Security Federal Corp 8-K, filed Feb 7, 2022
Security Federal Corp (SFDL)
8-K
2022-02-07
For: 2022-02-07
View Original
Added on
April 11, 2026
About this 8-K
Security Federal Corp filed this 8-K on February 7, 2022.
Items reported
- Item 2.02: Financial results
- Item 9.01: Financial statements and exhibits
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UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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Washington, D.C. 20549
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FORM
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CURRENT REPORT
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Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
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Date of Report (Date of earliest event reported):
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(Exact name of registrant as specified in its charter)
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(State or other jurisdiction
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(Commission
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(IRS Employer
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of incorporation)
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File Number)
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Identification No.)
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(Address of principal executive offices)
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(Zip Code)
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Registrant's telephone number (including area code): (
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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.
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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. [ ]
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Item 2.02 Results of Operations and Financial Condition
On February 7, 2022, Security Federal Corporation issued its earnings release for the quarter and year ended December 31, 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
104 Cover Page Interactive
Data File (embedded within the Inline XBRL document)
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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.
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SECURITY FEDERAL CORPORATION
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Date: February 7, 2022
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By:
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/s/Darrell Rains |
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Darrell Rains
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Chief Financial Officer
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Exhibit 99.1
NEWS RELEASE
SECURITY FEDERAL CORPORATION ANNOUNCES FOURTH QUARTER
RESULTS AND RECORD ANNUAL EARNINGS
Aiken, South Carolina (February 7, 2022) - Security Federal Corporation (“Company”) (OTCBB: SFDL), the holding company for Security Federal Bank (“Bank”),
today announced earnings and results for the quarter and year ended December 31, 2021. The Company reported net income of $2.0 million, or $0.62 per share, for the quarter ended December 31, 2021 compared to $3.1 million, or $0.94 per share, for the
same period in 2020. For the year ended December 31, 2021, net income increased $5.7 million, or 81.2%, to $12.8 million, or $3.93 per share, compared to $7.1 million, or $2.19 per share, during 2020. The increase in annual net income was primarily
due to higher net interest income and non-interest income, specifically grant income, during 2021 combined with the release of reserves following significantly higher loan loss provisions during 2020 in response to the potential and unknown economic
impact of the ongoing COVID-19 pandemic.
Fourth Quarter Financial Highlights
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Net interest income increased $321,000, or 3.8%, to $8.7 million primarily due to lower interest expense and higher interest
income from loans
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Non-interest income decreased $189,000, or 6.7%, to $2.6 million
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Non-interest expense increased $1.6 million, or 21.0%, to $8.9 million
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Quarterly average interest earning assets increased $110.4 million, or 10.4%, to $1.2 billion
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Quarterly average interest bearing liabilities increased $48.9 million, or 5.7%, to $906.1 million
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Quarter Ended
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(Dollars in Thousands, except for Earnings per Share)
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12/31/2021
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12/31/2020
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Total interest income
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$ 9,634
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$ 9,564
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Total interest expense
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924
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1,175
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Net interest income
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8,710
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8,389
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Reversal of provision for loan losses
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(134)
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-
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Net interest income after provision for loan losses
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8,844
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8,389
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Non-interest income
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2,642
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2,831
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Non-interest expense
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8,942
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7,388
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Income before income taxes
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2,544
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3,832
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Provision for income taxes
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516
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767
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Net income
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$ 2,028
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$ 3,065
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Earnings per common share (basic)
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$ 0.62
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$ 0.94
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Annual Comparative Financial Highlights
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Net interest income increased $2.8 million, or 9.1%, to $33.3 million, primarily due to a 41.9% decrease in interest expense.
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Non-interest income increased $1.2 million, or 10.6%, primarily due to increases in grant income, ATM and check card fee income, trust income
and gain on sale of mortgage loans. The Bank was awarded a $1.8 million grant during the third quarter of 2021 by the Community Development Financial Institutions (CDFI) Rapid Response Program (RRP) in order to provide certified CDFIs
with resources to help counter the economic impact of COVID-19 in distressed
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and underserved communities. The grant proceeds were used to fund qualified loans within the Bank’s target market areas. These increases in
non-interest income were partially offset by a decrease of $1.3 million in net gain on sale of investments.
