supervisor when applicable). FDICIA also directs the
FDIC to develop with other appropriate agencies a method for insured depository
institutions to provide supplemental disclosure of the estimated fair market value of
assets and liabilities, to the extent feasible and practicable, in any balance sheet,
financial statement, report of condition, or any other report of any insured depository
institution. FDICIA also requires the federal banking regulatory agencies to prescribe, by
regulation, standards for all insured depository institutions and depository institution
holding companies relating, among other things, to: (i) internal controls, information
systems, and audit systems; (ii) loan documentation; (iii) credit underwriting; (iv)
interest rate risk exposure; and (v) asset quality.

---

FDICIA contains a prompt
corrective action section intended to resolve problem institutions at the least
possible long-term cost to the deposit insurance funds. Pursuant to this section, the
federal banking agencies are required to prescribe a leverage limit and a risk-based
capital requirement indicating levels at which institutions will be deemed to be
well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and
critically undercapitalized. In the case of a depository institution that is
critically undercapitalized (a term defined to include institutions which
still have positive net worth), the federal banking regulators are generally required to
appoint a conservator or receiver.

Deposit Insurance: The FDIC
establishes rates for the payment of premiums by federally insured banks and thrifts for
deposit insurance. A separate Bank Insurance Fund (BIF) and Savings
Association Insurance Fund (SAIF) are maintained for commercial banks and
thrifts, respectively, with insurance premiums from the industry used to offset losses
from insurance payouts when banks and thrifts fail. Since 1993, insured depository
institutions like First Security Bank have paid for deposit insurance under a risk-based
premium system.

Transactions with Affiliates and
Insiders: First Security Bank is subject to Section 23A of the Federal Reserve Act, which
places limits on the amount of loans to, and certain other transactions with, affiliates,
as well as on the amount of advances to third parties collateralized by the securities or
obligations of affiliates. The aggregate of all covered transactions is limited in amount,
as to any one affiliate, to 10% of the Banks capital and surplus and, as to all
affiliates combined, to 20% of the Banks capital and surplus. Furthermore, within
the foregoing limitations as to amount, each covered transaction must meet specified
collateral requirements.

First Security Bank is also subject
to Section 23B of the Federal Reserve Act, which prohibits an institution from engaging in
certain transactions with affiliates unless the transactions are on terms substantially
the same, or at least as favorable to such institution, as those prevailing at the time
for comparable transactions with nonaffiliated companies. First Security Bank is subject
to certain restrictions on extensions of credit to executive officers, directors, certain
principal shareholders, and their related interests. Such extensions of credit (i) must be
made on substantially the same terms, including interest rates and collateral, as those
prevailing at the time for comparable transactions with third parties and (ii) must not
involve more than the normal risk of repayment or present other unfavorable features.

Community Reinvestment Act: The
Community Reinvestment Act requires that, in connection with examinations of financial
institutions within their respective jurisdictions, the Federal Reserve, the FDIC, the
OCC, or the Office of Thrift Supervision shall evaluate the record of the financial
institutions in meeting the credit needs of their local communities, including low and
moderate income neighborhoods, consistent with the safe and sound operation of those
institutions. These factors are also considered in evaluating mergers, acquisitions, and
applications to open a branch or facility.

The Sarbanes-Oxley Act of 2002
(Sarbanes-Oxley Act), which became law on July 30, 2002, added new legal
requirements for all publicly-held companies affecting corporate governance, accounting
and corporate reporting. The Securities and Exchange Commission has been delegated the
task of enacting rules to implement various provisions, and the Company is required to
comply with such rules to the extent they are applicable to the Company. In addition, each
of the national stock exchanges has developed new corporate governance rules, including
rules strengthening director independence requirements for boards, the adoption of
corporate governance codes, and charters for the nominating and audit committees.

Other Regulations: Interest and
certain other charges collected or contracted for by First Security Bank are subject to
state usury laws and certain federal laws concerning interest rates. First Security
Banks loan operations are subject to certain federal laws applicable to credit
transactions, such as the federal Truth-In-Lending Act, governing disclosures of credit
terms to consumer borrowers; the Home Mortgage Disclosure Act of 1975, requiring financial
institutions to provide information to enable the public and public officials to determine
whether a financial institution is fulfilling its obligation to help meet the housing
needs of the community it serves; the Equal Credit Opportunity Act, prohibiting
discrimination on the basis of creed or other prohibited factors in extending credit; the
Fair Credit Reporting Act of 1978, governing the use and provision of information to
credit reporting agencies; the Fair Debt Collection Act, concerning the manner in which
consumer debts may be collected by collection agencies; and the rules and regulations of
the various federal agencies charged with the responsibility of implementing such federal
laws. The deposit operations of First Security Bank also are subject to the Right to
Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer
financial records and prescribes procedures for complying with administrative subpoenas of
financial records, and the Electronic Funds Transfer Act and Regulation E issued by the
Federal Reserve Board to implement that Act, which governs automatic deposits to and
withdrawals from deposit accounts and customers rights and liabilities arising from
the use of automated teller machines and other electronic banking services.

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Enforcement Powers: FIRREA expanded
and increased civil and criminal penalties available for use by the federal regulatory
agencies against depository institutions and certain institution-affiliated
parties (primarily including management, employees, and agents of a financial
institution, independent contractors such as attorneys and accountants, and others who
participate in the conduct of the financial institutions affairs). These practices
can include the failure of an institution to timely file required reports; the filing of
false or misleading information; or the submission of inaccurate reports. Civil penalties
may be as high as $1,000,000 a day for such violations. Criminal penalties for some
financial institution crimes have been increased to twenty years. In addition, regulators
are provided with greater flexibility to commence enforcement actions against institutions
and institution-affiliated parties. Possible enforcement actions include the termination
of deposit insurance. Furthermore, FIRREA expanded the appropriate banking agencies
power to issue cease and desist orders that may, among other things, require affirmative
action to correct any harm resulting from a violation or practice, including restitution,
reimbursement, indemnifications, or guarantees against loss. A financial institution may
also be ordered to restrict its growth, dispose of certain assets, rescind agreements or
contracts, or take other actions as determined by the ordering agency to be appropriate.

Effect of Governmental Monetary
Policies: The earnings of First Security Bank are affected by domestic economic conditions
and the monetary and fiscal policies of the United States government and its agencies. The
Federal Reserve Boards monetary policies have had, and are likely to continue to
have, an important impact on the operating results of commercial banks through its power
to implement national monetary policy in order, among other things, to curb inflation or
combat a recession. The monetary policies of the Federal Reserve Board have major effects
upon the levels of bank loans, investments, and deposits through its open market
operations in United States government securities and through its regulation of the
discount rate on borrowings of member banks and the reserve requirements against member
bank deposits. It is not possible to predict the nature or impact of future changes in
monetary and fiscal policies.

Financial Services Modernization Act:
On November 12, 1999, President Clinton signed into law the Gramm-Leach-Bliley Act of 1999
(the Financial Services Modernization Act). The Financial Services
Modernization Act repeals the two affiliation provisions of the Glass-Steagall Act:
Section 20, which restricted the affiliation of Federal Reserve Member Banks with firms
engaged principally in specified securities activities; and Section 32, which
restricts officer, director, or employee interlocks between a member bank and any company
or person primarily engaged in specified securities activities. In addition,
the Financial Services Modernization Act also contains provisions that expressly preempt
any state law restricting the establishment of financial affiliations, primarily related
to insurance. The general effect of the law is to establish a comprehensive framework to
permit affiliations among commercial banks, insurance companies, securities firms, and
other financial service providers by revising and expanding the BHCA framework to permit a
holding company system to engage in a full range of financial activities through a new
entity known as a Financial Holding Company. Financial activities is broadly
defined to include not only banking, insurance, and securities activities, but also
merchant banking and additional activities that the Federal Reserve, in consultation with
the Secretary of the Treasury, determines to be financial in nature, incidental to such
financial activities, or complementary activities that do not pose a substantial risk to
the safety and soundness of depository institutions or the financial system generally.

---

Generally, the Financial
Services Modernization Act:

`o        Repeals  historical  restrictions  on, and  eliminates  many  federal and state law  barriers to,
                  affiliations  among banks,  securities firms,  insurance  companies,  and other financial service
                  providers;

         o        Provides a uniform  framework for the functional  regulation of the activities of banks,  savings
                  institutions, and their holding companies;

         o        Broadens the activities  that may be conducted by national  banks,  banking  subsidiaries of bank
                  holding companies, and their financial subsidiaries;

         o        Provides an enhanced framework for protecting the privacy of consumer information;

         o        Adopts a number of provisions related to the capitalization,  membership,  corporate  governance,
                  and other measures designed to modernize the Federal Home Loan Bank system;

         o        Modifies the laws governing the implementation of the Community Reinvestment Act ("CRA"); and

         o        Addresses a variety of other legal and regulatory  issues  affecting both  day-to-day  operations
                  and long-term activities of financial institutions.`

In order for a bank holding company
to take advantage of the ability to affiliate with other financial services providers,
that company must become a Financial Holding Company as permitted under an
amendment to the BHCA. To become a Financial Holding Company, Security Capital Corporation
would file a declaration with the Federal Reserve, electing to engage in activities
permissible for Financial Holding Companies and certifying that it is eligible to do so
because all of its insured depository institution subsidiaries are well-capitalized and
well-managed. In addition, the Federal Reserve must also determine that each insured
depository institution subsidiary of Security Capital Corporation has at least a
satisfactory CRA rating.

The Financial Services Modernization
Act also includes a new section of the Federal Deposit Insurance Act governing
subsidiaries of state banks that engage in activities as principal that would only
be permissible for a national bank to conduct in a financial subsidiary. It
expressly preserves the ability of a state bank to retain all existing subsidiaries. In
order to form a financial subsidiary, a state bank must be well-capitalized, and the state
bank would be subject to the same capital deduction, risk management and affiliate
transaction rules as applicable to national banks.

Security Capital Corporation and
First Security Bank do not believe that the Financial Services Modernization Act will have
a material adverse effect on operations in the near-term. However, to the extent that it
permits banks, securities firms, and insurance companies to affiliate, the financial
services industry may experience further consolidation. The Financial Services
Modernization Act is intended to grant to community banks certain powers as a matter of
right that larger institutions have accumulated on an ad hoc basis. Nevertheless, this act
may have the result of increasing the amount of competition that Security Capital
Corporation and First Security Bank face from larger institutions and other types of
companies offering financial products, many of which may have substantially more financial
resources than Security Capital Corporation and First Security Bank.

Capital.    
          Security Capital Corporation and First Security Bank are required to comply with
          the capital adequacy standards established by the Federal Reserve Board and the
          FDIC. There are two basic measures of capital adequacy for bank holding
          companies and their banking subsidiaries: a risk-based measure and a leverage
          measure.

The risk-based capital standards are
designed to make regulatory capital requirements more sensitive to differences in risk
profile among depository institutions and bank holding companies, to account for
off-balance sheet exposure, and to minimize disincentives for holding liquid assets.
Assets and off-balance sheet items are assigned to broad risk categories, each with
appropriate weights. The resulting capital ratios represent capital as a percentage of
total risk-weighted assets and off-balance sheet items.

---

The minimum guideline for the total
capital to risk-weighted assets, including certain off-balance sheet items such as standby
letters of credit (total capital ratio) is 8.0 percent. At least half of total
capital must be composed of common equity, undivided profits, minority interests in the
equity accounts of consolidated subsidiaries, non-cumulative perpetual preferred stock,
and a limited amount of cumulative perpetual preferred stock, less goodwill and certain
other intangible assets (Tier 1 capital). The remainder may consist of
subordinated debt, other preferred stock, a limited amount of loan loss reserves, and
unrealized gains on equity securities subject to limitations (Tier 2 capital).

The following table represents the
capital ratios for Security Capital Corporation and First Security Bank as of December 31,
2006:

`Corporation                 Bank
Risk-Based Capital Ratio                     Ratio                     Ratio         Requirements
------------------------                     -----                     -----         ------------
Total Capital                                14.70%                    14.20%           8.00%
Tier 1 Capital                               13.50%                    13.00%           4.00%
Leverage Capital                             10.60%                    10.20%           3.00%`

Deposit Insurance Assessments: The
deposits of First Security Bank are insured by the FDIC up to the limits set forth under
applicable law. A majority of the deposits of First Security Bank are subject to the
deposit insurance assessments of the Bank Insurance Fund (BIF) of the FDIC.
However, a portion of First Security Banks deposits, relating to a savings
association acquisition, are subject to assessments imposed by the Savings Association
Insurance Fund (SAIF) of the FDIC. The FDIC equalized the assessment rates for
BIF-insured and SAIF-insured deposits effective January 1, 1997. The assessments imposed
on all FDIC deposits for deposit insurance have an effective rate ranging from 0 to 27
basis points per $100 of insured deposits, depending on the institutions capital
position and other supervisory factors. Legislation was enacted in 1996 requiring both
SAIF-insured and BIF-insured deposits to pay a pro rata portion of the interest due on the
obligations issued by the Financing Corporation (FICO). Based on the assigned
FICO debt service rates, the assessments paid by the Bank during 2006 ranged from 1.32
basis points to 1.26 basis points, per $100 of deposits. The assessments for the first
quarter of 2007 will be paid based on an assigned FICO debt service rate of 1.22 basis
points.

Competition

The banking business is a highly
competitive business. Security Capital Corporations market area consists principally
of Panola, Quitman, Desoto and Tunica Counties in Mississippi. Security Capital
Corporation competes with other financial institutions, as well as insurance companies and
various other entities, for deposits and in providing financial services in these counties
and the surrounding counties. Security Capital Corporation, as provided by the FDIC Market
Share Report of June 30, 2006 (the latest Market Share Report), held 57.44% of the deposit
market in Panola County. In Quitman County, this same report reflects Security Capital
Corporation holding 18.09% of the deposit market. In Desoto County, an area filled with
large regional banks and national banks, Security Capital Corporation held a 4.60% share
of the deposit market as of June 30, 2006. Management measures the success of the
locations in this area, not only by the growth of the deposits, but by its ability to
continue to be competitive and to grow in the loan production area. In Tunica County,
Security Capital Corporation held a 44.43% share of the deposit base as of June 30, 2006.

Available Information

The Company maintains an internet
website at www.firstsecuritybk.com. The Company provides on its website, as filed with the
Securities and Exchange Commission, the quarterly reports on Form 10-Q, as well as the
annual report Form 10-K, current reports on Form 8-K, and amendments to those reports.
These reports will be available on the Companys website as soon as reasonably
practical after the reports are filed with the Commission. Information on the
Companys website is not incorporated into this Form 10-K or the Companys other
securities filings and is not a part of them. Electronic or paper copies of the reports
will be provided, free of charge, upon request by mail, through our website or in person.

---

Statistical Disclosure

The statistical disclosures for the
Company are contained in Tables 1 through 16.

Table 1  Five Year
Financial Summary

Table 2  Average
Balances, Interest Earned and Interest Yields

Table 3  Net
Interest Earning Assets

Table 3A 
Volume/Rate Analysis

Table 4 
Non-Interest Income and Expense

Table 5  Loans by
Type

Table 6  Loan
Liquidity

Table 7  Allowance
for Loan Losses

Table 8 
Nonperforming Assets

Table 8A 
Allocation of the Allowance for Loan Losses

Table 9  Securities

Table 10  Securities
Maturity and Repricing Schedule

Table 11 
Securities Weighted Maturity and Tax Equivalent Yield by Classification

Table 12  Deposit
Information

Table 13  Maturity Ranges of Time
Deposits with Balances More Than $100,000

Table 14  Funding Uses
and Sources

Table 15 
Liquidity; Interest Rate Sensitivity

Table 15A  Changes
in Net Interest Income over One Year Horizon

Table 16  Capital
Ratios

---

Making or continuing an investment in
securities issued by the Company, including the Companys common stock, involves
certain risks that you should carefully consider. The risks and uncertainties described
below are not the only risks that may have a material adverse effect on the Company.
Additional risks and uncertainties also could adversely affect the Companys business
and results of operations. If any of the following risks actually occur, the
Companys business, financial condition or results of operations could be negatively
affected, the market price for your securities could decline, and you could lose all or a
part of your investment. Further, to the extent that any of the information contained in
this Annual Report on Form 10-K constitutes forward-looking statements, the risk factors
set forth below also are cautionary statements identifying important factors that could
cause the Companys actual results to differ materially from those expressed in any
forward-looking statements made by or on behalf of the Company.

The Company may be vulnerable to
certain sectors of the economy.

A portion of the Companys loan
portfolio is secured by real estate. If the economy deteriorated and depressed real estate
values beyond a certain point, that collateral value of the portfolio and the revenue
stream from those loans could come under stress and possibly require additional loan loss
accruals. The Companys ability to dispose of foreclosed real estate at prices above
the respective carrying values could also be impinged, causing additional losses.

General economic conditions in the
areas where the Companys operations or loans are concentrated may adversely affect
our customers ability to meet their obligations.

A sudden or severe downturn in the
economy in the geographic markets served by the Company in the state of Mississippi may
affect the ability of the Companys customers to meet loan payments obligations on a
timely basis. The local economic conditions in these areas have a significant impact on
the Companys commercial, real estate, and construction loans, the ability of
borrowers to repay these loans and the value of the collateral securing such loans.
Changes resulting in adverse economic conditions of the Companys market areas could
negatively impact the financial results of the Companys banking operations and its
profitability. Additionally, adverse economic changes may cause customers to withdraw
deposit balances, thereby causing a strain on the Companys liquidity.

The Company is subject to a risk of
rapid and significant changes in market interest rates.

The Companys assets and
liabilities are primarily monetary in nature, and as a result the Company is subject to
significant risks tied to changes in interest rates. The Companys ability to operate
profitably is largely dependent upon net interest income. Unexpected movement in interest
rates markedly changing the slope of the current yield curve could cause the
Companys net interest margins to decrease, subsequently decreasing net interest
income. In addition, such changes could adversely affect the valuation of the
Companys assets and liabilities.

At present the Companys
one-year interest rate sensitivity position continues to indicate an overall neutrality,
such that a gradual increase in interest rates during the next twelve months should not
have a significant impact on net interest income during that period. However, as with most
financial institutions, the Companys results of operations are affected by changes
in interest rates and the Companys ability to manage this risk. The difference
between interest rates charged on interest-earning assets and interest rates paid on
interest-bearing liabilities may be affected by changes in market interest rates, changes
in relationships between interest rate indices, and/or changes in the relationships
between long-term and short-term market interest rates. A change in this difference might
result in an increase in interest expense relative to interest income, or a decrease in
the Companys interest rate spread.

---

Certain changes in interest rates,
inflation, or the financial markets could affect demand for the Companys products
and the Companys ability to deliver products efficiently.

Loan originations, and potentially
loan revenues, could be adversely impacted by sharply rising interest rates. Conversely,
sharply falling rates could increase prepayments within the Companys securities
portfolio lowering interest earnings from those investments. An underperforming stock
market could reduce brokerage transactions, therefore reducing investment brokerage
revenues; in addition, wealth management fees associated with managed securities
portfolios could also be adversely affected. An unanticipated increase in inflation could
cause the Companys operating costs related to salaries & benefits, technology,
& supplies to increase at a faster pace than revenues.

The fair market value of the
Companys securities portfolio and the investment income from these securities also
fluctuate depending on general economic and market conditions. In addition, actual net
investment income and/or cash flows from investments that carry prepayment risk, such as
mortgage-backed and other asset-backed securities, may differ from those anticipated at
the time of investment as a result of interest rate fluctuations.

Changes in the policies of monetary
authorities and other government action could adversely affect the Companys
profitability.

The results of operations of the
Company are affected by credit policies of monetary authorities, particularly the Federal
Reserve Board. The instruments of monetary policy employed by the Federal Reserve Board
include open market operations in U.S. government securities, changes in the discount rate
or the federal funds rate on bank borrowings and changes in reserve requirements against
bank deposits. In view of changing conditions in the national economy and in the money
markets, particularly in light of the continuing threat of terrorist attacks and the
current military operations in the Middle East, we cannot predict possible future changes
in interest rates, deposit levels, loan demand or the Companys business and
earnings. Furthermore, the actions of the United States government and other governments
in responding to such terrorist attacks or the military operations in the Middle East may
result in currency fluctuations, exchange controls, market disruption and other adverse
effects.

Natural disasters could affect the
Companys ability to operate.

The Companys market areas are
susceptible to hurricanes. Natural disasters, such as hurricanes, can disrupt the
Companys operations, result in damage to properties and negatively affect the local
economies in which the Company operates.

The Company cannot predict whether or
to what extent damage caused by future hurricanes will affect the Companys
operations or the economies in the Companys market areas, but such weather events
could cause a decline in loan originations, a decline in the value or destruction of
properties securing the loans and an increase in the risk of delinquencies, foreclosures
or loan losses.

Greater loan losses than expected may
adversely affect the Companys earnings.

The Company as lender is exposed to
the risk that its customers will be unable to repay their loans in accordance with their
terms and that any collateral securing the payment of their loans may not be sufficient to
assure repayment. Credit losses are inherent in the business of making loans and could
have a material adverse effect on the Companys operating results. The Companys
credit risk with respect to its real estate and construction loan portfolio will relate
principally to the creditworthiness of corporations and the value of the real estate
serving as security for the repayment of loans. The Companys credit risk with
respect to its commercial and consumer loan portfolio will relate principally to the
general creditworthiness of businesses and individuals within the Companys local
markets.

