Security Bancorp, Inc. Announces Third Quarter Earnings

Security Bancorp posts higher earnings, strong loan growth, but rising non-performing assets.

What the company is saying

Security Bancorp, Inc. reports third quarter and year-to-date earnings, highlighting net income of $1.7 million ($4.40 per share) for the quarter and $4.7 million ($12.53 per share) for the nine months ended September 30, 2026. The company emphasizes growth in net interest income, up 14.5% for the quarter and 20.3% year-to-date, attributing this to increased loan volume, higher loan rates, and lower interest expense. Management points to a $21.4 million (7.1%) increase in net loans receivable and a $13.9 million (4.4%) rise in deposits as key drivers of asset growth. The narrative acknowledges a decrease in non-interest income, primarily from lower gains on secondary market loan sales, and an uptick in non-interest expenses due to higher salaries and occupancy costs. CEO Michael D. Griffith is named as the reporting executive. The tone is confident, with management stating the allowance for loan losses is adequate despite a sharp increase in non-performing assets.

What the data suggests

The disclosed figures show Security Bancorp's net income rose to $1.7 million for the quarter and $4.7 million for the nine months, with per-share earnings up to $4.40 and $12.53 respectively. Net interest income increased to $4.0 million for the quarter and $11.5 million year-to-date, reflecting a 14.5% and 20.3% gain over the prior year. Loans receivable grew by $21.4 million to $321.4 million, and deposits increased by $13.9 million to $330.8 million, supporting a $11.6 million rise in total assets. Non-interest income declined to $498,000 for the quarter and $1.4 million for the nine months, mainly due to reduced gains on loan sales. Non-interest expenses rose to $2.2 million for the quarter and $6.4 million for the nine months, driven by higher compensation and occupancy costs. Provision for credit losses increased to $45,000 for the quarter and $135,000 year-to-date, consistent with significant loan growth. Non-performing assets jumped from $4,000 to $947,000, primarily from real estate owned, but the allowance for loan losses stands at $2.9 million, covering 310.35% of non-performing assets. Investment securities available-for-sale fell by $9.5 million to $27.2 million due to maturities and paydowns. Stockholders’ equity rose by $3.8 million to $45.8 million, now 11.7% of total assets. The data indicates solid core earnings and balance sheet expansion, but asset quality deterioration is evident.

Analysis

The announcement is a standard quarterly earnings release, presenting realised, audited financial results for the period ended September 30, 2026. All key claims—net income, net interest income, asset and loan growth, deposit increases, and capital ratios—are supported by specific, period-over-period numerical data. The tone is positive but proportionate to the actual improvements disclosed, with no exaggerated language or speculative projections. Only a single forward-looking statement appears, relating to management's belief in the adequacy of loan loss reserves, which is clearly identified as an opinion rather than a forecast. There are no large capital outlays, long-term projections, or aspirational claims; all benefits and changes are already realised and quantifiable. The data quality is high, and the narrative closely matches the evidence.

Risk flags

• ●Non-performing assets increased sharply from $4,000 to $947,000 in nine months, mainly due to real estate owned. This raises concerns about asset quality and potential future credit losses, especially if loan growth continues at this pace.
• ●Provision for credit losses rose to $135,000 year-to-date, up from $36,000, indicating management is responding to higher loan balances and possible credit risk, but the adequacy of reserves depends on future asset performance.
• ●Non-interest income declined due to lower gains on loan sales, suggesting potential headwinds if secondary market activity remains weak or if the company cannot offset this with other fee income sources.

Bottom line

Security Bancorp delivered higher net income and strong loan and deposit growth for the third quarter and year-to-date, supported by improved net interest income and expanding balance sheet. However, the sharp rise in non-performing assets signals emerging credit quality issues that could pressure future results if not contained. Management maintains confidence in loan loss reserves, but the jump in real estate owned and increased credit loss provisions warrant close monitoring. The company’s capital and equity ratios remain healthy, and core earnings are solid, but sustaining this trajectory will require stabilizing asset quality and maintaining disciplined expense management. The most important takeaway is that while profitability is improving, the risk profile is shifting as loan growth outpaces credit performance.

