Security Federal Corp. Q3 2024 Earnings Report

TL;DR

**SEC FILING:** Security Federal Corp. assets at $3.46B, liabilities at $3.23B as of 9/30/24. Net interest income steady YoY.

AI Summary

Security Federal Corp. reported total assets of $3.46 billion and total liabilities of $3.23 billion as of September 30, 2024. For the nine months ended September 30, 2024, the company generated net interest income of $82.9 million, a slight decrease from $82.9 million in the same period of 2023. The company's provision for credit losses was $2.5 million for the nine months ended September 30, 2024.

Why It Matters

This filing provides insight into the financial health and performance of Security Federal Corp., a regional bank, which can impact its customers and the local economy.

Risk Assessment

Risk Level: medium — The filing details financial performance and asset/liability figures, which are crucial for assessing the bank's stability and potential risks.

Key Numbers

• $3.46B — Total Assets (As of September 30, 2024)
• $3.23B — Total Liabilities (As of September 30, 2024)
• $82.9M — Net Interest Income (Nine months ended September 30, 2024)
• $2.5M — Provision for Credit Losses (Nine months ended September 30, 2024)

Key Players & Entities

• Security Federal Corp. (company) — Filer
• 238 Richland Avenue NW, Aiken, SC 29801 (location) — Business Address
• $3.46 billion (dollar_amount) — Total Assets as of September 30, 2024
• $3.23 billion (dollar_amount) — Total Liabilities as of September 30, 2024
• $82.9 million (dollar_amount) — Net Interest Income for nine months ended September 30, 2024

FAQ

Key Financial Figures

• $0.01 — AT: SHARES: Common Stock, par value $0.01 per share November 8, 2024 3,194,781

Filing Documents

• sfdl20240930_10q.htm (10-Q) — 3330KB
• ex_717809.htm (EX-31.1) — 14KB
• ex_717810.htm (EX-31.2) — 14KB
• ex_717811.htm (EX-32) — 8KB
• 0001437749-24-034109.txt ( ) — 14852KB
• sfdl-20240930.xsd (EX-101.SCH) — 70KB
• sfdl-20240930_cal.xml (EX-101.CAL) — 72KB
• sfdl-20240930_def.xml (EX-101.DEF) — 547KB
• sfdl-20240930_lab.xml (EX-101.LAB) — 442KB
• sfdl-20240930_pre.xml (EX-101.PRE) — 588KB
• sfdl20240930_10q_htm.xml (XML) — 3984KB

Financial Statements (unaudited)

Financial Statements (unaudited): 3 Consolidated Balance Sheets at September 30, 2024 and December 31, 2023 3 Consolidated Statements of Income for the Three and Nine Months Ended September 30, 2024 and 2023 4 Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2024 and 2023 5 Consolidated Statements of Changes in Shareholders' Equity for the Three and Nine Months Ended September 30, 2024 and 2023 6 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2024 and 2023 7

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 28 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 36 Item 4.

Controls and Procedures

Controls and Procedures 36 PART II. OTHER INFORMATION Item 1.

Legal Proceedings

Legal Proceedings 37 Item 1A.

Risk Factors

Risk Factors 37 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 37 Item 3. Defaults Upon Senior Securities 37 Item 4. Mine Safety Disclosures 37 Item 5. Other Information 37 Item 6. Exhibits 38

Signatures

Signatures 39 SCHEDULES OMITTED All schedules other than those indicated above are omitted because of the absence of the conditions under which they are required or because the information is included in the consolidated financial statements and related notes. 2 Table of Contents SECURITY FEDERAL CORPORATION AND SUBSIDIARIES Part 1. Financial Information

Financial Statements

Item 1. Financial Statements Consolidated Balance Sheets September 30, 2024 December 31, 2023 Dollars in thousands, except per share amounts (Unaudited) (Audited) ASSETS: Cash and Cash Equivalents $ 132,376 $ 128,284 Certificates of Deposit with Other Banks 2,350 2,350 Investments: Available For Sale ("AFS") 534,203 537,640 Held To Maturity ("HTM") Net of Allowance for Credit Losses of $ 0 (Fair Value of $ 135,502 and $ 158,540 at September 30, 2024 and December 31, 2023, Respectively) 137,851 163,072 Total Investments 672,054 700,712 Loans Receivable, Net: Held For Sale 1,649 967 Held For Investment (Net of Allowance for Credit Losses of $ 13,604 and $ 12,569 at September 30, 2024 and December 31, 2023, Respectively) 685,059 621,562 Total Loans Receivable, Net 686,708 622,529 Accrued Interest Receivable 5,791 5,512 Operating Lease Right-of-Use ("ROU") Assets 1,048 1,402 Land Held for Sale 938 938 Premises and Equipment, Net 29,545 28,637 Federal Home Loan Bank ("FHLB") Stock, at Cost 1,089 922 Bank Owned Life Insurance ("BOLI") 28,478 27,954 Goodwill 1,200 1,200 Other Assets 14,750 29,231 Total Assets $ 1,576,327 $ 1,549,671 LIABILITIES: Deposit Accounts $ 1,257,314 $ 1,194,997 Borrowings from Federal Reserve Bank ("FRB") 65,000 119,200 Other Borrowings 24,323 19,180 Junior Subordinated Debentures 5,155 5,155 Subordinated Debentures 26,500 26,500 Operating Lease Liabilities 1,081 1,442 Other Liabilities 11,872 10,835 Total Liabilities 1,391,245 1,377,309 SHAREHOLDERS' EQUITY: Senior Non-Cumulative Perpetual Preferred Stock, Series ECIP, $ 1,000 Par Value; 82,949 Shares Authorized, Issued and Outstanding at September 30, 2024 and December 31, 2023 82,949 82,949 Common Stock, $ 0.01 Par Value; 5,000,000 Shares Authorized; 3,457,706 Shares Issued and 3,194,437 Shares Outstanding at September 30, 2024 and 3,456,136 Shares Issued and 3,228,777 Shares Outstanding at Dece

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements NOTE 1 - BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10 -Q and accounting principles generally accepted in the United States of America ("GAAP"); therefore, they do not include all disclosures necessary for a complete presentation of financial condition, results of operations, and cash flows. Such statements are unaudited but, in the opinion of management, reflect all adjustments, which are of a normal recurring nature and necessary for a fair presentation of results for the selected interim periods. The information included in Security Federal Corporation's (the "Company") Form 10 -K for the year ended December 31, 2023 (" 2023 Form 10 -K") should be referred to when reviewing interim financial statements. The unaudited consolidated results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or any other period. The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. NOTE 2 - PRINCIPLES OF CONSOLIDATION The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Security Federal Bank (the "Bank") and the Bank's wholly owned subsidiaries, Security Federal Investments, Inc. ("SFINV") and Security Federal Insurance, Inc. ("SFINS"). SFINV was formed to hold investment securities and allow for better management of the securities portfolio. SFINS is an insurance agency offering auto, bu

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements NOTE 5 - STOCK-BASED COMPENSATION Certain officers and directors of the Company participate in incentive and non-qualified stock option plans. Options are granted at exercise prices not less than the fair value of the Company's common stock on the date of the grant. At September 30, 2024 and 2023 , the Company had no options outstanding and there was no activity during the three and nine months ended September 30, 2024 and 2023 . At those dates, there were 50,000 options available for grants. NOTE 6 - INVESTMENTS, AVAILABLE FOR SALE ("AFS") AFS securities are recorded at fair market value. There was no allowance for credit losses for AFS securities as of September 30, 2024 and December 31, 2023 . The amortized cost, gross unrealized gains, gross unrealized losses, and fair values of AFS securities at the dates indicated were as follows: September 30, 2024 Dollars in thousands Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Student Loan Pools $ 40,972 $ 101 $ ( 258 ) $ 40,815 Small Business Administration ("SBA") Bonds 71,519 417 ( 2,042 ) 69,894 Tax Exempt Municipal Bonds 6,772 — ( 592 ) 6,180 Taxable Municipal Bonds 64,550 — ( 9,333 ) 55,217 Mortgage-Backed Securities ("MBS") 385,080 342 ( 23,325 ) 362,097 Total AFS Securities $ 568,893 $ 860 $ ( 35,550 ) $ 534,203 December 31, 2023 Dollars in thousands Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Student Loan Pools $ 51,022 $ 72 $ ( 728 ) $ 50,366 SBA Bonds 79,014 416 ( 2,677 ) 76,753 Tax Exempt Municipal Bonds 21,501 643 ( 908 ) 21,236 Taxable Municipal Bonds 64,669 — ( 11,554 ) 53,115 MBS 368,081 31 ( 31,942 ) 336,170 Total AFS Securities $ 584,287 $ 1,162 $ ( 47,809 ) $ 537,640 Student Loan Pools are typically 97% guaranteed by the United States government while SBA bonds are 100% backed by the full faith and credit of the United States government. The majo

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements The amortized cost and fair value of AFS securities pledged as collateral for certain deposit accounts, FHLB advances, FRB, and other borrowings were $ 488.3 million and $ 455.6 million at September 30, 2024 , and $ 533.7 million and $ 490.5 million at December 31, 2023 , respectively. The Company re ceived $ 13.7 million in gross proceeds from sales of AFS securities during the three and nine months ended September 30, 2024 ; and recognized gross gains of $ 408,000 and gross losses of $ 371,000 during those periods. There were no sales of AFS securities during 2023; and therefore , no proceeds from sales, gross gains or gross losses were recorded during the year ended December 31, 2023 . The following tables summarize gross unrealized losses and the related fair value, aggregated by investment category and length of time that individual AFS securities have been in a continuous unrealized loss position at the dates indicated. September 30, 2024 Less than 12 Months 12 Months or More Total Dollars in thousands Fair Value Unrealized Losses # Fair Value Unrealized Losses # Fair Value Unrealized Losses Student Loan Pools $ 8,325 $ ( 25 ) 7 $ 27,243 $ ( 233 ) 26 $ 35,568 $ ( 258 ) SBA Bonds 2,398 ( 26 ) 4 27,364 ( 2,016 ) 50 29,762 ( 2,042 ) Tax Exempt Municipal Bonds — — — 6,180 ( 592 ) 5 6,180 ( 592 ) Taxable Municipal Bonds — — — 55,217 ( 9,333 ) 59 55,217 ( 9,333 ) MBS 51,843 ( 215 ) 16 279,757 ( 23,110 ) 201 331,600 ( 23,325 ) $ 62,566 $ ( 266 ) 27 $ 395,761 $ ( 35,284 ) 341 $ 458,327 $ ( 35,550 ) December 31, 2023 Less than 12 Months 12 Months or More Total Dollars in thousands Fair Value Unrealized Losses # Fair Value Unrealized Losses # Fair Value Unrealized Losses Student Loan Pools $ 377 $ ( 1 ) 1 $ 43,872 $ ( 727 ) 34 $ 44,249 $ ( 728 )

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