Security Federal Corporation Announces Increase in Quarterly and Year-to-Date Earnings

Security Federal delivered double-digit profit growth and strong capital ratios in Q3 2026.

What the company is saying

Security Federal Corporation reports net income available to common shareholders of $3.6 million, or $1.16 per share, for Q3 2026, up 13.0% from the prior year. The company attributes this growth to a $592,000 (4.9%) increase in net interest income and a $157,000 (6.0%) rise in non-interest income, which together offset a $115,000 (1.1%) increase in non-interest expense and the absence of a credit loss reversal seen last year. For the first nine months of 2026, net income available to common shareholders reached $10.4 million, or $3.35 per share, a 27.5% increase year-over-year. Management highlights robust capital ratios—total risk-based capital at 21.56%, CET1 at 20.31%, and Tier 1 leverage at 11.04%—and a low non-performing assets ratio of 0.33%. The Board has authorized the repurchase of up to 124,035 shares under the current buyback program, with pricing at management's discretion. The release emphasizes consistent profitability, asset quality, and capital strength, while providing full period-over-period financial details.

What the data suggests

The disclosed figures show Security Federal's financial performance is improving, with Q3 2026 net income available to common shareholders at $3,587,000, up from $3,174,000 in Q3 2025. Earnings per share rose to $1.16 from $1.01. Year-to-date, net income available to common shareholders increased to $10,376,000 from $8,139,000, and EPS to $3.35 from $2.57. Net interest income grew by $592,000 (4.9%) in the quarter and $2.8 million (8.2%) year-to-date, while non-interest income rose by $157,000 (6.0%) in the quarter and $1.3 million (16.3%) year-to-date. Non-interest expense and provision for credit losses increased but were more than offset by revenue gains. Asset quality remains stable, with non-performing assets at $5,339,000 (0.33% of total assets) and allowance for credit losses at $13,597,000 (1.96% of gross loans). Capital ratios improved year-over-year, with total risk-based capital at 21.56%. The buyback authorization is a standard capital management move, not a transformative event. The data is comprehensive for headline financials and regulatory metrics, though it lacks segment-level detail.

Analysis

The announcement is a standard quarterly and year-to-date financial results release, with all key claims supported by detailed, realised financial data. The company discloses net income, earnings per share, net interest income, non-interest income, expenses, credit quality, and capital ratios for both the current and prior periods, enabling clear assessment of performance trends. The only forward-looking element is the share repurchase authorization, which is a routine capital management action and not presented with exaggerated language or outsized claims. There is no evidence of narrative inflation or overstatement; the tone is proportionate to the reported results, which show double-digit growth in net income and improved capital and asset quality metrics. No large capital outlay is paired with long-dated or uncertain returns, and all material benefits are already realised or will be in the near term.

Risk flags

• ●Rising provision for credit losses—$465,000 year-to-date in 2026 versus a $200,000 reversal last year—signals a less favorable credit environment or more conservative reserving, which could pressure future earnings if credit quality deteriorates.
• ●Non-interest expense increased by $1.0 million (3.3%) year-to-date, outpacing inflation and potentially squeezing margins if revenue growth slows.
• ●The share repurchase authorization leaves pricing and timing entirely at management's discretion, introducing execution risk and uncertainty about the actual impact on shareholder value.
• ●The absence of segment or service-line financial breakdowns limits visibility into the drivers of non-interest income and expense, making it harder to assess the sustainability of growth across business lines.

Bottom line

Security Federal Corporation posted strong Q3 and year-to-date results, with net income and EPS up double digits and capital ratios well above regulatory minimums. The company is generating higher net interest and non-interest income, while keeping asset quality stable and non-performing assets low. The new share repurchase authorization provides flexibility for capital return, but its actual impact will depend on management's execution. Investors should watch for any signs of rising credit stress or expense growth outpacing revenue. The most important takeaway is that Security Federal is delivering consistent, realised profitability and maintaining a robust balance sheet, but more granular disclosure on business line performance would further strengthen the investment case.

Announcement summary

(OTCID: SFDL) Security Federal Corporation announced earnings and financial results for the three and nine months ended September 30, 2026. Net income available to common shareholders was $3.6 million, or $1.16 per common share, for the third quarter of 2026, representing an increase of $413,000, or 13.0% compared to the third quarter of 2025. The increase in net income was attributed to higher net interest income, which rose by $592,000, or 4.9%, and higher non-interest income, which increased by $157,000, or 6.0%. Non-interest expense increased by $115,000, or 1.1%, and there was no provision for credit losses in the third quarter of 2026 compared to a $200,000 reversal in the third quarter of 2025. For the third quarter of 2026, total interest income was $19,149,000, total interest expense was $6,478,000, net interest income was $12,671,000, non-interest income was $2,791,000, non-interest expense was $10,466,000, income before income taxes was $4,996,000, provision for income taxes was $994,000, net income was $4,002,000, preferred stock dividends were $415,000, and net income available to common shareholders was $3,587,000. Earnings per common share (basic) for the third quarter of 2026 was $1.16. For the first nine months of 2026, net income available to common shareholders was $10.4 million, or $3.35 per common share, an increase of $2.2 million, or 27.5% compared to the first nine months of 2025. The increase was driven by higher net interest income (up $2.8 million, or 8.2%) and non-interest income (up $1.3 million, or 16.3%), offsetting an increase in provision for credit losses (up $665,000) and higher non-interest expense (up $1.0 million, or 3.3%). For the nine months ended September 30, 2026, total interest income was $56,896,000, total interest expense was $19,435,000, net interest income was $37,461,000, provision for credit losses was $465,000, net interest income after provision for credit losses was $36,996,000, non-interest income was $8,924,000, non-interest expense was $31,568,000, income before income taxes was $14,352,000, provision for income taxes was $2,731,000, net income was $11,621,000, preferred stock dividends were $1,245,000, and net income available to common shareholders was $10,376,000. Earnings per common share (basic) for the first nine months of 2026 was $3.35. The company recorded a $350,000 provision for credit losses on loans and a $115,000 provision for credit losses on unfunded commitments, totaling $465,000 for the first nine months of 2026, compared to a $317,000 reversal of provision for credit losses on loans and a $117,000 provision for credit losses on unfunded commitments, resulting in a $200,000 net reversal in the first nine months of 2025. At September 30, 2026, non-performing assets were $5,339,000, non-performing assets to total assets was 0.33%, allowance for credit losses was $13,597,000, and allowance for credit losses to gross loans was 1.96%. At September 30, 2026, total assets were $1,624,945,000, cash and cash equivalents were $110,342,000, total loans receivable (net) were $681,588,000, investment securities were $739,026,000, deposits were $1,385,140,000, borrowings were $26,683,000, total shareholders' equity was $200,031,000, common shareholders' equity was $117,082,000, and common equity book value per share was $37.94. The total risk-based capital to risk weighted assets ratio was 21.56%, CET1 capital to risk weighted assets was 20.31%, and the Tier 1 leverage capital ratio was 11.04% as of September 30, 2026. The Board of Directors authorized the repurchase of up to 124,035 shares of the Company’s outstanding common stock under its current repurchase program at prices determined by management. Security Federal has 19 full-service branches in South Carolina and Georgia. The Bank provides a full range of financial services, including trust and investments, and insurance services are provided by Security Federal Insurance, Inc.

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