Security Federal Corporation (“Company”) (OTCBB:SFDL), the holding company for Security Federal Bank, today announced earnings for the first quarter of its fiscal year ending March 31, 2013. The Company reported net income available to common shareholders of $621,000 or $0.21 per common share (basic) for the three months ended June 30, 2012, an increase of $270,000 or 76.92% compared to net income available to common shareholders of $351,000 or $0.12 per common share (basic) for the three months ended June 30, 2011. This increase was primarily the result of a $1.58 million decrease in the provision for loan losses.
Non-performing assets, which consist of non-accrual loans and repossessed assets increased $5.17 million or 14.04% to $41.99 million at June 30, 2012 from $36.82 million at March 31, 2012. Management of the Company is actively focused on and working diligently to reduce these balances. For the quarter ended June 30, 2012, an additional $725,000 was added to the allowance through the provision for loan losses, a decrease of $1.58 million compared to provision expense of $2.30 million for the same period in the previous year. The decrease in the provision was due to the adequacy of the allowance for loan losses which was 3.00% of total loans held for investment at June 30, 2012 compared to 2.83% at June 30, 2011. Management continues to closely monitor the loan portfolio to proactively identify any potential problem loans.
Net interest margin for the quarter ended June 30, 2012 decreased 44 basis points to 2.81% from 3.25% for the quarter ended June 30, 2011 and decreased 28 basis points from 3.09% for the year ended March 31, 2012. As a result of the decrease in net interest margin, net interest income decreased $1.03 million or 14.90% to $5.86 million for the three months ended June 30, 2012 compared to $6.88 million for the three months ended June 30, 2011.