0000939057-21-000214.txt : 20210802 0000939057-21-000214.hdr.sgml : 20210802 20210802135843 ACCESSION NUMBER: 0000939057-21-000214 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20210802 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20210802 DATE AS OF CHANGE: 20210802 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SECURITY FEDERAL CORP CENTRAL INDEX KEY: 0000818677 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 570858504 STATE OF INCORPORATION: SC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-16120 FILM NUMBER: 211135533 BUSINESS ADDRESS: STREET 1: 238 RICHLAND AVENUE NW CITY: AIKEN STATE: SC ZIP: 29801 BUSINESS PHONE: 8036413000 MAIL ADDRESS: STREET 1: 238 RICHLAND AVENUE NW CITY: AIKEN STATE: SC ZIP: 29801 FORMER COMPANY: FORMER CONFORMED NAME: SECURITY FEDERAL CORPORATION DATE OF NAME CHANGE: 19920703 8-K 1 8k63021.htm
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K
 
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): August 2, 2021
 
SECURITY FEDERAL CORPORATION
(Exact name of registrant as specified in its charter)
 
South Carolina
  
000-16120
  
57-0858504
(State or other jurisdiction
  
(Commission
  
(IRS Employer
of incorporation)
  
 File Number)
  
Identification No.)
 
238 Richland Avenue NW, Aiken, South Carolina
  
29801
(Address of principal executive offices)
  
(Zip Code)
 
Registrant's telephone number (including area code): (803) 641-3000
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.
 
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]

Item 2.02  Results of Operations and Financial Condition

On August 2, 2021, Security Federal Corporation issued its earnings release for the quarter ended June 30, 2021.  A copy of the earnings release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

Item 9.01  Financial Statements and Exhibits

(d)                 Exhibits




2
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 
SECURITY FEDERAL CORPORATION
     
     
Date: August 2, 2021
By:
 /s/ Darrell Rains
   
Darrell Rains
   
Chief Financial Officer

3
EX-99.1 2 ex99163021.htm
Exhibit 99.1

NEWS RELEASE

SECURITY FEDERAL CORPORATION ANNOUNCES INCREASE IN SECOND QUARTER EARNINGS

Aiken, South Carolina (August 2, 2021) - Security Federal Corporation (“Company”) (OTCBB: SFDL), the holding company for Security Federal Bank (“Bank”), today announced earnings and financial results for the three and six month periods ended June 30, 2021.

Net income increased $908,000 or 45.0%, to $2.9 million, or $0.90 per common share, for the quarter ended June 30, 2021 compared to $2.0 million, or $0.62 per common share, for the same quarter last year. Year to date net income increased $3.0 million or 98.1%, to $6.1 million, or $1.88 per common share, for the six months ended June 30, 2021 compared to $3.1 million, or $0.97 per common share, during the six months ended June 30, 2020. The increase in net income was primarily the result of decreases in interest expense and the provision for loan losses during the first six months of 2021.

Second Quarter Financial Highlights
•
Net interest income increased $397,000, or 5.4%, to $7.7 million, as the decline in interest expense exceeded the decline in interest income
•
Total non-interest income decreased $119,000, or 4.2%, to $2.7 million
•
Total non-interest expense increased $455,000, or 6.5%, to $7.4 million
•
Average interest earning assets grew $115.0 million to $1.1 billion for the second quarter of 2021 compared to $1.0 billion for the same quarter last year
•
Average interest bearing liabilities grew $36.0 million to $874.8 million
 
Quarter Ended
  
(Dollars in Thousands, except for Earnings per Share)
6/30/2021
6/30/2020
  
Total interest income
$                8,717
     $                9,098
  
Total interest expense
           978
                      1,756
  
Net interest income
             7,739
                      7,342
  
Provision for loan losses
              (735)
                         700
  
Net interest income after provision for loan losses
             8,474
                      6,642
  
Non-interest income
             2,687
                      2,806
  
Non-interest expense
             7,446
                      6,991
  
Income before income taxes
             3,715
                      2,457
  
Provision for income taxes
                791
                         441
  
Net income
$                2,924
    $                2,016
  
Earnings per common share (basic)
 $                  0.90
    $                  0.62
  
 
Year to Date (Six Months) Comparative Financial Highlights
•
Net interest income increased $1.5 million, or 10.8%, to $15.8 million, as the decline in interest expense exceeded the decline in interest income
•
Non-interest income decreased $141,000 or 2.5%
•
Non-interest expense increased $421,000 or 2.9%
•
Average interest earning assets grew $141.3 million, or 14.7%, to $1.1 billion for the first half of 2021 compared to $963.4 million for the same period in 2020
•
Average interest bearing liabilities grew $48.0 million, or 5.8%, to $871.9 million