The Company makes various assumptions
and judgments about the collectibility of its loan portfolio and provide an allowance for
estimated loan losses based on a number of factors. The Company believes that its current
allowance for loan losses is adequate. However, if the Companys assumptions or
judgments prove to be incorrect, the allowance for loan losses may not be sufficient to
cover actual loan losses. The Company may have to increase its allowance in the future in
response to the request of one of its primary banking regulators, to adjust for changing
conditions and assumptions, or as a result of any deterioration in the quality of the
Companys loan portfolio. The actual amount of future provisions for loan losses
cannot be determined at this time and may vary from the amounts of past provisions.

---

The Companys stock is not
listed or traded on the financial markets.

The Companys stock is neither
listed nor traded on any securities exchange and transfer to a non-stockholder is
restricted. The Company, through handling a stock sale, provides a market for the stock.

The Company is subject to regulation
by various Federal and State entities.

The Company is subject to the
regulations of the Securities and Exchange Commission (SEC), the Federal
Reserve Board, the Federal Deposit Insurance Corporation and the Mississippi Department of
Banking and Consumer Finance. New regulations issued by these agencies may adversely
affect the Companys ability to carry on its business activities. The Company is
subject to various Federal and state laws and certain changes in these laws and
regulations may adversely affect the Companys operations.

The Company is also subject to the
accounting rules and regulations of the SEC and the Financial Accounting Standards Board.
Changes in accounting rules could adversely affect the reported financial statements or
results of operations of the Company and may also require extraordinary efforts or
additional costs to implement.

Any of these laws or regulations may
be modified or changed from time to time, and the Company cannot be assured that such
modifications or changes will not adversely affect the Company.

The Company engages in acquisitions
of other businesses from time to time.

On occasion, the Company will engage
in acquisitions of other businesses. Acquisitions may result in customer and employee
turnover, thus increasing the cost of operating the new businesses. The acquired companies
may also have legal contingencies, beyond those that the Company is aware of, that could
result in unexpected costs.

The Company is subject to industry
competition which may have an impact upon its success.

The profitability of the Company
depends on its ability to compete successfully. The Company operate in a highly
competitive financial services environment. Certain competitors are larger and may have
more resources than the Company does. The Company faces competition in its regional market
areas from other commercial banks, savings and loan associations, credit unions, internet
banks, finance companies, mutual funds, insurance companies, brokerage and investment
banking firms, and other financial intermediaries that offer similar services. Some of the
Companys nonbank competitors are not subject to the same extensive regulations that
govern the Company or the Bank and may have greater flexibility in competing for business.

Another competitive factor is that
the financial services market, including banking services, is undergoing rapid changes
with frequent introductions of new technology-driven products and services. The
Companys future success may depend, in part, on its ability to use technology
competitively to provide products and services that provide convenience to customers and
create additional efficiencies in the Companys operations.

Anti-takeover laws and certain
agreements and charter provisions may adversely affect share value.

Certain provisions of state and
federal law and the Companys articles of incorporation may make it more difficult
for someone to acquire control of the Company. Under federal law, subject to certain
exemptions, a person, entity, or group must notify the federal banking agencies before
acquiring 10% or more of the outstanding voting stock of a bank holding company, including
the Companys shares. Banking agencies review the acquisition to determine if it will
result in a change of control. The banking agencies have 60 days to act on the notice, and
take into account several factors, including the resources of the acquiror and the
antitrust effects of the acquisition.

---

Securities issued by the Company,
including the Companys common stock, are not FDIC insured.

Securities issued by the Company, including
the Companys common stock, are not savings or deposit accounts or other obligations
of any bank and are not insured by the FDIC, the Bank Insurance Fund, or any other
governmental agency or instrumentality, or any private insurer, and are subject to
investment risk, including the possible loss of principal.

Security Capital Corporation makes
loans, and most of its assets are located in Panola, Quitman, Desoto, and Tunica Counties
in Mississippi. Adverse changes in economic conditions in these areas could hurt Security
Capital Corporations ability to collect loans, could reduce the demand for loans,
and could negatively impact performance and financial condition.

Security Capital Corporations
Profitability Depends on Economic Policies and Factors Beyond Our Control.

Security Capital Corporations earnings
depend to a great extent on rate differentials, which are the differences
between interest income that Security Capital Corporation earns on loans and investments
and the interest expense paid on deposits and other borrowings. These rates are highly
sensitive to many factors which are beyond Security Capital Corporations control,
including general economic conditions and the policies of various government and
regulatory authorities. Changes in interest rate policy by the Board of Governors of the
Federal Reserve System affect Security Capital Corporations interest income,
interest expense and investment portfolio. Also, governmental policies such as the
creation of a tax deduction for individual retirement accounts can increase savings and
affect the cost of funds. A rapid increase or decrease in interest rates could have an
adverse effect on the net interest margin and results of operations of Security Capital
Corporation. The nature, timing and effect of any future changes in federal monetary and
fiscal policies on Security Capital Corporation and its results of operations are not
predictable.

There is No Assurance That Security
Capital Corporation Will Be Able to Successfully Compete with Others for Business.

The banking business is highly
competitive, and the profitability of Security Capital Corporation depends principally
upon its ability to compete in the market areas where its banking operations are located.
Security Capital Corporation competes with other commercial banks, savings banks, savings
and loan associations, credit unions, mortgage companies, finance companies, mutual funds,
insurance companies, brokerage and investment banking firms, asset-based non-bank lenders
and certain other non-financial entities, including retail stores which may maintain their
own credit programs and certain governmental organizations which may offer more favorable
financing than Security Capital Corporation. Many of these competitors have greater
financial and other resources than Security Capital Corporation, and certain larger
competitors are recent entrants into Security Capital Corporations markets.

Not Applicable

Security Capital Corporation, through
First Security Bank, currently operates from its main office in central Batesville and
from 12 additional branches in Panola, Quitman, Desoto, and Tunica Counties  all
located in Mississippi. Information about these branches is set forth in the table below:

---

`Name of Office                        Location/Telephone Number                   Banking Services Offered
--------------                        -------------------------                   ------------------------

Main Office                           295 Highway 6 West                          Loans, Deposits, Cash,
                                      Batesville, Mississippi 38606;              Safe Deposit Boxes, ATM,
                                      662-563-9311                                Trust, Drive-thru


Express Branch                        130 Highway 51 North                        Drive-thru, Cash
                                      Batesville, Mississippi 38606;
                                      662-563-9311

Marks Branch                          Highway 3 South                             Loans, Deposits, Cash,
                                      Marks, Mississippi 38646;                   Safe Deposit Boxes,
                                      662-326-8053                                Drive-thru

Power Drive Branch                    230 Power Drive                             Loans, Deposits, ATM
                                      Batesville, Mississippi 38606;              Safe Deposit Boxes,
                                      662-563-9311                                Cash, Drive-thru

Sardis Branch                         201 South Main                              Loans, Deposits, Cash
                                      Sardis, Mississippi 38666;                  Safe Deposit Boxes,
                                      662-487-1661                                Drive-thru

Olive Branch Branch                   6659 Highway 305                            Loans, Deposits, Cash,
                                      Olive Branch, Mississippi 38654;            Safe Deposit Boxes, ATM,
                                      662-895-1994                                Drive-thru

Como Branch                           227 Main Street                             Loans, Deposits, Cash
                                      Como, Mississippi 38619;                    Safe Deposit Boxes,
                                      662-526-5191                                Drive-thru

Crenshaw Branch                       729 Broad Street                            Loans, Deposits, Cash,
                                      Crenshaw, Mississippi 38621;                Safe Deposit Boxes,
                                      662-382-5215                                Drive-thru

Tunica Branch                         1262 Edwards Street                         Loans, Deposits, Drive-
                                      Tunica, Mississippi 38676;                  thru, Safe Deposit Boxes,
                                      662-363-2311                                ATM, Cash

Robinsonville Branch                  11490 Old Highway 61                        Loans, Deposits, Cash,
                                      Robinsonville, Mississippi 38664;           Safe Deposit Boxes,
                                      662-363-5015                                ATM, Drive-thru

Hernando Branch                       985 Commerce Street                         Loans, Deposits, Cash,
                                      Hernando, Mississippi 38632;                Safe Deposit Boxes,
                                      662-449-4115                                ATM, Drive-thru

Pope Branch                           7024 Highway 51                             Deposits, Cash, ATM,
                                      Pope, Mississippi 38658;                    Drive-thru
                                      662-578-5650

Southaven Branch                      3035 Church Road                            Loans, Deposits, Cash,
                                      Southaven, MS  38672;                       Safe Deposit Boxes,
                                      662-893-3243                                ATM, Drive-thru`

---

`Sardis Express Branch                 610 East Lee Street                         Deposits, Cash, ATM
                                      Sardis, Mississippi  38666;                 Drive-thru
                                      662-487-1895


Goodman Road Branch                   5028 Goodman Road                           Loans, Deposits, Cash,
                                      Olive Branch, Mississippi  38654;           Safe Deposit Boxes,
                                      662-890-1043                                ATM, Drive-thru

Trust and Financial Services          275 Highway 6 West                          Investment Planning &
Branch                                Batesville, Mississippi38606;               Management, Personal Trusts,
                                      662-563-9311                                Corporate Trusts, Pension &
                                                                                  Profit-Sharing Plans, IRAs,
                                                                                  Paying Agent Accounts`

First Security Bank owns its main
office and all of its branch offices, except the Express Branch. The Express Branch is
leased for an annual rent of $9,600 under a ground lease agreement that expires in 2007,
with an option to renew. The main office facility, originally was occupied in 1973, is
used solely by Security Capital Corporation and First Security Bank. This facility
contains approximately 21,300 square feet and houses the executive offices and the
operations department as well as providing the customer area for cash, deposit, safe
deposit and loan transactions. The other branch buildings range in size from approximately
600 square feet for the Express Branch to 7,000 square feet for the Hernando, Olive
Branch, and Southaven locations.

First Security Bank is the defendant
in a case styled Amy French, individually, and Austin Lenard, a minor, by and through His
Next Friend and Mother, Amy French vs. First Security Bank and Joshua Hawkins, Cause No.
2002-327-BB, filed on December 17, 2002, in the Circuit Court of the Second Judicial
District of Panola County, Mississippi. The case involves an accident that occurred when a
First Security Bank employee traveling in his personal vehicle to service an ATM was
involved in an automobile accident. The pregnant occupant of the other vehicle gave birth
later that day. The claims in the lawsuit are that the mother and child are experiencing
permanent and continuing injuries, and the plaintiffs ask for compensatory damages in the
amount determined to be fair by the jury. At December 31, 2005, the legal proceedings had
not been resolved. However, an analysis by legal counsel anticipates possible awards to
the claimants to be within the insurance coverage with no potential loss to the Bank and
closure of the case is dependent on forthcoming medical documentation on status of
claimants.

From time to time First Security Bank
is a defendant in various other lawsuits arising out of the normal course of business. In
the opinion of management, the ultimate resolution of this category of claims should not
have a material adverse effect on Security Capital Corporations consolidated
financial position or results of operations.

No matters were submitted to a
shareholder vote during the fourth quarter of 2006.

---

There is no public trading market for
the Common Stock of Security Capital Corporation. The articles and bylaws of Security
Capital Corporation give Security Capital Corporation a right of first refusal to acquire
shares when a shareholder wishes to sell stock.

Security Capital Corporation paid an
annual cash dividend of $1.00 per share in 2006, and $.95 per share (split adjusted) in
2005. The primary source of funds for dividends paid by Security Capital Corporation to
its shareholders is the dividend income received from First Security Bank. There are
certain restrictions on the payment of such dividends imposed by federal and state banking
laws, regulations and authorities. Under Mississippi law, the payment of dividends by
First Security Bank must be approved by the Mississippi Department of Banking and Consumer
Finance. The FDIC also has the authority to regulate the payment of dividends and to
prohibit a regulated depository institution from engaging in what, in such agencys
opinion, constitutes an unsafe or unsound practice for conducting business. Depending upon
the financial condition of the depository institution, payment of dividends could be
deemed to constitute such an unsafe or unsound practice. In addition, a depository
institution may not pay a dividend or otherwise make a capital distribution if the payment
thereof would cause such institution to fail to satisfy its capital requirements.

At December 31, 2006, there were 777
stockholders of record of the Companys common stock.

Five Year Financial
Summary

The following table sets forth
certain financial information for Security Capital Corporation on a consolidated
historical basis. Such information should be read in conjunction with, and is qualified in
its entirety by, the consolidated financial statements and notes appearing elsewhere in
this report.

`Security Capital Corporation
                                         Table 1 - Five Year Financial Summary


                                                12/31/2006     12/31/2005     12/31/2004    12/31/2003     12/31/2002
                                                    (in thousands except per share data and Other Financial Data)
Income Statement Data:
Interest Income                                       30,586         24,458        19,092         17,009         16,847
Interest Expense                                      11,523          6,907         4,139          3,955          4,760
Net Interest Income                                   19,063         17,551        14,953         13,054         12,087
Provision for Loan Losses                                965          1,440           637            546            672
Net Interest Income After Provision                   18,098         16,111        14,316         12,508         11,415
Noninterest Income                                     6,926          6,151         5,657          5,666          5,155
Noninterest Expenses                                  14,435         12,948        11,410         10,618         10,092
Income Before Income Taxes                            10,589          9,314         8,563          7,556          6,478
Income Tax Expense                                     3,349          2,707         2,431          2,039          1,666
NET INCOME                                             7,240          6,607         6,132          5,517          4,812

Per Share Data:
Net Income*                                             2.64           2.41          2.24           2.02           1.76
Cash Dividends*                                         1.00           0.95          0.91           0.82           0.74
Book Value*                                            18.95          17.21         16.01          14.94          13.85`

---

`Other Ratios:
Return on Average Assets                                1.58           1.57          1.65           1.66           1.60
Return on Equity                                       14.36          14.16         14.22          13.73          13.45
Loans to Deposits                                      89.08          83.98         70.29          70.87          70.60
Loans to Total Assets                                  71.27          68.36         60.06          60.08          59.42
Equity Capital to Total Assets                         11.34          10.83         11.24          12.01          12.00
Average Equity to Average Assets                       10.99          11.12         11.61          12.12          11.94
Dividend Payout Ratio                                  37.90          39.52         40.52          40.66          42.04

Other Financial Data:
Cash Dividends Declared                            2,743,770      2,611,400     2,484,937      2,243,187      2,022,867
Weighted Average
Outstanding Common Shares                          2,743,233      2,741,805     2,739,359      2,734,493      2,733,754

        * The per share information is based upon the retroactive effect of the stock dividends for the period.

The per share data being reflected was derived using the weighted average number of outstanding shares at
December 31, 2006 as the denominator.  (The weighted average number of outstanding shares at December
31, 2006 was 2,743,233.)  For example, the cash dividends per share was determined by dividing the amount
of dividends by 2,743,233.

Balance Sheet Data:
Total Assets                                         458,329        435,876       390,274        340,253        315,596
Earning Assets                                       398,824        381,794       349,276        304,056        276,677
Investment Securities AFS                             61,028         78,949        96,669         76,320         74,879
Investment Securities HTM                              7,850          2,047         2,050          2,053              0
Other Securities                                       2,250          1,456         1,259            991            738
Loans - Net                                          322,324        294,046       230,805        200,759        184,060
Allowance for Loan Losses                              4,334          3,899         3,598          3,665          3,455
Total Deposits                                       366,699        354,766       333,458        288,442        265,597
Savings Deposits                                      30,553         30,349        28,416         25,869         19,747
Time Deposits                                        156,692        129,057       116,064        110,914        121,093
Long Term Borrowings                                  11,937         12,991         8,634          4,738          5,113
Shareholders' Equity                                  51,984         47,187        43,870         40,848         37,857


Average Balances:
Total Assets                                         458,715        419,569       371,424        331,612        299,830
Earning Assets                                       396,474        372,321       333,561        296,651        268,860
Securities                                            75,986         93,077        97,514         87,954         69,521
Total Loans                                          314,960        271,323       221,309        197,814        179,295
Allowance for Loan Losses                              4,281          3,727         3,850          3,667          3,232
Savings Deposits                                      31,605         29,420        26,663         23,006         18,340
Time Deposits                                        144,549        117,127       114,125        114,998        110,189
Long-Term Borrowings                                  12,450         11,766         7,695          3,197          4,852
Shareholder's Equity                                  50,413         46,665        43,110         40,183         35,790

Other Data:
Number of Employees                                      190            182           162            157            146`

---

Release 33-8098 requires the company
to disclose any accounting estimates based on highly uncertain data and any material
impact from adopting an accounting statement or policy.

The primary area in which there is
uncertainty is the potential losses in the loan portfolio. In this area, an estimate is
derived from an analysis of the loan portfolio and the Allowance for Loan Losses of the
loans and the loan types that pose a risk of being a future loss. To prepare for the
potential loss, an increase will be made to the loan loss reserve, if needed, for the
inclusion of the balances or a percentage of the balances of the identified risks in the
loan portfolio. With the need to increase the Allowance for Loan Losses, an increase will
occur in bad debt expense or the Provision for Loan Losses expense which ultimately lowers
the net income which is reflected on the Income Statement. In addition, the building up of
the Allowance for Loan Losses results in a decrease in the total assets reflected on the
balance sheet by the decrease in the net loan portfolio. The amount expensed  which
is a non-cash transaction  for the accounting period will be an adjustment on the
Statement of Cash Flows. In 2006, the allocation to Allowance for Loan Losses increased
expenses and lowered net income and net assets by $965 thousand. For future periods, the
affect on the income statement and the balance sheet will be dependent on the amount of
loan charge offs and the strength of the loan portfolio for the accounting period. If the
charge offs decrease and the analysis of the loan portfolio and the Allowance for Loan
Losses determine no additional provisions are required, the decrease of the accrual
estimate will boost income and net assets. See Allowance and Provision for Loan
Losses for more details.

Managements Discussion and
Analysis of Financial Condition and Results of Operations For the Years Ended December 31,
2006, 2005, and 2004

Managements Discussion and
Analysis of Financial Condition and Results of Operations analyzes the major elements of
Security Capital Corporations balance sheets and statements of income. This section
should be read in conjunction with Security Capital Corporations Consolidated
Financial Statements and accompanying Notes and other detailed information appearing
elsewhere in this report.

This discussion includes various
forward-looking statements with respect to credit quality (including delinquency trends
and the allowance for loan losses), corporate objectives and other financial and business
matters. When used in this discussion the words anticipate,
project, expect, believe, and similar expressions are
intended to identify forward-looking statements. Security Capital Corporation cautions
that these forward-looking statements are subject to numerous assumptions, risks and
uncertainties, all of which may change over time. Actual results could differ materially
from forward-looking statements.

In addition to factors disclosed by
Security Capital Corporation elsewhere in this report, the following factors, among
others, could cause actual results to differ materially from such forward-looking
statements: exposure to local economic conditions, interest rate risk, credit quality,
risks inherent in consumer and commercial lending, competition, and the extent and timing
of legislative and regulatory actions and reforms.

---

Security Capital Corporation earned
$7,239,882 or $2.64 per share for 2006, $6,606,641 or $2.41 per share for 2005, and
$6,132,173 or $2.24 per share for 2004 representing an increase of $1,107,709 or $.40 per
share for the period from year 2004 through year 2006. These changes are due to the
general growth of the banking operation and the effective management of the assets and
liabilities.

Net interest income is the most
significant component of Security Capital Corporations earnings. Net interest income
is the difference between interest and fees realized on earning assets, primarily loans
and securities, and interest paid on deposits and other borrowed funds. The net interest
income is determined by several factors, including the volume of earning assets and
liabilities, the mix of earning assets and liabilities and interest rates. Although there
are a certain number of these factors which can be controlled by management policies and
actions, there are certain other factors, such as the general level of credit demand, the
Federal Reserve Board monetary policy, and changes in tax law that are beyond the control
of management.

The increase in net interest income
in 2006 as compared to 2005 is due primarily to the increase in loans.

The following table sets forth the
major components of interest earning assets and interest-bearing liabilities for three
consecutive years ending December 31, 2006. In the table below, the loan interest includes
loan fees and the interest on securities considers discount accretion and premium
amortization.

