Security Federal Corporation ("Company") SFDL, +2.47%, the holding company for Security Federal Bank ("Bank"), announced results for the three and nine months ended September 30, 2019.

Net income for the quarter was $2.2 million, or $0.71 per diluted share, compared to $2.1 million, or $0.68 per diluted share, for the third quarter of 2018, an increase of $112,000 or 5.3%. Year to date net income was $6.2 million, or $1.98 per diluted share, compared to $5.7 million, or $1.82 per diluted share, during the nine months ended September 30, 2018. The $535,000 or 9.5% increase in earnings was primarily the result of increases in net interest income and non-interest income during the nine months ended September 30, 2019.

Third Quarter 2019 Financial Highlights

Net income of $2.2 million was highest in Company history

Average interest earning assets grew $78 million to $912 million at September 30, 2019

Average yield on interest earning assets increased 13 basis points to 4.25%

Total interest income increased $1.1 million, or 13.3%, to $9.6 million

Total interest expense increased $862,000 or 60.3% to $2.3 million

Net interest income increased to $7.3 million for the third quarter of 2019

Increased quarterly dividend payment to $0.10 per share

The Bank opened its 17 [th] full service branch, located in Augusta, Georgia

Non-interest income increased $339,000, or 16.4%, to $2.4 million for the quarter ended September 30, 2019 primarily due to an increase in gain on sale of investment securities and loans. Non-interest expense increased $572,000, or 8.9%, to $7.0 million primarily due to increases in salaries and employee benefits expense and the change in net cost of operation of other real estate owned ("OREO").

Year to Date (Nine Months) Comparative Financial Highlights

Interest income increased $3.5 million, or 14.4%, to $27.8 million, while interest expense increased $2.2 million, or 56.4%, to $6.1 million.

Year to date non-interest income increased $1.2 million, or 21.1%, to $7.1 million primarily due to an increase in gain on sale of investment securities and loans. Non-interest expense increased $1.8 million, or 9.4%, to $21 million for the nine months ended September 30, 2019. The most significant increases were in salaries and employee benefits expense, depreciation and maintenance of equipment, and the cost of operation of OREO.

Credit Quality Highlights

Net charge-offs decreased $89,000, or 56.1%, to $70,000 for the third quarter of 2019 compared to $159,000 for the same period in 2018.

Provision for loan losses was $75,000 during the third quarter of 2019 compared to $150,000 for the same quarter last year.

Non-performing assets improved to $4.8 million at September 30, 2019 from $10.9 million at September 30, 2018.

Allowance for loan losses as a percentage of gross loans was 1.9% at September 30, 2019 compared to 2.0% at September 30, 2018.

Balance Sheet Highlights and Capital Management

Total assets were $991 million at September 30, 2019, an increase of $89 million, or 9.9%, from September 30, 2018.

Investment securities increased $64 million, or 16.1%, to $460 million at September 30, 2019 from $396 million at September 30, 2018.

Net loans receivable were $454 million at September 30, 2019, an increase of $30 million, or 7.0%, from one year prior. The most significant increase was in the commercial real estate category.

Total deposits increased $64 million, or 8.5%, to $815 million at September 30, 2019 from $751 million one year prior. The most significant increases were in demand deposits and time deposits.

Book value per share increased to $31.22 at September 30, 2019 from $26.03 at September 30, 2018.