10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10 – Q

(Mark one)

(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2016

( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD:

FROM: TO:

COMMISSION FILE NUMBER: 0-16120

SECURITY FEDERAL CORPORATION

(Exact name of registrant as specified in its charter)

South Carolina	57-0858504
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

238 RICHLAND AVENUE NORTHWEST, AIKEN, SOUTH CAROLINA 29801

(Address of principal executive office and Zip Code)

(803) 641-3000

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES X NO

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes [X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filed    [ ]	Accelerated filer [ ]
Non-accelerated filer    [ ]	Smaller reporting company [ X ]

Indicate by check mark whether the registrant is a shell corporation (defined in Rule 12b-2 of the Exchange Act).

YES NO X

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practical date.

CLASS:	OUTSTANDING SHARES AT:	SHARES:
Common Stock, par value $0.01 per share	August 12, 2016	2,945,474

PART I.	FINANCIAL INFORMATION (UNAUDITED)	PAGE NO.
Item 1.	Financial Statements (unaudited):	3
	Consolidated Balance Sheets at June 30, 2016 and December 31, 2015	3
	Consolidated Statements of Income for the Three and Six Months Ended June 30, 2016 and 2015	4
	Consolidated Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2016 and 2015	5
	Consolidated Statements of Changes in Shareholders’ Equity for the Six Months Ended June 30, 2016 and 2015	6
	Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015	7
	Notes to Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	35
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	47
Item 4.	Controls and Procedures	48
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	48
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3.	Defaults Upon Senior Securities	48
Item 4.	Mine Safety Disclosures	48
Item 5.	Other Information	48
Item 6.	Exhibits	49
	Signatures	51

SCHEDULES OMITTED

All schedules other than those indicated above are omitted because of the absence of the conditions under which they are required or because the information is included in the consolidated financial statements and related notes.

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Part 1. Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets

	June 30, 2016			December 31, 2015
	(Unaudited)			(Audited)
ASSETS:
Cash and Cash Equivalents	$	8,883,215		$	8,381,951
Certificates of Deposit with Other Banks	3,445,005			3,445,005
Investment and Mortgage-Backed Securities:
Available For Sale	387,953,612			375,513,870
Held To Maturity (Fair Value of $28,961,965 and $29,681,280 at June 30, 2016 and December 31, 2015, Respectively)	28,508,469			29,873,098
Total Investments and Mortgage-Backed Securities	416,462,081			405,386,968
Loans Receivable, Net:
Held For Sale	1,682,094			2,462,559
Held For Investment (Net of Allowance of $8,395,214 and $8,275,133 at June 30, 2016 and December 31, 2015, Respectively)	333,354,131			328,110,170
Total Loans Receivable, Net	335,036,225			330,572,729
Accrued Interest Receivable:
Loans	872,097			886,968
Mortgage-Backed Securities	648,502			614,925
Investment Securities	1,478,781			1,523,200
Total Accrued Interest Receivable	2,999,380			3,025,093
Premises and Equipment, Net	20,208,626			20,116,918
Federal Home Loan Bank ("FHLB") Stock, at Cost	2,048,300			2,214,800
Other Real Estate Owned ("OREO")	2,377,793			4,361,411
Bank Owned Life Insurance	16,837,045			16,573,045
Goodwill	1,199,754			1,199,754
Other Assets	1,200,351			4,449,956
Total Assets	$	810,697,775		$	799,727,630
LIABILITIES AND SHAREHOLDERS’ EQUITY:
Liabilities:
Deposit Accounts	$	657,602,257		$	652,096,545
Advances From FHLB	29,110,000			34,640,000
Other Borrowings	9,384,881			6,411,977
Advance Payments By Borrowers For Taxes and Insurance	576,367			256,730
Junior Subordinated Debentures	5,155,000			5,155,000
Senior Convertible Debentures	6,084,000			6,084,000
Other Liabilities	5,228,151			4,115,956
Total Liabilities	713,140,656			708,760,208
Shareholders' Equity:
Serial Preferred Stock, $.01 Par Value; Authorized 200,000 Shares; Issued and Outstanding Shares, 22,000	22,000,000			22,000,000
Common Stock, $.01 Par Value; Authorized 5,000,000 Shares; Issued and Outstanding Shares, 3,146,407 and 2,945,474, Respectively	31,464			31,464
Additional Paid-In Capital	12,032,816			12,028,832
Treasury Stock, at Cost (200,933 Shares)	(4,330,712		)	(4,330,712		)
Unvested Restricted Stock	(25,358		)	(25,358		)
Accumulated Other Comprehensive Income	8,256,333			4,262,361
Retained Earnings	59,592,576			57,000,835
Total Shareholders' Equity	97,557,119			90,967,422
Total Liabilities And Shareholders' Equity	$	810,697,775		$	799,727,630