`Security Capital Corporation
                       Table 2 - Average Balances; Interest Earned and Interest Yields
                                                (in thousands)

                                                           Years ended December 31,
                                 --------------------------------------------------------------------------------
                                           2006                       2005                      2004
                                 -------------------------- ------------------------- ---------------------------
                                 Average           Average  Average           Average  Average           Average
                                 Balance  Interest Yields   Balance  Interest  Yields  Balance  Interest  Yields
                                 -------- -------- -------- -------- -------- -------- -------- -------- --------
Assets:
Interest-Earning Assets:
Securities                        78,986    3,386     4.29   92,679   3,687     3.98   96,219   3,826     3.98
BV to MV                            -677                        398                     1,295
Total Securities                  78,309    3,386     4.32   93,077   3,687     3.96   97,514   3,826     3.92

Loans (2)
Commerical/Agricultural          240,725   19,759     8.21  197,627  13,888     7.03  150,633   8,951     5.94
Consumer/Installment              69,092    5,826     8.43   68,682   5,275     7.68   66,148   5,050     7.63
Mortgage                             529       44     8.32      859      70     8.15    1,096      89     8.12
Other Personal Loans               5,122      278     5.43    4,155     278     6.69    3,432     952    27.74
Total Loans                      315,468   25,907     8.21  271,323  19,511     7.19  221,309  15,042     6.80

Other Investments
CDs with Other Banks                 374       15     4.01      564      19     3.37      529      19     3.59
Federal Funds Sold                 1,836       88     4.79    3,567     106     2.97    4,488      58     1.29
FHLB Account/Bank Accounts         1,942       84     4.33    3,325      76     2.29    9,721     147     1.51
Total Other                        4,152      187     4.50    7,456     201     2.70   14,738     224     1.52

Total Earning Assets             397,929   29,480     7.41  371,856  23,399     6.29  333,561  19,092     5.72`

---

`Noninterest Earning Assets:

Allowance for Loan Losses         -4,281                     -3,727                    -3,850
Fixed Assets                      18,848                     16,570                    12,612
Other Assets                      23,404                     19,250                    14,951
Cash and Due Froms                14,922                     15,620                    14,150

Total Noninterest Earning
Assets                            52,893                     47,713                    37,863

Total Assets                     450,822                    419,569                   371,424

Liabilities & Shareholder
Equity

Interest-Bearing Liabilities
Deposits:
Interest-Bearing DDA             132,447    3,511     2.65  145,036   2,461     1.70  123,215   1,280     1.04
Savings Deposits                  31,363      470     1.50   29,420     348     1.18   26,663     280     1.05
Time Deposits                    144,549    6,169     4.27  117,127   3,355     2.86  114,125   2,230     1.95

Total Interest-Bearing Deposits  308,359   10,150     3.29  291,583   6,164     2.11  264,003   3,790     1.44

Borrowed Funds
Short-Term Borrowings              3,899      216     5.54    6,272     230     3.67    1,032      15     1.45
FHLB Advances- Short/Long-Term    23,334    1,133     4.86   11,766     506     4.30    7,695     334     4.34

Total Borrowed Funds              27,233    1,349     4.95   18,038     736     4.08    8,727     349     4.00

Total Interest-Bearing
Liabilities                      335,592   11,499     3.43  309,621   6,900     2.23  272,730   4,139     1.52

Non-Interest-Bearing
Liabilities
Non-Interest-Bearing Deposits     58,877                     58,199                    51,798
Other Liabilities                  5,939                      5,084                     3,786

Shareholders' Equity              50,414                     46,665                    43,110

Total Liabilities & SH Equity    450,822                    419,569                   371,424

Net Interest Income &
Interest Rate Spread                       17,981     3.98           16,499     4.06           14,953     4.21

Net Interest Margin                                   4.52                      4.44                      4.48`

---

`The following table sets forth net interest earning assets and liabilities for 2006, 2005 and 2004.
                                        Table 3 - Net Interest Earning Assets
                                                   (in thousands)

                                                           2006               2005               2004
                                                           ----               ----               ----

              Average Interest
                 Earning Assets                           397,929            371,856            333,561

              Average Interest
                 Bearing Liabilities                      335,592            309,621            272,730

              Net                                          62,337             62,235             60,831


         Table 3A -  Volume/Rate  Analysis  depicts the dollar  effect of volume and rate changes from 2004 to 2006.
Variances which were not  specifically  attributable to volume or rate were allocated  proportionately  between rate
and volume using the absolute  values of each for a basis for the  allocation.  Non-accruing  loans were included in
the average loan balances used in determining the yields.

                                         Table 3A - Volume/Rate Analysis
                                                  (in thousands)

                                                      2006 Change from 2005             2005 Change from 2004
                                                 ------------------------------     ----------------------------
                                                  Volume       Rate      Total       Volume       Rate     Total
                                                  ------       ----      -----       ------       ----     -----

INTEREST INCOME: (1)

Loans                                                 3,624     2,767       6,391        3,596       863     4,459

Investment Securities                                  -638       335        -303         -176        39      -137

Other                                                  -149       134         -15         -197       174       -23

Total Interest Income                                 2,837     3,236       6,073        3,223     1,076     4,299

INTEREST EXPENSE: (2)

Interest Bearing
Demand Deposit Accounts                                -334     1,378       1,044          371       813     1,184

Savings Deposits                                         29        94         123           33        35        68

Time Deposits                                         1,171     1,651       2,822           86     1,039     1,125

Borrowed Funds                                          455       157         612          380         7       387

Total Interest Expense                                1,321     3,280       4,601          870     1,894     2,764

NET INTEREST INCOME                                   1,516       -44       1,472        2,353      -818     1,535`

Non-interest expense increased by
13.48% from 2004 to 2005 and increased by 11.48% from 2005 to 2006, primarily because of
increases in salaries and employee benefits. Increases in non-interest expense is
supported by the decision to provide a new state of the art facility for the Robinsonville
Branch. The increase also signifies the move by Security Capital Corporation into an
additional location in Desoto County that required expenditures for banking facilities as
well as training employees to perform the operational procedures. Security Capital
Corporation, in providing state of the art buildings in its Desoto County locations, has
addressed the needs of its staff and of the increase in business as well as presented an
attractive banking establishment for its customers. With the establishment of a new
facility, other costs are involved such as the purchase of new equipment and the increase
in the maintenance costs of the equipment. In addition to the increase in employees,
salaries and employee benefits normally increase in a range from 3% to 7% dependent on the
profits and the attainment of performance goals.

---

Included in the 2004 non-interest
income is an insurance settlement payment of $350,000 for loss of the original branch
building in 2002 due to fire. This payment was partially offset by loss of $123,000 on
disposal of obsolete fixed assets. For 2005, non-interest income increased by $494 from
2004 to 2005, primarily in the area of service charges. Reflected in the 2006 non-interest
income is the gain from the sale of property. In 2006, a gain of $406,000 was due to the
sale of a building that previously housed the trust services and a vacant lot that was
identified as other real estate. The components of non-interest income in 2006 reflect a
steady increase attributable to the growth of the business with no non-routine transaction
of material value to report.

The following table provides details
on non-interest income and expense for the Years ended December 31, 2004 through 2006.

`Table 4 - Non-Interest Income and Expense
                                            (in thousands)

                                                              2006       2005      2004
                                                              ----       ----      ----
              Non-Interest Income:
              Trust Department Income                         1,038       978        911
              Service Charges: Deposits                       4,592     4,333      3,876
              Other Operating Income                          1,296       840        870

              Total Non-Interest Income                       6,926     6,151      5,657

              Non-Interest Expense:
              Salaries & Employee Benefits                    9,276     8,588      7,607
              Occupancy Expense                               1,888     1,553      1,236
              Other Operating Expense                         3,271     2,807      2,567

              Total Non-Interest Expense                     14,435    12,948     11,410`

Security Capital Corporation records a
provision for income taxes currently payable, along with a provision for those taxes in
the future. Such deferred taxes arise from differences in timing of certain items for
financial statement reporting rather than income tax reporting. Security Capital
Corporation benefits in its computation of income taxes due from having tax-exempt
securities and loans.

The loan portfolio constitutes the
major earning asset of Security Capital Corporation and in the opinion of management
offers the best alternative for maximizing interest spread above the cost of funds. The
continuing loan growth is primarily due to Security Capital Corporations move to a
market area that is experiencing rapid growth in the building of residential and
commercial structures. Real Estate Loans and Commercial Loans comprise the largest segment
of the loan portfolio. Commercial loans which bear a higher degree of risk comprise 5.80%
of the loan portfolio at December 31, 2006. Agricultural loans, another type of loan that
carries a higher degree of risk, are only 2.34% of the loan portfolio at December 31,
2006.

---

The Board of Directors of the
Corporation has approved guidelines and policies specific for each type loan. These
guidelines are followed under the direction of the President and the Senior Loan Officer.
All loans made above $25,000 will be presented by the officer originating the loan to a
committee of loan officers for a review of the maker(s), the repayment ability, source of
repayment, type and sufficiency of collateral and length of repayment. The loans reviewed
will be compiled into a report certifying that the loans have been made in accordance with
the Board approved policies and principles. This periodic report is submitted to the
Directors Loan Committee for review and then ratified at the next scheduled meeting. Each
loan officer has an individual lending limit (not to exceed the legal limit of $250,000)
which is awarded based on his or her lending experience and length of service. Any loan in
excess of the loan officers limit must be approved prior to consummation by the
Senior Loan Officer or the President or the Board of Directors or by a combined lending
authority with another loan officer. All loans or lines of credit over $250,000 must be
pre-approved by the Directors Loan Committee.

All loans must have an ample margin
of safety between the loan advance and the current fair value of the collateral. The
benchmark, under normal circumstances, is loan advances for all types of loans and should
not exceed 80% of the current fair value of the collateral. However, decisions of judgment
are needed in special circumstances and this percentage may be reduced by the
abnormality/unusual nature of the collateral. Documentation of the collateral is properly
collected before the loan transaction is completed and will meet the requirements (to name
a few) of the Mississippi Uniform Commercial Code, the Loan Policy, and all pertinent
regulations. In an effort to secure and to protect the liens of the First Security Bank, a
staff provides loan management with periodic reports highlighting loan accounts requiring
additional documentation. In addition, the compliance and loan review officer along with
the internal audit staff monitor the procedures on an ongoing basis with reports for
management of any deficiencies.

The composition of the loan portfolio
consists chiefly of real estate, agricultural, consumer and commercial loans. Real estate
loans, in addition to the general collateral and documentation requirements, require the
performance of an appraisal or evaluation before the credit decision is made. An appraisal
is required for all new real estate loans where the loan amount is $250,000 or greater.
All appraisals must be prepared by a certified appraiser. However, on 1-4 family
residential real estate loans less than $1,000,000, the appraisal may be prepared by a
licensed appraiser. For small loans (less than $250,000), the appraisals may be performed
by a certified or licensed in-house appraiser. Real estate loans are normally considered a
low risk due to the required strength in collateral. Agricultural loans mandate an
extensive review of the customers farming tract record, financial statements, cash
flow statements, projected income and collateral. The depth of these reviews should
determine the honesty, integrity, the debt status, the repayment ability and the
collateral strength of the farmer. To combat this high risk area, the banks policy
is for production loans to be completely secured with tangible assets and not to exceed
60% of the projected cash repayment ability. Consumer loans is another area of high risk
due to the type and location of the collateral and the volatility of the economy which may
affect the payback ability of the customer. The consumer loans normally require the
pledging of collateral. However, up to $10,000 may be extended without the pledging of the
collateral but must be based on the creditworthiness of the loan applicant. Credit card
loans (a very high risk area)  in the consumer group  require a financial
statement submitted in order for a credit limit of $5,000 and over to be granted.
Commercial loans require a review of the purpose and the assessment of the future benefit
of the operation, the financial statements, and the collateral on the onset to determine
the strength of the potential loan asset. The degree of risks associated with the
commercial lending is dependent on the completeness of the initial loan evaluation
process.

The bank monitors its loans in a
manner that the loan portfolio will not represent an excessive risk due to concentrations
of credit from a large volume of economically related assets advanced to one individual,
related groups of borrowers or industry. Loans to one individual or corporation shall not
exceed the limits set by state law. Mississippi state law states that the limit of lending
to one individual or entity shall not exceed 20% of unimpaired capital and reserves. To
keep abreast of the loan concentrations, a tracking of individual borrowers, related
groups of borrowers and industry groups as well as geographical locations is compiled in a
quarterly report that is presented to the Directors Loan Committee.

---

`The following table reflects outstanding balances by loan types for the past five years.

                                            Table 5 - Loans by Type
                                                (in thousands)

                                                              2006       2005       2004       2003       2002
                                                              ----       ----       ----       ----       ----

Commercial, Financial & Agricultural                         38,349     30,826     28,077     32,878     38,229
Real Estate - Construction & Development                    105,545     86,404     49,189     37,116     27,165
Real Estate - Mortgage                                      153,525    149,602    124,911    103,348     96,737
Installment Loans to Individuals                             26,858     28,833     29,898     28,529     22,602
Other                                                         2,381      2,280      2,328      2,553      2,782

Total Loans                                                 326,658    297,945    234,403    204,424    187,515



         The following table reflects the maturity  schedule or repricing  frequency of all loans that will reprice
or mature within one year.

                                                 Table 6 - Loan Liquidity
                                                      (in thousands)

                                                                      Within     1 thr 5     Over
                                                                      1 Year      Years     5 Years     Total
                                                                      ------      -----     -------     -----
           Loans That Will Reprice or Will Mature:
           Allocation by Maturity Date:
           Commercial, financial and agriculture loans                 26,948     10,324        488      37,760
           Construction and development                                93,471     12,622         41     106,134
                                                                      120,419     22,946        529     143,894

           Repricing frequency of loan types above:
           Fixed Rate                                                  36,002     15,644        301      51,947
           Variable Rate                                               84,417      7,302        228      91,947

           Total                                                      120,419     22,946        529     143,894
           Percent of Total                                            83.69%     15.95%      0.36%     100.00%`

The provision for loan losses
represent charges made to earnings to maintain an adequate allowance for loan losses. The
allowance is maintained at an amount believed by management to be sufficient to absorb
losses inherent in the credit portfolio. Factors considered in establishing an appropriate
allowance include: a careful assessment of the financial condition of the borrower; a
realistic determination for the value and adequacy of underlying collateral; the condition
of the local economy and the condition of the specific industry of the borrower; a
comprehensive analysis of the levels and trends of loan categories; and review of
delinquent and classified loans.

Security Capital Corporation
maintains a comprehensive loan review program to evaluate loan administration, credit
quality, and loan documentation. This program includes a regular review of problem loans,
delinquencies, and charge-offs. The adequacy of the allowance for loan losses is evaluated
on a quarterly basis. This evaluation focuses on specific loan reviews, changes in the
type and volume of the loan portfolio given the current and forecasted economic
conditions, and historical loss experience. Any one of the following conditions may
necessitate a review of a specific loan: a question of whether the customers cash
flow or net worth may not be sufficient to repay the loan; the loan has been criticized in
a regulatory examination; the accrual of interest has been suspended; serious delinquency;
or other reasons where either the ultimate collectibility of the loan is in question or
the loan has other special or unusual characteristics which require special monitoring.

---

Activity in the allowance for loan
losses is reflected in Table 7  Analysis of Allowance for Loan Losses. The recorded
values of loans and leases actually removed from the consolidated balance sheets are
referred to as charge-offs and, after netting out recoveries on previously charged-off
assets, become net charge-offs. Security Capital Corporations policy is to
charge-off loans, when, in managements opinion, the loan is deemed uncollectible,
although concerted efforts are made to maximize recovery.

`Security Capital Corporation
                                      Table 7 - Allowance for Loan Losses
                                                (in thousands)

                                                    2006          2005         2004          2003         2002
                                                    ----          ----         ----          ----         ----

Balance at Beginning of Year                        3,899         3,598        3,665         3,455        3,039

Loans Charged-Off

Commercial, Financial & Agricultural                  105           250          242           146           75

Real Estate - Construction & Development               35            20            6             4            -

Real Estate - Mortgage                                 44           313          225            69           75

Installment Loans to Individuals                    1,017           971          655           167          584

Other                                                  13            63            -           324            4

Total Charge-Offs                                   1,214         1,617        1,128           710          738

Charge-Off Recovered

Commercial, Financial & Agricultural                    8            23            2            36            8

Real Estate - Construction & Development                4             -            -            26            6

Real Estate - Mortgage                                 21            49           24             -           39

Installment Loans to Individuals                      648           383          398           104          423

Other                                                   3            23            -           208            6

Total Recoveries                                      684           478          424           374          482

Net Charge-Offs                                       530         1,139          704           336          256

Current Year Provision                                965         1,440          637           546          672

Balance at End of Year                              4,334         3,899        3,598         3,665        3,455`

---

`Loans at End of Year (Net of Allowance)           322,324       294,046      230,805       200,759      187,515

Ratio: Allowance to Loans                           1.34%         1.33%        1.56%         1.83%        1.84%

Average Loans                                     315,468       271,323      221,309       197,814      179,295

Ratio:  Allowance to Average Loans                  1.37%         1.44%        1.63%         1.85%        1.93%

Ratio:  Net Charge Offs to Average Loans            0.17%         0.42%        0.32%         0.17%        0.14%`

Nonperforming assets and relative
percentages to loan balances are presented in Table 8  Nonperforming Assets. The
level of nonperforming loans and leases is an important element in assessing asset quality
and the relevant risk in the credit portfolio. Nonperforming loans include non-accrual
loans, restructured loans, and loans delinquent 90 days or more. Loans are classified as
non-accrual when management believes that collection of interest is doubtful, typically
when payments are past due over 90 days, unless well secured and in the process of
collection. Another element associated with asset quality is other real estate owned
(OREO), which represents properties acquired by Security Capital Corporation through loan
defaults by customers.

`Table 8 - Nonperforming Assets
                                                      (in thousands)

                                                         2006       2005        2004        2003       2002
                                                         ----       ----        ----        ----       ----
              Loans:
              Non-accrual                                  819         15         172         78         590

              90 Days+ Past-Due                           2308        786         724        629         307

              Total Nonperforming Loans                  3,127        801         896        707         897
              As % of Total Loans                        0.96%      0.27%       0.38%      0.35%       0.48%

              Other Real Estate                            365        558         165        129         234
              As % of Total Loans                        0.11%      0.19%       0.07%      0.06%       0.12%

              Loan Loss Reserve                          4,334      3,899       3,598      3,665       3,455

              Loan Charge-Offs                            1214       1617        1128        710         738

              Total Loans                              326,658    297,945     234,403    204,424     187,515`

The consolidated reserve for loan
losses reflected in Table 7 are the balances remaining after the charge offs for the year.

The loan portfolio contained $819 thousand
in non-accrual loans represented by five loans and an aggregate of $2,308 thousand of 90
days past due and over as of December 31, 2006. If the non-accrual loans had been
performing loans during the 2006 period, interest income would have shown an addition of
$20 thousand. The 90 days and over past due loans, classified as being well-secured and
capable of being collected, were not subject to a non-accrual status and interest is
accrued and recognized daily as income. The interest income recognized in 2006 for the
loans classified as 90 days and over past due at December 31, 2006, totaled $110 thousand.

---

As of December 31, 2006, loan
management had not identified any loans requiring greater than normal supervision other
than the loans in the categories of Watch, Substandard and Doubtful indicated below.
Analysis of possible workout plans does not anticipate any deficiency. The actual
deficiency depends on the market for the equipment and real estate at the time of
disposal.

Management believes loans classified
for regulatory purposes as loss, doubtful, or substandard that are not included in
nonperforming or impaired loans do not represent or result from trends or uncertainties
which will have a material impact on future operating results, liquidity, or capital
resources.

In addition to loans classified for
regulatory purposes, management designates certain loans for internal monitoring purposes
in a watch category. Loans may be placed on managements watch list as a result of
delinquent status, concern about the borrowers financial condition or the value of
the collateral securing the loan, substandard classification during regulatory
examinations, or simply as a result of managements desire to monitor more closely a
borrowers financial condition and performance. Watch category loans may include
loans with loss potential that are still performing and accruing interest and may be
current under the terms of the loan agreement; however, management may have a significant
degree of concern about the borrowers ability to continue to perform according to
the terms of the loan. Loss exposure on these loans is typically evaluated based primarily
upon the estimated liquidation value of the collateral securing the loan. Also, watch
category loans may include credits which, although adequately secured and performing,
reflect a past delinquency problem or unfavorable financial trends exhibited by the
borrower.

All watch list loans are subject to
additional scrutiny and monitoring. Security Capital Corporations policies require
loan officers to identify borrowers that should be monitored in this fashion and believe
this process ultimately results in the identification of problem loans in a more timely
fashion. At December 31, 2006, Security Capital Corporation in its Loan Loss Reserve
Analysis classified $12,931,915 with a rating of Watch, $1,642,198 with a rating of
Substandard, and $822,008 with a rating of Doubtful.

All other real estate is carried by
Security Capital Corporation at the lower of cost or market value less costs to dispose.
Any normal expense of holding the other real estate is expensed as incurred. Expenditures
occurring from other real estate that is substantial or that extends the life of the asset
are capitalized.

An analysis of the loan portfolio and
the loan loss reserve or allowance is conducted on a quarterly basis by the President and
loan administrators and approved by the Board of Directors to insure that the bank is well
protected against any potential and/or unexpected loan losses. To arrive at the proper
grades or classifications needed in the loan loss reserve analysis, each loan officer
reviews each loan in his or her portfolio. The review process will include consideration
of the payment history of the customer, bankruptcy status, and stimuli in the economy or
in the area that may affect the future cash flow of the customer. The loan officer and/or
the senior loan administrator will grade the loan as exceptional, satisfactory, watch,
substandard or doubtful. This quarterly review and grading process is conducted on an
ongoing basis to identify the loans that are non-performing as well as loans that no
longer require an allocation in the loan loss reserve. The required reserve will fluctuate
from quarter to quarter due to the loan portfolio performance being monitored.

The composition of the allowance or
reserve for loan losses is based on the risk elements in the loan portfolio. Loans with
the highest risk are graded doubtful. These would be loans that have been restructured due
to poor payment performance, insufficient collateral to support the loan balance,
non-accrual loans and loans that have been modified due to a change in the financial
condition of the borrower to such an extent that a loss would most normally be expected.
Loans with the second highest risk are graded substandard. These loans normally portray
extremely weak credit with a potential for either partial or total loss which must be
recognized. With these loans, legal action is anticipated with the debt not being retired
through liquidation of the collateral. The next risk level is the loans that are
considered to be on the watch list. These loan customers display inadequate
financial strength or credit to provide loan management with the assurance that they will
meet the scheduled repayment plan. Loan customers who have filed bankruptcy present a high
risk due to likelihood of the payment plan may not be re-affirmed. Due to the type of
collateral or lack of collateral, consumer loans without real estate are considered
another area of risk requiring more reserves. Agricultural loans, by the nature of the
purpose and the unforeseen elements in the farming process, complete the loans identified
as having more than the normal risks.

