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Security Federal Corporation (“Company”) (OTCBB:SFDL), the holding company for Security Federal Bank, today announced earnings for the six month and quarterly periods ended September 30, 2011. The Company reported net income available to common shareholders of $660,000 or $0.22 per common share (basic) for the six months ended September 30, 2011, an increase of $127,000 or 23.83% when compared to net income of $533,000 or $0.22 per common share (basic) for the six months ended September 30, 2010. For the three months ended September 30, 2011, net income available to common shareholders increased $72,000 or 30.51% to $308,000 compared to $236,000 for the three months ended September 30, 2010. The increases in both periods were primarily the result of a decrease in non-interest expense combined with a decrease in preferred stock dividends. These changes were offset slightly by a decrease in non-interest income and an increase in the provision for loan losses.
The Company made significant progress in recent quarters to reduce its non-interest expense through the implementation of several cost savings strategies. As a result, for the six months ended September 30, 3011, non-interest expense decreased $1.05 million or 9.19% to $10.36 million, compared to $11.41 million for the same period in 2010. For the quarter ended September 30, 2011, non-interest expense decreased $655,000 or 11.19% to $5.20 million compared to $5.85 million in 2010.
Also during fiscal 2011, the Company was able to reduce the annual cumulative dividend rate paid on preferred stock through its participation in the Community Development Capital Initiative (“CDCI”). The annual cumulative dividend rate of 5% paid on the Series A preferred stock issued to the U.S. Treasury through the Capital Purchase Program in 2008 was reduced to an annual cumulative dividend rate of 2% paid on the Series B preferred stock issued to the U.S. Treasury through its participation in the CDCI program. As a result of this exchange, preferred stock dividends and the related accretion of preferred stock to redemption value decreased $245,000 or 52.69% to $220,000 for the six month period ended September 30, 2011 and decreased $111,000 or 50.23% to $110,000 for the quarter ended September 30, 2011.