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

FORM 10-Q

SECURITY CAPITAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

ITEM NO. 1A RISK FACTORS
There are no material changes to the Company's risk factors from what was previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2006.

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 March 31, 2007, First Security Bank had approximately $475.1 million in assets compared to $442.8 million at March 31, 2006. Loans increased to $338.0 million at March 31, 2007 from $308.6 million at March 31, 2006. Deposits increased by $26.7 million from March 31, 2006 to March 31, 2007 for a total of $402.4 million. For the three months ended March 31, 2007 and March 31, 2006, the Bank reported income of approximately $1,819,217 and $1,827,750, respectively.
 

CHANGES IN FINANCIAL CONDITION
The cash and cash equivalents of $27.1 million at March 31, 2007 reflected an increase of $3.7 million from the cash position of $23.4 million at December 31, 2006. This increase 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.

The earning assets at December 31, 2006 were $404.6 million and at March 31, 2007 were $416.7 million. The increase is attributable mainly to the growth in the loan portfolio. The premises and equipment, net of the accumulated depreciation, at December 31, 2006 and at March 31, 2007 totaled approximately $22.0 million – reflecting a small increase of $59 thousand for the first three months in 2007. Available-for-sale securities increased from $71.1 million at December 31, 2006 to $74.1 million at March 31, 2007. Other assets decreased to $3.9 million at March 31, 2007 from $4.4 million at December 31, 2006.

Deposit liabilities at March 31, 2007 reflected a 9.7% growth or a $35.6 million increase for the first three months in 2007. The rise in deposits which is attributed to the normal first quarter increase in public funds decreases the amount of long-term borrowings and short-term borrowings needed for funding investments in loans and facilities. Short-term borrowings provide a tool in providing the funding for unforeseen deposit withdrawals and seasonal loan demands. The short-term funding was eliminated during the first three months in 2007 with the payment of $18 million to the Federal Home Loan Bank. The federal funds purchased at December 31, 2006 of $8 million had been returned.

The net unrealized loss on available-for-sale securities reflected in the shareholders' equity section on December 31, 2006 was $41 thousand. At March 31, 2007, the shareholders' equity section reflected a net unrealized gain on available-for-sale securities of $162 thousand. The change reflected over these reporting periods reflect the normal atmosphere of a friendly market. The change of the market affected the comprehensive income with a net increase of $203 thousand for the three months ending March 31, 2007 and a decrease of $85 thousand for the three months ending March 31, 2006.

The consolidated statements of cash flows summarize the changes in the financial condition of the Company. The most prevalent of the changes for the three months ending March 31, 2007 are: an increase of $9.6 million in loans; an increase in available-for-sale securities and held-to-maturity securities of $3.1 million resulting from purchases of $5.3 million offset by an approximate $2.3 million in maturities and sales; an increase of $35.6 million in deposits; an increase of $19.5 million in short-term borrowings followed by a decrease of $30.6 million in short-t1rm borrowing from the Federal Home Loan Bank; and a decrease of $8 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 by the following mix: Commercial 6.09%; Agricultural 2.52%; Real Estate 82.82%; Consumer 8.05% and Other .52%. The major components of the real estate loans are 41.46% for construction and land development property, 18.87% for first liens on 1-4 family residential property and 31.97% for nonfarm and nonresidential property.

At March 31, 2007, 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. The nonaccrual loans at March 31, 2007 totaled $809 thousand. Any other real estate owned is carried at lower of cost or current appraised value less cost to dispose. Other real estate at March 31, 2007 totaled $44 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 March 31, 2007.

For the three months ended March 31, 2007, the Company experienced $247 thousand in charge-offs of loans and $222 thousand in recoveries of loans for a net decrease effect to the Allowance for Loan Losses of $25 thousand. The net charge-offs, annualized, represent .03% of average loans. Of the $247 thousand charge to the Allowance for Loan Losses, the breakdown is 7.29% for 1-4 family residential loans and 92.71% for consumer loans. Consumer loan collections of $212 thousand represent the major component of the $222 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. The asset and liability reports for March 31, 2007 substantiates that the Company remains in a neutral position to changes in rates. A 1% increase or decrease in market rates will basically not affect net interest income. 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. When funds exceed the needs for reserve requirements or short-term liquidity needs, the company will increase its security investments or invest in 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.

Projections for the next twelve months are for a net interest margin of 4.24%, a return on assets of 2.16%, and a return on equity of 18.86%. The net interest income for twelve months ending March 31, 2008 is projected to be $20.3 million – which represents a yield on earning assets of 7.94% and a liability cost of 3.70%.

At March 31, 2007, the regulatory liquidity ratio of 20.8% is well within the policy requirement of a minimum liquidity ratio of 15%. The earnings at risk and the economic value of equity ratios reflected compliance with the policy limits of -10.0% and -30.0%, respectively. With a policy limitation of 20%, the volatile dependency ratio of 14.3% reflected an improvement from the prior quarters which exposed the effect of the short-term borrowings of federal funds and advances from the Federal Home Loan Bank.

At March 31, 2007, the tools to meet these needs are the secured and unsecured lines of credit with the correspondent banks totaling $37.5 million (to borrow federal funds) and the line of credit with the Federal Home Loan Bank that exceeded $132 million. At March 31, 2007, the Company had available (unused) line of credit of approximately $114.4 million.
 