---

`Table 8A - Allocation of the Allowance for Loan Losses
                                                                (Dollars in thousands)
                                                                    At December 31,
                          -----------------------------------------------------------------------------------------------------
                                 2006                 2005                2004                2003                 2002
                          -------------------- ------------------- ------------------- -------------------- -------------------
                           Amount    Percent    Amount   Percent    Amount   Percent    Balance   Percent   Balance   Percent
                          --------- ---------- --------- --------- --------- --------- ---------- --------- --------- ---------

Commercial, Financial
   & Agricultural         $    590     13.61%   $   401   10.28%    $   538   14.95%    $   856    23.36%    $ 1,006   29.12%

Real Estate - Construction
   & Development               913     21.06%       865   22.19%        522   14.51%        461    12.58%        298    8.63%

Real Estate - Mortgage       1,922     44.34%     1,906   48.88%      1,735   48.22%      1,533    41.83%      1,246   36.06%

Installment Loans
   to Individuals              460     10.62%       575   14.75%        780   21.68%        732    19.97%        816   23.62%

Other Loans                    413      9.54%       152    3.90%         23    0.64%         26     0.71%         28    0.81%

Unallocated                     36      0.83%         -        -          -        -         57     1.56%         61    1.77%
                          --------- ---------- --------- --------- --------- --------- ---------- --------- --------- ---------

Total Loans               $  4,334    100.00%  $  3,899  100.00%    $ 3,598  100.00%   $  3,665   100.00%    $ 3,455  100.00%
                          ========= ========== ========= ========= ========= ========= ========== ========= ========= =========`

Note:  Percent in the above table represents the amount represented by the
loan type in the loan portfolio.

The allowance is based on regular,
quarterly assessments of the estimated losses inherent in the loan portfolio. Our
methodology for assessing the appropriateness of the allowance consists of several key
elements, which include the formula allowance and specific allowances for identified
problem loans. The portfolio is segregated into nine various rating codes based on a risk
analysis of the portfolio prepared by management. Loss factors are based both on our loss
experience as well as on significant factors that, in managements judgment, affect
the collect-ability of the portfolio as of the evaluation date.

The appropriateness of the allowance
is reviewed by management based upon our evaluation of then-existing economic and business
conditions affecting our key lending areas and other conditions, such as credit quality
trends (including trends in delinquencies, nonperforming loans and foreclosed assets
expected to result from existing conditions), collateral values, loan volumes and
concentrations, specific industry conditions within portfolio segments and recent loss
experience in particular segments of the portfolio that existed as of the balance sheet
date and the impact that such conditions were believed to have had on the collect-ability
of the loan. Management reviews these conditions quarterly. To the extent that if any of
these conditions is evidenced by a specifically identifiable problem credit or portfolio
segment as of the evaluation date, managements estimate of the effect of this
condition may be reflected as a specific allowance applicable to this credit or portfolio
segment.

The allowance for loan losses is
based on estimates of losses inherent in the loan portfolio. Actual losses can vary
significantly from the estimated amounts. Our methodology as described permits adjustments
to any loss factor used in the computation of the formula allowance in the event that, in
managements judgment, significant factors which affect the collect-ability of the
portfolio as of the evaluation date are not reflected in the loss factors. By assessing
the estimated losses inherent in the loan portfolio on a quarterly basis, we are able to
adjust specific and inherent loss estimates based upon any more recent information that
has become available.

---

Assessing the adequacy of the
allowance for loan losses is inherently subjective as it requires making material
estimates, including the net realizable value of collateral expected to be received on
impaired loans that may be susceptible to significant change. In the opinion of
management, the allowance, when taken as a whole, covers all known and inherent losses in
the loan portfolio that are both probable and reasonable to estimate.

At December 31, 2002, the loan
portfolio analysis required an increase in the loan loss reserve. The major stimulus for
the increase was the growth in the loan portfolio from $170 million to $187.5 million. A
decrease in the amount allocated for doubtful loans from $38 thousand to $7 thousand was
attributed to a decrease in the balance of loans with this grade. The loan loss reserve at
December 31, 2002, was allocated as follows: substandard loans, $201 thousand; doubtful
loans, $7 thousand; bankruptcy loans, $350 thousand; credit card loans, $39 thousand;
agricultural loans, $742 thousand; consumer loans without real estate collateral, $645
thousand; watch loans, $133 thousand; and the remainder of the adjusted loan portfolio,
$1,277 thousand.

Due to the growth in the loan
portfolio from $187.5 million to $204.4 million during 2003, the loan portfolio analysis
required an increase in the loan loss reserve. The allocation for doubtful loans reflected
an increase of $17 thousand primarily due to using a specific allocation for a projected
loss. A specific allocation is a deficiency when the balance of the loans exceeds the
market value of the collateral. The loan loss reserve at December 31, 2003, was allocated
as follows: substandard loans, $166 thousand; doubtful loans, $25 thousand; bankruptcy
loans, $439 thousand; credit card loans, $38 thousand; agricultural loans, $575 thousand;
consumer loans without real estate collateral, $540 thousand; watch loans, $260 thousand;
and the remainder of the adjusted loan portfolio, $1,622 thousand.

At December 31, 2004, the loan loss
reserve reflected a small decrease of $67 thousand from the previous year. The loan loss
reserve at December 31, 2004, was composed of the following: substandard loans, $160
thousand; an allocation for deemed uncollectible doubtful loans, $113 thousand; bankruptcy
loans, $448 thousand; credit card loans, $49 thousand; agricultural loans, $288 thousand;
consumer loans without real estate collateral, $558 thousand; watch loans, $202 thousand;
and the remainder of the adjusted loan portfolio, $780 thousand.

The loan loss reserve at December 31,
2005, showed an increase of $291 thousand from the previous year, which can be justified
by the increase in the loan portfolio. The loan loss reserve at December 31, 2005, was
represented by substandard loans ($195 thousand), doubtful loans ($5 thousand), bankruptcy
loans ($577 thousand), credit card loans ($42 thousand), agricultural loans ($145
thousand), consumer loans without real estate collateral ($543 thousand), watch loans
($301 thousand) and the remainder of the adjusted loan portfolio ($1,992 thousand). In the
third and fourth quarter of 2005, management looked intently at the adequacy of the loan
loss reserve with the loan losses of $1.4 million being recognized for the year. Analysis
at the close of 2005 of the loan loss reserve considered loan growth in specific market
areas, and potential problem accounts forecasted changes in the allocation and methodology
in the loan loss reserve calculations.

At December 31, 2006, the loan loss
reserve reflected a growth of approximately $435 thousand from December 31, 2005. The
allocation for substandard loans, which increased from 2005 by $341 thousand, remained
basically unchanged at approximately $180 thousand due to the change in the historic
percentage. Bankruptcy loans decreased by approximately $1,064 thousand and caused a
decrease in its loan loss reserve allocation of $235 thousand. The loans classified as
watch loans increased by approximately $2.9 million. This increase created an increase in
the watch loans allocation by $447 thousand. The allocation for doubtful loans increased
by $372 thousand in 2006, attributable to an increase in the level of doubtful loans and
the estimated loss. The doubtful loans grew from $14 thousand in 2005 at an estimated loss
of $5 thousand to $822 thousand in 2006 at an estimated loss of $377 thousand. The loan
loss reserve for December 31, 2006, also includes consideration and allocation as follows:
construction loans of $31.6 million, $316 thousand, commercial real estate loans of $74.7
million, $374 thousand; nonfarm/nonresidential loans of $91.1 million, $228 thousand and
economic factors based on loans of $327 million, $819 thousand.

---

Loan charge offs in 2005 and 2006
were $1,617 and $1,214 thousand, respectively, reflecting a decrease over the average loan
charge offs of $1,152 thousand for the period of 2003 through 2005. This continuing level
in loan charge offs mandates the need to maintain the status in the provisions for the
Allowance for Loan Losses for 2005 and 2006, respectively, $1,440 thousand and $965
thousand. The significant increase in 2005 from 2004 of $803 in the provision is the
resulting action of a continuing analysis of problem loans, a readiness to recognize
losses, and a dedication to maintain a sufficient level of a reserve. The provisions in
2006 continued that dedication of maintaining the reserve based on historic experience and
current trends. The latest regulatory exam as of September 30, 2005, however, classified
$1.9 million of loans as substandard, up from $1.6 million as reflected in the regulatory
exam as of December 31, 2003. This increase will be a gauge in the analysis of needed loan
provisions. Recoveries reflected an increase in 2006 from $478 thousand to $684 thousand
as a result of the diligent efforts by loan and deposit personnel to regain principal from
the classified loan activity. The ratio of the Allowance for Loan Losses to Loans for the
years presented reflects a range from a low of 1.33% in 2005 to a high of 1.84% in 2002.

Securities are identified as either
Available for Sale, Held to Maturity or Other Securities. Securities held to maturity are
those securities which Security Capital Corporation has both the intent and the ability to
hold to maturity and are reported at the amortized cost. Securities available for sale are
those securities which Security Capital Corporation may decide to sell if needed for
liquidity, asset/liability management or other reasons. Securities that are available for
sale are reported at market value with the unrealized gains or losses included as a
separate component of equity, net of tax. Other securities are carried at cost and are
investments in FHLB, First National Bankers Bankshares and Federal Agricultural
Mortgage Corporation.

`Table 9 - Securities
                                                        (in thousands)

                                                      2006         2005        2004        2003         2002
                                                      ----         ----        ----        ----         ----
        Securities Available for Sale
        U. S. Treasuries                                   -           -           -          702         713
        U. S. Agencies                                 5,441      11,175      23,316       28,560      15,026
        Mortgage Backed                               20,915      20,872      22,419        9,611      17,158
        State, Municipals & Other                     34,672      46,902      50,934       37,447      41,982

        Total Securities AFS                          61,028      78,949      96,669       76,320      74,879

        Securities Held to Maturity
        U. S. Treasuries                                   -           -           -           -            -
        U. S. Agencies                                     -           -           -           -            -
        Mortgage Backed                                    -           -           -           -            -
        State, Municipals & Other                      7,850       2,047       2,050        2,053           -

        Total Securities HTM                           7,850       2,047       2,050        2,053           -

        Other Securities
        Equities                                       2,250       1,456       1,259          991         738

        Total Securities                              71,128      82,452      99,978       79,364      75,617`

The security  portfolio  is composed of U. S.  Treasury  securities,
U. S. Agency  securities,  State and
Municipal securities - both tax-exempt and taxable, equities, and mortgage-backed securities.

---

`Table 10
                                            Securities Maturity & Repricing Schedule
                                                         For 12/31/2006
                                                         (in thousands)

                                                      1 Year         After 1 Year     5 to 10         Over
                                                     and Less        Thru 5 Years      Years         10 Years
                                                     --------        ------------      -----         --------
                     Agencies
                     Fair Value                        1,979             1,502           986            974
                     Book Yield                        4.000             5.226         3.947          3.947

                     Taxable Municipals

                     Fair Value                          707               238           150              -

                     Book Yield                        5.472             6.218         4.790              -

                     Municipals

                     Fair Value                        3,222            15,519        11,575         11,411
                     Book Yield                        5.190             5.280         6.086          7.402


                     Equity-FHLB                           0                 0             0          1,746
                     Book Yield                                                                       4.530

                     Other Securities                      0                 0             0            504

                     MBS
                     Fair Value                            0                 0             0         20,915
                     Book Yield                                                                       5.180

                     Total Fair Values                 5,908            17,259        12,711         35,550
                     Weigh Bk Yields                   4.830             5.290         5.900          5.750



                    Table 11 - Securities Weighted Maturity and Tax Equivalent Yield by Classification
                                                     December 31, 2006

                                                                                          Weighted
                                                                 Weighted              Tax-Equivalent
                                                                 Maturity                   Yield
                                                                 --------              ---------------
              U. S. Agencies                                     4.88 Yrs                  4.315%
              Mortgage Backed                                    4.82 Yrs                  5.180%
              Taxable Municipals                                 1.62 Yrs                  5.551%
              Tax-Exempt Municipals                              6.84 Yrs                  6.065%

              Total Securities Portfolio                         5.98 Yrs                  5.645%`

---

The weighted tax-equivalent yields
reflected in the table above were calculated using amortized costs and a tax rate of 34%.

The securities portfolio carries
varying degrees of risk. Investments in U. S. Treasury and U. S. Agency securities have
little or no credit risk. Mortgage-backed securities are substantially issues of federal
agencies. Obligations of states and political subdivisions are the areas of highest
potential credit exposure in the portfolio. This risk is minimized through the purchase of
high quality investments. When purchased, obligations of states and political subdivisions
and corporate bonds must have a credit rating by Moodys or Standard and Poors
of A or better. The risk of non-rated municipal bonds is minimized by limiting
the amounts invested in local issues. Management believes the non-rated securities are of
high equality. No securities of an individual issuer exceeded 10% of Security Capital
Corporations shareholders equity as of December 31, 2006. Security Capital
Corporation does not use off-balance sheet derivative financial instruments as defined in
Statement of Financial Accounting Standards No. 119, Disclosure about Derivative
Financial Instruments and Fair Value of Financial Instruments.

In 2003 and 2004, the securities
investment was increased as investment decisions favored securities investments when
adequate loan funding was maintained. In 2005 and 2006, the securities portfolio decreased
as the loan demand increased without an echo of the same increase in the deposits.

Security Capital Corporation offers a
wide variety of deposit services to individual and commercial customers, such as
non-interest-bearing and interest-bearing checking accounts, savings accounts, money
market deposit accounts, and time deposit. The deposit base provides the major funding
source for earning assets. Total average deposits have shown steady growth over the past
few years. Time deposits continue to be the largest single source of Security Capital
Corporations deposit base.

A five year schedule of average
balances of deposits by type is presented in Table 12. Also, the maturities of time
deposits greater than $100,000 are presented in Table 13.

`Table 12 - Deposit Information
                                                      (in thousands)

                                        2006               2005               2004              2003               2002
                                -----------------  -----------------  ----------------  -----------------  ------------------
                                 Average     Avg    Average     Avg    Average    Avg    Average     Avg    Average     Avg
                                 Balance    Rate    Balance    Rate    Balance   Rate    Balance    Rate    Balance    Rate
                                ---------  ------  ---------  ------  ---------  -----  ---------  ------  ---------  -------
Noninterest- Bearing
   Demand                          58,635             57,954            51,557             47,034             41,552
   Savings                            242                245               241                226                213
Interest-bearing
   Demand                         132,447   2.65     145,036   1.70    123,215   1.04      93,409   1.00      79,950   1.34
   Savings                         31,363   1.50      29,420   1.18     26,663   1.05      22,780   1.13      18,127   1.58
   Time Deposits                  144,549   4.27     117,127   2.86    114,125   1.95     114,998   2.11     110,189   2.67
                               -----------        -----------        ----------        -----------        -----------
                                  367,236            349,782           315,801            278,447            250,031
                               ===========        ===========        ==========        ===========        ===========


                                          Table 13 - Maturity Ranges of Time Deposits
                                               With Balances More Than $100,000
                                                    As of December 31, 2006
                                                        (in thousands)


                          3 Months or Less                                                    $33,704
                          Over 3 Months thru 6 Months                                          17,158
                          Over 6 Months thru 12 Months                                         21,199
                          Over 12 Months                                                        5,108
                                                                                      ----------------
                                                                                               77,169
                                                                                      ================`

---

Security Capital Corporation in its
normal course of business will acquire large certificates of deposit (time deposits),
generally from public entities that exhibit a variety of maturities. These funds are
acquired on a bid basis and are considered to be part of the deposit base of Security
Capital Corporation.

Aside from the core deposit base and
large denomination certificates of deposit mentioned above, the remaining funding sources
include short-term and long-term borrowings. As of December 31, 2006, Security Capital
Corporations short-term borrowings consisted of $1,443,000 of the Treasury Tax and
Loan open-end note and $14,000,000 of the $25,937,000 borrowed from the Federal Home Loan
Bank. As of December 31, 2005, the short-term borrowings were composed of $1,105,000 in
the Treasury, Tax and Loan open-end note. Security Capital Corporation foresees short-term
borrowings to be a continued source of liquidity and will continue to use these borrowings
as a method to fund short-term needs.

At the end of 2005 and 2006, Security
Capital Corporation had long-term debt in the amount of $12,991,000 and $11,937,000,
respectively. Scheduled principal payments of $625 thousand are due to the Federal Home
Loan Bank in 2007. The rates on the debt with Federal Home Loan Bank as of December 31,
2005, ranged from 2.335% to 6.575% with the maturities ranging to 2025. The maximum
month-end balance during 2006 with Federal Home Loan Bank occurred at the end of July with
the balance of $33,188,784. For 2006, the average outstanding long-term balance was
$12,450,240 for debt with Federal Home Loan Bank.

Liquidity management is the process
by which Security Capital Corporation ensures that adequate liquid funds are available to
meet financial commitments on a timely basis. These commitments include honoring
withdrawals by depositors, funding credit obligations to borrowers, servicing long-term
obligations, making shareholder dividend payments, paying operating expenses, funding
capital expenditures and maintaining reserve requirements. Interest rate risk is the
exposure to Corporation earnings and capital from changes in future interest rates. All
financial institutions assume interest rate risk as an integral part of normal operations.
Managing and measuring the interest rate risk is the process that ranges from reducing the
exposure of Security Capital Corporations interest margin regarding swings in
interest rates assuring that there are sufficient capital and liquidity to support future
balance sheet growth.

Liquidity risk is the risk to a
banks earnings and capital arising from its inability to meet obligations when they
come due without incurring losses. Bank management must ensure that sufficient funds are
available at a reasonable cost to meet potential demands from both funds providers and
borrowers.

Security Capital Corporation
addresses short-term liquidity from both an asset liquidity and a liability liquidity
viewpoint. Short-term asset liquidity is provided by money market assets, the investment
portfolio, and readily saleable bank assets. Short-term liability liquidity is measured by
the liabilities considered to be more volatile in nature and more likely to be sensitive
to changes in interest rates. Short-term liquidity is monitored thru the asset/liability
reports in a measure of a coverage ratio and a crisis coverage ratio. These ratios measure
the ability of the bank to raise cash quickly and how many times this cash will cover
volatile liabilities. For December 31, 2006, the coverage ratio was 4.45X  which was
in compliance of the policy limit of 1X. Of this ratio, the calculated reserves or the
source for cash was $167.0 million which would be needed to meet the demand of the
identified volatile liabilities and unused loan commitments of $25.3 million and $12.2
million, respectively. The crisis ratio looks at the coverage of volatile liabilities
under a scenario where cash is needed immediately. The crisis ratio for December 31, 2006,
was 1.66X, adequately within the policy limit of .50X. The identified reserves for a
crisis ratio totaled $121.4 million and the volatile liabilities and unused loan
commitments totaled $73.2 million. Additionally, the bank monitors liquidity by looking at
the ratio of cash and short-term investments versus non-core funding. The liquidity ratio
for December 31, 2006, was in compliance with the policy limit of 15% with a ratio of
18.1%. This ratio measures the net cash and short-term marketable assets of $64.6 million
to the net deposits and short-term liabilities of $356.8 million. The corporations
dependency ratio of 21.0% reflected a slight noncompliance issue with the policy ratio of
20.0% at December 31, 2006 which is attributable to an increase of the net volatile
liabilities. This ratio measures the net volatile liabilities to the earning assets less
short-term investments.

Long-term liquidity is the ability of
the bank to maintain its reputation in the market and to produce an acceptable return to
its shareholders. Adverse effects of reputation deterioration could cause depositors and
other funds providers as well as investors, to seek higher compensation and negatively
impact the banks earnings and capital. If negative public opinion occurred,
withdrawals of funding could become debilitating. The bank will take steps to minimize its
reputation risk and the potential impact on liquidity. One step is to monitor its reliance
on credit-sensitive funding. Another issue that is monitored is asset growth. Strategic
consideration will be given to the development of new business. A significant component of
reputation risk is the underlying credit underwriting process of the financial
institution. Continued stringent underwriting standards for both existing and for new
business will be employed. Additionally, concentrations of credit will be closely
monitored.

---

At December 31, 2006, we had
outstanding loan origination commitments and unused commercial and commercial and retail
lines of credit of $38.4 million. Letters of credit commitments totaling $16 million
consisted of financial standby letters of credit of $8.1 million, performance standby
letters of credit of $1.6 million and commercial letters of credit of $6.3 million. We
anticipate that we will have sufficient funds available to meet current origination and
other lending commitments. As a contingency plan for significant funding needs, the
Asset/Liability Management Committee may also consider the sale of securities, sale of
loans and/or the temporary curtailment of lending activities. Certificates of deposit that
are scheduled to mature within one year totaled approximately $137 million at December 31,
2006. We expect to retain a substantial majority of these certificates of deposit.

The asset/liability committee is
responsible for managing liquidity issues and interest rate risk, among other matters.
Various interest rate movements are factored into a simulation model to assist the
asset/liability committee in assessing interest rate risk. The committee analyzes the
results of the simulation model to formulate strategies to effectively manage the interest
rate risk that may exist.

The liquidity of Security Capital
Corporation is dependent on the receipt of dividends from First Security Bank. Management
expects that in the aggregate, First Security Bank will continue to have the ability to
provide adequate funds to Security Capital Corporation.

