News Column

Security Federal Corporation Announces Increase in Quarterly and Six Month Earnings

August 16, 2014



By a News Reporter-Staff News Editor at Investment Weekly News -- Security Federal Corporation ("Company") (OTCBB:SFDL), the holding company for Security Federal Bank ("Bank"), announced earnings for the quarter and six month periods ended June 30, 2014. The Company reported net income available to common shareholders of $1.4 million or $0.46 per common share (basic) for the quarter ended June 30, 2014, an increase of $598,000 or 77.8% compared to net income available to common shareholders of $769,000 or $0.26 per common share (basic) for the quarter ended June 30, 2013. For the six months ended June 30, 2014, net income available to common shareholders increased $1.2 million or 92.4% to $2.6 million or $0.87 per common share (basic), compared to net income available to common shareholders of $1.3 million or $0.45 per common share (basic) for the same period in 2013. The increases in earnings for the quarter and six month periods are primarily a result of increases in net interest income combined with decreases in the provision for loan losses. These factors were offset slightly by a decrease in non-interest income in both periods.

Net interest spread increased 27 basis points to 3.05% for the quarter ended June 30, 2014 and increased 20 basis points to 2.93% for the six months ended June 30, 2014 when compared to the same periods in 2013. The improvement in net interest spread was achieved through lower cost of funds as total interest expense decreased 23.1% and 24.9% for the quarter and six month periods ended June 30, 2014, respectively, compared the same periods in the prior year. The decrease in interest expense was partially offset by slightly lower interest income. Consistent with the increase in interest spread, net interest income increased $409,000 or 7.1% to $6.1 million for the quarter ended June 30, 2014, compared to $5.7 million for the quarter ended June 30, 2013. Net interest income increased $462,000 or 4.1% to $11.8 million for the six months ended June 30, 2014 compared to $11.3 million for the six months ended June 30, 2013.

The provision for loan losses declined $800,000 or 88.9% to $100,000 for the second quarter of 2014 from $900,000 for the second quarter of 2013. Net charge-offs declined $164,000 or 16.5% to $834,000 for the second quarter of 2014 from $998,000 for the comparable quarter in 2013, with the ratio of net charge-offs to gross loans decreasing to 0.94% in the second quarter of 2014 from 1.05% in the same quarter one year ago. Net charge-offs for the six months ended June 30, 2014 were $1.3 million, a decline of $1.1 million or 43.6% compared to $2.4 million for the comparable period in 2013, with the ratio of net charge-offs to gross loans decreasing to 0.75% for the six months ended June 30, 2014 from 1.24% for the same period one year ago. The allowance for loan losses represented 342.6% of annualized net charge-offs during the six months ended June 30, 2014 compared to 233.6% of annualized net charge-offs during the comparable period in 2013.

Non-interest income decreased $411,000 or 23.6% to $1.3 million for the quarter ended June 30, 2014 from $1.7 million for the comparable quarter in 2013. Non-interest income for the six-months ended June 30, 2014 decreased $820,000 or 22.2% to $2.9 million compared to $3.7 million for the same period in 2013. The decreases in both periods were the result of a decrease in gain on sale of investments combined with a decrease in grant income from CDFI programs. For the quarter ended June 30, 2014 the loss on sale of investments was $40,000, a decrease of $409,000 or 110.7% from a gain of $370,000 for the same period in 2013. For the six months ended June 30, 2014, gain on sale of investments decreased $709,000 or 94.1% to $45,000. Grant income decreased $336,000 or 52.9% during the same period.

Non-interest expense decreased $75,000 or 1.4% to $5.3 million for the quarter ended June 30, 2014 from $5.4 million for the comparable quarter in 2013. For the six months ended June 30, 2014, non-interest expense decreased $262,000 or 2.4% to $10.6 million, compared to $10.9 million for the same period in 2013. The decreases in both periods were primarily the result of a decrease in costs associated with other real estate owned combined with a decrease in prepayment penalties incurred for paying down Federal Home Loan Bank advances. Net costs associated with other real estate owned decreased $87,000 or 25.5% and $214,000 or 29.0%, respectively for the quarter and six month periods ended June 30, 2014 when compared to the same periods in the prior year. The Company incurred prepayment penalties of $238,000 for paying down Federal Home Loan Bank advances during the six months ended June 30, 2013 compared to zero for the same period in 2014.

Total assets at June 30, 2014 were $844.3 million compared to $849.2 million at December 31, 2013, a decrease of $4.9 million or 0.6% for the six month period. Net loans receivable decreased $12.3 million or 3.4% to $346.6 million at June 30, 2014 from $358.9 million at December 31, 2013 due to decreased loan demand. Total deposits decreased $273,000 to $658.4 million at June 30, 2014 compared to $658.7 million at December 31, 2013. FHLB advances, other borrowings, convertible senior debentures and subordinated debentures decreased $9.2 million or 8.6% to $97.8 million at June 30, 2014 from $107.0 million at December 31, 2013.

Security Federal Bank has 13 full service branch locations in Aiken, Clearwater, Graniteville, Langley, Lexington, North Augusta, Wagener, Columbia and West Columbia, South Carolina and Evans, Georgia. A full range of financial services, including trust and investments, are provided by the Bank and insurance services are provided by the Bank's wholly owned subsidiary, Security Federal Insurance, Inc.

Keywords for this news article include: Home Loan, Real Estate, Banking and Finance, Security Federal Corporation.

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Source: Investment Weekly News


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