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Security Federal Corporation Announces Increase In Earnings

Stocks in this article: SFDL

As of December 31, 2012, the Bank exceeded all regulatory capital requirements with a Total Risk-Based capital ratio of 20.77%, compared to 18.71% at March 31, 2012. The Company’s shareholders’ equity increased $1.8 million or 2.3% to $82.6 million at December 31, 2012 compared to $80.8 million at March 31, 2012.

Total assets at December 31, 2012 were $890.4 million compared to $924.6 million at March 31, 2012, a decrease of $34.3 million or 3.7% for the nine-month period. Net loans receivable decreased $30.8 million or 7.2% to $397.7 million at December 31, 2012 from $428.5 million at March 31, 2012. Total deposits decreased $19.9 million or 2.9% to $676.3 million at December 31, 2012 compared to $696.2 million at March 31, 2012. Federal Home Loan Bank advances, other borrowings, convertible senior debentures and subordinated debentures decreased $17.3 million or 12.1% to $125.8 million at December 31, 2012 from $143.1 million at March 31, 2012.

As previously announced, the Company’s Board of Directors approved a fiscal year-end change from March 31 to a calendar year-end of December 31. This change was effective as of December 31, 2012; therefore the Company operated a short year from April 1, 2012 to December 31, 2012 and then began a new fiscal year on January 1, 2013. Conversion of the fiscal year to a calendar year is intended to simplify reporting and more closely align the Company with its peer banks.

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.

Forward-looking statements:

Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations of the business environment in which the Company operates, projections of future performance, perceived opportunities in the market, potential future credit experience, and statements regarding the Company’s mission and vision. These forward-looking statements are based upon current management expectations and may, therefore, involve risks and uncertainties. The Company’s actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety or range of factors including, but not limited to, interest rate fluctuations; changes in the level and trend of loan delinquencies and write-offs; economic conditions in the Company’s primary market area; results of examinations of the Company by the Board of Governors of the Federal Reserve System and the Bank by the Federal Deposit Insurance Corporation and the South Carolina State Board of Financial Institutions, or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses or to write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings; demand for residential, commercial business and commercial real estate, consumer, and other types of loans; success of new products; competitive conditions between banks and non-bank financial service providers; legislative or regulatory changes that adversely affect the Company’s business including changes in regulatory policies and principles, or the interpretations of regulatory capital or other rules, including changes related to Basel III requirements, the impact of the effect of the Dodd-Frank Wall Street Reform and Consumer Protection Act and the implementing regulations, including the interpretation of regulatory capital or other rules; changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the Financial Accounting Standards Board, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; technology factors affecting operations; pricing of products and services; and other risks detailed in the Company’s reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended March 31, 2012. Accordingly, these factors should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements. The Company undertakes no responsibility to update or revise any forward-looking statement.

(In Thousands, except for Earnings per Share and Ratios)
Quarter Ended December 31, Nine Months Ended December 31,
  2012       2011     2012       2011
Total interest income $ 8,044 $ 9,467 $ 24,791 $ 29,577
Total interest expense   2,378       2,974     7,460       9,583
Net interest income 5,666 6,493 17,331 19,994
Provision for loan losses   950       2,100     1,975       6,700

Net interest income after provision for loan losses

4,716 4,393 15,356 13,294
Non-interest income 1,703 2,563 4,365 5,327
Non-interest expense   5,693       5,235     17,062       15,592
Income before income taxes 726 1,721 2,659 3,029
Provision for income taxes   172       1,235     704       1,664
Net income $ 554     $ 486   $ 1,955     $ 1,365
Preferred stock dividends & accretion
of preferred stock to redemption value 110 110 330 330
Net income available to common
Shareholders $ 444     $ 376   $ 1,625     $ 1,035
Earnings per common share (basic) $ 0.15     $ 0.13   $ 0.55     $ 0.35
December 31, 2012 March 31, 2012   %  
Total assets $ 890,355 $ 924,637 -3.71 %
Cash and cash equivalents 7,904 9,331 -15.29 %
Total loans receivable, net 397,706 428,511 -7.19 %
Investment and mortgage-backed securities 430,988 421,631 2.22 %
Deposits 676,339 696,201 -2.85 %
Borrowings 125,813 143,110 -12.09 %
Shareholders' equity 82,592 80,772 2.25 %
Book value per share $ 20.45 $ 19.83 3.13 %
Total risk based capital ratio (1) 20.77 % 18.71 % 11.01 %
Non performing assets 25,159 36,818 -31.67 %
Non performing assets to total assets 2.83 % 3.98 % -28.89 %
Allowance as a percentage of gross loans 2.80 % 3.32 % -15.66 %
(1)- This ratio is calculated using Bank only information and not consolidated information

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