The Interest Rate Risk Management
System is comprised of six different steps. They are: Board Oversight; Senior Management
Oversight; Risk Limits and Controls; Risk Identification and Measurement; Risk Monitoring
and Reporting; and Independent Review. A strategic plan highlighting risk tolerance levels
is established and monitored by the Board. Senior management implements the strategic plan
of goals, objectives and risk limits. Risk limits are set for Earnings at Risk, Gap
Analysis, Economic Value and Value at Risk. The status of liquidity and rate sensitivity
is forecasted in a quarterly report, Asset/Liability Performance Analysis which is
provided by an independent outside organization. The resulting analysis report notifies
Security Capital Corporation of compliance with the limitations/goals established by
Security Capital Corporation and regulatory agencies as well as projecting a flat rate
scenario where rates do not change from the starting point of the analysis, the scenario
of rates increasing by 200 and 300 basis points and the scenario of rates decreasing by
200 or 300 basis points.

The areas of interest rate risk which
Security Capital Corporation is susceptible are Repricing Risk, Option Risk and Yield
Curve/Basis Risk. Repricing Risk is the difference in the timing of the assets and the
liabilities due to either maturities or repricing within a certain time frame. Option Risk
is the interest rate related options embedded in the banks assets and liabilities
which change the cash flow characteristics of the assets and liabilities. Yield
Curve/Basis Risk are the changes in the relationship between different interest rates with
the same maturity or interest rates across a maturity spectrum which create compression or
expansion of net interest margins.

Gap Analysis is the analytical tool
that places maturing and repricing assets and liabilities into time buckets to measure the
short and long term pricing imbalances for a given period. The broad guidelines set by
Security Capital Corporation for this measure are set in time frames of three months, six
months, and twelve months with a +/- cumulative gap position limit of 30%. Earnings at
Risk (EAR), another analysis tool, is considered managements best source of managing
short-term interest rate risk (in a one-year time frame.) The EAR variance is the
percentage change in net interest income over 12 months relative to the base case scenario
(with rates being flat) for a +/- instantaneous parallel movement. The first limit or
level is set at 10% of net interest income which will serve as a warning to management.
The second level of 15% represents a risk earnings and is not acceptable to management.
When this occurs, an explanation of the variance is reported to Asset/Liability Committee
and to the Board of Directors with an action plan to decrease the variance. Among the
possible actions are loan sales, use of FHLB borrowings and investment portfolio
restructuring. Economic Value of Equity is the tool for measuring long-term interest rate
risk. This tool measures the long-term safety and soundness of the institution being
compromised for the sake of short-term results. The two limits of Economic Value of Equity
are level I designated having a variance of 30-39% and level II designated having a
variance of 40% or higher and uses the same concern or action level as for Earnings at
Risk

---

The analysis performed using December
31, 2006, data projecting for the period ending December 31, 2007, reflected the net
interest income at $19.8 million. Return on Assets and Return on Equity at 1.70% and
14.85%, respectively, compare to December 31, 2006, actuals at 1.58% and 14.36%,
respectively. The model for December 31, 2006 has shifted to an overall neutrality to
changes in rates as compared to the model for December 31, 2005, which reflected a
liability sensitive status. In the current model, the net interest margin remains the same
in the 200 ramp up and in the up 100 ramp. For the 200 ramp down and the 100 ramp down,
the model reflects a .06% and .05% increase, respectively. The Economic Value of Equity
increased 14.1% in the up 200 ramp. The down 200 ramp results in a decrease to net
interest income of 14.3% which is well within the policy limit of 30%. As rates move down
100 basis points we see a decrease in net interest income of 1.1%. The model shows a
best place position of reaping some benefit if rates fall and only a slight
risk if rates rise.

First Security Banks source of
funding is predominantly core deposits consisting of both commercial and individual
deposits, maturities of securities, repayments of loan principal and interest, federal
funds purchased, and long-term borrowings from the FHLB. With the deposit base being
diversified between individual and commercial accounts, First Security Bank avoids
dependence on large concentrations of funds. Security Capital Corporation does not solicit
certificates of deposit from brokers. The primary sources of liquidity on the asset side
of the balance sheet are federal funds sold and securities classified as available for
sale. Most of the investment securities portfolio are classified in the available for sale
category and are subject to be sold should liquidity needs arise.

In 2004, the funds provided by
operation activities totaled $6.4 million. The funds available from operations,
maturities, calls and sales of securities of $36 million, and increases in deposits of $45
million were used to invest in securities of $59 million and in loans of $30 million.
Other major uses of funds were cash dividends of $2.5 million and investment in buildings
and locations of $2.9 million.

In 2005, the funds provided by
operations totaled $5.8 million. The increase in loans of $63.6 million demanded funding
from the redemption of federal funds sold of $14 million, an increase in borrowings of
approximately $19 million (which includes federal funds purchased), and an increase in
deposits of $21.3 million. Other uses of fundings were a $2 million purchase of bank owned
life insurance, $2.6 million in dividends paid, and a $4.5 million capitalization for
premises. A net decrease of $9.4 million between purchases and maturities in investment in
securities assisted in providing for the expenditures in 2005.

Along with the cash provided by
operations of $7.2 million in 2006, the cash available for use was provided by an increase
of deposits of $11.9 million and a net increase of borrowings of $13.2 million. These
funds were used to provide for an increase in loan demand of $28.7 million, the paying of
a cash dividend of $2.7 million, and the addition of buildings and equipment of $4.6
million.

Table 14  Funding Uses and
Sources details the main components of cash flows for 2004 thru 2006.

`Table 14 - Funding Uses and Sources
                                                             (in thousands)

                                           2006                              2005                              2004
                                         Increase                          Increase                          Increase
                             Average    (Decrease)      %      Average    (Decrease)      %      Average    (Decrease)      %
                             Balance      Amount      Change   Balance      Amount      Change   Balance      Amount      Change

Funding Uses
Loans                         315,468        44,145     16.27   271,323        50,014     22.60   221,309        23,495     11.88
Securities*                    78,986       -13,693    -14.77    92,679        -3,540     -3.68    96,219        10,637     12.43
Federal Funds Sold              1,836        -1,731    -48.53     3,567          -921    -20.52     4,488          -924    -17.07
                              396,290        28,721      7.81   367,569        45,553     14.15   322,016        33,208     11.50

Funding Sources
Noninterest Bearing Deposits
   Demand Deposits             58,635           681      1.18    57,954         6,397     12.41    51,557         4,523      9.62
   Savings Deposits               242            -3     -1.22       245             4      1.66       241            15      6.64
Interest Bearing Deposits
   Demand Deposits            132,447       -12,589     -8.68   145,036        21,821     17.71   123,215        29,806     31.91
   Savings Deposits            31,363         1,943      6.60    29,420         2,757     10.34    26,663         3,883     17.05
   Time Deposits              144,549        27,422     23.41   117,127         3,002      2.63   114,125          -873     -0.76
Borrowings                     27,233         9,195     50.98    18,038         9,311    106.69     8,727          -118     -1.33
                              394,469        26,649      7.25   367,820        43,292     13.34   324,528        37,236     12.96

*Cost basis is used for securities instead of market values.`

---

Table 15  Liquidity and
Interest Rate Sensitivity reflects interest earning assets and interest-bearing
liabilities by maturity distribution. Product lines repricing in time periods
predetermined by contractual agreements are included in the respective maturity
categories.

`Table 15 - Liquidity; Interest Rate Sensitivity
                                                             (in thousands)

                                                                  As of December 31, 2006
                                                Less       Over 3 Mos      Over 1 yr       Over
                                                3 Mos       thru 1 Yr      thru 3 Yrs     3 Yrs       Total

Interest Earning Assets
Loans                                           139,254          109,393        52,550      25,461    326,658
Short-Term Investments                              198         -              -            -             198
Investment Securities                             4,671            7,767        22,568      36,122     71,128
Other                                             -             -              -             5,764      5,764
Total Interest Earning Assets                   144,123          117,160        75,118      67,347    403,748

Interest Bearing Liabilities
NOW                                              19,190         -                4,652      34,308     58,150
Money Market                                     20,409         -                4,948      36,517     61,874
Savings Deposits                                 13,659         -                2,448      46,712     62,819
Time Deposits                                    57,156           79,850         7,462      12,224    156,692
Short-Term Borrowings                            15,443         -              -            -          15,443
Long-Term Borrowings                                153              472         3,344       7,968     11,937
Total Interest Bearing Liabilities              126,010           80,322        22,854     137,729    366,915

Rate Sensitive Assets (RSA)                     144,123          261,283       336,401     403,748    403,748
Rate Sensitive Liabilities (RSL)                126,010          206,332       229,186     366,915    366,915
Rate Sensitive Gap                               18,113           36,838        52,264     -70,382     36,833
Rate Sensitive Cumulative Gap                    18,113           54,951       107,215      36,833     36,833
Cumulative % of Earning Assets                    4.49%           13.61%        26.55%       9.12%      9.12%
Cumulative % of Total Assets                      5.32%           16.15%        31.51%      10.83%     10.83%`

Interest rate risk can also be
measured by analyzing the extent to which the repricing of assets and liabilities are
mismatched to create an interest sensitivity gap. An asset or liability is
said to be interest rate sensitive within a specific time period. The interest rate
sensitivity gap is defined as the difference between the amount of interest earning assets
maturing or repricing within a specific time period and the amount of interest bearing
liabilities maturing or repricing within that same time period. A gap is considered
positive when the amount of interest rate sensitive assets exceeds the amount of interest
rate sensitive liabilities. A gap is considered negative when the amount of interest rate
sensitive liabilities exceeds the amount of interest rate sensitive assets. During a
period of rising interest rates, therefore, a negative gap would tend to adversely affect
the net interest income. Conversely, during a period of falling interest rates, a negative
gap position would tend to result in an increase in net interest income.

Certain shortcomings are inherent in
the method of analysis presented in the foregoing table. For example, although certain
assets and liabilities may have similar maturities or periods to repricing, they may react
in different degrees to changes in market interest rates. Also, the interest rates on
certain types of assets and liabilities may fluctuate in advance of changes in market
interest rates, while interest rates on other types of assets may lag behind changes in
market rates. Additionally, in the event of a change in interest rates, prepayment and
early withdrawal levels would likely deviate significantly from those assumed in
calculating the table. Therefore, we do not rely solely on a gap analysis to manage our
interest rate risk, but rather we use what we believe to be the more reliable simulation
model  relating to changes in net interest income.

---

Based on simulation modeling at
December 31, 2006, and December 31, 2005, our net interest income would change over a
one-year time period due to changes in interest rates as follows:

`Table 15A - Change in Net Interest Income Over One Year Horizon

                                                                   (Dollars in Thousands)
                                                       at December 31, 2006     at December 31, 2005
                                                      ------------------------ ------------------------
                                                        Dollar         %         Dollar         %
Changes in Levels of Interest Rates                     Change       Change      Change      Change
                                                      ------------ ----------- ----------- ------------

                   Increase 2.00%                              $3       0.00%       -$102         .50%
                   Increase 1.00%                             -21      -0.01%        -109         .60%
                   Decrease 1.00%                             210       1.10%         259        1.40%
                   Decrease 2.00%                             269       1.40%         518        2.80%`

Analysis of the simulation presented
indicates as of December 31, 2005, there is little short term interest rate risk due to
the projected increase in net interest income of 2.80% in a down 200 basis point rate
ramp. As of December 31, 2006, the neutral status is evident as reflected in the projected
..00% decrease in the up 200 ramp. The down 200 ramp as of December 31, 2006, results in an
increase to net interest income of 1.40%, well within the policy limit of (10%).

Security Capital Corporation and
First Security Bank are subject to various regulatory capital guidelines as required by
federal and state banking agencies, as discussed in greater detail under Item 1 hereof.
These guidelines define the various components of core capital and assign risk weights to
various categories of assets.

The Federal Deposit Insurance
Corporation Improvement Act of 1991 (FDICIA) requires federal regulatory
agencies to define capital tiers. These are: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized, and critically undercapitalized. Under
these regulations, a well-capitalized institution must achieve a Tier I
risk-based capital ratio of at least 6.00%, and a total capital ratio of at least 10.00%,
and a leverage ratio of at least 5.00% and not be under a capital directive order. Failure
to meet capital requirements can initiate regulatory action that could have a direct
material effect on Security Capital Corporations financial statements. If adequately
capitalized, regulatory approval is required to accept brokered deposits. If
undercapitalized, capital distributions, asset growth and expansion is limited, in
addition to the institution being required to submit a capital restoration plan.

Management believes Security Capital
Corporation and First Security Bank meet all the capital requirements as of December 31,
2006, as noted below in Table 16  Capital Ratios, and is well-capitalized under the
guidelines established by the banking regulators. To be well-capitalized, Security Capital
Corporation and First Security Bank must maintain the prompt corrective action capital
guidelines described above.

---

Security Capital Corporation
increased the amount of dividends paid to $2,743,770 in 2006, compared to $2,611,400 in
2005, an increase of $132,370 or 5.07%.

`Table 16 - Capital Ratios
                                                    (Dollars in thousands)

                                                                           As of December 31,
                                                                      2006        2005       2004

                          Tier 1 Capital

                          Total Tier 1 Capital                         48,151      43,568     39,486

                          Total Capital
                          Tier 1 Capital                               48,151      43,568     39,486
                          Allowable Allowance for Loan Losses           4,334       3,899      3,373

                          Total Capital                                52,485      47,467     42,859

                          Risk Weighted Assets

                          Net Average Assets                          454,841     426,707    378,931

                          Total Risk Weighted Assets                  356,670     330,071    271,296

                          Risk Based Ratios
                          Tier 1 Leverage Ratio                         10.59       10.21      10.42
                          Tier 1 Risk Based Capital Ratio               13.50       13.20      14.55
                          Total Risk Based Capital Ratio                14.72       14.38      15.80`

There were no off-balance sheet
arrangements existing at December 31, 2006.

---

`Tabular Disclosure of Contractual Obligations
                                               (in thousands)

                                                          Payment due by period
                                                  Less than   1 to 3    3 to 5    More Than
Contractual Obligations                 Total      1 Year      Years     Years     5 Years
------------------------                -----    ----------   -------  --------  -----------

Long-Term Debt Obligations             $11,937    $    656    $3,344    $1,479    $   6,458

Capital Lease Obligations                   10          10         -         -            -

Operating Lease Obligations                  -           -         -         -            -

Purchase Obligations                         -           -         -         -            -

Other Long-Term Liabilities
Reflected on the Registrant's

Balance Sheet under GAAP                     -           -         -         -            -

Total                                  $11,947       $ 666    $3,344    $1,479      $ 6,458`

Market risk is the potential of loss
arising from adverse changes in interest rates and prices. The Company is exposed to
market risk as a consequence of the normal course of conducting its business activities.
Financial products that expose the Company to market risk include investment securities,
loans, deposits and debt. The Companys market risk management process involves
measuring, monitoring, controlling and managing risks that can significantly impact the
Companys financial position and operating results. In this management process,
market risks are balanced with expected returns in an effort to enhance earnings
performance and shareholder value, while limiting the volatility of each. Normal business
transactions expose the Companys balance sheet profile to varying degrees of market
risk. The Companys primary market risk exposure is interest rate risk. A key element
in the process of managing market risk involves oversight by senior management and the
Board of Directors as to the level of such risk assumed by the Company in its balance
sheet. The Board of Directors reviews and approves risk management policies, including
risk limits and guidelines and delegates oversight functions to the Asset Liability
Management Committee (ALCO). The ALCO, consisting of senior business and
finance officers, monitors the Companys market risk exposure and as market
conditions dictate, modifies balance sheet positions.

---

`SECURITY CAPITAL CORPORATION

                                                              SELECTED FINANCIAL DATA

                                                              YEARS ENDED DECEMBER 31,



                                                       2006          2005           2004            2003            2002
                                               --------------- -------------- ---------------- --------------- ----------------
                                                                   (In thousands, except per share data)

INCOME DATA
Interest and fees on loans                     $        27,013 $       20,570 $         15,042 $        13,584 $        13,175
Interest and dividends on securities                     3,294          3,643            3,826           3,256           3,210
Other interest income                                      279            245              224             169             462
                                               --------------- -------------- ---------------- --------------- ----------------
   Total interest income                                30,586         24,458           19,092          17,009          16,847
Interest expense                                        11,523          6,907            4,139           3,955           4,760
                                               --------------- -------------- ---------------- --------------- ----------------
   Net interest income                                  19,063         17,551           14,953          13,054          12,087
Provision for loan losses                                  965          1,440              637             546             672
                                               --------------- -------------- ---------------- --------------- ----------------
Net interest income after provision for
   loan losses                                          18,098         16,111           14,316          12,508          11,415
                                               --------------- -------------- ---------------- --------------- ----------------
Service charges on deposit accounts                      4,592          4,333            3,876           3,758           3,671
Other income                                             2,334          1,818            1,781           1,908           1,484
                                               --------------- -------------- ---------------- --------------- ----------------
Total noninterest income                                 6,926          6,151            5,657           5,666           5,155
                                               --------------- -------------- ---------------- --------------- ----------------
Salaries and employee benefits                           9,276          8,588            7,607           6,649           6,145
Occupancy and equipment expense                          1,888          1,553            1,236           1,311           1,277
Other expenses                                           3,271          2,807            2,567           2,658           2,670
                                               --------------- -------------- ---------------- --------------- ----------------
Total noninterest expenses                              14,435         12,948           11,410          10,618          10,092
                                               --------------- -------------- ---------------- --------------- ----------------

Income before income taxes                              10,589          9,314            8,563           7,556           6,478
Income taxes                                             3,349          2,707            2,431           2,039           1,666
                                               --------------- -------------- ---------------- --------------- ----------------

Net income                                     $         7,240 $        6,607 $          6,132 $         5,517 $         4,812
                                               =============== ============== ================ =============== ===============
PER SHARE DATA (1)
Net income - basic                             $          2.64 $         2.41 $           2.24 $          2.02 $          1.76
Dividends                                                 1.00           0.95             0.91            0.82            0.74
Book value                                               18.95          17.21            16.01           14.94           13.85

OTHER RATIOS
Return on average assets                                  1.58           1.57             1.65            1.66            1.60
Return on equity                                         14.36          14.16            14.22           13.73           13.45
Loans to deposits                                        89.08          83.98            70.29           70.87           70.60
Loans to total assets                                    71.27          68.36            60.06           60.08           59.42
Equity capital to total assets                           11.34          10.83            11.24           12.01           12.00
Average equity to average assets                         10.99          11.12            11.61           12.12           11.94
Dividend payout ratio                                    37.90          39.52            40.52           40.66           42.04

FINANCIAL DATA
Total assets                                   $       458,329 $      435,876 $        390,274 $       340,253 $       315,596
Net loans                                              322,324        294,046          230,805         200,759         184,060
Total deposits                                         366,699        354,766          333,458         288,442         265,597
Total shareholders' equity                              51,984         47,187           43,870          40,848          37,857

(1)    Restated for stock dividends`

---

`SECURITY CAPITAL CORPORATION

                                         CONSOLIDATED BALANCE SHEETS

                                        DECEMBER 31, 2006 and 2005

                                                                    2006                      2005
                                                             ----------------         -------------------
                                                                            (In thousands)
ASSETS

Cash and due from banks                                       $      23,073            $         19,138
Interest-bearing deposits with banks                                    374                         539
                                                             ----------------         -------------------
   Total cash and cash equivalents                                   23,447                      19,677
                                                             ----------------         -------------------

Certificates of deposit with other banks                                198                         392

Securities available-for-sale                                        61,028                      78,949
Securities held-to-maturity (estimated fair value
   of $8,150 in 2006 and $2,063 in 2005)                              7,850                       2,047
Securities, other                                                     2,250                       1,456
                                                             ----------------         -------------------
     Total securities                                                71,128                      82,452
                                                             ----------------         -------------------
Loans, less allowance for loan losses of
   $4,334 in 2006 and $3,899 in 2005                                322,324                     294,046
Interest receivable                                                   5,091                       4,015
Premises and equipment                                               21,969                      18,706
Goodwill                                                              3,874                       3,874
Cash surrender value of life insurance                                5,869                       5,670
Customers' liability on acceptances                                   2,293                       3,205
Other assets                                                          2,136                       3,839
                                                             ----------------         -------------------
Total Assets                                                  $     458,329            $        435,876
                                                             ----------------         -------------------

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
   Noninterest-bearing deposits                               $      59,380            $         63,082
   Interest-bearing deposits                                        307,319                     291,684
                                                             ----------------         -------------------
     Total deposits                                                 366,699                     354,766
   Interest payable                                                   1,591                       1,038
  Acceptances outstanding                                             2,293                       3,205
  Federal funds purchased                                             8,000                      15,000
  Borrowed funds                                                     27,380                      14,096
  Other liabilities                                                     382                         584
                                                             ----------------         -------------------
     Total liabilities                                              406,345                     388,689
                                                             ----------------         -------------------

Shareholders' equity:
  Common stock - $5 par value, 5,000,000 shares
     authorized, 2,753,557 shares and 2,622,878
     shares issued in 2006 and 2005, respectively                    13,768                      13,114
  Surplus                                                            35,654                      31,380
  Retained earnings                                                   2,651                       3,003
  Accumulated other comprehensive income                                (41)                       (255)
  Treasury stock, at par, 9,487 shares and
     11,058 shares in 2006 and 2005, respectively                       (48)                        (55)
                                                             ----------------         -------------------
       Total shareholders' equity                                    51,984                      47,187
                                                             ----------------         -------------------
Total Liabilities and Shareholders' Equity                    $     458,329             $       435,876
                                                             ================         ===================