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

3

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income (Unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016			2015
Interest Income:
Loans	$	4,824,401	$	4,622,109	$	9,466,509		$	9,159,304
Mortgage-Backed Securities	1,225,059		1,353,336		2,479,460			2,777,689
Investment Securities	1,118,693		1,088,753		2,203,092			2,073,859
Other	4,603		1,587		9,113			4,137
Total Interest Income	7,172,756		7,065,785		14,158,174			14,014,989
Interest Expense:
NOW and Money Market Accounts	104,321		103,851		207,436			222,280
Statement Savings Accounts	8,594		7,610		16,484			14,730
Certificate Accounts	423,267		470,104		831,999			949,263
FHLB Advances and Other Borrowed Money	179,768		339,233		428,427			760,988
Senior Convertible Debentures	121,680		121,680		243,360			243,360
Junior Subordinated Debentures	30,454		25,713		59,557			50,791
Total Interest Expense	868,084		1,068,191		1,787,263			2,241,412
Net Interest Income	6,304,672		5,997,594		12,370,911			11,773,577
Provision For Loan Losses	—		—		—			100,000
Net Interest Income After Provision For Loan Losses	6,304,672		5,997,594		12,370,911			11,673,577
Non-Interest Income:
Gain on Sale of Investment Securities	153,650		181,814		411,718			1,668,753
Gain on Sale of Loans	191,589		181,082		400,555			335,101
Service Fees on Deposit Accounts	265,036		274,651		505,381			532,167
Commissions From Insurance Agency	122,143		103,547		291,990			233,659
Trust Income	162,000		148,800		324,000			297,600
Bank Owned Life Insurance Income	132,000		87,000		264,000			174,000
Check Card Fee Income	257,110		248,119		495,252			479,420
Grant Income	—		—		265,496			—
Other	180,805		162,572		333,681			317,892
Total Non-Interest Income	1,464,333		1,387,585		3,292,073			4,038,592
Non-Interest Expense:
Compensation and Employee Benefits	3,177,520		2,986,924		6,508,318			5,973,955
Occupancy	470,532		455,053		967,250			945,711
Advertising	112,806		99,564		242,783			195,725
Depreciation and Maintenance of Equipment	499,041		445,585		975,415			862,830
Federal Deposit Insurance Corporation ("FDIC") Insurance Premiums	127,443		155,592		260,490			315,813
Net Cost (Benefit) of Operation of OREO	1,945		90,873		(673,981		)	287,497
Prepayment Penalties on FHLB Advances	281,206		—		528,712			787,851
Other	1,022,630		1,101,446		2,420,080			2,220,250
Total Non-Interest Expense	5,693,123		5,335,037		11,229,067			11,589,632
Income Before Income Taxes	2,075,882		2,050,142		4,433,917			4,122,537
Provision For Income Taxes	509,608		527,054		1,150,900			1,094,822
Net Income	1,566,274		1,523,088		3,283,017			3,027,715
Preferred Stock Dividends	110,000		110,000		220,000			220,000
Net Income Available to Common Shareholders	$	1,456,274	$	1,413,088	$	3,063,017		$	2,807,715
Net Income Per Common Share (Basic)	$	0.49	$	0.48	$	1.04		$	0.95
Net Income Per Common Share (Diluted)	$	0.47	$	0.46	$	0.99		$	0.91
Cash Dividend Per Share on Common Stock	$	0.08	$	0.08	$	0.16		$	0.16
Weighted Average Shares Outstanding (Basic)	2,944,001		2,944,001		2,944,001			2,944,001
Weighted Average Shares Outstanding (Diluted)	3,248,444		3,248,249		3,248,445			3,248,240

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

4

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

	Three Months Ended June 30,
	2016			2015
Net Income	$	1,566,274		$	1,523,088
Other Comprehensive Income (Loss)
Unrealized Gains (Losses) on Securities:
Unrealized Holding Gains (Losses) on Securities Available For Sale, Net of Taxes of $1,928,197 and $(1,494,172) at June 30, 2016 and 2015, Respectively	3,151,680			(2,441,980		)
Reclassification Adjustment for Gains Included in Net Income, Net of Taxes of $58,387 and $69,089 at June 30, 2016 and 2015, Respectively	(95,263		)	(112,725		)
Amortization of Unrealized Gains on Available For Sale Securities Transferred to Held To Maturity, Net of Taxes of $(10,986) and $(6,341) at June 30, 2016 and 2015, Respectively	(17,955		)	(10,363		)
Other Comprehensive Income (Loss)	3,038,462			(2,565,068		)
Comprehensive Income (Loss)	$	4,604,736		$	(1,041,980	)

	Six Months Ended June 30,
	2016			2015
Net Income	$	3,283,017		$	3,027,715
Other Comprehensive Income (Loss)
Unrealized Gains (Losses) on Securities:
Unrealized Holding Gains (Losses) on Securities Available For Sale, Net of Taxes of $2,635,791 and ($758,513) at June 30, 2016 and 2015, Respectively	4,307,424			(1,240,793		)
Reclassification Adjustment for Gains Included in Net Income, Net of Taxes of $156,453 and $634,126 at June 30, 2016 and 2015, Respectively	(255,265		)	(1,034,627		)
Amortization of Unrealized Gains on Available For Sale Securities Transferred to Held To Maturity, Net of Taxes of $(35,602) and $(6,341) at June 30, 2016 and 2015, Respectively	(58,187		)	(10,363		)
Other Comprehensive Income (Loss)	3,993,972			(2,285,783		)
Comprehensive Income	$	7,276,989		$	741,932

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

5

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Shareholders' Equity (Unaudited)

For the Six Months Ended June 30, 2016 and 2015

	Preferred  Stock		Common Stock		Unvested Restricted Stock			Additional Paid – In  Capital		Treasury Stock			Accumulated Other  Comprehensive Income		Retained Earnings			Total
Balance at December 31, 2015	$	22,000,000	$	31,464	$	(25,358	)	$	12,028,832	$	(4,330,712	)	$	4,262,361	$	57,000,835		$	90,967,422
Net Income	—		—		—			—		—			—		3,283,017			3,283,017
Other Comprehensive Income, Net of Tax	—		—		—			—		—			3,993,972		—			3,993,972
Stock Option Compensation Expense	—		—		—			3,984		—			—		—			3,984
Cash Dividends on Preferred Stock	—		—		—			—		—			—		(220,000		)	(220,000		)
Cash Dividends on Common Stock	—		—		—			—		—			—		(471,276		)	(471,276		)
Balance at June 30, 2016	$	22,000,000	$	31,464	$	(25,358	)	$	12,032,816	$	(4,330,712	)	$	8,256,333	$	59,592,576		$	97,557,119

