Security Federal Corporation, the holding company of Security Federal Bank, has announced earnings for the year ended Dec. 31, 2013. Net income available to common shareholders increased $1.4 million or 72.3 percent to $3.4 million or $1.14 per common share (basic) for the year ended Dec. 31, 2013 compared to $1.9 million or 66 cents per common share (basic) for the 12 months ended Dec. 31, 2012. The increase was primarily the result of a decrease in the provision for loan losses combined with an increase in non-interest income.


Security Federal Corporation reported net income available to common shareholders of $1.1 million or 38 cents per common share (basic) for the three months ended Dec. 31, 2013, an increase of $665,000 or 149.8 percent compared to net income of $444,000 or 15 cents per common share (basic) for the three months ended Dec. 31, 2012. The increase was primarily the result of a decrease in the provision for loan losses of $950,000, and non-interest expense of $229,000 offset slightly by a $233,000 decrease in non-interest income.


For the year ended Dec. 31, 2013, the provision for loan losses was $2.6 million, a $1.3 million or 32.6 percent decrease from $3.9 million for the comparable period in 2012. For the quarter ended Dec. 31, 2013, Security Federal Corporation recognized no provision for loan losses compared to $950,000 for the quarter ended Dec. 31, 2012. Non-performing assets, which consist of non-accrual loans and repossessed assets, decreased $11.2 million or 44.5 percent to $14 million at Dec. 31, 2013 from $25.2 million at Dec. 31, 2012. Net charge offs were 1.01 percent of gross loans during the year ended Dec. 31, 2013 compared to 1.69 percent for the same period in 2012 and the allowance for loan losses represented 275.2 percent of net charge offs during the year ended Dec. 31, 2013 compared to 166 percent of net charge offs during the comparable period in 2012.


Non-interest income increased $917,000 or 15.3 percent to $6.9 million for the year ended Dec. 31, 2013 from $6 million for the comparable 12 month period in 2012. The increase is a result of income related to a grant Security Federal Bank received in recognition of its commitment to community development. During the year ended Dec. 31, 2013, the corporation recognized $929,000 in grant income in connection with this award compared to no income for the same period in 2012. Non-interest income for the quarter ended Dec. 31, 2013 decreased $233,000 or 13.7 percent to $1.5 million compared to $1.7 million for the same quarter in 2012 as a result of a $364,000 decrease in the gain on sale of investments offset partially by an increase in grant income of $196,000.


Non-interest expense decreased $154,000 or .7 percent to $22.0 million for the year ended Dec. 31, 2013, compared to $22.2 million for the same period in 2012. For the quarter ended Dec. 31, 2013, non-interest expense decreased $229,000 or 4 percent to $5.5 million compared to $5.7 million for the same quarter in 2012. The decreases in both periods are primarily the result of a decrease in the net cost of operation of other real estate owned. For the year ended Dec. 31, 2013, net cost of operation of other real estate owned decreased $1.6 million or 49.9 percent to $1.6 million compared to $3.2 million for the comparable period in 2012. Net cost of operation of other real estate owned decreased $444,000 or 56.8 percent to $338,000 for the quarter ended Dec. 31, 2013 compared to $782,000 for the same quarter in 2012. The net cost of operation of other real estate owned includes all expenses associated with other real estate owned including write-down in value and gain or loss on sales incurred during the period. Other real estate owned was $3.9 million at Dec. 31, 2013 compared to $6.8 million at Dec. 31, 2012.


Total assets at Dec. 31, 2013 were $849.2 million, a decrease of $41.1 million or 4.6 percent compared to $890.4 million at Dec. 31, 2012. Net loans receivable decreased $38.8 million or 9.8 percent to $358.9 million at Dec. 31, 2013 from $397.7 million at Dec. 31, 2012. Total deposits decreased $17.6 million or 2.6 percent to $658.7 million at Dec. 31, 2013 compared to $676.3 million at Dec. 31, 2012. Federal Home Loan Bank advances, other borrowings, convertible senior debentures and subordinated debentures decreased $18.8 million or 15 percent to $107 million at Dec. 31, 2013 from $125.8 million at Dec. 31, 2012.


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 Security Federal Bank’s wholly owned subsidiary, Security Federal Insurance, Inc.