Security Federal (SFDL)

Risks

• Our business may be adversely affected by downturns in the national economy and in the economies in our market areas.
• Our allowance for loan losses may prove to be insufficient to absorb losses in our loan portfolio.
• If our non-performing assets increase, our earnings will be adversely affected.
• Our construction and land loans are based upon estimates of costs and the value of the completed project.
• The level of our commercial real estate loan portfolio may subject us to additional regulatory scrutiny.
• Declines in property values have increased loan-to-value ratios on a significant portion of our one- to four-family loans and home equity lines of credit, which exposes us to greater risk of loss.
• Our real estate lending also exposes us to the risk of environmental liabilities.
• If our investments in real estate are not properly valued or sufficiently reserved to cover actual losses, or if we are required to increase our valuation reserves, our earnings could be reduced.
• We may incur losses on our securities portfolio as a result of changes in interest rates.
• Changes in interest rates may reduce our net interest income, and may result in higher defaults in a rising rate environment.
• An increase in interest rates, change in the programs offered by governmental sponsored entities ("GSE"), or our ability to qualify for such programs may reduce our mortgage revenues, which would negatively impact our non-interest income.
• New or changing tax, accounting, and regulatory rules and interpretations could significantly impact strategic initiatives, results of operations, cash flows, and financial condition.
• Non-compliance with the USA PATRIOT Act, Bank Secrecy Act, or other laws and regulations could result in fines or sanctions.
• Our growth or future losses may require us to raise additional capital in the future, but that capital may not be available when it is needed, or the cost of that capital may be very high.