Security Bancorp, Inc. Announces Second Quarter Earnings

Rhea-AI Summary

Security Bancorp, Inc. (SCYT) reported a net income of $627,000, or $1.72 per share, for the second quarter of 2021, up from $516,000, or $1.36 per share a year ago. For the six months, net income rose to $1.3 million, or $3.56 per share, compared to $1.1 million last year. However, net interest income fell by 2.7% to $3.6 million. Non-interest income rose significantly, reaching $608,000 for the quarter, attributed to increased loan sales. Total assets increased by 9% to $284.3 million, while deposits rose by 13.5% to $252.4 million.

Positive

• Net income increased 21.5% year-over-year for Q2.
• Non-interest income up 31.3% for Q2, driven by increased mortgage activity.
• Total assets grew by $23.5 million or 9.0% compared to December 2020.
• Deposits increased by $30.1 million or 13.5% since December 2020.

Negative

• Net interest income decreased by $99,000 or 2.7% for six months.
• Provision for loan losses increased by $40,000 year-over-year.
• Non-performing assets rose 27.2% to $374,000.

News Market Reaction – SCYT

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On the day this news was published, SCYT declined NaN%, reflecting a moderate negative market reaction.

Data tracked by StockTitan Argus on the day of publication.

MCMINNVILLE, Tenn., Aug. 09, 2021 (GLOBE NEWSWIRE) -- Security Bancorp, Inc. (“Company”) (OTCBB: “SCYT”), the holding company for Security Federal Savings Bank of McMinnville, Tennessee, today announced its consolidated earnings for the second quarter of its fiscal year ended December 31, 2021.

Net income for the three months ended June 30, 2021 was $627,000, or $1.72 per share, compared to $516,000, or $1.36 per share, for the same quarter last year. For the six months ended June 30, 2021, the Company’s net income was $1.3 million or $3.56 per share, compared to $1.1 million, or $2.89 per share, for the same period in 2020.

For the three months ended June 30, 2021, net interest income remained relatively unchanged at $1.8 million compared to the same period in 2020. For the six months ended June 30, 2021, net interest income decreased $99,000, or 2.7%, to $3.6 million from $3.7 million for the six months ended June 30, 2020. The decrease in net interest income for the six months ended June 30, 2021 was primarily the result of a decrease in loan and investment interest rates. Net interest income after provision for loan losses for the three months ended June 30, 2021 was $1.8 million, an increase of $28,000, or 1.6%, from the same period in the previous year. For the six months ended June 30, 2021, net interest income after provision for loan losses decreased $139,000, or 3.8%, to $3.5 million from $3.6 million for the same period in 2020. The primary reason for the decrease during the six months ended June 30, 2021 was a decrease in net interest income as well as an increase in the provision for loan losses offset by a decrease in interest expense.

Non-interest income for the three months ended June 30, 2021 was $608,000 compared to $463,000 for the same quarter of 2020, an increase of $145,000. Non-interest income for the six months ended June 30, 2021 was $1.3 million compared to $875,000 for the same period the prior year, an increase of $420,000. The increase during the three and six months ended June 30, 2021 was primarily attributable to an increase in the gains on the sale of loans due to the volume of mortgage activity as well as an increase in financial service fees.

Non-interest expense for the three months ended June 30, 2021 was $1.5 million and was relatively consistent with the same period in 2020. For the six months ended June 30, 2021, non-interest expense was $3.1 million and also relatively consistent with the same period in 2020.

Consolidated assets of the Company were $284.3 million at June 30, 2021, compared to $260.8 million at December 31, 2020. The $23.5 million, or 9.0%, increase in assets was a result of an increase in cash and due from banks, interest-bearing deposits, investments and loans receivable.   Loans receivable, net, increased $4.6 million, or 2.6%, to $179.5 million at June 30, 2021 from $174.9 million at December 31, 2020. The increase in loans receivable was attributable to an increase in commercial real estate loans.

For the three months ended June 30, 2021 the provision for loan losses was $60,000 compared to $50,000 for the same period in 2020. The provision for loan losses was $120,000 for the six months ended June 30, 2021 compared to $80,000 in the comparable period in 2020, an increase of $40,000.

Non-performing assets increased $80,000, or 27.2%, to $374,000 at June 30, 2021 from $294,000 at December 31, 2020. The increase is attributable to an increase in non-performing loans. Based on its analysis of delinquent loans, non-performing loans and classified loans, management believes that the Company’s allowance for loan losses of $1.9 million at June 30, 2021 was adequate to absorb known and inherent risks in the loan portfolio at that date. At June 30, 2021, the allowance for loan losses to non-performing assets was 511.76% compared to 609.46% at December 31, 2020.

Investment and mortgage-backed securities available-for-sale increased $4.4 million, or 11.7%, to $41.6 million at June 30, 2021, compared to $37.2 million at December 31, 2020. The increase was due to investment purchases funded by the increase in customer deposit balances. There were no investment and mortgage-backed securities held-to-maturity at June 30, 2021 and December 31, 2020.

Deposits increased $30.1 million, or 13.5%, to $252.4 million at June 30, 2021 from $222.4 million at December 31, 2020. The increase was primarily attributable to increases in consumer and commercial checking accounts, savings, and certificate of deposits balances. The balance in repurchase agreements decreased from $7.7 million at June 30, 2020 to a zero balance at June 30, 2021 due to the transfer of these balances to commercial checking accounts.

Stockholders’ equity increased $1.1 million or 4.3%, to $27.4 million, or 9.6% of total assets at June 30, 2021 compared to $26.3 million, or 10.1%, of total assets, at December 31, 2020.

Safe-Harbor Statement

Certain matters in this News Release may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may relate to, among others, expectations of the business environment in which the Company operates and projections of future performance. 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 range of factors including, but not limited to, the general business environment, interest rates, competitive conditions, regulatory changes, and other risks.

Contact:	Joe Pugh
	President & Chief Executive Officer
	(931) 473-4483

SECURITY BANCORP, INC. CONSOLIDATED FINANCIAL HIGHLIGHTS (unaudited) (dollars in thousands)
OPERATING DATA	Three months ended June 30,					Six months ended June 30,
		2020		2021			2020		2021
Interest income		$2,232		$2,112			$4,700		$4,219
Interest expense		450		292			972		590
Net interest income		1,782		1,820			3,728		3,629
Provision for loan losses		50		60			80		120
Net interest income after provision for loan losses		1,732		1,760			3,648		3,509
Non-interest income		463		608			875		1,295
Non-interest expense		1,510		1,524			3,068		3,062
Income before income tax expense		685		844			1,455		1,742
Income tax expense		169		217			359		443
Net income		$516		$627			$1,096		$1,299
Net Income per share (basic)		$1.36		$1.72			$2.89		$3.56
FINANCIAL CONDITION DATA	At June 30, 2021					At December 31, 2020
Total assets		$284,333					$260,827
Investments and mortgage backed securities - available for sale		41,576					37,216
Loans receivable, net		179,516					174,913
Deposits		252,435					222,352
Repurchase agreements	-0-						7,719
Federal Home Loan Bank Advances		2,000					2,000
Stockholders' equity		27,428					26,298
Non-performing assets		374					294
Non-performing assets to total assets		0.13%					0.11%
Allowance for loan losses		$1,914					$1,793
Allowance for loan losses to total loans receivable		1.05%					1.02%
Allowance for loan losses to non-performing assets		511.76%					609.46%

FAQ

What were Security Bancorp's earnings for Q2 2021?

Security Bancorp reported a net income of $627,000, or $1.72 per share, for Q2 2021.

How did Security Bancorp's net income for the first half of 2021 compare to 2020?

Net income for the first half of 2021 rose to $1.3 million from $1.1 million in 2020.

What factors contributed to the increase in non-interest income for SCYT?

The increase in non-interest income was mainly due to higher gains on loan sales and increased financial service fees.

How did the company's total assets change as of June 30, 2021?

Total assets increased by $23.5 million, or 9.0%, to $284.3 million compared to December 31, 2020.

What was the status of Security Bancorp's loan losses?

The provision for loan losses increased to $120,000 for the first half of 2021, up from $80,000 in 2020.