The accompanying notes are an integral part of these statements.`

---

`SECURITY CAPITAL CORPORATION

                                     CONSOLIDATED STATEMENTS OF INCOME

                             YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004


                                                              2006          2005        2004
                                                          -----------   -----------  ------------
                                                           (In thousands, except per share data)
INTEREST INCOME
Interest and fees on loans                                 $   27,013   $  20,570    $   15,042
Interest and dividends on securities
    Taxable                                                     1,596       1,705         1,966
    Tax-exempt                                                  1,698       1,938         1,860
Other                                                             279         245           224
                                                          -----------   -----------  ------------
    Total interest income                                      30,586      24,458        19,092
                                                          -----------   -----------  ------------
INTEREST EXPENSE
Interest on time deposits of $100,000 or more                   3,101       1,452           850
Interest on other deposits                                      7,048       4,712         2,940
Interest on borrowed funds                                      1,374         743           349
                                                          -----------   -----------  ------------
    Total interest expense                                     11,523       6,907         4,139
                                                          -----------   -----------  ------------

Net interest income                                            19,063      17,551        14,953

Provision for loan losses                                         965       1,440           637
                                                          -----------   -----------  ------------
    Net interest income after provision for loan losses        18,098      16,111        14,316
                                                          -----------   -----------  ------------

OTHER INCOME
Service charges on deposit accounts                             4,592       4,333         3,876
Other service charges and fees                                    647         388           325
Trust Department income                                         1,038         978           911
Securities gains (losses), net                                   -253         -52           -12
Gains (losses) on sale of other assets, net                       454          67           224
Other                                                             448         437           333
                                                          -----------   -----------  ------------
    Total other income                                          6,926       6,151         5,657
                                                          -----------   -----------  ------------

OTHER EXPENSE
Salaries and employee benefits                                  9,276       8,588         7,607
Net occupancy expense                                           1,020         801           713
Furniture and equipment expense                                   868         752           523
Printing, stationery, and supplies                                348         250           194
Data processing                                                   366         301           280
Directors' fees                                                   274         259           247
Professional fees                                                 191         143           183
Other                                                           2,092       1,854         1,663
                                                          -----------   -----------  ------------
    Total other expense                                        14,435      12,948        11,410
                                                          -----------   -----------  ------------

Income before income taxes                                     10,589       9,314         8,563
Income taxes                                                    3,349       2,707         2,431
                                                          -----------   -----------  ------------
Net income                                                 $    7,240   $   6,607    $    6,132
                                                          ===========   ===========  ============

Basic net income per share                                 $     2.64   $    2.41    $     2.24


The accompanying notes are an integral part of these statements.`

---

`SECURITY CAPITAL CORPORATION

                                                CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                                                     YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

                                                                       (In thousands)
                                                                                                                Accumu-
                                                                                                                lated
                                                                                                                Other
                                                                                                                Compre-
                                                     Comprehensive     Common               Retained   Treasury hensive
                                                         Income        Stock      Surplus   Earnings   Stock    Income     Total
                                                     -------------  ----------   ---------  ---------- -------- -------- ---------

Balance, January 1, 2004                              $             $  11,900    $ 24,862   $  2,891   $ (90)   $ 1,285  $ 40,848

  Comprehensive income:
       Net income for 2004                            $     6,132           -           -      6,132       -          -     6,132
       Net change in unrealized gain (loss) on
          securities available-for-sale, net of tax          (775)          -           -          -       -       (775)     (775)
                                                     -------------
       Comprehensive income                           $     5,357
                                                     =============

  Cash dividends paid                                                       -           -     (2,485)      -          -    (2,485)
  5% stock dividend                                                       593       2,839     (3,432)      -          -         -
  Purchase of fractional shares                                             -         (10)         -      (2)         -       (12)
  Purchase of treasury stock                                                -          (5)         -      (1)         -        (6)
  Reissuance of treasury stock                                              -         140          -      28          -       168
                                                                    ----------   ---------  ---------- -------- -------- ---------

Balance, December 31, 2004                                             12,493      27,826      3,106     (65)       510    43,870

  Comprehensive income:
       Net income for 2005                            $     6,607           -           -      6,607       -          -     6,607
       Net change in unrealized gain (loss) on
          securities available-for-sale, net of tax          (765)          -           -          -       -       (765)     (765)
                                                     -------------
       Comprehensive income                           $     5,842
                                                     =============

  Cash dividends paid                                                       -           -     (2,612)      -          -    (2,612)
  5% stock dividend                                                       621       3,477     (4,098)      -          -         -
  Purchase of fractional shares                                             -         (13)         -      (2)         -       (15)
  Reissuance of treasury stock                                              -          90          -      12          -       102
                                                                    ----------   ---------  ---------- -------- -------- ---------
Balance, December 31, 2005                                          $  13,114    $ 31,380   $  3,003   $ (55)   $  (255) $ 47,187

                                                                 ( Continued )

The accompanying notes are an integral part of these statements.`

---

`SECURITY CAPITAL CORPORATION

                                                CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

                                                     YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004

                                                                       (In thousands)
                                                                                                                Accumu-
                                                                                                                lated
                                                                                                                Other
                                                                                                                Compre-
                                                     Comprehensive     Common               Retained   Treasury hensive
                                                         Income        Stock      Surplus   Earnings   Stock    Income     Total
                                                     -------------  ----------   ---------  ---------- -------- -------- ---------

Balance, December 31, 2005 (brought forward)                         $  13,114   $ 31,380   $  3,003    $   (55) $  (255) $ 47,187

  Comprehensive income:
       Net income for 2006                            $   7,240              -          -      7,240          -        -     7,240
       Net change in unrealized gain (loss) on
          securities available-for-sale, net of tax         214              -          -          -          -      214       214
                                                     -------------
       Comprehensive income                           $   7,454
                                                     =============

  Cash dividends paid                                                        -          -     (2,744)         -        -    (2,744)
  5% stock dividend                                                        654      4,194     (4,848)         -        -         -
  Purchase of fractional shares                                              -        (15)         -         (3)       -       (18)
  Reissuance of treasury stock                                               -         95          -         10        -       105
                                                                    ----------   ---------  ---------- -------- -------- ---------

Balance, December 31, 2006                                           $  13,768   $ 35,654   $  2,651    $   (48)  $  (41) $ 51,984
                                                                    ==========   =========  ========== ======== ======== =========


The accompanying notes are an integral part of these statements.`

---

`SECURITY CAPITAL CORPORATION

                                                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                  YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004


                                                                             2006             2005               2004
                                                                       ---------------   --------------    ------------------
                                                                                          (In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                              $        7,240    $       6,607     $        6,132
Adjustments to reconcile net income to net cash
  provided by operating activities:
    Provision for loan losses                                                      965            1,440                637
    Amortization of premiums and discounts on
      securities, net                                                              277              601                814
    Depreciation and amortization                                                1,003              880                688
    Deferred income taxes                                                           78              (24)               242
    FHLB stock dividend                                                            (67)             (38)               (17)
    (Gain) loss on sale of securities, net                                         253               52                 12
    (Gain) loss on sale of other assets, net                                      (454)             (67)              (224)
    Changes in:
      Interest receivable                                                       (1,076)            (877)              (724)
      Cash value of life insurance, net                                           (199)            (194)              (118)
      Other assets                                                              (1,496)          (4,550)            (2,271)
      Interest payable                                                             579              443                 77
      Other liabilities                                                          1,140            1,569              1,158
                                                                       ---------------   --------------    ------------------

Net cash provided by operating activities                                        8,243            5,842              6,406
                                                                       ---------------   --------------    ------------------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of securities available-for-sale                                       (5,622)         (19,284)           (58,568)
Proceeds of maturities and calls of securities
    available-for-sale                                                          11,611           28,386             24,481
Proceeds from sales of securities available for sale                            12,289            6,746             11,680
Purchase of securities held to maturity                                         (5,803)               -                  -
Purchase of other securities                                                      (727)            (158)              (250)
Additions to premises and equipment                                             (4,636)          (4,545)            (2,900)
Proceeds of sale of other assets                                                 1,374              284                550
Purchase of bank-owned life insurance                                                -           (2,000)                 -
Changes in:
    Loans                                                                      (28,713)         (63,629)           (30,318)
    Federal funds sold                                                               -           14,000              6,380
    Certificates of deposits with other banks                                      194              199                (99)
                                                                       ---------------   --------------    ------------------

Net cash used in investing activities                                          (20,033)         (40,001)           (49,044)
                                                                       ---------------   --------------    ------------------


                                                                   ( Continued )

The accompanying notes are an integral part of these statements.`

---

`SECURITY CAPITAL CORPORATION

                                                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                  YEARS ENDED DECEMBER 31, 2006, 2005 AND 2004


                                                                             2006             2005               2004
                                                                       ---------------   --------------    ------------------
(Continued)                                                                               (In thousands)

CASH FLOWS FROM FINANCING ACTIVITIES
Dividends paid on common stock                                         $        (2,744)   $      (2,612)    $       (2,485)
Purchase of treasury stock                                                           -                -                 (6)
Reissuance of treasury stock                                                       105              102                168
Purchase of fractional shares                                                      (18)             (15)               (12)
Repayment of debt                                                              (48,246)          (8,948)            (4,676)
Proceeds from issuance of debt                                                  61,530           12,913              5,640
Changes in:
   Deposits                                                                     11,933           21,308             45,015
   Federal funds purchased                                                      (7,000)          15,000                  -
                                                                       ---------------   --------------    ------------------

Net cash provided by financing activities                                       15,560           37,748            43,644
                                                                       ---------------   --------------    ------------------

Net increase in cash and cash equivalents                                        3,770            3,589              1,006

Cash and cash equivalents at beginning of year                                  19,677           19,088             15,082
                                                                       ---------------   --------------    ------------------

Cash and cash equivalents at end of year                               $        23,447    $      19,677     $       16,088
                                                                       ===============   ==============    ==================


Supplemental Disclosures of Cash Flow Information

Cash paid during the year for:
    Interest                                                           $        10,944    $       6,464     $        4,061
    Income taxes                                                                 3,295            2,910              2,232
Noncash activities:
    Transfers of loans to other real estate and
      repossessed inventory                                                        738            1,052                228





The accompanying notes are an integral part of these statements.`

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

NOTE A  SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

Security Capital Corporation
(Corporation), and its subsidiaries, follow accounting principles generally accepted in
the United States of America, including, where applicable, general practices within the
banking industry.

1.     Consolidation

The consolidated financial statements
include the accounts of Security Capital Corporation, a one-bank holding company, and its
wholly-owned subsidiaries, First Security Bank (Bank), Batesville Security Building
Corporation (Building Corporation), and Banks wholly-owned subsidiary, First
Security Insurance, Inc. (Insurance). Significant intercompany accounts and transactions
have been eliminated.

2.     Nature of Operations

The Corporation is a financial
holding company. Its primary asset is its investment in its subsidiary bank. The Bank
operates under a state bank charter and provides full banking services, including trust
services. The Bank is subject to regulation by the Mississippi Department of Banking and
Consumer Finance, and the Federal Deposit Insurance Corporation (FDIC). The area served by
the Bank is primarily the northern half of Mississippi, and services are provided in
branch locations at Batesville, Marks, Sardis, Como, Crenshaw, Olive Branch, Hernando,
Robinsonville, Tunica, Pope, and Southaven. The operations of the Building Corporation and
Insurance are not material in relation to the Corporation as a whole.

3.     Estimates

The preparation of financial
statements in conformity with accounting principles generally accepted in the United
States of America requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from those
estimates.

The Banks loans are generally
secured by specific items of collateral including real property, consumer assets, and
business assets. Although the Bank has a diversified loan portfolio, a substantial portion
of its debtors ability to honor their contracts is dependent on local economic
conditions in the agricultural and real estate development industries.

( Continued )

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

While management uses available
information to recognize losses on loans, further reductions in the carrying amounts of
loans may be necessary based on changes in local economic conditions. In addition,
regulatory agencies, as an integral part of their examination process, periodically review
the estimated losses on loans. Such agencies may require the Bank to recognize additional
losses based on their judgments about information available to them at the time of their
examination. Because of these factors, it is reasonably possible that the estimated losses
on loans may change materially in the near term. However, the amount of the change that is
reasonably possible cannot be estimated.

4.    Securities

Investments in securities are
accounted for as follows:

Securities
Available-for-Sale

Securities classified as
available-for-sale are those securities that are intended to be held for an indefinite
period of time, but not necessarily to maturity. Any decision to sell a security
classified as available-for-sale would be based on various factors, including movements in
interest rates, liquidity needs, security risk assessments, changes in the mix of assets
and liabilities and other similar factors. These securities are carried at their estimated
fair value, and the net unrealized gain or loss is reported as accumulated other
comprehensive income, net of tax, until realized. Premiums and discounts are recognized in
interest income using the interest method.

Gains and losses on the sale of
securities available-for-sale are determined using the adjusted cost of the specific
security sold.

Securities
Held-to-Maturity

Securities classified as
held-to-maturity are those securities for which there is a positive intent and ability to
hold to maturity. These securities are carried at cost adjusted for amortization of
premium and accretion of discount, computed by the interest method.

Trading Account Securities

Trading account securities are those
securities which are held for the purpose of selling them at a profit. There were no
trading account securities on hand at December 31, 2006 and 2005.

( Continued )

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

4.    
          Securities (Continued)

Other Securities

Other securities are carried at cost
and consist of investments in Federal Home Loan Bank (FHLB), First National Bankers
Bankshares, and Federal Agricultural Mortgage Corporation. The transferability of these
stock holdings is restricted.

5.    
          Loans

Loans are carried at the principal
amount outstanding adjusted for the allowance for loan losses, and net deferred
origination fees. Interest income on loans is recognized based on the principal balance
outstanding and the stated rate of the loan.

A loan is considered to be impaired
when it appears probable that the entire amount contractually due will not be collected.
Factors considered in determining impairment include payment status, collateral values,
and the probability of collecting scheduled payments of principal and interest when due.
Generally, impairment is measured on a loan by loan basis using the fair value of the
supporting collateral.

Loans are generally placed on a
nonaccrual status when principal or interest is past due ninety days, or when specifically
determined to be impaired. When a loan is placed on nonaccrual status, interest accrued
but not received is generally reversed against interest income. If collectability is in
doubt, cash receipts on nonaccrual loans are used to reduce principal rather than recorded
as interest income. Past due status is based on contractual terms.

Loan origination fees and certain
direct origination costs are capitalized and recognized as an adjustment of the yield on
the related loan.

6.     Allowance for Loan
Losses

The allowance for loan losses is
maintained at a level believed adequate by management to absorb probable losses inherent
in the loan portfolio and is based on the size and current risk characteristics of the
loan portfolio, an assessment of individual problem loans, actual and anticipated loss
experience, current economic events, including unemployment levels, and other pertinent
factors, including regulatory guidance and general economic conditions. Determination of
the allowance is inherently subjective as it requires significant estimates, including the
evaluation of collateral supporting impaired

( Continued )

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

6.    
          Allowance for Loan Losses (Continued)

loans, estimated losses on pools of
homogeneous loans based on historical loss experience, and consideration of current
economic trends, all of which may be susceptible to significant change. Loan losses are
charged off against the allowance, while recoveries of amounts previously charged off are
credited to the allowance. A provision for loan losses is charged to operations based on
managements periodic evaluation of the factors previously mentioned, as well as
other pertinent factors.

The allowance for loan losses
consists of an allocated component and an unallocated component. The components of the
allowance for loan losses represent an estimation done pursuant to either Financial
Accounting Standards Board (FASB) Statement No. 5, Accounting for
Contingencies, or FASB Statement No. 114, Accounting by Creditors for
Impairment of a Loan. The allocated component of the allowance for loan losses
reflects expected losses resulting from an analysis developed through specific credit
allocations for individual or pools of loans and historical loss experience for each loan
category. The specific allocations are based on a regular review of all loans where the
internal credit rating is at or below a predetermined classification. The historical loan
loss element is determined statistically using loss experience and the related internal
gradings of loans charged off. The analysis is performed quarterly, and loss factors are
updated regularly based on actual experience. The allocated component of the allowance for
loan losses also includes consideration of the amounts necessary for any concentrations
and changes in portfolio mix and volume.

The unallocated portion of the
allowance reflects managements estimate of probable inherent but undetected losses
within the portfolio due to uncertainties in economic conditions, changes in collateral
values, unfavorable information about a borrowers financial condition, and other
risk factors that have not yet manifested themselves. In addition, the unallocated
allowance includes a component that explicitly accounts for the inherent imprecision in
the loan loss analysis.

7.     Premises and Equipment

Premises and equipment are stated at
cost, less accumulated depreciation and amortization. Depreciation and amortization are
determined using the straight-line method at rates calculated to depreciate or amortize
the cost of assets over their estimated useful lives.

Maintenance and repairs of property
and equipment are charged to operations, and major improvements are capitalized. Upon
retirement, sale, or other disposition of property and equipment, the cost and accumulated
depreciation are eliminated from the accounts, and any gains or losses are included in
operations.

( Continued )

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

8.     Bank Owned Life
Insurance

The Corporation invests in bank owned
life insurance (BOLI). BOLI involves the purchasing of life insurance by the Corporation
on a chosen number of employees. The Corporation is the owner of the policies and,
accordingly, the cash surrender value of the policies is an asset, and increases in cash
surrender values are reported as income. The co-beneficiaries of the policies are the Bank
and the insured employee.

9.     Other Real Estate

Other real estate consists of
properties acquired through foreclosure and is recorded at the lower of cost or current
appraised value less estimated expense to sell. The Bank writes down other real estate
annually in accordance with state banking regulations. Any write-down from the cost to
estimated fair market value required at the time of foreclosure is charged to the
allowance for loan losses. Subsequent gains or losses, including write-downs, on other
real estate are reported in other operating income or expenses. At December 31, 2006, and
2005, other real estate of $365,000 and $558,000, respectively, is included in other
assets.

10.     Income Taxes

Income taxes are provided for the tax
effects of the transactions reported in the financial statements and consist of taxes
currently payable plus deferred taxes related primarily to differences between the bases
of assets and liabilities as measured by income tax laws and their bases as reported in
the financial statements. The deferred tax assets and liabilities represent the future tax
consequences of those differences, which will either be taxable or deductible when the
assets and liabilities are recovered or settled.

The Corporation and its subsidiaries
file consolidated income tax returns. The subsidiaries provide for income taxes on a
separate return basis and remit to the Corporation amounts determined to be payable.

11.     Net Income per Share

Basic net income per share is
computed by dividing net income by the weighted average number of common shares
outstanding for each year. Diluted net income per share is computed by dividing net income
by the weighted average number of common shares outstanding adjusted to include the number
of additional common shares that would have been outstanding if any dilutive potential
common shares had been issued. For the three years ended December 31, 2006, there were no
potential dilutive common shares. All weighted average, actual shares or per share
information in the financial statements have been adjusted retroactively for the effect of
stock dividends.

( Continued )

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

11.    
          Net Income per Share (Continued)

Presented below is a summary of the
components used to calculate basic net income per share for the years ended December 31,
2006, 2005, and 2004 (as restated for stock dividends):

`2006            2005              2004
                                                                             -------------    --------------   ----------------
                                                                                     (In thousands, except per share data)
        Basic Net Income Per Share
           Weighted average common shares outstanding                                2,743             2,742             2,739
                                                                             =============    ==============   ================
           Net income                                                         $      7,240      $      6,607      $      6,132
                                                                             =============    ==============   ================
           Basic net income per share                                         $       2.64      $       2.41      $       2.24
                                                                             =============    ==============   ================`

12.     Statement of Cash
Flows

For purposes of reporting cash flows,
cash and cash equivalents include cash on hand and noninterest-bearing and readily
available interest-bearing deposits due from other banks.

13.     Advertising

Advertising costs are expensed as
incurred. Advertising expense for 2006 and 2005 was approximately $267,000 and $212,000,
respectively.

14.     Goodwill

Prior to 2002, goodwill, representing
the excess of the purchase price over the fair value of the net assets of the acquired
entities, was being amortized on a straight-line basis over the period of expected benefit
of 15 years. Effective January 1, 2002, the Corporation and its subsidiaries adopted the
provisions of FASB No. 142, Goodwill and Other Intangible Assets. Under this
statement, goodwill is no longer amortized over its estimated useful life, but is subject
to an assessment for impairment using a fair value based test at least annually. If
impaired, the asset is written down to its estimated fair value.

15.    Off-Balance Sheet
Financial Instruments

In the ordinary course of business,
the Bank enters into off-balance sheet financial instruments consisting of commitments to
extend credit, credit card agreements, commercial and similar letters of credit, and
commitments to purchase securities. Such financial instruments are recorded in the
financial statements when they are exercised.

( Continued )

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

16.    Trust Assets

Except for amounts included in
deposits, assets of the Trust Department are not included in the accompanying balance
sheets.

17.    Business Segments

FASB Statement No. 131,
Disclosures About Segments of an Enterprise and Related Information, requires
public companies to report (i) certain financial and descriptive information about their
reportable operating segments (as defined) and (ii) certain enterprise-wide financial
information about products and services, geographic areas, and major customers. Management
believes the Corporations principal activity is community banking and that any other
activities are not considered significant segments.

18.    Accounting
Pronouncements

In September 2006, the FASB issued
SFAS No. 157, Fair Value Measurements (SFAS 157). This statement defines fair
value, establishes a framework for measuring fair value in generally accepted accounting
principles, and expands disclosures about fair value measurements. This Statement applies
whenever assets or liabilities are required or permitted to be measured at fair value
under currently existing standards. No additional fair value measurements are required
under this Statement. SFAS 157 is effective for financial statements issued for fiscal
years beginning after November 15, 2007, and interim periods within those years. The
Company plans to apply the disclosure provisions of SFAS 157 to all fair value
measurements.