	Preferred Stock		Common Stock		Unvested Restricted Stock			Additional Paid – In  Capital		Treasury Stock			Accumulated Other Comprehensive Income			Retained Earnings			Total
Balance at December 31, 2014	$	22,000,000	$	31,449	$	—		$	11,990,813	$	(4,330,712	)	$	5,476,375		$	52,267,460		$	87,435,385
Net Income	—		—		—			—		—			—			3,027,715			3,027,715
Other Comprehensive Loss, Net of Tax	—		—		—			—		—			(2,285,783		)	—			(2,285,783		)
Common Stock Issuance	—		15		(25,358		)	25,343		—			—			—			—
Stock Option Compensation Expense	—		—		—			6,338		—			—			—			6,338
Cash Dividends on Preferred Stock	—		—		—			—		—			—			(220,000		)	(220,000		)
Cash Dividends on Common Stock	—		—		—			—		—			—			(471,275		)	(471,275		)
Balance at June 30, 2015	$	22,000,000	$	31,464	$	(25,358	)	$	12,022,494	$	(4,330,712	)	$	3,190,592		$	54,603,900		$	87,492,380

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

6

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited)

	Six Months Ended June 30,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	3,283,017		$	3,027,715
Adjustments To Reconcile Net Income To Net Cash Provided By Operating Activities:
Depreciation Expense	698,002			609,013
Stock Option Compensation Expense	3,984			6,338
Discount Accretion and Premium Amortization	2,660,159			2,044,787
Provisions for Losses on Loans	—			100,000
Income From Bank Owned Life Insurance	(264,000		)	(174,000		)
Gain on Sales of Loans	(400,555		)	(335,101		)
Gain on Sales of Mortgage-Backed Securities	(46,040		)	(503,051		)
Gain on Sales of Investment Securities	(365,678		)	(1,165,702		)
Gain on Sale of OREO	(781,363		)	(104,813		)
Write Down on OREO	40,000			174,400
Amortization of Deferred Costs on Loans	57,977			24,866
Proceeds From Sale of Loans Held For Sale	14,835,314			11,772,855
Origination of Loans Held For Sale	(13,654,294		)	(11,972,819		)
Decrease (Increase) in Accrued Interest Receivable:
Loans	14,871			105,860
Mortgage-Backed Securities	(33,577		)	18,722
Investment Securities	44,419			(115,003		)
Increase in Advance Payments By Borrowers	319,637			298,720
Other, Net	1,824,276			997,909
Net Cash Provided By Operating Activities	8,236,149			4,810,696
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Mortgage-Backed Securities Available For Sale	(31,230,934		)	(27,734,716		)
Principal Repayments on Mortgage-Backed Securities Available For Sale	13,928,123			14,907,051
Proceeds From Sale of Mortgage-Backed Securities Available For Sale	2,423,078			23,333,612
Purchase of Mortgage-Backed Securities Held To Maturity	(1,507,125		)	—
Principal Repayments on Mortgage-Backed Securities Held To Maturity	2,613,163			1,014,906
Purchase of Investment Securities Available For Sale	(18,938,907		)	(60,620,546		)
Principal Repayments on Investment Securities Available For Sale	8,729,548			—
Maturities of Investment Securities Available For Sale	5,032,629			15,329,891
Proceeds From Sale of Investment Securities Available For Sale	12,158,368			30,890,194
Purchase of FHLB Stock	(2,827,100		)	(2,020,700		)
Redemption of FHLB Stock	2,993,600			3,130,700
(Decrease) Increase in Loans Receivable	(5,444,078		)	20,012,876
Proceeds From Sale of OREO	2,867,121			1,300,046
Purchase and Improvement of Premises and Equipment	(789,711		)	(1,286,685		)
Net Cash Provided (Used) By Investing Activities	(9,992,225		)	18,256,629

7

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Unaudited) (Continued)
	Six Months Ended June 30,
	2016			2015
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in Deposit Accounts	$	5,505,712		$	(910,323	)
Proceeds from FHLB Advances	132,705,000			174,790,000
Repayment of FHLB Advances	(138,235,000		)	(197,290,000		)
Increase in Other Borrowings, Net	2,972,904			362,107
Dividends to Preferred Stock Shareholders	(220,000		)	(220,000		)
Dividends to Common Stock Shareholders	(471,276		)	(471,275		)
Net Cash Provided (Used) By Financing Activities	2,257,340			(23,739,491		)
Net Increase (Decrease) in Cash and Cash Equivalents	501,264			(672,166		)
Cash and Cash Equivalents at Beginning of Period	8,381,951			10,192,702
Cash and Cash Equivalents at End of Period	$	8,883,215		$	9,520,536
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash Paid During The Period For:
Interest	$	1,857,994		$	2,404,297
Income Taxes	$	155,242		$	672,388
Supplemental Schedule of Non Cash Transactions:
Transfers From Loans Receivable to OREO	$	142,140		$	3,723,940
Transfers from Mortgage-Backed Securities Available For Sale to Held To Maturity	$	—		$	32,811,452

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

8

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

1. Basis of Presentation

The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and accounting principles generally accepted in the United States of America ("U.S. GAAP"); therefore, they do not include all disclosures necessary for a complete presentation of financial condition, results of operations, and cash flows.  Such statements are unaudited but, in the opinion of management, reflect all adjustments, which are of a normal recurring nature and necessary for a fair presentation of results for the selected interim periods.  Users of financial information produced for interim periods are encouraged to refer to the footnotes contained in the audited consolidated financial statements appearing in Security Federal Corporation’s (the “Company”) 2015 Annual Report to Shareholders which was filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2015 (“2015 10-K”) when reviewing interim financial statements. 

