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, 2012. The Company reported net income available to common shareholders of $1.2 million or $0.40 per common share (basic) for the six months ended September 30, 2012, an increase of $521,000 or 78.9% when compared to net income of $660,000 or $0.22 per common share (basic) for the six months ended September 30, 2011. For the three months ended September 30, 2012, net income available to common shareholders increased $252,000 or 81.8% to $560,000 compared to $308,000 for the three months ended September 30, 2011. The increases in both periods were primarily the result of a decrease in the provision for loan losses.
Non-performing assets, which consist of non-accrual loans and repossessed assets, increased $1.6 million or 4.4% to $38.4 million at September 30, 2012 from $36.8 million at March 31, 2012 and decreased from $42.0 million at June 30, 2012. Management of the Company is actively focused on and working diligently to reduce these balances. For the six months ended September 30, 2012, an additional $1.0 million was added to the allowance through the provision for loan losses. As a result, the allowance for loan losses was 2.84% of total loans held for investment at September 30, 2012 compared to 2.94% at September 30, 2012. Management continues to closely monitor the loan portfolio to proactively identify any potential problem loans.
Net interest margin decreased 33 basis points to 2.82% for the six months ended September 30, 2012 and 27 basis points to 2.83% for the quarter ended September 30, 2012 when compared to the same periods in 2011. The decreases in margin are primarily a result of the significant decrease in loans. Total loans receivable, net, decreased $25.5 million or 5.9% to $403.0 million for the six months ended September 30, 2012. This reflects the Bank’s strategy of maximizing risk based capital through steady earnings and decreasing certain loan type concentrations. As a result of the decrease in margin, net interest income decreased $1.8 million or 13.6% to $11.7 million for the six months ended September 30, 2012 compared to $13.5 million for the six months ended September 30, 2011. For the quarter ended September 30, 2012, net interest income decreased $812,000 or 12.3% to $5.8 million compared to $6.6 million for the quarter ended September 30, 2011.
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