Security Federal Corporation Enters into Securities Purchase Option Agreement with US Department of the Treasury

On January 10, 2025, Security Federal Corporation, the holding company of Security Federal Bank, announced the signing of an ECIP Securities Purchase Option Agreement with the United States Department of the Treasury. The agreement allows Security Federal Corporation the option to purchase all 82,949 shares of the Senior Non-Cumulative Preferred Stock held by the Treasury, which were issued under the Treasury’s Emergency Capital Investment Program on May 24, 2022.

According to the terms, the purchase price for the Preferred Stock will be determined based on a specific formula that considers the present value of the stock and any accrued dividends, providing a potential substantial discount from the face value. The purchase option can only be exercised after the first ten years following the Original Closing Date if certain Threshold Conditions are met, which include criteria related to Deep Impact Lending and Qualified Lending defined by the ECIP.

As of now, Security Federal Corporation does not meet any of the Threshold Conditions required to exercise the purchase option, and there is no certainty as to when these conditions will be fulfilled. The company has highlighted that no consecutive quarters have been reported where both the Deep Impact and Qualified Lending Conditions were met, and the Preferred Stock currently carries a 2.0% dividend rate.

Apart from fulfilling Threshold Conditions, the Agreement mandates that Security Federal Corporation complies with various eligibility conditions, including terms of the original ECIP purchase agreement, maintaining qualifications as a CDFI or an MDI, and meeting legal and regulatory requirements.

The company stated that the details provided in the report contain forward-looking statements, emphasizing that risks and uncertainties are involved in exercising the purchase option, notably pertaining to satisfying factual, legal, and regulatory conditions, as well as uncontrollable factors such as interest rates. Security Federal Corporation commits to updating any forward-looking statements to reflect new information or circumstances as necessary.

The full Agreement document has been filed as Exhibit 10.1 to the Current Report on Form 8-K for reference. ENDOFARTICLE

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Security Federal’s 8K filing here.

About Security Federal

Security Federal Corporation operates as the bank holding company for Security Federal Bank that provides various banking products and services. It offers various deposit products, such as savings and checking accounts, money market accounts, fixed interest rate certificates with varying maturities, and individual retirement accounts.