2. Principles of Consolidation

The accompanying unaudited consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Security Federal Bank (the “Bank”) and the Bank’s wholly owned subsidiaries, Security Federal Insurance, Inc. (“SFINS”) and Security Financial Services Corporation (“SFSC”). SFINS was formed during fiscal 2002 and began operating during the December 2001 quarter and is an insurance agency offering auto, business, and home insurance.  SFINS has a wholly owned subsidiary, Collier Jennings Financial Corporation, which has as subsidiaries Security Federal Auto Insurance, The Auto Insurance Store Inc., and Security Federal Premium Pay Plans Inc. Security Federal Premium Pay Plans Inc. has one wholly owned premium finance subsidiary and also has an ownership interest in four other premium finance subsidiaries. SFSC was formed in 1975 and is currently inactive.

The Company has a wholly owned subsidiary, Security Federal Statutory Trust (the “Trust”), which issued and sold fixed and floating rate capital securities of the Trust.  However, under current accounting guidance, the Trust is not consolidated in the Company’s financial statements.  The Bank is primarily engaged in the business of accepting savings and demand deposits and originating mortgage loans and other loans to individuals and small businesses for various personal and commercial purposes.

3. Critical Accounting Policies

The Company has adopted various accounting policies, which govern the application of accounting principles generally accepted in the United States in the preparation of our financial statements.  Our significant accounting policies are described in the footnotes to the audited consolidated financial statements at December 31, 2015 included in our 2015 Annual Report to Shareholders.  Certain accounting policies involve significant judgments and assumptions by management, which have a material impact on the carrying value of certain assets and liabilities, and, as such, have a greater possibility of producing results that could be materially different than originally reported.  We consider these accounting policies to be critical accounting policies.  The judgments and assumptions we use are based on historical experience and other factors, which we believe to be reasonable under the circumstances.  Because of the nature of the judgments and assumptions we make, actual results could differ from these judgments and estimates which could have a material impact on our carrying values of assets and liabilities and our results of operations.

The Company believes the allowance for loan losses is a critical accounting policy that requires the most significant judgments and estimates used in preparation of the consolidated financial statements.  The impact of an unexpected and sudden large loss could deplete the allowance and potentially require increased provisions to replenish the allowance, which would negatively affect earnings. The Company provides for loan losses using the allowance method.  Accordingly, all loan losses are charged to the related allowance and all recoveries are credited to the allowance for loan losses.  Additions to the allowance for loan losses are provided by charges to operations based on various factors, which, in management’s judgment, deserve current recognition in estimating possible losses.  Such factors considered by management include the fair value of the underlying collateral, stated guarantees by the borrower (if applicable), the borrower’s ability to repay from other economic resources, growth and composition of the loan portfolio, the relationship of the allowance for loan losses to the outstanding loans, loss experience, delinquency trends, and general economic conditions.  Management evaluates the carrying value of the loans periodically and the allowance is adjusted accordingly.

9

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

3. Critical Accounting Policies, Continued

While management uses the best information available to make evaluations, future adjustments may be necessary if economic conditions differ substantially from the assumptions used in making these evaluations.  The allowance for loan losses is subject to periodic evaluations by our bank regulatory agencies, including the Board of Governors of the Federal Reserve System ("Federal Reserve"), the FDIC and the South Carolina Board of Financial Institutions, that may require adjustments to be made to the allowance based upon the information that is available at the time of their examination.

The Company values impaired loans at the loan’s fair value if it is probable that the Company will be unable to collect all amounts due according to the terms of the loan agreement at the present value of expected cash flows, the market price of the loan, if available, or the value of the underlying collateral.  Expected cash flows are required to be discounted at the loan’s effective interest rate.  When the ultimate collectibility of an impaired loan’s principal is in doubt, wholly or partially, all cash receipts are applied to principal.  When this doubt does not exist, cash receipts are applied under the contractual terms of the loan agreement first to interest and then to principal.  Once the recorded principal balance has been reduced to zero, future cash receipts are applied to interest income to the extent that any interest has been foregone.  Further cash receipts are recorded as recoveries of any amounts previously charged off.

The Company uses assumptions and estimates in determining income taxes payable or refundable for the current year, deferred income tax liabilities and assets for events recognized differently in its financial statements and income tax returns, and income tax expense. Determining these amounts requires analysis of certain transactions and interpretation of tax laws and regulations. The Company exercises considerable judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets. These judgments and estimates are reevaluated on a continual basis as regulatory and business factors change. No assurance can be given that either the tax returns submitted by us or the income tax reported on the Consolidated Financial Statements will not be adjusted by either adverse rulings by the United States Tax Court, changes in the tax code, or assessments made by the Internal Revenue Service.

4. Earnings Per Common Share

Accounting guidance specifies the computation, presentation and disclosure requirements for earnings per share (“EPS”) for entities with publicly held common stock or potential common stock such as options, warrants, convertible securities or contingent stock agreements if those securities trade in a public market. Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding.  Diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive common shares had been issued.  The dilutive effect of options outstanding under the Company’s stock option plan is reflected in diluted EPS by application of the treasury stock method.

