U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549

FORM 10-Q

COMMISSION FILE NUMBER:       000-50224

SECURITY CAPITAL CORPORATION
SECOND QUARTER 2005 INTERIM FINANCIAL STATEMENTS

TABLE OF CONTENTS
    

SECURITY CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ITEM NO. 2 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion contains “forward-looking statements” relating to, without limitation, future economic performance, plan and objectives of management for future operations, and projections of revenues and other financial items that are based on the beliefs of the Company’s management, as well as assumptions made by and information currently available to the Company’s management. The words “expect,” “estimate,” “anticipate,” and “believe,” as well as similar expressions, are intended to identify forward-looking statements. The Company’s actual results may differ and the Company’s operating performance each quarter is subject to various risks and uncertainties that are discussed in detail in the Company’s filing of the Form 10Q with the Securities and Exchange Commission.

The subsidiary Bank represents the primary assets of the Company. On June 30, 2005, First Security Bank had approximately $420.0 million in assets compared to $377.1 million at June 30, 2004. Loans increased to $277.1 million at June 30, 2005 from $225.2 million at June 30, 2004. Deposits increased by $24 million from June 30, 2004 to June 30, 2005 for a total of $346.9 million. For the six months ended June 30, 2005 and June 30, 2004, the Bank reported income of approximately $3,538,000 and $3,084,000, respectively.
 

CHANGES IN FINANCIAL CONDITION
The cash and due from banks of $15.7 million at June 30, 2005 reflected a small decrease from the cash position of $16.1 million at December 31, 2004. This small decrease is attributed to a daily fluctuation due to normal bank transactions. The cash management team readily invests available cash and assesses the investment tools for the most desirable yield and the funding needs of the bank. This strategy is displayed in the reduction in the federal funds sold from the position at December 31, 2004. The funds from the federal funds sold assisted in addressing a continuing loan demand.

The earning assets at December 31, 2004 were $352.9 million and at June 30, 2005 were $379.1 million. The investments in fixed assets continue to increase with the expansion of the banking services into the Southaven area and with the purchase of real estate adjacent to the main office location to provide offices for the trust services, mortgage lending and information technology departments. The premises and equipment, net of the accumulated depreciation, at December 31, 2004 was $15.0 million as compared to $18.5 million at June 30, 2005. Other assets increased to $5.8 million at June 30, 2005 from $3.4 million at December 31, 2004, with the major component of the increase attributed to an increase in the customer liability acceptances.

Deposit liabilities at June 30, 2005 reflected a 4% growth or a $13.3 million increase for the first six months in 2005. The rise in deposits decreases the need for increments on long-term borrowings. Short-term borrowings provide a tool in providing the funding for unforeseen deposit withdrawals and customer loan advances. At June 30, 2005, short-term funding was required as evidenced by $10 million of federal funds purchased.

The net unrealized gain on available-for-sale securities reflected in the shareholder’s equity section on December 31, 2004 and on June 30, 2005 was $510 thousand and $354 thousand, respectively. The changes reflected over these reporting periods reflect the volatile nature of the market. The changes in the market affected the comprehensive income with a decrease of $1.4 million for the three months ending June 30, 2004 and a cumulative or net decrease of $1.2 million for the six months ending June 30, 2004. In 2005, the comprehensive income reflected a net decrease of $156 thousand for the six months ending June 30 and an increase of $321 thousand for the three months ending June 30.

The consolidated statements of cash flows summarize the changes in the financial condition of the Company. The most prevalent of the changes for the six months ending June 30, 2005 are: an increase of $42.7 million in loans; a net decrease in available-for-sale securities of $4.4 million resulting from purchases of $19.1 million offset by an approximate $23.5 million in maturities and sales; an increase in the investment in premises and equipment of $3.7 million; an increase of $13.3 million in deposits; an increase in the investment in bank owned life insurance of $2.1 million and an increase in borrowings attributed to $3.3 million in advances from FHLB and $10 million in federal funds purchased.
 

NONPERFORMING ASSETS AND RISK ELEMENTS.
Diversification within the loan portfolio is an important means of reducing inherent lending risks. The loan portfolio is represented of the following mix: Commercial 6.57%; Agricultural 2.28%; Real Estate 79.61%; Consumer 11.0% and Other .54%. The major components of the real estate loans are 28.94% for construction and land development property, 25.80% for first liens on 1-4 family residential property and 36.64% for nonfarm and nonresidential property.

At June 30, 2005, the subsidiary bank had loans past due as follows:

The accrual of interest is discontinued on loans which become ninety days past due unless the loans are adequately secured and in the process of collection. Nonaccrual loans totaled $37 thousand at June 30, 2005. Any other real estate owned is carried at lower of cost or current appraised value less cost to dispose. Other real estate at June 30, 2005 totaled $729 thousand. A loan is classified as a restructured loan when the interest rate is materially reduced or the term is extended beyond the original maturity date because of the inability of the borrower to service the debt under the original terms. The subsidiary bank had no restructured loans at June 30, 2005.

