Security Federal Corporation: Navigating Q3 2024 Earnings
Wednesday, Oct 30, 2024 2:40 pm ET
2min read Security Federal Corporation (OTCBB: SFDL), the holding company for Security Federal Bank, recently announced its earnings and financial results for the three and nine months ended September 30, 2024. The Company reported net income available to common shareholders of $2.0 million, or $0.62 per share, for the quarter ended September 30, 2024, compared to $2.1 million, or $0.65 per share, for the third quarter of 2023. Year-to-date net income available to common shareholders was $5.9 million, or $1.83 per common share, for the nine months ended September 30, 2024, compared to $6.6 million, or $2.02 per common share, during the nine months ended September 30, 2023. Both the quarterly and year-to-date decreases in net income available to common shareholders were primarily due to increases in the provision for credit losses and non-interest expense, as well as the payment of preferred stock dividends during 2024, which were partially offset by increases in net interest income and non-interest income.
Net interest income increased $964,000, or 10.2%, to $10.4 million during the quarter ended September 30, 2024, compared to $9.4 million during the third quarter of 2023. Total interest income increased $2.7 million, or 16.1%, to $19.5 million while total interest expense increased $1.7 million, or 23.7%, to $9.1 million during the quarter ended September 30, 2024 compared to the same quarter the prior year. The increase in interest income and interest expense was the result of higher market interest rates and increased average interest-earning assets and interest-bearing liabilities.
Non-interest income increased $457,000, or 21.1%, to $2.6 million during the quarter ended September 30, 2024 compared to the same quarter in the prior year primarily due to $263,000 and $74,000 increases in trust income and gain on sale of loans, respectively. Non-interest expense increased $389,000, or 4.4%, to $9.3 million during the quarter ended September 30, 2024 compared to the same quarter in the prior year primarily due to an increase in salaries and employee benefits expense.
The Company's financial performance in the past year has been marked by significant changes in key financial metrics. Net interest income increased by $1.8 million (6.1%) to $30.6 million, driven by higher interest income on investment securities and loans, partially offset by increased interest expense on deposits. Non-interest income decreased by $222,000 (2.3%) to $9.4 million, primarily due to a decrease in gain on sale of loans. Non-interest expense increased by $1.7 million (4.9%) to $35.9 million. Despite these changes, net income remained relatively stable at $10.2 million for both years ended December 31, 2023 and 2022.
Increases in the provision for credit losses and non-interest expense have significantly impacted Security Federal Corporation's net income trends. In Q3 2024, the provision for credit losses increased to $1.2 million, up from $376,000 in the same period last year, while non-interest expense rose by $389,000 to $9.3 million. These increases, coupled with a $415,000 payment of preferred stock dividends, offset gains from higher net interest income and non-interest income, leading to a $122,000 decrease in net income available to common shareholders compared to Q3 2023.
Market interest rates and average interest-earning assets and interest-bearing liabilities have significantly impacted Security Federal Corporation's interest income and expense in the past year. During the nine months ended September 30, 2024, total interest income increased by $10.5 million (22.5%) to $57.1 million, primarily driven by a $5.2 million (39.3%) increase in investment securities and loans. Conversely, total interest expense surged by $8.7 million (49.0%) to $26.5 million, largely due to a $5.7 million (256.3%) increase in deposits. This trend reflects higher market interest rates and increased average interest-earning assets and interest-bearing liabilities, as the bank's interest income growth outpaced its interest expense growth.
In conclusion, Security Federal Corporation's Q3 2024 earnings reflect a mixed bag of financial performance. While the Company experienced increases in net interest income and non-interest income, these gains were offset by higher provision for credit losses and non-interest expense, as well as the payment of preferred stock dividends. As investors evaluate the Company's financial health and stability, they should consider the potential impact of these trends on future earnings and the Company's ability to navigate the current economic landscape.
Net interest income increased $964,000, or 10.2%, to $10.4 million during the quarter ended September 30, 2024, compared to $9.4 million during the third quarter of 2023. Total interest income increased $2.7 million, or 16.1%, to $19.5 million while total interest expense increased $1.7 million, or 23.7%, to $9.1 million during the quarter ended September 30, 2024 compared to the same quarter the prior year. The increase in interest income and interest expense was the result of higher market interest rates and increased average interest-earning assets and interest-bearing liabilities.
Non-interest income increased $457,000, or 21.1%, to $2.6 million during the quarter ended September 30, 2024 compared to the same quarter in the prior year primarily due to $263,000 and $74,000 increases in trust income and gain on sale of loans, respectively. Non-interest expense increased $389,000, or 4.4%, to $9.3 million during the quarter ended September 30, 2024 compared to the same quarter in the prior year primarily due to an increase in salaries and employee benefits expense.
The Company's financial performance in the past year has been marked by significant changes in key financial metrics. Net interest income increased by $1.8 million (6.1%) to $30.6 million, driven by higher interest income on investment securities and loans, partially offset by increased interest expense on deposits. Non-interest income decreased by $222,000 (2.3%) to $9.4 million, primarily due to a decrease in gain on sale of loans. Non-interest expense increased by $1.7 million (4.9%) to $35.9 million. Despite these changes, net income remained relatively stable at $10.2 million for both years ended December 31, 2023 and 2022.
Increases in the provision for credit losses and non-interest expense have significantly impacted Security Federal Corporation's net income trends. In Q3 2024, the provision for credit losses increased to $1.2 million, up from $376,000 in the same period last year, while non-interest expense rose by $389,000 to $9.3 million. These increases, coupled with a $415,000 payment of preferred stock dividends, offset gains from higher net interest income and non-interest income, leading to a $122,000 decrease in net income available to common shareholders compared to Q3 2023.
Market interest rates and average interest-earning assets and interest-bearing liabilities have significantly impacted Security Federal Corporation's interest income and expense in the past year. During the nine months ended September 30, 2024, total interest income increased by $10.5 million (22.5%) to $57.1 million, primarily driven by a $5.2 million (39.3%) increase in investment securities and loans. Conversely, total interest expense surged by $8.7 million (49.0%) to $26.5 million, largely due to a $5.7 million (256.3%) increase in deposits. This trend reflects higher market interest rates and increased average interest-earning assets and interest-bearing liabilities, as the bank's interest income growth outpaced its interest expense growth.
In conclusion, Security Federal Corporation's Q3 2024 earnings reflect a mixed bag of financial performance. While the Company experienced increases in net interest income and non-interest income, these gains were offset by higher provision for credit losses and non-interest expense, as well as the payment of preferred stock dividends. As investors evaluate the Company's financial health and stability, they should consider the potential impact of these trends on future earnings and the Company's ability to navigate the current economic landscape.
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