In September 2006, the SEC staff
issued Staff Accounting Bulletin No. 108, Considering the Effects of Prior Year
Misstatements when Quantifying Misstatements in Current Year Financial Statements
(SAB 108). The intent of SAB 108 is to reduce diversity in practice for the
method companies use to quantify financial statement misstatements, including the effect
of prior year uncorrected errors. SAB 108 establishes an approach that requires
quantification of financial statement errors using both an income statement and a
cumulative balance sheet approach. SAB 108 is effective for fiscal years ending after
November 15, 2006. The adoption of this statement did not have a material effect on the
financial position, results of operations or cash flows.

( Continued )

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

19.    
          Accounting Pronouncements (Continued)

In February 2007, the FASB issued
SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities
(SFAS 159), which permits entities to choose to measure many financial
instruments and certain other items at fair value. SFAS 159 is effective as of the
beginning of an entitys first fiscal year that begins after November 15, 2007.
Earlier adoption is permitted as of the beginning of a fiscal year that begins on or
before November 15, 2007, provided the entity also elects to apply the provision of FASB
Statement No. 157, Fair Value Measurements. The Company is currently evaluating the impact
of SFAS 159, but does not expect the adoption of SFAS to have a material impact on its
consolidated financial position, results of operations or cash flows.

NOTE B  RESERVE
REQUIREMENTS

The Bank is required to maintain
reserve funds in cash or on deposit with the Federal Reserve Bank. The required reserve at
December 31, 2006 and 2005, was $269,000 and $2,123,000, respectively.

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

NOTE C  SECURITIES

A summary of amortized cost and
estimated fair value of securities available-for-sale and securities held-to-maturity at
December 31, 2006 and 2005, follows:

`Gross            Gross
                                                           Amortized       Unrealized        Unrealized         Estimated
                                                              Cost              Gains           Losses          Fair Value
                                                         --------------   --------------    ---------------  ----------------
       December 31, 2006:                                                          (In thousands)
          Securities available-for-sale:
              U. S. Government agencies                   $       5,486    $          11     $          56    $       5,441
              Mortgage-backed securities                         21,170               35               290           20,915
              State and local political
                 subdivisions                                    34,439              451               218           34,672
                                                         --------------   --------------    ---------------  ----------------
                                                          $      61,095    $         497     $         564    $      61,028
                                                         ==============   ==============    ===============  ================
          Securities held-to-maturity:
              State and local political
                  subdivisions                            $       7,850    $         327     $          27    $       8,150
                                                         ==============   ==============    ===============  ================

       December 31, 2005:
          Securities available-for-sale:
              U. S. Government agencies                          11,491                -               316           11,175
              Mortgage-backed securities                         21,254               42               426           20,870
              State and local political
                 subdivisions                                    46,611              708               415           46,904
                                                         --------------   --------------    ---------------  ----------------
                                                          $      79,356    $         750     $       1,157    $      78,949
                                                         ==============   ==============    ===============  ================
    Securities held-to-maturity:
              State and local political
                  subdivisions                            $       2,047    $          41     $          25    $       2,063
                                                         ==============   ==============    ===============  ================`

( Continued )

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

The scheduled maturities of
securities at December 31, 2006, are as follows:

`Available-For-Sale                 Held-to-Maturity
                                                         ---------------------------------   --------------------------------
                                                             Amortized     Estimated           Amortized        Estimated
                                                               Cost        Fair Value            Cost           Fair Value
                                                         --------------   ----------------   --------------  ----------------
                                                                                  (In thousands)

       Due in one year or less                            $       5,718    $       5,698     $        210     $         210
       Due after one year through five years                     15,974           15,931            1,355             1,328
       Due after five years through ten years                    11,153           11,203            1,465             1,507
       Due after 10 years                                         7,080            7,281            4,820             5,105
       Mortgage-backed securities                                21,170           20,915                -                 -
                                                         --------------   ----------------   --------------  ----------------

                                                          $      61,095    $      61,028     $      7,850     $       8,150`

Investment securities with a carrying
value of $32,408,000 and $52,314,000 at December 31, 2006 and 2005, respectively, were
pledged to secure public and trust deposits and for other purposes as required or
permitted by law.

Gross gains of $38,679 in 2006,
$53,000 in 2005 and $151,201 in 2004, and gross losses of $292,096 in 2006, $105,000 in
2005 and $162,763 in 2004, were realized on securities available-for-sale.

The details concerning securities
classified as available for sale with unrealized losses as of December 31, 2006 and 2005,
were as follows:

`Losses < 12 Months         Losses 12 Months or >                  Total
                                    ----------------------------- ------------------------------ -----------------------------
                                                                          (In thousands)
                                                         Gross                        Gross                         Gross
                                         Fair         Unrealized       Fair        Unrealized         Fair       Unrealized
                                         Value          Losses         Value         Losses           Value        Losses
                                    -------------  -------------  --------------  -------------- ------------ ----------------
   2006
   U. S. Government
       agencies                     $        -     $         -     $      3,939    $        56    $   3,939     $      56
   Mortgage-backed
       securities                        5,203              20           13,218            270       18,421           290
   State and local political
       subdivisions                      4,337              18           14,095            200       18,432           218
                                    -------------  -------------  --------------  -------------- ------------ ----------------
                                    $    9,540     $        38     $     31,252    $       526    $  40,792     $     564
                                    =============  =============  ==============  ============== ============ ================`

( Continued )

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

`Losses < 12 Months         Losses 12 Months or >                  Total
                                    ------------------------------ -----------------------------  ----------------------------
                                                                          (In thousands)
                                                         Gross                        Gross                         Gross
                                         Fair         Unrealized       Fair        Unrealized         Fair       Unrealized
                                         Value          Losses         Value         Losses           Value        Losses
                                    -------------- --------------- -------------- --------------  -----------  ---------------
   2005
      U. S. Government
         agencies                    $      3,915  $          76    $      7,260   $         240  $  11,175     $        316
     Mortgage-backed
         securities                        11,439            274           7,432             152     18,871               426
      State and local political
         Subdivisions                      14,474            230           9,242             185     23,716               415
                                    -------------- --------------- -------------- --------------  -----------  ---------------

                                     $     29,828  $         580    $     23,934   $         577  $  53,762     $       1,157
                                    ============== =============== ============== ==============  ===========  ===============`

The details concerning securities
classified as held to maturity with unrealized losses as of December 31, 2006 and 2005,
were as follows:

`Losses < 12 Months         Losses 12 Months or >                  Total
                                    ------------------------------ -----------------------------  ----------------------------
                                                                          (In thousands)
                                                         Gross                        Gross                         Gross
                                         Fair         Unrealized       Fair        Unrealized         Fair       Unrealized
                                         Value          Losses         Value         Losses           Value        Losses
                                    -------------- --------------- -------------- --------------  -----------  ---------------
   2006
     State and local political
       subdivisions                  $          -  $           -    $      1,538    $       27    $    1,538    $       27
                                    ============== =============== ============== ==============  ===========  ===============

   2005
      State and local political
         subdivisions                $          -  $           -    $        382    $       25    $      382    $       25
                                    ============== =============== ============== ==============  ===========  ===============`

As of December 31, 2006,
approximately 49% of the number of securities in the portfolio reflected an unrealized
loss. Management is of the opinion the Corporation has the ability and intent to hold
these securities until such time as the value recovers or the securities mature.
Management also believes the deterioration in value is attributable to changes in market
interest rates and not to the credit quality of the issuer.

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

NOTE D  LOANS

Major classifications of loans were
as follows:

`December 31,
                                                                                               -------------------------------
                                                                                                    2006             2005
                                                                                               ---------------  --------------
                                                                                                       (In thousands)

      Commercial, financial and agricultural                                                    $     38,349    $      30,826
      Real estate - construction and development                                                     105,545           86,404
      Real estate - mortgage                                                                         153,525          149,602
      Installment loans to individuals                                                                26,858           28,833
      Other                                                                                            2,381            2,280
                                                                                               ---------------  --------------
                                                                                                     326,658          297,945
      Less allowance for loan losses                                                                  (4,334)          (3,899)
                                                                                               ---------------  --------------

                                                                                                $    322,324    $     294,046
                                                                                               ===============  ==============

    Included in the above are customer demand deposits in overdraft  status of  approximately  $597,000 at December
    31, 2006, and $397,000 at December 31, 2005.

    Transactions in the allowance for loan losses were as follows:

                                                                                              Years Ended December 31,
                                                                                     ------------------------------------------
                                                                                          2006          2005          2004
                                                                                     ------------  -------------   ------------
                                                                                                    (In thousands)

       Balance at beginning of year                                                   $    3,899    $    3,598      $   3,665
       Charge-offs during year                                                            (1,214)       (1,617)        (1,128)
       Recoveries on loans previously
          charged off                                                                        684           478            424
       Provision charged to operating expense                                                965         1,440            637
                                                                                     ------------  -------------   ------------

       Balance at end of year                                                         $    4,334    $    3,899      $   3,598
                                                                                     ============  =============   ============`

At December 31, 2006 and 2005, the
recorded investment in loans considered to be impaired totaled approximately $1,935,000
and $609,000, respectively. The allowance for loan losses related to these loans
approximated $472,000 and $550,000 at December 31, 2006 and 2005, respectively. The
average recorded investment in impaired loans during the years ended December 31, 2006 and
2005, was approximately $1,365,000 and $543,000, respectively. For the years ended
December 31, 2006, 2005, and 2004, the amount of income recognized on impaired loans was
immaterial. At December 31, 2006 and 2005, nonaccrual loans amounted to approximately
$819,000 and $15,000, respectively, and loans past due ninety days or more and still
accruing interest amounted to approximately $1,489,000 and $786,000, respectively.

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

NOTE E  PREMISES
AND EQUIPMENT

Premises and equipment are stated at
cost, less accumulated depreciation and amortization as follows:

`December 31,
                                                                        Estimated Useful      ------------------------------
                                                                          Life in Years             2006            2005
                                                                        ----------------      --------------   -------------
                                                                                                      (In thousands)

       Land                                                                     -              $    4,734       $     4,795
       Buildings and improvements                                          10   - 40               16,935            14,132
       Furniture and equipment                                              3   - 10                6,936             6,055
                                                                                              --------------   -------------
                                                                                                   28,605            24,982
       Less accumulated depreciation and amortization                                              (6,636)           (6,276)
                                                                                              --------------   -------------

                                                                                               $   21,969       $    18,706
                                                                                              ==============   =============`

The amount charged to operating
expense for depreciation was $913,000 for 2006, $798,000 for 2005, and $623,000 for 2004.

NOTE F  TIME
DEPOSITS

The aggregate amount of time deposits
in denominations of $100,000 or more for 2006 and 2005 was $77,169,000 and $59,438,000,
respectively.

Projected maturities of time deposits
included in interest-bearing deposits at December 31, 2006, are as follows (in thousands):

`Year                                         Amount
                                       ----                                         ------

                                       2007                                        136,978
                                       2008                                          5,572
                                       2009                                          1,890
                                       2010                                          2,279
                                       2011                                            811
                                    Thereafter                                       9,162
                                                                               ------------

                                                                               $   156,692
                                                                               ============`

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

NOTE G  BORROWED
FUNDS

Borrowed funds consisted of the
following:

`December 31,
                                                                                                   -------------------------
                                                                                                      2006          2005
                                                                                                   -----------   -----------
                                                                                                        (In thousands)

       FHLB advances                                                                                $  25,937    $  12,991
       Treasury tax and loan note                                                                       1,443        1,105
                                                                                                   -----------   -----------

                                                                                                    $  27,380    $  14,096
                                                                                                   ===========   ===========`

The Bank has outstanding advances
from the FHLB under a blanket agreement for advances and a security agreement
(Agreements). The Agreements entitle the Bank to borrow funds from FHLB to fund mortgage
loan programs and to satisfy certain other funding needs. Advances from the FHLB have
maturity dates ranging from January, 2007, through August, 2025. Interest is payable
monthly at rates ranging from 2.335% to 6.575%. The advances are collateralized by FHLB
capital stock, amounts on deposit with the FHLB, and a blanket lien on first mortgage,
small business, and agricultural loans equal to the advances outstanding. FHLB advances
available and unused at December 31, 2006, totaled $59.1 million.

Federal funds purchased represent
unsecured borrowings from other banks, generally on an overnight basis.

Annual principal repayment
requirements on FHLB borrowings at December 31, 2006, are as follows:

`Year                               Amount
                                             ----                               ------
                                                                            (In thousands)

                                             2007                                 14,625
                                             2008                                  1,656
                                             2009                                  1,688
                                             2010                                    722
                                             2011                                    757
                                          Thereafter                               6,489`

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

NOTE H  EMPLOYEE
RETIREMENT PLANS

The Bank has a defined contribution
plan which incorporates the provisions of a deferred compensation plan [401(k)] covering
all employees who perform 1,000 hours of service annually, have one year of service and
are age twenty-one or older. The Banks contribution is 2% of salaries, and employees
may contribute up to 15% of their salary which is matched by the Bank up to an additional
3%. Additional Bank contributions are subject to Board discretion. The Banks
contribution was approximately $289,000 for 2006, $248,000 for 2005, and $223,000 for
2004.

The Bank also has an employee stock
ownership plan (ESOP) covering the same group of employees as the 401(k) plan, which is
funded at the discretion of the Board. The ESOP invests primarily in the stock of
Corporation. Dividends on ESOP shares are recorded as a reduction of retained earnings and
the shares are considered outstanding for earnings per share computation. Bank
contributions were approximately $275,000 for 2006, $261,000 for 2005, and $232,000 for
2004. The ESOP held 198,712 and 193,516 shares of Corporation common stock, 198,711 and
192,215 of which were allocated shares, at December 31, 2006 and 2005, respectively.

NOTE I 
COMPREHENSIVE INCOME

In the calculation of comprehensive
income, certain reclassification adjustments are made to avoid double counting amounts
that are displayed as part of other comprehensive income. The disclosures of the
reclassification amounts are as follows:

`Years Ended December 31,
                                                                                    -------------------------------------------
                                                                                        2006           2005          2004
                                                                                    ------------   ------------   -------------
                                                                                                  (In thousands)
          Net change in unrealized (losses) gains on
              available-for-sale securities                                          $       88    $   (1,273)     $ (1,247)
          Reclassification adjustment for net losses
              (gains) realized in income                                                    253            52            12
                                                                                    ------------   ------------   -------------
          Net unrealized (gains) losses                                                     341        (1,221)       (1,235)
          Tax effect                                                                       (127)          456           460
                                                                                    ------------   ------------   -------------

          Net change in unrealized gains (losses) on
              securities available-for-sale, net of tax                              $      214    $     (765)     $   (775)
                                                                                    ============   ============   =============`

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

NOTE J  INCOME TAXES

The provision for income taxes
including the tax effects of securities transactions is as follows:

`Years Ended December 31,
                                                                                     ------------------------------------------
                                                                                          2006          2005         2004
                                                                                     ------------  ------------   -------------
                                                                                                   (In thousands)

       Current:
          Federal                                                                     $    2,820    $    2,352       $  1,901
          State                                                                              451           379            288
       Deferred                                                                               78           (24)           242
                                                                                     ------------  ------------   -------------

                                                                                      $    3,349    $    2,707       $  2,431
                                                                                     ============  ============   =============


    The difference between the total expected tax expense at the federal tax rate and the reported income tax
    expense is as follows:

                                                                                              Years Ended December 31,
                                                                                     ------------------------------------------
                                                                                          2006          2005          2004
                                                                                     ------------  ------------   -------------
                                                                                                   (In thousands)

       Tax on income before income taxes                                             $     3,600    $    3,167       $  2,911
       Increase (decrease) resulting from:
          Tax-exempt income                                                                 (636)         (719)          (639)
          Disallowed interest expense                                                         72            54             33
          State income taxes, net of federal benefit                                         298           250            190
          Other, net                                                                          15           (45)           (64)
                                                                                     ------------  ------------   -------------

                                                                                     $     3,349    $    2,707     $    2,431
                                                                                     ============  ============   =============`

( Continued )

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

The components of the net deferred
tax included in the consolidated balance sheets are as follows:

`December 31,
                                                                                                   -----------------------------
                                                                                                        2006          2005
                                                                                                   -------------    ------------
                                                                                                          (In thousands)
       Deferred tax assets:
          Allowance for loan losses                                                                 $    1,429       $  1,266
          Unrealized loss on securities
             available for sale                                                                             25            152
             Other                                                                                          17             14
                                                                                                   -------------    ------------
                                                                                                         1,471          1,432
                                                                                                   -------------    ------------

       Deferred tax liabilities:
          Premises and equipment                                                                          (163)          (168)
          Other                                                                                           (830)          (580)
                                                                                                   -------------    ------------
                                                                                                          (993)          (748)
                                                                                                   -------------    ------------

       Net deferred tax asset                                                                       $      478       $    684
                                                                                                   =============    ============`

NOTE K  COMMITMENTS
AND CONTINGENT LIABILITIES

The consolidated financial statements
do not reflect various commitments and contingent liabilities which arise in the normal
course of the Banks business and which involve elements of credit risk, interest
rate risk and liquidity risk. These commitments and contingent liabilities are commitments
to extend credit, commercial letters of credit, credit card agreements, and standby
letters of credit. A summary of the Banks approximate commitments and contingent
liabilities arising from the normal course of business at December 31 is as follows:

`Contractual Amount
                                                                                               -------------------------------
                                                                                                     2006            2005
                                                                                               ---------------   -------------
                                                                                                       (In thousands)

        Commitments to extend credit                                                            $     38,356     $    48,228
        Credit card arrangements                                                                       2,352           2,253
        Letters of credit                                                                             15,961          14,251`

( Continued )

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

Commitments to extend credit, credit
card agreements, commercial letters of credit, and standby letters of credit include some
exposure to credit loss in the event of nonperformance of the customer. The Banks
credit policies and procedures for such commitments and financial guarantees are the same
as those used for lending activities. Because these instruments have fixed maturity dates,
and because many of them expire without being drawn upon, they do not generally present
any significant liquidity risk. No significant losses on commitments were incurred during
the three years ended December 31, 2006, nor are any significant losses as a result of
these transactions anticipated.

The Bank leases property for branch
offices under a noncancellable lease agreement that expires in 2007. The lease is for a
five-year period with an option to renew. The total minimum rental commitment at December
31, 2006, under the leases is approximately $9,600 which is due as follows:

`Year                      Amount
                                                ----                   -----------
                                                2007                       9,600
                                                2008                           -
                                                2009                           -
                                                2010                           -
                                                2011                           -
                                                                       $   9,600`

The annual rental expense was $9,600
for 2006, 2005, and 2004.

The Bank is a defendant in various
pending and threatened legal actions arising in the normal course of business. In the
opinion of management, based upon the advice of legal counsel, the ultimate disposition of
these matters will not have a material effect on the consolidated financial statements.

NOTE L  RELATED
PARTY TRANSACTIONS

In the normal course of business,
loans are made to directors and executive officers and to companies in which they have a
significant ownership interest. In the opinion of management, these loans are made on
substantially the same terms, including interest rates and collateral, as those prevailing
at the time for comparable transactions with other parties, are consistent with sound
banking practices and are within applicable regulatory and lending limitations. Such loans
amounted to approximately $4,749,000 and $2,254,000 at December 31, 2006 and 2005,
respectively.

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

NOTE M  REGULATORY
MATTERS

Banking regulations require the Bank
to maintain certain capital levels and limit the dividends paid by the Bank to the holding
company. Dividends paid by the Bank to the Corporation are the primary source of funds for
dividends by the Corporation to its shareholders.

The Corporation and its subsidiary
bank are subject to various regulatory capital requirements administered by the federal
and state banking agencies. Failure to meet minimum capital requirements can initiate
certain mandatory and possibly additional discretionary actions by regulators that, if
undertaken, could have a direct material effect on the Corporations consolidated
financial statements. Under capital adequacy guidelines and the regulatory framework for
prompt corrective action, the Corporation and its subsidiary must meet specific capital
guidelines that involve quantitative measures of the assets, liabilities, and certain
off-balance-sheet items as calculated under regulatory accounting practices. Capital
amounts and classification are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors.

Quantitative measures established by
regulation to ensure capital adequacy require the Corporation and its subsidiary bank to
maintain minimum amounts and ratios (set forth in the following table) of total and Tier 1
capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier
1 capital (as defined) to adjusted average total assets (leverage). Managements
contention is that, as of December 31, 2006, the Corporation and its subsidiary bank
exceed all capital adequacy requirements.

At December 31, 2006, the Bank was
categorized by regulators as well-capitalized under the regulatory framework for prompt
corrective action. A financial institution is considered to be well-capitalized if it has
a total risk-based capital ratio of 10% or more, a Tier 1 risk-based capital ratio of 6%
or more, and a Tier 1 leverage capital ratio of 5% or more. There are no conditions or
anticipated events that, in the opinion of management, would change the categorization.

The actual capital amounts and ratios
at December 31, 2006 and 2005, are presented in the following table. No amount was
deducted from capital for interest-rate risk exposure.