CAPITAL RESOURCES
Total consolidated equity capital at March 31, 2007 was $53.7 million or approximately 11.24% 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 March 31, 2007 as reflected below:
 

RESULTS OF OPERATIONS - YEAR TO DATE
The consolidated net income for the Company for the three months ending March 31, 2007 was $1.8 million which reflects approximately the same consolidated net income for the same period in 2006.

Interest income increased to $8.2 million for the three months ending March 31, 2007 indicating an increase of $1.2 million from the $7.0 million for the three months ending March 31, 2007. The increase in interest income signifies an increase in the pricing of the loan products.

Interest expense reflects an increase of $923 thousand to $3.2 million for the three months ending March 31, 2007 from $2.3 million for the same period in 2006. The increase in interest expense can be attributed to the continuing competitive pricing of the deposit accounts to attract new customers and maintain existing customers.

The increase in the provision for loan losses of $32 thousand could be attributed to an increase in loans. However, the evaluation of the quality of the loan portfolio and the quarterly analysis of the Allowance for Loan Losses determines the requirements and the adequacy of the provision.

Noninterest income for the three months ending March 31, 2007 was $1.8 million which is an increase from the $1.6 million for the same period in 2006, reflecting an increase of $167 thousand. The main component of the increase in the non-routine income in 2007 is attributable to service charges on deposit accounts. The service charges on deposit accounts, for the three months ended March 31, 2007 and March 31, 2006, totaled $1.3 million and $1.1 million, respectively.

Other expenses, consisting primarily of salaries, employee benefits and occupancy expense, for the three months ending March 31, 2007 reveal an increase of $275 thousand or 7.94% from the same period in 2006. Salaries and employee benefits of $2.5 million for the three months ended March 31, 2007 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 $875 thousand for the three months ended March 31,2007 is indicative of the applicable tax liability for the increase in the income for 2007 along with the adjustments for tax-exempt income.

The net interest margin for the three months ending March 31, 2007 is 4.24%. The return on equity for the three month period ending March 31, 2007 is 14.31%. For the three months ended March 31, 2007, the return on assets is reflected at 1.56%. These ratios, reflecting the financial status of the company, are consistent with the ratios for prior reporting periods.
 

RECENT ACCOUNTING PRONOUNCEMENTS

The following accounting standards, issued recently have been considered:

Financial Accounting Standards Board Statement (FASB) No. 159, Fair Value Option for Financial Assets and Financial Liabilities; FASB No. 158, Employers' Accounting for Defined Benefit Pension and Other Retirement Plans; FASB No. 157, Fair Value Measurements; FASB No. 48, Accounting for Uncertainty in Income Taxes; FASB No. 156, Accounting for Servicing of Financial Assets; FASB No. 155, Accounting for Certain Hybrid Financial Instruments; and Staff Accounting Bulletin (SAB) No. 108, Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements.

Of these standards, FASB No. 159, Fair Value Option for Financial Assets and Financial Liabilities, and FASB No. 157, Fair Value Measurements, have been adopted.

The Board of Directors approved the adoption of FASB No. 159 and FASB No. 157 with the objective to improve the financial reporting through the opportunity to mitigate volatility in reported earnings by recognizing selected assets and liabilities at fair value. Securities selected to recognize at fair value included agencies, mortgage-backs and municipals. These securities were reclassified from available-for-sale to the trading account category and are accounted for under the fair value option. After the close of the quarter, these securities were subsequently sold and the proceeds were reinvested in securities that would improve income by approximately 1%. Liquidity also is projected to improve from the additional cash flows from the purchased mortgage-backed securities. The liability selected to report at fair value was a Federal Home Loan Bank (FHLB) advance. With the prepayment of the FHLB advance in the subsequent quarter, net interest income is projected to increase on an average of 2.5% over the next ten years. In summary, the adoption is considered to have a positive effect on future financials due to the predicted improved cash flow, an increase in the average yield of the investment securities, and the opportunity to redeem the liability and obtain deposits at a lower funding cost. From an asset-liability management perspective, these projected changes will improve the balance sheet and the income statement Management's intent regarding future investments in securities is to classify selected securities at purchase as trading and to account and evaluate monthly under the fair option of FASB No. 159.

In adopting FASB No. 159, an adjustment of $272 thousand, net of deferred taxes of $162 thousand, was recorded to the Corporation's retained earnings as of January 1, 2007 to reflect the unrealized loss on the selected securities. The net unrealized loss was previously included in accumulated other comprehensive income. Also, the adoption of FASB No. 159 reflected the identification of an advance from the Federal Home Loan Bank (FHLB) to report at fair value. For the liability recognized, an adjustment of $68 thousand was booked to retained earnings, net of deferred taxes of $40 thousand as of January 1, 2007.

The following table reflects the assets and liabilities recorded to be routinely measured at fair value:

Using quoted market prices in active markets, fair values were determined for the securities referenced above. The fair value for the liability considered the prepayment penalty for the respective valuation date. The change in the fair values for the securities held for trading and the FHLB advance was booked to profit or loss from fair value accounting which is recognized in the Consolidated Income Statements under Other Income. Income and expense on the trading assets and the trading liabilities are recorded as interest is earned or paid.
 

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, 2006 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 1A. RISK FACTORS
There are no material changes to the Company's risk factors from what was previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2006.
 

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

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SECURITY CAPITAL CORPORATION

BY /s/ Frank West                     
Frank West
President and Chief Executive Officer

DATE: May 10, 2007

BY /s/ Connie Woods Hawkins   
Connie Woods Hawkins
Executive Vice-President, Cashier
and Chief Financial Officer

DATE: May 10, 2007
 

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 March 31, 2006, 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: