Security Bancorp: A Strong Second Quarter Performance

Security Bancorp, Inc. ("Security Bancorp" or "the Company") recently announced its second quarter earnings for the fiscal year ended December 31, 2024, showcasing a robust performance driven by growth in net interest income and a significant decrease in non-performing assets. This article delves into the key aspects of the Company's earnings report, highlighting its financial stability and growth potential.


**Net Interest Income and Net Interest Margin**

Security Bancorp's net interest income for the three months ended September 30, 2024, increased by 14.3% year-over-year to $2.9 million. This growth was primarily driven by an increase in loan balances and interest income on loans, partially offset by a smaller increase in interest expense. The Company's net interest margin improved to 3.35% in 2023, up from 3.23% in 2022, indicating a strong and stable business model.


**Non-Interest Income and Expenses**

The Company's non-interest income increased by 55% year-over-year to $635,000, primarily due to incentive income related to its card processing contracts. However, non-interest expense also rose by 20% to $2.0 million, primarily due to an increase in consulting fee expense related to renegotiation of the Bank's data processing contracts. Despite the higher expenses, net interest income after provision for loan losses still increased by 12.0% to $8.0 million.

**Asset Growth and Loan Portfolio Diversification**

Security Bancorp's consolidated assets grew by 6.8% to $346.6 million at September 30, 2024, primarily due to an increase in loans receivable, net. The Company's loan portfolio is diversified, with a focus on residential mortgage and commercial real estate loans, which accounted for 46% and 32% of total loans, respectively. This diversification strategy helps mitigate risks associated with overexposure to a single sector or industry.


**Risk Management and Allowance for Loan Losses**

The Company's allowance for loan losses increased to $2.6 million at September 30, 2024, up from $2.4 million at December 31, 2023. This proactive approach to risk management is reflected in the significant improvement in the ratio of the allowance for loan losses to non-performing assets, which reached 63,750.0% at September 30, 2024.

Security Bancorp's strong second quarter earnings demonstrate its financial stability and growth potential. The Company's focus on net interest income, asset growth, and effective risk management positions it well for continued success in the future. As an investment opportunity, Security Bancorp offers a compelling combination of value and growth, making it an attractive choice for investors seeking a solid, low-risk addition to their portfolios.