`Security Capital
                                                                                    Corporation
                                                                                  (Consolidated)                  Bank
                                                                             ------------------------  -----------------------
                                                                                Amount       Ratio        Amount        Ratio
                                                                             ------------  ----------  -------------  --------
                                                                                              ($ In Thousands)
      December 31, 2006:
        Total risk-based                                                     $    52,485      14.7%     $    50,503      14.2%
        Tier 1 risk-based                                                         48,151      13.5%          46,169      13.0%
        Tier 1 leverage                                                           48,151      10.6%          46,169      10.2%

      December 31, 2005:
        Total risk-based                                                     $    47,467      14.4%     $    45,417      13.8%
        Tier 1 risk-based                                                         43,568      13.2%          41,518      12.7%
        Tier 1 leverage                                                           43,568      10.2%          41,518       9.8%`

( Continued )

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

The minimum amounts of capital and
ratios as established by banking regulators at December 31, 2006 and 2005, were as
follows:

`Security Capital
                                                                                    Corporation
                                                                                  (Consolidated)                  Bank
                                                                            -------------------------  ------------------------
                                                                                Amount       Ratio        Amount        Ratio
                                                                            -------------  ----------  -------------  ---------
                                                                                              ($ In Thousands)
      December 31, 2006:
        Total risk-based                                                     $    28,534       8.0%     $    28,376       8.0%
        Tier 1 risk-based                                                         14,267       4.0%          14,188       4.0%
        Tier 1 leverage                                                           13,645       3.0%          13,586       3.0%

      December 31, 2005:
        Total risk-based                                                     $    26,406       8.0%     $    26,247       8.0%
        Tier 1 risk-based                                                         13,203       4.0%          13,123       4.0%
        Tier 1 leverage                                                           12,801       3.0%          12,747       3.0%`

NOTE N  DISCLOSURE
ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS

The following disclosure of the
estimated fair value of financial instruments is made in accordance with FASB Statement
No. 107, Disclosures About Fair Value of Financial Instruments. The estimated
fair value amounts have been determined using available market information and appropriate
valuation methodologies. However, considerable judgment is necessarily required to
interpret market data to develop the estimates of fair value. Accordingly, the estimates
presented herein are not necessarily indicative of the amounts that could be realized in a
current market exchange. The use of different market assumptions and/or estimation
methodologies may have a material effect on the estimated fair value amounts.

The following methods and assumptions
were used to estimate the fair value of each class of financial instruments for which it
is practicable to estimate that value:

Cash and Cash Equivalents  For
such short-term instruments, the carrying amount is a reasonable estimate of fair value.

Securities  For securities held
as investments, fair value equals market price, if available. If a quoted market price is
not available, fair value is estimated using quoted market prices for similar securities.
Fair value of other securities, which consist of FHLB, First National Bankers
Bankshares, and Federal Agricultural Mortgage Corporation, is estimated to be the carrying
value which is par.

( Continued )

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

Loans  The fair value of loans
is estimated by discounting the future cash flows using the current rates at which similar
loans would be made to borrowers with similar credit ratings and for the same remaining
maturities.

Deposits  The fair values of
demand deposits are, as required by Statement No. 107, equal to the carrying value of such
deposits. Demand deposits include noninterest-bearing demand deposits, savings accounts,
NOW accounts, and money market demand accounts. The fair value of variable rate term
deposits, those repricing within six months or less, approximates the carrying value of
these deposits. Discounted cash flows have been used to value fixed rate term deposits and
variable rate term deposits repricing after six months. The discount rate used is based on
interest rates currently being offered on comparable deposits as to amount and term.

FHLB and Other Borrowings  The
fair value of the fixed rate borrowings are estimated using discounted cash flows, based
on current incremental borrowing rates for similar types of borrowing arrangements. The
carrying amount of any variable rate borrowings approximates their fair values.

Off-Balance Sheet Instruments 
Fair values of off-balance sheet financial instruments are based on fees charged to enter
into similar agreements. However, commitments to extend credit do not represent a
significant value until such commitments are funded or closed. Management has determined
that these instruments do not have a distinguishable fair value and no fair value has been
assigned.

The estimated fair values of the
financial instruments, none of which are held for trading purposes, were as follows:

`December 31, 2006                      December 31, 2005
                                                      ------------------------------------    ---------------------------------
                                                          Carrying           Estimated           Carrying          Estimated
                                                           Amount           Fair Value            Amount           Fair Value
                                                      -----------------   ----------------    ---------------   ---------------
                                                                (In thousands)                         (In thousands)
       Financial assets:
          Cash and cash equivalents                    $       23,447     $      23,447        $     19,677     $      19,677
          Certificates of deposit with
              other banks                                         198               198                 392               392
          Securities available-for-sale                        61,028            61,028              78,949            78,949
          Securities held-to-maturity                           7,850             8,150               2,047             2,063
          Securities, other                                     2,250             2,250               1,456             1,456
          Loans                                               326,658           327,008             294,046           272,375
       Financial liabilities:
          Noninterest-bearing deposits                         59,380            59,380              63,082            63,082
          Interest-bearing deposits                           307,319           306,118             291,684           290,334
          FHLB and other borrowings                            35,380            33,935              29,096            29,096`

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

NOTE O 
CONCENTRATIONS OF CREDIT

Most of the loans, commitments,
commercial letters of credit and standby letters of credit have been granted to customers
in the Banks market area. Generally such customers are also depositors. Investments
in state and municipal securities also include governmental entities within the
Banks market area. The concentrations of credit by type of loan are set forth in
Note D. The distribution of commitments to extend credit approximates the distribution of
loans outstanding. Letters of credit were granted primarily to commercial borrowers.

NOTE P  CONDENSED
PARENT COMPANY STATEMENTS

Balance sheets as of December 31,
2006 and 2005, and statements of income and cash flows for the years ended December 31,
2006, 2005, and 2004 of Security Capital Corporation (parent company only) are presented
below:

`BALANCE SHEETS
                                                                                                         December 31,
                                                                                                --------------------------------
                                                                                                      2006           2005
                                                                                                --------------  ----------------
                                                                                                        (In thousands)
     Assets
     Cash and cash equivalents                                                                   $         50    $         23
     Investment in subsidiaries                                                                        50,515          45,730
     Land                                                                                               1,924           2,173
     Other assets                                                                                         401             243
                                                                                                --------------  ----------------
                                                                                                 $     52,890    $     48,169
                                                                                                ==============  ================

     Liabilities and Shareholders' Equity
     Notes payable                                                                               $        815    $        930
     Other liabilities                                                                                     92              52
     Shareholders' equity                                                                              51,983          47,187
                                                                                                --------------  ----------------

                                                                                                 $     52,890    $     48,169
                                                                                                ==============  ================`

( Continued )

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

`STATEMENTS OF INCOME

                                                                                            Years Ended December 31,
                                                                                ------------------------------------------------
                                                                                      2006           2005            2004
                                                                                ---------------  -------------  ----------------
                                                                                                (In thousands)
     Income
     Dividends from subsidiary                                                   $      2,888    $      2,695    $      2,420
     Other                                                                                 89              53              10
                                                                                ---------------  -------------  ----------------
                                                                                        2,977           2,748           2,430

     Expense                                                                              425             202             151
                                                                                ---------------  -------------  ----------------
     Income before income taxes and equity in
        undistributed earnings of subsidiaries                                          2,552           2,546           2,279
     Income tax (expense) benefit                                                          61              56              50
                                                                                ---------------  -------------  ----------------
     Income before equity in undistributed earnings
        of subsidiaries                                                                 2,613           2,602           2,329
     Equity in undistributed earnings of subsidiaries
        in excess of dividends                                                          4,627           4,005           3,803
                                                                                ---------------  -------------  ----------------

     Net income                                                                  $      7,240    $      6,607    $      6,132
                                                                                ===============  =============  ================`

( Continued )

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

`STATEMENTS OF CASH FLOWS

                                                                                            Years Ended December 31,
                                                                                 ------------------------------------------------
                                                                                      2006           2005            2004
                                                                                 -------------  --------------   ----------------
                                                                                                (In thousands)
     Cash Flows From Operating Activities
     Net income                                                                  $      7,240    $      6,607    $      6,132
     Equity in subsidiaries' earnings                                                  (4,572)         (4,005)         (3,803)
     Other, net                                                                           (74)             80             (68)
                                                                                 -------------  --------------   ----------------

     Net cash provided by operating activities                                          2,594           2,682           2,261
                                                                                 -------------  --------------   ----------------

     Cash Flows From Investing Activities
     Purchases of assets                                                                 (195)         (1,179)          (1,204)
     Proceeds from sale of other asset                                                    440               -                -
     Other, net                                                                             -              (2)               -
                                                                                 -------------  --------------   ----------------

     Net cash provided by (used in) investing activities                                  245          (1,181)          (1,204)
                                                                                 -------------  --------------   ----------------

     Cash Flows From Financing Activities
     Dividends paid on common stock                                                    (2,744)         (2,611)         (2,485)
     Issuance of debt                                                                       -             930               -
     Repayment of debit                                                                  (155)
     Other, net                                                                            87              87             150
                                                                                 -------------  --------------   ----------------

     Net cash used in financing activities                                             (2,812)         (1,594)         (2,335)
                                                                                 -------------  --------------   ----------------

     Net increase (decrease) in cash and cash equivalents                                  27             (93)         (1,278)

     Cash and cash equivalents at beginning of year                                        23             116           1,394
                                                                                 -------------  --------------   ----------------

     Cash and cash equivalents at end of year                                    $         50    $         23    $        116`

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

`Three Months Ended
                                                              ------------------------------------------------------------------
                                                                   Mar. 31          June 30        Sept. 30          Dec. 31
                                                              ---------------  --------------   ---------------   --------------
                                                                            (In thousands, except per share data)
    2006
    Total interest income                                       $      7,006     $     7,685      $    8,081        $   7,814
    Total interest expense                                             2,319           2,669           3,198            3,337
        Net interest income                                            4,687           5,016           4,883            4,477
    Provision for loan losses                                            241             242             241              241
        Net interest income after provision for
           loan losses                                                 4,446           4,774           4,642            4,236
    Total noninterest income, excluding
        securities gains (losses)                                      1,597           1,561           1,705            2,316
    Securities gains (losses)                                            (13)              6              28             (274)
    Total noninterest expenses                                         3,451           3,587           3,537            3,860
    Income taxes                                                         797             927             926              699

    Net income                                                  $      1,782      $    1,827      $    1,912        $   1,719
    Per share:  (1)
        Net income                                              $        .65      $      .67      $      .70        $     .62
        Cash dividends declared                                            -               -               -             1.00


(1) Restated for stock dividends.`

( Continued )

---

SECURITY CAPITAL
CORPORATION

NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS

NOTE Q  SUMMARY OF
QUARTERLY RESULTS OF OPERATIONS AND PER SHARE

AMOUNTS (UNAUDITED)
(Continued)

`Three Months Ended
                                                               ----------------------------------------------------------------
                                                                   Mar. 31          June 30        Sept. 30         Dec. 31
                                                               --------------   --------------  --------------   --------------
                                                                            (In thousands, except per share data)
    2005
    Total interest income                                       $      5,332     $     5,906      $    6,493        $   6,727
    Total interest expense                                             1,287           1,595           1,893            2,132
                                                               --------------   --------------  --------------   --------------
        Net interest income                                            4,045           4,311           4,600            4,595
    Provision for loan losses                                            185             185             465              605
                                                               --------------   --------------  --------------   --------------
        Net interest income after provision for
           loan losses                                                 3,860           4,126           4,135            3,990
    Total noninterest income, excluding
        securities gains (losses)                                      1,492           1,555           1,616            1,556
    Securities gains (losses)                                              7               -             (16)             (43)
    Total noninterest expenses                                         3,075           3,269           3,325            3,295
    Income taxes                                                         657             593             754              703
                                                               --------------   --------------  --------------   --------------

    Net income                                                  $      1,627      $    1,819      $    1,656        $   1,505
                                                               ==============   ==============  ==============   ==============

    Per share:  (1)
        Net income                                              $        .59      $      .66      $      .60        $     .56
        Cash dividends declared                                            -               -               -             1.00


(1)      Restated for stock dividends.`

---

We have audited the accompanying
consolidated balance sheets of Security Capital Corporation and subsidiaries as of
December 31, 2006 and 2005, and the related consolidated statements of income, changes in
shareholders equity and cash flows for each of the three years in the period ended
December 31, 2006. These financial statements are the responsibility of the
Corporations management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audits to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial
statements referred to above present fairly, in all material respects, the consolidated
financial position of Security Capital Corporation and subsidiaries as of December 31,
2006 and 2005, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended December 31, 2006, in conformity with
accounting principles generally accepted in the United States of America.

We also have audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United States), the
effectiveness of Security Capital Corporations internal control over financial
reporting as of December 31, 2006, based on criteria established in Internal
Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission and our report dated March 14, 2007, expressed an unqualified opinion
thereon.

---

Not Applicable

Disclosure controls and procedures
are designed to ensure that information required to be disclosed by the Company in the
reports it files or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Securities and Exchange
Commissions rules and forms. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required to be
disclosed by the Company in the reports that it files under the Exchange Act is
accumulated and communicated to management, including the Chief Executive Officer and the
Chief Financial Officer, as appropriate to allow timely decisions regarding required
disclosure.

As required by Rule 13a-15(b) of the
Securities Exchange Act, our management, including the Chief Executive Officer and Chief
Financial Officer, conducted an evaluation as of December 31, 2006, of the effectiveness
of our disclosure controls and procedures as defined in Exchange Act Rule
13a-15(e). Based on that evaluation, our Chief Executive Officer and Chief Financial
Officer, concluded that, as of December 31, 2006, our controls and procedures were
effective to ensure that information required to be disclosed in reports that we file or
submit under the Exchange Act are recorded, processed, summarized and reported in
accordance with the rules and forms of the SEC and that such information is accumulated
and communicated to management as appropriate to allow timely decisions regarding required
disclosure.

Management is responsible for the
preparation, integrity and reliability of the consolidated financial statements and
related financial information contained in this annual report. The financial statements
were prepared in accordance with generally accepted accounting principles and prevailing
practices of the banking industry. Where amounts must be based on estimates and judgments,
they represent the best estimates and judgments of management.

Management has established and is
responsible for maintaining an adequate internal control structure designed to provide
reasonable, but not absolute, assurance as to the integrity and reliability of the
financial statements, safeguarding of assets against loss from unauthorized use or
disposition and the prevention and detection of fraudulent financial reporting. The
internal control structure includes: a financial accounting environment; a comprehensive
internal audit function; an independent audit committee of the board of directors; and
extensive financial and operating policies and procedures. Management also recognizes its
responsibility for fostering a strong ethical climate which is supported by a code of
conduct, appropriate levels of management authority and responsibility, an effective
corporate organizational structure and appropriate selection and training of personnel.

The board of directors, primarily
through its audit committee, oversees the adequacy of the Companys internal control
structure. The audit committee, whose members are neither officers nor employees of the
Company, meets periodically with management, internal auditors and internal credit
examiners, if required, to review the functioning of each and to ensure that each is
properly discharging its responsibilities. In addition, T. E. Lott and Company, an
independent registered public accounting firm, was engaged to audit the Companys
financial statements and express an opinion as to the fairness of presentation of such
financial statements. T. E. Lott and Company was also engaged to audit managements
assessment of the Companys internal control over financial reporting and the
Companys internal control over financial reporting itself. The report of T. E. Lott
and Company follows this report.

Management recognizes that there are
inherent limitations in the effectiveness of any internal control structure. Because of
its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may
deteriorate.

Management assessed the effectiveness
of the Companys internal control over financial reporting as of December 31, 2006
based upon the criteria for effective internal control over financial reporting described
in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations (COSO) of the Treadway Commission. Based upon this assessment, management
believes that, as of December 31, 2006, the Company maintained effective control over
financial reporting.

Not Applicable

There were no significant changes in
the Companys internal controls or in other factors that could significantly affect
the Companys internal controls over financial reporting in the fourth quarter of
2006 or thereafter.

---

To the Audit Committee of the
Board of Directors and Shareholders of
Security Capital Corporation

We have audited managements
assessment, included in the accompanying Report of Management on Internal Control Over
Financial Reporting, that Security Capital Corporation maintained effective internal
control over financial reporting as of December 31, 2006, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO). Security Capital Corporations management is
responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting. Our
responsibility is to express an opinion on managements assessment and an opinion on
the effectiveness of the Corporations internal control over financial reporting
based on our audit.

We conducted our audit in accordance
with the standards of the Public Company Accounting Oversight Board (United States). Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material
respects. Our audit included obtaining an understanding of internal control over financial
reporting, evaluating managements assessment, testing and evaluating the design and
operating effectiveness of internal control, and performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable
basis for our opinion.

A companys internal control
over financial reporting is a process designed to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A
companys internal control over financial reporting includes those policies and
procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3)
provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the companys assets that could have a material
effect on the financial statements.

Because of its inherent limitations,
internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.

In our opinion, managements
assessment that Security Capital Corporation maintained effective internal control over
financial reporting as of December 31, 2006, is fairly stated, in all material respects,
based on criteria established in Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also in our
opinion, Security Capital Corporation maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2006, based on criteria
established in Internal Control-Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).

We have also audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United States), the
consolidated balance sheets of Security Capital Corporation and subsidiaries as of
December 31, 2006 and 2005, and the related consolidated statements of income, changes in
shareholders equity, and cash flows for each of the three years in the period ended
December 31, 2006, and our report dated March 14, 2007, expressed an unqualified opinion
thereon.

Columbus, Mississippi
March 14, 2007

---

Not Applicable

Included under the heading
Information Concerning Nominees and Directors in the Companys Proxy
Statement dated April 6, 2007, and incorporated by reference herein.

The Companys Board of Directors
has adopted a Code of Ethics that applies to the Companys principal executive
officer, principal financial officer, principal accounting officer, or persons performing
similar functions. A copy of this Code of Ethics can be found at the Companys
internet website at www.firstsecuritybk.com. The Company intends to disclose any
amendments to its Code of Ethics, and any waiver from a provision of the Code of Ethics
granted to the Companys principal executive officer, principal financial officer,
principal accounting officer, or persons performing similar functions, on the
Companys internet website within five business days following such amendment or
waiver. The information contained on or connected to the Companys internet website
is not incorporated by reference into this Form 10-K and should not be considered part of
this or any other report that we file with or furnish to the SEC.

Included under the heading
Executive Compensation in the Companys Proxy Statement dated April 6,
2007, and incorporated by reference herein.

Included under the heading
Security Ownership of Certain Beneficial Owners and Management in the
Companys Proxy Statement dated April 6, 2007, and incorporated by reference herein.

Included under the heading
Certain Relationship and Related Transactions in the Companys Proxy
Statement dated April 6, 2007, and incorporated by reference herein.

Included under the heading
Independent Public Accountants and Fees in the Companys Proxy Statement
dated April 6, 2007, and incorporated by reference herein.

---

`(a)      Independent Registered Public Accountants' Report

         (b)      Consolidated Financial Statements - See the Financial Statements included in Item 8.

         (c)      Financial Statement Schedules - Financial statement schedules are omitted for the reason that they are
                  not required or are not applicable, or the required information is included in the financial
                  statements.

         (d)      Exhibits - The exhibits filed as part of this Annual Report on Form 10-K are identified in the Exhibit
                  Index, which Exhibit Index specifically identifies those exhibits that describe or evidence all
                  management contracts and compensation plans or arrangements required to be filed as exhibits to
                  this report.  Such Exhibit Index is incorporated herein by reference.`

None

`SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 Capital Corporation


Date: March 15, 2007                                              By   /s/ Frank West
                                                                     ------------------------------------------
                                                                      Frank West, Chief Executive Officer

Date: March 15, 2007                                              By   /s/ Connie Hawkins
                                                                     ------------------------------------------
                                                                      Connie Hawkins, Chief Financial Officer`

---

`SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following
persons on behalf of the Registrant and in the capacities and on the dates indicated:



DATE:    March 15, 2007                               /s/ Larry Pratt, Director
       ----------------------                       -------------------------------------


DATE:    March 15, 2007                               /s/ Frank West, Director
       ----------------------                       -------------------------------------


DATE:    March 15, 2007                               /s/ Laney Funderburk, Director
       ----------------------                       -------------------------------------


DATE:    March 15, 2007                               /s/ Joe Brown, Director
       ----------------------                       -------------------------------------


DATE:    March 15, 2007                               /s/ Ben Smith, Director
       ----------------------                       -------------------------------------


DATE:    March 15, 2007                               /s/ G. E. McKittrick, Director
       ----------------------                       -------------------------------------


DATE:    March 15, 2007                               /s/ Will Hays, Director
       ----------------------                       -------------------------------------


DATE:    March 15, 2007                               /s/ Steve Ballard, Director
       ----------------------                       -------------------------------------


DATE:    March 15, 2007                               /s/ Tony Jones, Director
       ----------------------                       -------------------------------------`

---

`Exhibit Index

                                                                                                     Reference to
                                                                                                    Prior Filing or
   Exhibit                                                                                          Exhibit Number
   Number                                          Document                                         Attached Hereto
   -------     ---------------------------------------------------------------------------          -----------------
     3.1       Registrant's Articles of Incorporation                                                      *

     3.2       Registrant's Bylaws                                                                         *

     21        Subsidiaries of the registrant                                                             21

    31.1       Rule 13a-14(a) Certification of the Company's President                                   31.1
               and Chief Executive Officer

    31.2       Rule 13a-14(a) Certification of the Company's Chief                                       31.2
               Financial Officer

     32        Section 1350 Certification                                                                 32



      *        Filed on March 31,2003, as an exhibit to the Registrant's Registration Statement
               on Form 10-SB (File No. 000-50224), and incorporated herein by reference`