Net income available to common shareholders represents consolidated net income adjusted for preferred dividends declared, accretions of discounts and amortization of premiums on preferred stock issuances and cumulative dividends related to the current dividend period that have not been declared as of period end.

The following table provides a reconciliation of net income to net income available to common shareholders for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Earnings Available To Common Shareholders:
Net Income		$1,566,274		$1,523,088		$3,283,017		$3,027,715
Preferred Stock Dividends	110,000		110,000		220,000		220,000
Net Income Available To Common Shareholders		$1,456,274		$1,413,088		$3,063,017		$2,807,715

10

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

4. Earnings Per Common Share, Continued

The following tables include a summary of the Company's basic and diluted EPS for the periods indicated.

	Three Months Ended June 30,
	2016					2015
	Income		Shares	Per Share Amounts		Income		Shares	Per Share Amounts
Basic EPS	$	1,456,274	2,944,001	$	0.49	$	1,413,088	2,944,001	$	0.48
Effect of Dilutive Securities:
Senior Convertible Debentures	75,442		304,200	(0.02)		75,442		304,200	(0.02)
Unvested Restricted Stock	—		243	—		—		48	—
Diluted EPS	$	1,531,716	3,248,444	$	0.47	$	1,488,530	3,248,249	$	0.46

	Six Months Ended June 30,
	2016					2015
	Income		Shares	Per Share Amounts		Income		Shares	Per Share Amounts
Basic EPS	$	3,063,017	2,944,001	$	1.04	$	2,807,715	2,944,001	$	0.95
Effect of Dilutive Securities:
Senior Convertible Debentures	150,883		304,200	(0.04)		150,883		304,200	(0.04)
Unvested Restricted Stock	—		244	(0.01)		—		39	—
Diluted EPS	$	3,213,900	3,248,445	$	0.99	$	2,958,598	3,248,240	$	0.91

5. Stock-Based Compensation

Certain officers and directors of the Company participate in incentive and non-qualified stock option plans. Options are granted at exercise prices not less than the fair value of the Company’s common stock on the date of the grant. The following is a summary of the activity under the Company’s stock option plans for the periods presented:

	Three Months Ended June 30,
	2016			2015
	Shares		Weighted Average Exercise Price	Shares	Weighted Average Exercise Price
Balance, Beginning of Period	26,000		$23.50	29,500	$23.55
Options Granted	—		—	—	—
Options Exercised	—		—	—	—
Options Forfeited	(1,000	)	23.49	—	—
Balance, End of Period	25,000		$23.50	29,500	$23.55

11

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

5. Stock-Based Compensation, Continued

	Six Months Ended June 30,
	2016			2015
	Shares		Weighted Average Exercise Price	Shares		Weighted Average Exercise Price
Balance, Beginning of Period	29,500		$23.55	47,500		$22.41
Options Granted	—		—	—		—
Options Exercised	—		—	—		—
Options Forfeited	(4,500	)	23.82	(18,000	)	20.55
Balance, End of Period	25,000		$23.50	29,500		$23.55
Options Exercisable	20,700			19,800
Options Available For Grant	50,000			50,000

At June 30, 2016, the Company had the following options outstanding:

Grant Date	Outstanding Options	Option Price	Expiration Date
08/24/06	3,500	$23.03	08/24/16
05/24/07	2,000	$24.34	05/24/17
07/09/07	1,000	$24.61	07/09/17
10/01/07	2,000	$24.28	10/01/17
01/01/08	12,000	$23.49	01/01/18
05/19/08	2,500	$22.91	05/19/18
07/01/08	2,000	$22.91	07/01/18

None of the options outstanding at June 30, 2016 or 2015 had an exercise price below the average market price during the three or six month periods ended June 30, 2016 or 2015. Therefore, these options were not deemed to be dilutive to EPS in those periods.

12

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

6. Investment and Mortgage-Backed Securities, Available For Sale

The amortized cost, gross unrealized gains, gross unrealized losses, and fair values of investment and mortgage-backed securities available for sale at the dates indicated were as follows:

	June 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Federal National Mortgage Association ("FNMA") Bonds	$	997,940	$	25,974	$	—	$	1,023,914
Small Business Administration (“SBA”) Bonds	99,488,051		1,525,658		128,028		100,885,681
Tax Exempt Municipal Bonds	79,348,443		6,609,439		—		85,957,882
Taxable Municipal Bonds	1,015,365		28,895		—		1,044,260
Mortgage-Backed Securities	193,948,106		5,103,368		319,945		198,731,529
Equity Securities	250,438		59,908		—		310,346
Total Available For Sale	$	375,048,343	$	13,353,242	$	447,973	$	387,953,612
	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
FHLB Securities	$	2,000,000	$	—	$	67,912	$	1,932,088
Federal Farm Credit Bank ("FFCB") Securities	2,000,000		—		12,064		1,987,936
FNMA Bonds	997,564		6,767		—		1,004,331
SBA Bonds	110,195,113		1,415,464		193,795		111,416,782
Tax Exempt Municipal Bonds	73,499,636		2,770,115		204,132		76,065,619
Mortgage-Backed Securities	180,197,347		3,281,116		681,251		182,797,212
Equity Securities	250,438		59,464		—		309,902
Total Available For Sale	$	369,140,098	$	7,532,926	$	1,159,154	$	375,513,870

The FHLB, FFCB, FNMA and the Federal Home Loan Mortgage Corporation (“FHLMC”) are government sponsored enterprises ("GSEs") and the securities and bonds issued by GSEs are not backed by the full faith and credit of the United States government.  SBA bonds are backed by the full faith and credit of the United States government. Included in the tables above and below in mortgage-backed securities are Government National Mortgage Association ("GNMA") mortgage-backed securities, which are also backed by the full faith and credit of the United States government.  At June 30, 2016 the Bank held an amortized cost and fair value of $116.2 million and $119.2 million, respectively, in GNMA mortgage-backed securities included in mortgage-backed securities listed above compared to an amortized cost and fair value of $116.8 million and $118.5 million, respectively, at December 31, 2015.