Announcement summary

(OTC:SCYT) Security Bancorp, Inc. announced consolidated earnings for the third quarter of its fiscal year ending December 31, 2026. Net income for the three months ended September 30, 2026 was $1.7 million, or $4.40 per basic share, compared to $1.5 million, or $3.94 per basic share, for the same quarter last year. For the nine months ended September 30, 2026, net income was $4.7 million, or $12.53 per basic share, compared to $3.8 million, or $10.03 per basic share, for the same period in 2025. Net interest income for the three months ended September 30, 2026 increased $504,000, or 14.5%, to $4.0 million from $3.5 million for the same period in 2025. For the nine months ended September 30, 2026, net interest income increased $1.9 million, or 20.3%, to $11.5 million from $9.5 million for the same period in 2025. The increase in net interest income was primarily due to an increase in loans, higher interest rates on loans, and a decrease in interest expense. Net interest income after provision for credit losses for the three months ended September 30, 2026 was $3.9 million, an increase of $488,000, or 14.2%, from $3.4 million for the same period in the previous year. For the nine months ended September 30, 2026, net interest income after provision for credit losses increased $1.8 million, or 19.4%, to $11.3 million from $9.5 million for the same period in 2025. Non-interest income for the three months ended September 30, 2026 decreased to $498,000 compared to $559,000 for the same period in 2025. Non-interest income for the nine months ended September 30, 2026 decreased to $1.4 million compared to $1.5 million for the same period of the prior year, primarily due to a decrease in gains on sale of secondary market loans. Non-interest expense for the three months ended September 30, 2026 was $2.2 million, an increase of $198,000, or 9.8%, from $2.0 million for the same period of the prior year. For the nine months ended September 30, 2026, non-interest expense was $6.4 million, an increase of $399,000, or 6.6%, compared to the same period in 2025, mainly due to higher salary, employee benefits, and occupancy expenses, offset by lower professional fees. Total assets increased by $11.6 million, or 3.0%, to $393.2 million at September 30, 2026 from $381.6 million at December 31, 2025, due to increases in loans funded by higher deposits and Federal Home Loan Bank advances. Loans receivable, net, increased $21.4 million, or 7.1%, to $321.4 million at September 30, 2026 from $300.0 million at December 31, 2025, primarily from growth in one to four family mortgage and commercial real estate loans. Provision for credit losses for the three months ended September 30, 2026 was $45,000, compared to $29,000 for the same period in 2025. For the nine months ended September 30, 2026, provision for credit losses was $135,000 compared to $36,000 in the comparable period in 2025, an increase of $99,000, due to significant loan growth. Non-performing assets increased $943,000 to $947,000 at September 30, 2026 from $4,000 at December 31, 2025, attributable to an increase in real estate owned. The allowance for loan losses was $2.9 million at September 30, 2026, which management believes is adequate to absorb known and inherent risks. At September 30, 2026, the ratio of the allowance for loan losses to non-performing assets was 310.35%. Investment and mortgage-backed securities available-for-sale at September 30, 2026 decreased $9.5 million, or 26.0%, to $27.2 million from $36.7 million at December 31, 2025, due to maturity and paydowns. There were no investment and mortgage-backed securities held-to-maturity at September 30, 2026 or December 31, 2025. Deposits increased $13.9 million, or 4.4%, to $330.8 million at September 30, 2026 from $316.9 million at December 31, 2025, primarily due to increases in interest bearing demand deposit balances and certificates of deposit. Stockholders’ equity increased $3.8 million, or 9.1%, to $45.8 million, or 11.7% of total assets at September 30, 2026 compared to $42.0 million, or 11.0% of total assets, at December 31, 2025. Michael D. Griffith is President & Chief Executive Officer.

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