0000939057-18-000024.txt : 20180129 0000939057-18-000024.hdr.sgml : 20180129 20180129164245 ACCESSION NUMBER: 0000939057-18-000024 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20180129 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20180129 DATE AS OF CHANGE: 20180129 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: 18556243 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 k8123117.htm FORM 8-K

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): January 29, 2018
 
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 January 29, 2018, Security Federal Corporation issued its earnings release for the quarter and year ended December 31, 2017.  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

The following exhibit is being filed herewith and this list shall constitute the exhibit index.




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: January 29, 2018
By:
 /s/Jessica T. Cummins 
   
Jessica T. Cummins
   
Chief Financial Officer

EX-99.1 2 exhibit9918k123117.htm EXHIBIT 99.1

Exhibit 99.1
 
NEWS RELEASE
SECURITY FEDERAL CORPORATION ANNOUNCES INCREASE IN PRE-TAX
ANNUAL AND FOURTH QUARTER EARNINGS
 

Aiken, South Carolina (January 29, 2018) - Security Federal Corporation ("Company") (OTCBB:SFDL), the holding company for Security Federal Bank ("Bank"), today announced earnings for the year and quarter ended December 31, 2017.  Net income before taxes increased $509,000 or 6.4% to $8.4 million for the year ended December 31, 2017 compared to $7.8 million in 2016.

On December 22, 2017, the Tax Cuts and Jobs Act ("Act") was signed into law which reduced the federal corporate tax rate from 35% to 21%, effective January 1, 2018. As a result of the reduction in the corporate income tax rate, the Company revalued its net deferred tax asset as of December 31, 2017. The impact was a one-time, non-cash charge to income tax provision of approximately $628,000. As a result, the Company reported net income available to common shareholders of $5.9 million or $2.01 per common share (basic) for the year ended December 31, 2017 compared to $6.2 million or $2.09 per common share (basic) for the year ended December 31, 2016.

Chief Executive Officer Chris Verenes commented, "2017 was a solid year for Security Federal with strong growth in core earnings and continued loan growth. The results were muted slightly as a result of the Act however, looking beyond this we expect to see significant future benefits from the legislation."

Net loans receivable grew $30.8 million or 8.6% to $390.5 million at December 31, 2017 from $359.7 million at December 31, 2016.  Total deposits increased $48.0 million or 7.3% to $702.1 million at December 31, 2017 compared to $654.1 million at December 31, 2016.  As a result, net interest income increased $740,000 or 3.0% to $25.6 million for the year ended December 31, 2017.

Non-performing assets improved $1.4 million or 17.0% to $6.8 million at December 31, 2017 from $8.2 million at December 31, 2016. Non-performing assets represented 0.79% and 1.01% of total assets at December 31, 2017 and 2016, respectively. Consistent with the decrease in non-performing assets, total charges to the provision for loan losses decreased as well. Total charges to the provision were $300,000 for the year ended December 31, 2017, $200,000 of which was recorded during the fourth quarter. The provision for loan losses was $500,000 for both the quarter and year ended December 31, 2016.

Non-interest income increased $943,000 or 14.7% to $7.3 million for the year ended December 31, 2017 from $6.4 million for the same period in 2016. The increase was primarily due to a $224,000 increase in gain on sale of loans combined with a $632,000 increase in bank owned life insurance income. During 2017, the Bank recognized $654,000 in death benefits in addition to $506,000 in income related to an increase in the cash surrender value of the policies.

Non-interest expense increased $1.4 million or 6.0% to $24.3 million for the year ended December 31, 2017 compared to $22.9 million for the year ended December 31, 2016. The most significant increase was in salaries and employee benefits expense, which increased $1.3 million or 10.3%.  The increase in non-interest expense was partially offset by a decrease in prepayment penalties on FHLB advances. The Bank prepaid $17.9 million in higher rate FHLB advances and incurred $789,000 in prepayment penalties during 2016 compared to no prepayment penalties in 2017.
 
 

Net income available to common shareholders for the quarter ended December 31, 2017 was $909,000 or $0.31 per common share (basic) compared to $1.4 million or $0.49 per common share (basic) for the same quarter in 2016.