Also included in mortgage-backed securities in the tables above and below are private label collateralized mortgage obligation ("CMO") securities. These securities are issued by non-governmental real estate mortgage investment conduits, which are not backed by the full faith and credit of the United States government.  At June 30, 2016 the Bank held an amortized cost and fair value of $16.6 million and $16.3 million, respectively, in private label CMO mortgage-backed securities, which are included in mortgage-backed securities in the table above, compared to an amortized cost and fair value of $3.8 million at December 31, 2015.

13

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

6. Investment and Mortgage-Backed Securities, Available For Sale, Continued

The amortized cost and fair value of investment and mortgage-backed securities available for sale at June 30, 2016 are shown below by contractual maturity.  Expected maturities will differ from contractual maturities because borrowers have the right to prepay obligations with or without call or prepayment penalties. Since mortgage-backed securities are not due at a single maturity date, they are disclosed separately, rather than allocated over the maturity groupings below.

Investment Securities	Amortized Cost		Fair Value
Less Than One Year	$	395,682	$	396,538
One – Five Years	14,763,466		15,081,296
Over Five – Ten Years	44,939,410		46,178,065
More Than Ten Years	121,001,679		127,566,184
Mortgage-Backed Securities	193,948,106		198,731,529
	$	375,048,343	$	387,953,612

At June 30, 2016 the amortized cost and fair value of investment and mortgage-backed securities available for sale pledged as collateral for certain deposit accounts, FHLB advances and other borrowings were $76.0 million and $78.7 million, respectively, compared to an amortized cost and fair value of $81.0 million and $83.2 million, respectively, at December 31, 2015.

The Bank received $11.4 million and $17.9 million in gross proceeds from sales of available for sale securities during the three months ended June 30, 2016 and 2015, respectively. As a result, the Bank recognized gross gains of $154,000 and $182,000, respectively, for the three months endedJune 30, 2016 and 2015, with no gross losses recognized for the same periods.

During the six months ended June 30, 2016 and 2015, the Bank received $14.6 million and $54.2 million, respectively, in gross proceeds from sales of available for sale securities. As a result, the Bank recognized gross gains of $412,000 and $1.7 million, respectively, and gross losses of $0 and $47,000, respectively, for the six months ended June 30, 2016 and 2015.

The following tables show gross unrealized losses and fair value, aggregated by investment category, and length of time that the individual available for sale securities have been in a continuous unrealized loss position at the dates indicated.

	June 30, 2016
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
SBA Bonds	$	15,665,655	$	71,059	$	9,429,862	$	56,969	$	25,095,517	$	128,028
Mortgage-Backed Securities	15,222,552		261,125		5,728,889		58,820		20,951,441		319,945
	$	30,888,207	$	332,184	$	15,158,751	$	115,789	$	46,046,958	$	447,973

	December 31, 2015
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
FHLB Securities	$	—	$	—	$	1,932,088	$	67,912	$	1,932,088	$	67,912
FFCB Securities	1,987,936		12,064		—		—		1,987,936		12,064
SBA Bonds	25,090,453		119,533		7,982,777		74,262		33,073,230		193,795
Tax Exempt Municipal Bonds	13,668,473		175,020		709,800		29,112		14,378,273		204,132
Mortgage-Backed Securities	63,273,417		648,862		1,706,086		32,389		64,979,503		681,251
	$	104,020,279	$	955,479	$	12,330,751	$	203,675	$	116,351,030	$	1,159,154

14

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

6. Investment and Mortgage-Backed Securities, Available For Sale, Continued

Securities classified as available for sale are recorded at fair market value.  At June 30, 2016 and December 31, 2015, 25.8% and17.6% of the unrealized losses, representing12and nine individual securities, respectively, consisted of securities in a continuous loss position for 12 months or more. The Company has the ability and intent to hold these securities until such time as the value recovers or the securities mature.  The Company believes, based on industry analyst reports and credit ratings, that the deterioration in value is attributable to changes in market interest rates and is not in the credit quality of the issuer and therefore, these losses are not considered other-than-temporary. The Company reviews its investment securities portfolio at least quarterly and more frequently when economic conditions warrant, assessing whether there is any indication of other-than-temporary impairment (“OTTI”).

Factors considered in the review include estimated future cash flows, length of time and extent to which market value has been less than cost, the financial condition and near term prospects of the issuer, and our intent and ability to retain the security to allow for an anticipated recovery in market value. If the review determines that there is OTTI, then an impairment loss is recognized in earnings equal to the entire difference between the investment’s cost and its fair value at the balance sheet date of the reporting period for which the assessment is made, or the Company may recognize a portion in other comprehensive income. The fair value of investments on which OTTI is recognized then becomes the new cost basis of the investment. There was no OTTI recognized during the six months ended June 30, 2016.

