Security Federal Corporation, the holding company for Security Federal Bank, announced earnings for the quarter and six month periods that ended June 30, 2018.
For the six months ending on June 30, 2018, net income increased $444,000 or 14.3 percent to $3.6 million or $1.20 per share (basic), compared to $3.1 million or $1.06 per share (basic) for the same period in 2017. The increase in earnings was primarily due to increases in net interest income and non-interest income combined with a decrease in the provision for income tax expense. These items were partially offset by an increase in non-interest expense.
Net interest income increased $908,000 or 7.3 percent to $13.3 million for the six months ending on June 30, 2018, compared to $12.4 million for the same period in 2017. Interest income on loans increased $1.4 million or 14.2 percent during the first half of 2018, which was attributable to an increase of $57.4 million or 16.0 percent in the average balance of loans combined with an increase in the yield on interest earning assets. These increases were partially offset by a higher cost of funds as total interest expense increased $480,000 or 24.3 percent to $2.5 million in the first six months of 2018.
The majority of the increase was related to interest expense on deposits, which increased $431,000 or 36.2 percent to $1.6 million during the first half of 2018 as a result of the increase in short-term interest rates combined with an increase in average deposits.
Non-interest income increased $358,000 or 10.4 percent to $3.8 million for the six months ending on June 30, 2018, compared to $3.4 million for the first six months in 2017. The increase was primarily attributable to increases in the gain on sale of loans and asset management income.
Non-interest expense increased $1.1 million or 9.1 percent to $12.8 million for the six months ending on June 30, 2018, compared to $11.7 million for the same period in 2017. The most significant increases were in salaries and employee benefits expense and depreciation and maintenance of equipment, which were both the result of increased headcount and capital expenses related to the addition of the two newest branches in Evans, Georgia and Ridge Spring, South Carolina.
Total assets increased $24.9 million or 2.9 percent to $893.7 million at June 30, 2018 from $868.8 million at December 31, 2017, primarily due to an increase in loans. Net loans receivable increased $39.4 million or 10.1 percent to $429.9 million at June 30, 2018 from $390.5 million at December 31, 2017. Total deposits increased $36.4 million or 5.2 percent to $738.5 million at June 30, 2018 compared to $702.1 million at December 31, 2017.
Security Federal Bank has 16 full service branch locations in South Carolina and Evans, Georgia. A full range of financial services, including trust and investments, are provided by the Bank’s wholly owned subsidiary, Security Federal Insurance, Inc.