Security Federal Corporation, the holding company for Security Federal Bank, recently 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 percent 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 percent 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 percent for the quarter ended June 30, 2014, and increased 20 basis points to 2.93 percent 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 percent and 24.9 percent for the quarter and six month periods ended June 30, 2014, respectively, compared the same periods in the prior year. Net interest income increased $409,000 or 7.1 percent 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 percent 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 percent 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 percent 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 percent in the second quarter of 2014 from 1.05 percent 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 percent 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 percent for the six months ended June 30, 2014 from 1.24 percent for the same period one year ago. The allowance for loan losses represented 342.6 percent of annualized net charge-offs during the six months ended June 30, 2014, compared to 233.6 percent of annualized net charge-offs during the comparable period in 2013.


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 percent for the six month period. Net loans receivable decreased $12.3 million or 3.4 percent 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 percent to $97.8 million at June 30, 2014 from $107.0 million at Dec. 31, 2013.