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Security Federal Corp.’s
success in the Aiken County market with 27% of deposits among banks and thrifts is due to
their philosophy of service and treating customers like guests
Financial
Savings & Loans
(SFDL-OTC: BB)
Security Federal Corporation
238 Richland Avenue, West
Aiken, SC 29801
Phone: 803-641-3000
Roy G. Lindburg
Chief Financial Officer
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
September 14, 2006
BIO: Roy G. Lindburg, CPA,
age 46, is the Executive Vice President/CFO and a Director of Security Federal Corporation
and Security Federal Bank. He has been the CFO for 11 years. Prior to his employment
with Security Federal, Lindburg was the Vice President of Finance and CFO of Keokuk
Bancshares and First Community Bank of Keokuk, Iowa. He was employed there for 8 and one
half years. Lindburg’s first job in banking was at Galva Federal Savings in Galva, Illinois
where he left as a Vice President and Director. He is a graduate with High Honors from the
University of Illinois with a bachelor’s in finance and holds a certified public
accountant certificate from the state of Iowa.
Company Profile:
Security Federal Corporation, Aiken, South Carolina, is the holding company for Security
Federal Bank, a $670 million savings bank with eleven branch offices in Aiken and Lexington
Counties in South Carolina. Security Federal Bank was formed in 1922, and Security
Federal Corporation in 1987, when the bank converted from mutual to stock ownership.
Security Federal Bank has a thrift charter and is regulated by the Office of Thrift
Supervision. Security Federal Bank has three wholly owned subsidiaries, Security Federal
Trust, Security Federal Investments, and Security Federal Insurance. Security Federal
Insurance recently acquired Collier Jennings Companies, an insurance agency and premium
finance company with offices in Aiken, North Augusta, and Augusta, Georgia.
CEOCFO: Mr. Lindburg,
will you tell us about your background with Security Federal?
Mr. Lindburg: “I have been with the organization 11½
years. I have been the CFO that entire time.”
CEOCFO: Security Federal
has been around since 1922; what accounts for the longevity?
Mr. Lindburg: “In 1958 there was a change in management.
Clif Weeks, the Chairman of Security Federal Corporation, and some of our current board
members, took over the management of the organization from a gentleman who wanted to
retire. They obtained Federal Insurance and then the organization really began to grow.
Some of those board members are still with us. It has been a long tradition, and Security
Federal has a good reputation in the markets it serves.”
CEOCFO: Will you tell us
about the area you service and the economy?
Mr. Lindburg: “The economy is pretty solid; we are in
the Sunbelt. Aiken is about twenty miles from Augusta Georgia and about fifty miles from Columbia
South Carolina. We are in the western part of South Carolina about two hours from the
mountains, Atlanta and Charlotte, and about two hours from Charleston, SC; we are in a
good location. We are not far from anything, the beach or mountains. Aiken has become a
retirement community. People want to live inland from the coast to avoid the hurricanes.
It is also horse country; thoroughbred horses are very popular here as well as polo. For
industry, we have Kimberly Clark, Bridgestone and a couple of federal installations, the
Savannah River Site, or SRS, and Fort Gordon that provide employment opportunities in our
area. We attract a variety of folks from around the country who want a good climate.”
CEOCFO: Why are they
banking with Security Federal?
Mr. Lindburg: “From our CEO, we have the philosophy of
service, and everybody says that, but the word “sales” is not in our vocabulary.
We advise, inform, and treat people like guests in our home and we do not pressure our
customers; we try to advise and recommend. We treat people like we want to be treated. I
think that is why we are successful in our market. We have the market share of deposits of
Aiken County. We have about 27% of deposits among banks and thrifts.”
CEOCFO: Is there much
competition on the community bank level?
Mr. Lindburg: “There is a lot of competition, but
currently, we are the only community bank headquartered in Aiken. There are a few new
start-ups that are going to serve the Augusta/Aiken area. Of course, we have the bigger
banks such as Wachovia Corporation (NYSE: WB), Bank of America (NYSE: BAC) and one of our
biggest competitors is SRP Credit Union, the credit union for SRS, the big nuclear site
located about 20 miles south of Aiken.”