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Non-interest expense increased $2.3 million, or 7.9%, during 2021 compared to 2020 primarily due to higher salaries and employee benefits
expenses and consulting fees.
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Average interest earning assets grew $119.8 million to $1.1 billion while average interest bearing liabilities increased $43.6 million to
$878.8 million.
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Year Ended
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(Dollars in Thousands, except for Earnings per Share)
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12/31/2021
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12/31/2020
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Total interest income
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$ 37,117
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$ 37,096
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Total interest expense
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3,824
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6,582
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Net interest income
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33,293
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30,514
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(Reversal of) provision for loan losses
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(2,404)
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3,600
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Net interest income after provision for loan losses
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35,697
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26,914
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Non-interest income
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12,633
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11,421
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Non-interest expense
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32,047
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29,708
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Income before income taxes
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16,283
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8,627
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Provision for income taxes
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3,509
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1,577
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Net income
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$ 12,774
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$ 7,050
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Earnings per common share (basic)
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$ 3.93
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$ 2.19
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Credit Quality
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We had a negative provision for loan losses of $2.4 million for the year ended December 31, 2021 compared to provision expense of $3.6 million
for the year ended December 31, 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 December 31, 2021.
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Non-performing assets improved to $2.8 million at December 31, 2021 from $3.6 million at December 31, 2020 and $4.1 million at December 31, 2019.
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Allowance for loan losses to gross loans was 2.19% at December 31, 2021 compared to 2.64% at December 31, 2020 and 2.01% at
December 31, 2019.
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Quarter Ended
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Year Ended
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(Dollars in thousands)
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12/31/2021
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12/31/2020
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12/31/2021
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12/31/2020
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(Reversal of) provision for loan losses
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$ (134)
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$ -
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$ (2,404)
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$ 3,600
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Net (recoveries) charge-offs
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$ (49)
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$ 3
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$ (648)
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$ (17)
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At Period End (dollars in thousands):
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12/31/2021
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12/31/2020
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12/31/2019
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Non-performing assets
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$ 2,813
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$ 3,624
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$ 4,114
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Non-performing assets to gross loans
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0.56%
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0.75%
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0.90%
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Allowance for loan losses
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$ 11,087
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$ 12,843
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$ 9,226
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Allowance to gross loans
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2.19%
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2.64%
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2.01%
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Balance Sheet Highlights and Capital Management
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Total assets increased $129.5 million during 2021 to $1.3 billion at December 31, 2021
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Net loans receivable increased $20.3 million, or 4.2%, during the year to $499.5 million.
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Investment and mortgage-backed securities increased $98.8 million, or 16.3%, during the year to $706.4 million at December 31, 2021 due to an
increase in deposits during the year.
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Total deposits increased $197.9 million, or 21.6%, to $1.1 billion at December 31, 2021 from $918.1 million at December 31, 2020, primarily due
to an increase in commercial checking accounts.
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Book value per share increased to $35.51 at December 31, 2021 compared to $34.40 at December 31, 2020.
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Dollars in thousands (except per share amounts)
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12/31/2021
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12/31/2020
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Total assets
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$ 1,301,214
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$ 1,171,710
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Cash and cash equivalents
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27,623
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18,506
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Total loans receivable, net *
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499,497
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479,167
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Investment and mortgage-backed securities
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706,356
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607,579
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Deposits
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1,115,963
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918,096
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Borrowings
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61,940
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131,972
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Shareholders' equity
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115,523
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111,906
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Book value per share
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$ 35.51
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$ 34.40
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Total risk based capital to risk weighted assets (1)
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18.65%
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19.89%
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CET1 capital to risk weighted assets (1)
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17.39%
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18.63%
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Tier 1 leverage capital ratio (1)
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9.87%
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9.76%
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* Includes PPP loans of $9.8 million at 12/31/2021 and $47.1 million at 12/31/2020
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(1) - Ratio is calculated using Bank only information and not consolidated information
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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 two newest branches, located in Augusta, Georgia and Columbia, South Carolina, are under construction but scheduled to open later this year. They will both be full-service branches 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.