7. Investment and Mortgage-Backed Securities, Held to Maturity

The amortized cost, gross unrealized gains, gross unrealized losses, and fair values of held to maturity securities at the dates indicated below were as follows:

	June 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Mortgage-Backed Securities (1)	$	28,508,469	$	459,443	$	5,947	$	28,961,965
Total Held To Maturity	$	28,508,469	$	459,443	$	5,947	$	28,961,965

^{(1) COMPRISED OF GSEs OR GNMA MORTGAGE-BACKED SECURITIES} 

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Mortgage-Backed Securities (1)	$	29,873,098	$	22,600	$	214,418	$	29,681,280
Total Held To Maturity	$	29,873,098	$	22,600	$	214,418	$	29,681,280

^{(1) COMPRISED OF GSEs OR GNMA MORTGAGE-BACKED SECURITIES} 

Other than the mortgage-backed securities included above, there were no other investment securities classified as held to maturity at June 30, 2016 and December 31, 2015.

At June 30, 2016, the Bank held an amortized cost and fair value of $18.4 million and $18.7 million, respectively in GNMA mortgage-backed securities, which are included in the table above, compared to an amortized cost and fair value of $20.5 million and $20.4 million, respectively, at December 31, 2015. The Company has not invested in any private label mortgage-backed securities classified as held to maturity.

At June 30, 2016, the amortized cost and fair value of mortgage-backed securities held to maturity that were pledged as collateral for certain deposit accounts, FHLB advances and other borrowings were $23.4 million and $23.7 million, respectively, compared to an amortized cost and fair value of $26.0 million and $25.8 million, respectively, at December 31, 2015.

15

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

7. Investment and Mortgage-Backed Securities, Held to Maturity, Continued

The following tables show gross unrealized losses, fair value, and length of time that individual held to maturity securities have been in a continuous unrealized loss position at the dates indicated below.

	June 30, 2016
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Mortgage-Backed Securities (1)	$	1,495,145	$	2,709	$	1,473,129	$	3,238	$	2,968,274	$	5,947
	$	1,495,145	$	2,709	$	1,473,129	$	3,238	$	2,968,274	$	5,947

^{(1) COMPRISED OF GSEs OR GNMA MORTGAGE-BACKED SECURITIES} 

	December 31, 2015
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Mortgage-Backed Securities (1)	$	25,484,972	$	214,418	$	—	$	—	$	25,484,972	$	214,418
	$	25,484,972	$	214,418	$	—	$	—	$	25,484,972	$	214,418

^{(1) COMPRISED OF GSEs OR GNMA MORTGAGE-BACKED SECURITIES} 

The Company’s held to maturity portfolio is recorded at amortized cost.  The Company has the ability and intent to hold these securities to maturity.

16

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

8.    Loans Receivable, Net

Loans receivable, net, consisted of the following as of the dates indicated below:

	June 30, 2016		December 31, 2015
Residential Real Estate Loans	$	77,229,040	$	76,373,071
Consumer Loans	50,076,365		50,380,289
Commercial Business Loans	14,233,684		12,514,133
Commercial Real Estate Loans	204,757,630		200,083,125
Total Loans Held For Investment	346,296,719		339,350,618
Loans Held For Sale	1,682,094		2,462,559
Total Loans Receivable, Gross	347,978,813		341,813,177
Less:
Allowance For Loan Losses	8,395,214		8,275,133
Loans In Process	4,438,089		2,902,849
Deferred Loan Fees	109,285		62,466
	12,942,588		11,240,448
Total Loans Receivable, Net	$	335,036,225	$	330,572,729

The Company uses a risk based approach based on the following credit quality measures when analyzing the loan portfolio: pass, caution, special mention, and substandard. These indicators are used to rate the credit quality of loans for the purposes of determining the Company’s allowance for loan losses. Pass loans are loans that are performing and are deemed adequately protected by the net worth of the borrower or the underlying collateral value. These loans are considered to have the least amount of risk in terms of determining the allowance for loan losses. Loans that are graded as substandard are considered to have the most risk. These loans typically have an identified weakness or weaknesses and are inadequately protected by the net worth of the borrower or collateral value. All loans 90 days or more past due are automatically classified in this category. The caution and special mention categories fall in between the pass and substandard grades and consist of loans that do not currently expose the Company to sufficient risk to warrant adverse classification but possess weaknesses.

The following tables list the loan grades used by the Company as credit quality indicators and the balance for each loan category at the dates presented, excluding loans held for sale.

	Credit Quality Measures
June 30, 2016	Pass		Caution		Special Mention		Substandard		Total Loans
Residential Real Estate	$	69,300,706	$	711,846	$	699,591	$	6,516,897	$	77,229,040
Consumer	46,068,672		2,552,834		88,022		1,366,837		50,076,365
Commercial Business	12,059,122		1,730,675		59,175		384,712		14,233,684
Commercial Real Estate	126,085,696		56,069,386		15,175,709		7,426,839		204,757,630
Total	$	253,514,196	$	61,064,741	$	16,022,497	$	15,695,285	$	346,296,719

	Credit Quality Measures
December 31, 2015	Pass		Caution		Special Mention		Substandard		Total Loans
Residential Real Estate	$	67,605,311	$	1,264,415	$	607,336	$	6,896,009	$	76,373,071
Consumer	46,344,056		2,510,519		81,617		1,444,097		50,380,289
Commercial Business	10,519,123		1,465,136		102,046		427,828		12,514,133
Commercial Real Estate	129,242,390		43,863,659		17,304,431		9,672,645		200,083,125
Total	$	253,710,880	$	49,103,729	$	18,095,430	$	18,440,579	$	339,350,618

