Executive Summary

Q4 2024 EPS was $0.94, down 16% year over year from $1.12 as higher provision for credit losses and non-interest expense offset strong net interest income; sequential EPS improved from $0.62 in Q3 2024 on stronger NII and lower provision .
Net interest income rose 7.8% YoY to $11.3M, driven by total interest income growth of 10.1% to $20.2M, while interest expense increased 13.0% to $9.0M amid higher market rates and larger earning assets and interest-bearing liabilities .
Credit quality showed modest pressure: non-performing assets increased to $7.6M (0.47% of assets) vs. $6.8M (0.44%) a year ago; allowance coverage remained steady at 1.98% of gross loans .
No formal guidance provided; the company declared a $0.14 quarterly dividend payable in mid-December 2024, marking the 136th consecutive quarterly dividend, supported by continued profitability .

What Went Well and What Went Wrong

What Went Well

“Net interest income increased $818,000, or 7.8%, to $11.3 million as the increase in interest income exceeded the increase in interest expense” .
“Non-interest income increased $77,000, or 2.8%, to $2.8 million… primarily due to an increase in gain on sale of loans,” adding diversification beyond spread income .
Balance sheet and capital: deposits grew to $1.324B (+10.8% YoY), borrowings fell to $92.964M (-45.3% YoY), and common equity book value per share increased to $31.21 (from $27.69), reflecting solid capital management and funding mix improvement .

What Went Wrong

Provision for credit losses increased to $280K in Q4 vs. $25K in Q4 2023; full-year provision was $1.370M vs. $246K in 2023, pressuring earnings .
Non-interest expense rose 5.2% YoY in Q4 to $9.523M, driven by higher salaries, benefits, and cloud services, indicating ongoing operating cost inflation .
Credit metrics softened: non-performing assets rose to $7.636M (0.47% of assets) vs. $6.825M (0.44%) a year ago, and net income available to common declined YoY to $3.004M vs. $3.616M in Q4 2023 .

Financial Results

Quarterly P&L comparison (oldest → newest)

Metric	Q2 2024	Q3 2024	Q4 2024
Total interest income ($USD Thousands)	$18,820	$19,531	$20,235
Total interest expense ($USD Thousands)	$8,639	$9,121	$8,982
Net interest income ($USD Thousands)	$10,181	$10,410	$11,253
Provision for credit losses ($USD Thousands)	$175	$580	$280
Non-interest income ($USD Thousands)	$2,454	$2,625	$2,847
Non-interest expense ($USD Thousands)	$9,669	$9,313	$9,523
Income before income taxes ($USD Thousands)	$2,791	$3,142	$4,297
Provision for income taxes ($USD Thousands)	$565	$732	$879
Net income ($USD Thousands)	$2,226	$2,410	$3,418
Preferred stock dividends ($USD Thousands)	$97	$415	$414
Net income available to common ($USD Thousands)	$2,129	$1,995	$3,004
EPS (basic, $USD)	$0.66	$0.62	$0.94

Year-over-year (Q4 2024 vs Q4 2023)

Metric	Q4 2023	Q4 2024
Total interest income ($USD Thousands)	$18,384	$20,235
Total interest expense ($USD Thousands)	$7,949	$8,982
Net interest income ($USD Thousands)	$10,435	$11,253
Provision for credit losses ($USD Thousands)	$25	$280
Non-interest income ($USD Thousands)	$2,770	$2,847
Non-interest expense ($USD Thousands)	$9,051	$9,523
Net income ($USD Thousands)	$3,616	$3,418
Net income to common ($USD Thousands)	$3,616	$3,004
EPS (basic, $USD)	$1.12	$0.94

Balance sheet and credit KPIs (period end)

KPI	12/31/2023	9/30/2024	12/31/2024
Total assets ($USD Thousands)	$1,549,671	$1,576,326	$1,611,773
Cash and cash equivalents ($USD Thousands)	$128,284	$132,376	$178,277
Total loans receivable, net ($USD Thousands)	$622,529	$686,708	$687,149
Investment securities ($USD Thousands)	$700,712	$672,054	$660,823
Deposits ($USD Thousands)	$1,194,997	$1,257,314	$1,324,033
Borrowings ($USD Thousands)	$170,035	$120,978	$92,964
Total shareholders’ equity ($USD Thousands)	$172,362	$185,082	$182,389
Common shareholders’ equity ($USD Thousands)	$89,413	$102,133	$99,440
Common equity book value per share ($)	$27.69	$31.97	$31.21
Non-performing assets ($USD Thousands)	$6,825	$6,770	$7,636
NPA / Total assets (%)	0.44%	0.43%	0.47%
Allowance for credit losses ($USD Thousands)	$12,569	$13,604	$13,894
Allowance to gross loans (%)	1.98%	1.95%	1.98%
Total risk-based capital ratio (%)	19.49%	19.21%	19.96%
CET1 ratio (%)	18.24%	17.96%	18.71%
Tier 1 leverage ratio (%)	9.83%	10.27%	9.88%