CEOCFO: You offer
financial counseling; will you tell us about that?
Mr. Lindburg: “That is the vision of our CEO, Timothy W.
Simmons. About ten years ago he saw a need where instead of just turning down a customer
for a loan, or a checking account if they did not qualify based on credit, that we would
take the next step and offer a service that we would look at their finances and recommend
steps to improve their credit. If the potential customer would follow our advice, stick to
the plan and stick to the budget, we would then make them a loan within a year or eighteen
months. Less than 50% of the people we turn down for a loan will take us up on the
offer, and for the people that follow the plan, it takes a lot of discipline and
handholding. The success rate is probably 10% of the folks that use the service actually
follow the plan, but if they do, they become good customers. It improves their life, they
can buy a new home, a different car, save money for education and it changes their whole
lifestyle. It has been successful. We probably break even on the service but we do gain
loyal customers.”
CEOCFO: You have
recently purchased an insurance and premium finance business; explain the fit for Security
Federal?
Mr. Lindburg: “We have been looking to get into the
insurance business in a more meaningful way for the last five years. We have partnered
with an agency on doing referrals, but it was awkward and sometimes the follow-up wasn’t
always there. We had looked at partnering with another agency in Aiken County to do the
referrals and we realized that there is not a lot of profit margin in property casualty
insurance, so to do it on a referral basis, it did not make a lot of money for the agency
and it didn’t make much for us. We got to talking with the Collier Jennings Companies
and realized that our philosophies were in-tune with one another, we both service
blue-collar markets, and we both do what is right for the customer. Our capital allows
them to grow we provide a good customer base that also allows them to grow. They give us
the platform that gives us the markets to the insurance companies. Therefore, we think it
is a good fit and we are excited about the acquisition.”
CEOCFO: What is ahead
for Security Federal?
Mr. Lindburg: “We hope to grow about 10 to 15% a year in
assets. We are looking at expanding in the Columbia South Carolina area. We currently have
2 branches there and we hope to increase that to 5 or 6 branches in the next 5 to 10
years. We plan on opening a branch in the Augusta, Georgia metro area in Columbia County, Georgia,
which is the second fastest growing county in Georgia, in the next twelve months and then
adding two or three more branches in the Augusta area over five years. We plan on steady
growth and earnings.”
CEOCFO: How are you
holding up in the ever-changing interest rate environment?
Mr. Lindburg: “It is interesting. It looks like rates
may begin to trend downward; we have been waiting on that for about six months. In terms
of our asset/liability management, we are a thrift charter but our balance sheet is very
similar to a commercial bank, so our interest rate risk, we believe, is in good shape.”
CEOCFO: Will you tell us
about community involvement for the bank?
Mr. Lindburg: “That is something in which we take pride
in; we are very involved in our communities both in Aiken County and in Lexington County
in the Columbia area. We encourage our folks to be involved, to show up at events, and be
involved in organizations like the chamber, United Way, and other civic organizations. Our
folks are involved and we believe that gives us an edge, because then people get to know
us on a personal level. We also have a loan committee meeting every week and we can
make decisions on larger loans usually within a week’s time.”
CEOCFO: Why should
potential investors be interested?
Mr. Lindburg: “Community banks have typically been a
good investment for investors. We went public and converted from a mutual savings and loan
in October of 1987, and our stock price with dividend reinvestments has been over a 15%
return annualized from that time. We think we have a good market and a good growth plan.
We feel we are a solid investment.”
CEOCFO: Any final
thoughts?
Mr. Lindburg: “Security Federal is a good place in which
to work. It is the best organization of the three banks I have worked for in my career. I
have been in banking since 1984, about 22 years. The bank looks after its employees, looks
after its customers and that has been the vision of our board and our CEO Timothy Simmons
and the president of our bank, J. Chris Verenes. It is a great place to work for and I am
blessed to be part of the organization.”
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