 
Six Months Ended
(Dollars in Thousands, except for Earnings per Share)
6/30/2021
 
6/30/2020
Total interest income
$              17,815
 
 $           18,194
Total interest expense
                2,056
  
               3,976
Net interest income
              15,759
 
              14,218
Provision for loan losses
              (1,605)
  
               1,400
Net interest income after provision for loan losses
              17,364
 
              12,818
Non-interest income
                5,461
  
               5,602
Non-interest expense
              15,056
 
              14,635
Income before income taxes
                7,769
  
               3,785
Provision for income taxes
                  1,666
 
                  705
Net income
$                6,103
  
 $             3,080
Earnings per common share (basic)
$                  1.88
 
 $               0.97


Credit Quality Highlights

•
We had a negative provision for loan losses of $1.6 million for the six months ended June 30, 2021, compared to provision expense of $1.4 million for the six months ended June 30, 2020. The negative provision during 2021 resulted from a reduction in qualitative adjustment factors related to improvement in the economic and business conditions at both the national and regional levels as of June 30, 2021.
•
Non-performing assets improved to $3.2 million at June 30, 2021 from $3.6 million at December 31, 2020 and declined from $4.0 million at June 30, 2020
•
Allowance for loan losses as a percentage of gross loans was 2.24% at June 30, 2021 compared to 2.64% at December 31, 2020 and 1.98% at June 30, 2020
 
Quarter Ended
Six Months Ended
(Dollars in thousands)
6/30/2021
6/30/2020
6/30/2021
6/30/2020
Provision for loan losses
$              (735)
$                700
$           (1,605)
$            1,400
Net recoveries
$              (212)
$              (104)
$              (186)
$              (51)

At Period End (dollars in thousands):
6/30/2021
12/31/2020
6/30/2020
Non-performing assets
 $              3,208
 $           3,624
 $            3,995
Non-performing assets to gross loans
0.63%
0.75%
0.74%
Allowance for loan losses
 $            11,424
 $         12,843
 $          10,676
Allowance to gross loans
2.24%
2.64%
1.98%

Balance Sheet Highlights and Capital Management
•
Total assets increased $28.4 million during the first half of 2021 to $1.2 billion at June 30, 2021
•
Net loans receivable increased $24.1 million or 5.0% since the prior year end to $503.3 million
•
Investment and mortgage-backed securities increased $11.1 million or 1.8% to $618.7 million at June 30, 2021
•
Total deposits increased $76.3 million or 8.3% during the first six months of 2021 to $994.4 million as a result of PPP funds deposited
•
Book value per share increased to $35.43 at June 30, 2021 from $34.40 at December 31, 2020 and $32.92 at June 30, 2020





Dollars in thousands (except per share amounts)
6/30/2021
12/31/2020
6/30/2020
Total assets
$       1,200,139
$         1,171,710
$          1,100,519
Cash and cash equivalents
              13,147
                18,506
               15,341
Total loans receivable, net *
            503,287
              479,167
              534,446
Investment and mortgage-backed securities
            618,678
              607,579
              488,790
Deposits
            994,355
              918,096
          875,186
Borrowings
              80,032
              131,972
              108,308
Shareholders' equity
            115,255
              111,906
              107,073
Book value per share
 $            35.43
 $               34.40
$                32.92
Total risk based capital ratio (1)
     20.24%
19.89%
    19.58%
Common equity tier one ratio (1)
              18.98%
              18.63%
              18.32%
Tier 1 leverage capital ratio (1)
           9.83%
             9.76%
 9.77%
* Includes PPP loans of $58.9 million, $47.1 million and $72.7 million at 6/30/2021, 12/31/2020 and 6/30/2020, respectively.
(1)- Ratio is calculated using Bank only information and not consolidated information
  


Security Federal has 17 full service branches located in Aiken, Ballentine, Clearwater, Columbia, Graniteville, Langley, Lexington, North Augusta, Ridge Spring, Wagener and West Columbia, South Carolina and Augusta 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. The Bank’s newest branch, located in Augusta, Georgia, is under construction but scheduled to open later this year. It will be a full-service branch offering depository banking as well as commercial and consumer lending.

For additional information contact Darrell Rains, Chief Financial Officer, at (803) 641-3000.


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: the effect of the COVID-19 pandemic, including on the Company’s credit quality and business operations, as well as its impact on general economic and financial market conditions and other uncertainties resulting from the COVID-19 pandemic, such as the extent and duration of the impact on public health, the U.S. and global economies, and consumer and corporate customers, including economic activity, employment levels and market liquidity; interest rate fluctuations; economic conditions in the Company’s primary market area; 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, and changes related to the 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; the ability to attract and retain deposits; the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions; adverse changes in the securities markets; 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 December 31, 2020.  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.