Estimates vs Actuals

Wall Street consensus estimates via S&P Global were unavailable for Q4 2024 (no EPS or revenue consensus retrieved). As a result, comparison to estimates cannot be provided.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly Dividend	Q4 2024	N/A	$0.14 per share payable ~Dec 15, 2024; record date Nov 30, 2024	Declared

No formal revenue, margin, OpEx, OI&E, or tax rate guidance was provided in Q4 materials .

Earnings Call Themes & Trends

No earnings call transcript was available for Q4 2024; themes below reflect company press releases.

Topic	Previous Mentions (Q2 2024)	Previous Mentions (Q3 2024)	Current Period (Q4 2024)	Trend
Net interest income trajectory	NII +11.6% YoY to $10.2M on higher rates and asset growth	NII +10.2% YoY to $10.4M	NII +7.8% YoY to $11.3M; interest income +10.1% YoY	Improving sequentially, strong YoY growth
Deposit growth and funding mix	Deposits $1.236B; +$41.2M YTD	Deposits $1.257B; +$62.3M YTD	Deposits $1.324B; +$129.0M YoY; borrowings reduced to $92.964M	Positive deposit inflows; reduced wholesale funding
Credit quality	NPA $7.122M; allowance 1.95% of loans	NPA $6.770M; allowance 1.95%	NPA $7.636M; allowance 1.98%; provision $280K in Q4	Slight deterioration in NPA; coverage steady
Non-interest income drivers	Gain on sale, trust, card fees up	Trust and gain on sale up; +21.1% YoY	Non-interest income +2.8% YoY on gain on sale of loans	Moderate growth
Operating costs/technology	Higher salaries and tech costs	Higher salaries and benefits	Higher salaries, benefits, and cloud services	Persistent cost inflation from tech/cloud

Management Commentary

“Total interest income increased $1.9 million, or 10.1%, to $20.2 million while total interest expense increased $1.0 million, or 13.0%, to $9.0 million… 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 expense increased $472,000, or 5.2%… primarily due to increases in salaries and expenses for employee benefits and cloud services” .
Credit quality commentary highlighted a full-year $1.4M total provision (loans provision $1.5M, unfunded commitments reversal $110K) and NPA of $7.6M (0.47% of assets) at year end .
Capital and balance sheet actions: borrowings decreased $77.1M (-45.3%) due to FRB TFP repayments and redemption of $16.5M subordinated debentures; common equity book value per share rose to $31.21 .

Q&A Highlights

No analyst Q&A available due to the absence of an earnings call transcript for Q4 2024.

Estimates Context

S&P Global consensus for Q4 2024 EPS and revenue was unavailable for SFDL; therefore, comparison to sell-side expectations cannot be provided this quarter.
Given limited coverage and small-cap OTC listing, we would not expect near-term consensus to materially influence trading; investors should focus on spread dynamics, deposit flows, credit provisioning cadence, and operating expense trajectory .

Key Takeaways for Investors

Sequential EPS recovery to $0.94 from $0.62 on stronger NII and lower provision is a positive near-term earnings inflection, despite YoY EPS decline on higher operating costs and preferred dividends .
Funding mix improved: deposits up 10.8% YoY to $1.324B and borrowings down 45.3% to $92.964M, reducing interest expense sensitivity and wholesale reliance—supportive for margin stability if rates normalize .
Credit trends require monitoring: NPA rose to 0.47% of assets and provisioning increased YoY; allowance coverage remained solid at ~1.98% of gross loans .
Operating cost inflation tied to salaries and cloud services is a structural headwind; efficiency discipline will be key to sustaining EPS momentum .
Capital remains robust (Total RBC 19.96%, CET1 18.71%); book value per share appreciated to $31.21, enhancing downside support for the equity .
No formal guidance; consistent dividend ($0.14) underscores earnings durability, though payout remains modest relative to capital base .
Near-term trading: watch subsequent quarters for NII trajectory vs. expense run-rate and credit provisioning cadence; medium-term thesis hinges on organic loan growth, deposit retention, and tech investment payoffs improving operating leverage .

SECURITY FEDERAL CORP (SFDL)·Q4 2024 Earnings Summary