For the six months ended June 30, 2005, the Company experienced $635 thousand in charge-offs of loans and $267 thousand in recoveries of loans for a net decrease effect to the Allowance for Loan Losses of $368 thousand. The net charge-offs represent .23 % of loans. Of the $635 thousand charge to the Allowance for Loan Losses, the breakdown is 19.84% for 1-4 family residential properties, 17.48% for commercial and industrial loans, 58.58% for consumer loans, .48% for construction and land development loans, and 3.62% for nonfarm, nonresidential propertiesf. Consumer loan collections of $218 thousand represent the major component of the $267 thousand in recoveries.
 

LIQUIDITY
The Company has an asset and liability management program that assists management in maintaining net interest margins during times of both rising and falling interest rates and in maintaining sufficient liquidity. As of June 30, 2005, Security Capital Corporation had a positive gap of 10.5% in a 12-month time frame. The regulatory liquidity ratio reflected 16.3%, within the policy requirement of a minimum liquidity ratio of 15%. A 1% increase in market rates will basically not affect net interest income while a decrease in market rates will reduce net interest income by .8%. The Company’s policy allows for no more than a 10% movement in NII (net interest income), in a 200 basis point ramp of market rates over a one-year period. Currently, a 200 basis point movement down would reduce NII by 1.5% while an upward movement of the same amount would decrease NII by .50%. When funds exceed the needs for reserve requirements or short-term liquidity needs, the company will increase its security investments or sell federal funds. It is management’s policy to maintain an adequate portion of its portfolio of assets and liabilities on a short-term basis to insure rate flexibility and to meet loan funding and liquidity needs.

At June 30, 2005, the tools to meet these needs are the secured and unsecured lines of credit with the correspondent banks totaling $20.5 million (to borrow federal funds) and the line of credit with the Federal Home Loan Bank that exceeded $100 million. At June 30, 2005, the Company had available (unused) line of credit of approximately $90 million.
 

CAPITAL RESOURCES
Total consolidated equity capital at June 30, 2005 was $47.2 million or approximately 11.19% of total assets. The main source of capital for the Corporation has been the retention of net income.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios of Total Capital, Tier 1 Capital and Leverage Capital. Currently, the Company and the Bank have adequate capital positions as of June 30, 2005 as reflected below:

RESULTS OF OPERATIONS - QUARTERLY
The consolidated net income for the Company for the three months ending June 30, 2005 was $1.8 million which reflected an increase of $188 thousand or 11.53% from the same period in 2004.

Interest income increased to $5.9 million for the three months ending June 30, 2005 which was a $1.3 million increase from the $4.6 million for the three months ending June 30, 2004. Other Income for the three months ending June 30, 2005 decreased to $1.6 million from $1.8 million for the three months ending June 30, 2004. The decrease is primarily the net results of the receipt of an insurance settlement of $350 thousand for the three months ending June 30, 2004 and the increase of $96 thousand in service charges on deposit accounts for the three months ending June 30, 2005.

Interest expense reflects an increase of $639 thousand to $1.6 million for the three months ending June 30, 2005 from $1 million for the same period in 2004. The increase in interest expense can be attributed to the competitive pricing of the deposit accounts in a rising rate market. Other expenses, consisting primarily of salaries, employee benefits and occupancy expense, for the three months ending June 30, 2005 reveal an increase of $281 thousand from the same period in 2004.

The increase in the provision for loan losses of $41 thousand is consistent with the increase in the loan portfolio and the quarterly analysis of the Allowance for Loan Losses.
 

RESULTS OF OPERATIONS - YEAR TO DATE
The Company had a consolidated net income for $3.4 million for the six months ending June 30, 2005, compared with consolidated net income of $3.0 million for the six months ending June 30, 2004.

Total interest income increased to $11.2 million for the six months ending June 30, 2005 from $9.0 million for the six months ending June 30, 2004, or an increase of 24.4 %. Earning assets through June 30, 2005 increased $43.6 million and interest-bearing liabilities increased $30.0 million compared to June 30, 2004, reflecting an increase of 12.96% and 10.58%, respectively.

Noninterest income for the six months ending June 30, 2005 was $3.1 million which approximately equates the $3.1 million for the same period in 2004, reflecting a decrease of $12 thousand. The decrease is mainly attributable to an insurance settlement of $350 thousand which was received in the six months ending June 30, 2004 with only non-routine income of a $78.6 thousand received for the same period in 2005. The main components of the non-routine income in 2005 is attributable to $41.2 thousand received as a member of an ATM network provider on the merger with another company and a gain of $30.3 thousand on the sale of an unused strip of property adjacent to a branch location. Included in noninterest income are service charges on deposit accounts, which for each of the six months ended June 30, 2005 and June 30, 2004, totaled $2.0 million and $1.9 million, respectively.

