Security Federal Corporation, the holding company for Security Federal Bank, announced Monday first quarter results of its fiscal year ending December 31, 2014. The Company reported net income available to common shareholders of $1.2 million or $0.41 per common share (basic) for the quarter ended March 31, 2014, an increase of $632,000 or 112.7% compared to net income available to common shareholders of $561,000 or $0.19 per common share (basic) for the quarter ended March 31, 2013. The increase in earnings for the quarter ended March 31, 2014 is primarily a result of a decrease of $1.0 million in the provision for loan losses offset slightly by a decrease of $409,000 in non- interest income compared to the same period in 2013.

The provision for loan losses declined $1.0 million or 91.3% from the first quarter of 2013 to $100,000 for the first quarter of 2014, driven by improved credit quality. Net charge-offs declined $862,000 or 63.5% to $496,000 for the first quarter of 2014 from $1.4 million for the comparable quarter in 2013, with the ratio of net charge-offs to gross loans falling to 0.55% in the first quarter of 2014 from 1.39% in the same quarter one year ago. The allowance for loan losses represented 496.0% of annualized net charge offs during the quarter ended March 31, 2014 compared to 204.4% of net charge offs during the comparable period in 2013.

Non-interest income decreased $409,000 or 21.0% to $1.5 million for the quarter ended March 31, 2014 from $1.9 million for the comparable quarter in 2013 primarily due to a decrease in gain on sale of investment securities of $300,000 or 78.0% combined with a decrease in grant income related to the Bank’s community development. During the quarter ended March 31, 2013, the Company recognized $416,000 in grant income compared to $282,000 for the same period in 2014.

Non-interest expense decreased $187,000 or 3.4% to $5.3 million for the quarter ended March 31, 2014 from $5.5 million for the comparable quarter in 2013. The decrease was primarily the result of a decrease in the net cost of operation of other real estate owned. For the quarter ended March 31, 2014, net cost of operation of other real estate owned decreased $127,000 or 32.1% to $269,000 compared to $396,000 for the comparable period in 2013. 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.

For the three months ended March 31, 2014, the Company’s net interest margin increased 11 basis points to 2.90% from 2.79% for the same quarter in 2013, because of the decreased rates paid on deposits and Federal Home Loan Bank advances. As a result, net interest income increased $53,000 or 0.9% to $5.6 million for the three months ended March 31, 2014 compared to the comparable quarter in 2013.

Total assets at March 31, 2014 were $848.8 million compared to $849.2 million at December 31, 2013, a decrease of $468,000 or 0.1% for the three month period. Net loans receivable decreased $3.9 million or 1.1% to $355.0 million at March 31, 2014 from $358.9 million at December 31, 2013 due to decreased loan demand. Total deposits increased $8.4 million or 1.3% to $667.1 million at March 31, 2014 compared to $658.7 million at December 31, 2013. FHLB advances, other borrowings, convertible senior debentures and subordinated debentures decreased $11.2 million or 10.5% to $95.8 million at March 31, 2014 from $107.0 million at December 31, 2013.

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