During the fourth quarter of 2016, the Company received a one-time preferred stock redemption discount of $660,000. The discount was recognized in net income available to common shareholders during the quarter and year ended December 31, 2016 and also contributed to the higher earnings for the quarter and year ended December 31, 2016 compared to the same periods in 2017. Excluding the effects of the tax reform in 2017 and the preferred stock redemption discount in 2016, fourth quarter net income available to common shareholders increased $768,000 or 99.9% to $1.5 million in 2017 compared to $769,000 for the same quarter in 2016.

Total assets increased $56.1 million or 6.9% to $868.8 million at December 31, 2017 from $812.7 million at December 31, 2016. Investment and mortgage-backed securities increased $24.4 million or 6.3% to $412.1 million at December 31, 2017 from $387.6 million at December 31, 2016.

Security Federal Bank has 15 full service branch locations in Aiken, Ballentine, Clearwater, Columbia, Graniteville, Langley, Lexington, North Augusta, Wagener, 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.

For additional information contact Jessica Cummins, 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, 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, 2017. 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.









 
SECURITY FEDERAL CORPORATION
UNAUDITED CONSOLIDATED FINANCIAL HIGHLIGHTS
(In Thousands, except for Earnings per Share and Ratios)
 
                         
   
INCOME STATEMENT HIGHLIGHTS
 
                         
   
Quarter Ended December 31,
    
Year Ended December 31,
  
   
2017
    
2016
    
2017
    
2016
  
Total interest income
  
$
7,620
    
$
7,077
    
$
29,787
    
$
28,388
  
                                 
Total interest expense
    
1,103
      
924
      
4,175
      
3,516
  
                                 
Net interest income
    
6,517
      
6,153
      
25,612
      
24,872
  
                                 
Provision for loan losses
    
200
      
500
      
300
      
500
  
                                 
Net interest income after provision for loan losses
    
6,317
      
5,653
      
25,312
      
24,372
  
                                 
Non-interest income
    
1,552
      
1,328
      
7,344
      
6,401
  
                                 
Non-interest expense
    
6,038
      
6,004
      
24,302
      
22,928
  
                                 
Income before income taxes
    
1,831
      
977
      
8,354
      
7,845
  
                                 
Writedown of deferred tax assets
    
628
      
-
      
628
      
-
  
                                 
Provision for income taxes
    
294
      
115
      
1,808
      
1,920
  
                                 
Net income
    
909
      
862
      
5,918
      
5,925
  
                                 
Preferred stock dividends
    
-
      
(93
)
    
-
      
(423
)
                                 
Redemption of preferred stock
    
-
      
660
      
-
      
660
  
                                 
Net income available to common shareholders
  
$
909
    
$
1,429
    
$
5,918
    
$
6,162
  
                                 
Earnings per common share (basic)
  
$
0.31
    
$
0.49
    
$
2.01
    
$
2.09
  
                                 
Earnings per common share (diluted)
  
$
0.30
    
$
0.46
    
$
1.91
    
$
1.99
  
                                 
                                 
   
BALANCE SHEET HIGHLIGHTS
                  
                                 
   
December 31, 
                  
     
2017
      
2016
    
% Change
          
                                 
Total assets
  
$
868,813
    
$
812,682
      
6.9
%
        
                                 
Cash and cash equivalents
    
10,320
      
9,375
      
10.1
%
        
                                 
Total loans receivable, net
    
390,493
      
359,723
      
8.6
%
        
                                 
Investment & mortgage-backed securities
    
412,055
      
387,643
      
6.3
%
        
                                 
Deposits
    
702,107
      
654,103
      
7.3
%
        
                                 
Borrowings
    
82,706
      
81,972
      
0.9
%
        
                                 
Shareholders' equity
    
77,923
      
71,112
      
9.6
%
        
                                 
Non performing assets
    
6,833
      
8,236
      
-17.0
%
        
                                 
Non performing assets to total assets
    
0.79
%
    
1.01
%
    
-22.4
%
        
                                 
Allowance as a percentage of gross loans, held for investment
    
2.08
%
    
2.30
%
    
-9.6
%
        
                                 
Book value per share
  
$
26.46
    
$
24.14
      
9.6
%