The provision for loan losses was $370 thousand in the first six months of 2005 compared with $307 thousand for the same period in 2004 showing an increase of $63 thousand. The Allowance for Loan Losses of $3.6 million on June 30, 2005 (approximately 1.3% of loans) is considered by management to be adequate to cover losses inherent in the loan portfolio. The Allowance for Loan Losses as of June 30, 2004 was 1.70% of loans. A re-evaluation of historical loss rates resulted in a reduction of the applied allocation rate beginning in the first quarter of 2005. The level of this allowance is dependent upon a number of factors, including the total amount of past due loans, general economic conditions, and management’s assessment of potential losses. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant change. Ultimately, losses may vary from current estimates and future additions to the allowance may be necessary. Thus, there can be no assurance that charge-offs in future periods will not exceed the Allowance for Loan Losses or that additional increases will not be required. Management evaluates the adequacy of the Allowance for Loan Losses quarterly and makes provisions for loan losses based on this evaluation.

Other expense increased by $640 thousand or 11.22% for the six months ended June 30, 2005, when compared with the same period in 2004. Salaries and employee benefits of $4.2 million for the six months ended June 30, 2005 represent the largest component of other expenses and steadily increases with the development of the market area and the training of future bank management, in both areas of commercial banking and trust.

Income tax expense of $1.2 million for the six months ended June 30, 2005 is indicative of the applicable tax liability for the increase in the income for 2005 along with the adjustments for tax-exempt income and tax deferred income.

The net interest margin forecasted in the Company’s asset liability management analysis for the coming twelve months period is 4.78% based on no change in rates. This forecast is down from the 4.89% as forecasted for the quarter ended March 31, 2005. The decrease in the forecast is due as rates are ramped up that the timing of the repricings create a slight loss in earnings of .5%. The projected return on equity for the twelve month period ending December 31, 2005 is 16.54%.

For the six months ended June 30, 2005, the return on assets is reflected at 1.87% as compared to the six months ended June 30, 2004 of 1.60%.

ITEM NO. 3 QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
There have been no material changes in market risk exposures that affect the quantitative and qualitative disclosures presented as of December 31, 2004 in the Company’s Form 10-K and Annual Report.
    

ITEM NO. 4 CONTROLS AND PROCEDURES
Within 90 days prior to the filing of this report, an evaluation under the direction and with the participation of our principal executive officer and principal financial officer was performed to determine the effectiveness of the design and operation of the disclosure controls and procedures. The principal executive officer and the principal financial officer concluded that our disclosure controls and procedures are effective in timely alerting them to material information required to be included in our periodic SEC reports. There have been no significant changes in the Corporation’s internal controls or in other factors subsequent to the date of the evaluation that could significantly affect these controls.
  

ITEM 1. LEGAL PROCEEDINGS
Out of the normal course of business, First Security Bank may be defendant in a lawsuit. In regard to any legal proceedings, which occurred during the reporting period, management expects no material impact on the Company’s consolidated financial position or results of operation.

ITEM 2. CHANGES IN SECURITIES
None

ITEM 3. DEFAULT UPON SENIOR SECURITIES
None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
 

ITEM 5. OTHER INFORMATION

None
    

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

SIGNATURES
    

SECURITY CAPITAL CORPORATION

Exhibit No. 31.1

Certificate pursuant to Rule 13a-14(a) or 15d-14(a) of Securities Exchange Act of 1934 as adopted pursuant to section 302 of Sarbanes-Oxley Act of 2002 – Chief Executive Officer.

I, Frank West certify that:

EXHIBIT 31.2

Certificate pursuant to Rule 13a-14(a) or 15d-14(a) of Securities Exchange Act of 1934 as adopted pursuant to section 302 of Sarbanes-Oxley Act of 2002 – Cashier and Chief Financial Officer.

I, Connie Woods Hawkins certify that:

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U. S. C., SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10Q, filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, of Security Capital Corporation (the "Company") for the period ended June 30, 2005, as filed with the Securities Exchange Commission on the date hereof (the "Report"), I, Frank West, the Chief Executive Officer of the Company, certify, pursuant to 18 U. S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to Security Capital Corporation and will be retained by Security Capital Corporation and furnished to the Securities and Exchange Commission or its staff upon request.

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U. S. C., SECTION 1350
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002)

In connection with the Quarterly Report on Form 10Q, filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, of Security Capital Corporation (the "Company") for the period ended June 30, 2005, as filed with the Securities Exchange Commission on the date hereof (the "Report"), I, Connie Woods Hawkins, the Chief Financial Officer of the Company, certify, pursuant to 18 U. S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version
of this written statement required by Section 906, has been provided to Security Capital Corporation and will be
retained by Security Capital Corporation and furnished to the Securities and Exchange Commission or its staff
upon request.