17

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

8.    Loans Receivable, Net, Continued

The following tables present an age analysis of past due balances by category at June 30, 2016 and December 31, 2015:

June 30, 2016	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable
Residential Real Estate	$	—	$	491,302	$	3,057,525	$	3,548,827	$	73,680,213	$	77,229,040
Consumer	686,826		100,051		319,099		1,105,976		48,970,389		50,076,365
Commercial Business	511,435		—		147,002		658,437		13,575,247		14,233,684
Commercial Real Estate	3,175,585		562,456		2,764,842		6,502,883		198,254,747		204,757,630
Total	$	4,373,846	$	1,153,809	$	6,288,468	$	11,816,123	$	334,480,596	$	346,296,719

December 31, 2015	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable
Residential Real Estate	$	—	$	1,144,381	$	3,306,675	$	4,451,056	$	71,922,015	$	76,373,071
Consumer	710,881		282,314		575,866		1,569,061		48,811,228		50,380,289
Commercial Business	101,201		—		178,076		279,277		12,234,856		12,514,133
Commercial Real Estate	3,309,287		929,819		2,973,135		7,212,241		192,870,884		200,083,125
Total	$	4,121,369	$	2,356,514	$	7,033,752	$	13,511,635	$	325,838,983	$	339,350,618

At June 30, 2016 and December 31, 2015, the Company did not have any loans that were 90 days or more past due and still accruing interest. Our strategy is to work with our borrowers to reach acceptable payment plans while protecting our interests in the existing collateral.  In the event an acceptable arrangement cannot be reached, we may have to acquire these properties through foreclosure or other means and subsequently sell, develop, or liquidate them.

The following table shows non-accrual loans by category at June 30, 2016 compared to December 31, 2015:

	June 30, 2016				December 31, 2015				$			%
	Amount		Percent (1)		Amount		Percent (1)		Increase (Decrease)			Increase (Decrease)
Non-accrual Loans:
Residential Real Estate	$	3,057,525	0.90	%	$	3,306,675	0.98	%	$	(249,150	)	(7.5	)%
Consumer	319,099		0.09		575,866		0.17		(256,767		)	(44.6	)
Commercial Business	147,002		0.04		178,076		0.05		(31,074		)	(17.4	)
Commercial Real Estate	2,764,842		0.81		2,973,135		0.80		(208,293		)	(7.0	)
Total Non-accrual Loans	$	6,288,468	1.84	%	$	7,033,752	2.09	%	$	(745,284	)	(10.6	)%

^{(1) PERCENT OF TOTAL LOANS HELD FOR INVESTMENT, NET OF DEFERRED FEES AND LOANS IN PROCESS.} 

18

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

8.    Loans Receivable, Net, Continued

The following tables show the activity in the allowance for loan losses by category for the three and six months ended June 30, 2016 and 2015:

	Three Months Ended June 30, 2016
	Residential Real Estate		Consumer			Commercial Business		Commercial Real Estate			Total
Beginning Balance	$	1,399,703	$	1,042,530		$	803,146	$	5,027,925		$	8,273,304
Provision for Loan Losses	52,888		104,830			62,721		(220,439		)	—
Charge-Offs	—		(59,452		)	—		(131,418		)	(190,870		)
Recoveries	10,045		28,068			—		274,667			312,780
Ending Balance	$	1,462,636	$	1,115,976		$	865,867	$	4,950,735		$	8,395,214

	Six Months Ended June 30, 2016
	Residential Real Estate		Consumer			Commercial Business		Commercial Real Estate			Total
Beginning Balance	$	1,323,183	$	1,063,153		$	773,948	$	5,114,849		$	8,275,133
Provision for Loan Losses	129,408		153,797			91,919		(375,124		)	—
Charge-Offs	—		(153,881		)	—		(202,618		)	(356,499		)
Recoveries	10,045		52,907			—		413,628			476,580
Ending Balance	$	1,462,636	$	1,115,976		$	865,867	$	4,950,735		$	8,395,214

	Three Months Ended June 30, 2015
	Residential Real Estate			Consumer			Commercial Business		Commercial Real Estate			Total
Beginning Balance	$	1,354,435		$	1,141,797		$	496,803	$	4,925,882		$	7,918,917
Provision for Loan Losses	(44,208		)	125,774			246,264		(327,830		)	—
Charge-Offs	(916		)	(273,007		)	—		(4,023		)	(277,946		)
Recoveries	767			13,420			4,000		136,424			154,611
Ending Balance	$	1,310,078		$	1,007,984		$	747,067	$	4,730,453		$	7,795,582

	Six Months Ended June 30, 2015
	Residential Real Estate			Consumer			Commercial Business			Commercial Real Estate			Total
Beginning Balance	$	1,392,065		$	886,716		$	159,353		$	5,919,362		$	8,357,496
Provision for Loan Losses	(36,838		)	456,705			591,341			(911,208		)	100,000
Charge-Offs	(45,916		)	(393,625		)	(10,947		)	(446,472		)	(896,960		)
Recoveries	767			58,188			7,320			168,771			235,046
Ending Balance	$	1,310,078		$	1,007,984		$	747,067		$	4,730,453		$	7,795,582

19

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

8.    Loans Receivable, Net, Continued

The following tables present information related to impaired loans evaluated individually and collectively for impairment in the allowance for loan losses at the dates indicated:

	Allowance For Loan Losses
June 30, 2016	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	—	$	1,462,636	$	1,462,636
Consumer	4,900		1,111,076		1,115,976
Commercial Business	—		865,867		865,867
Commercial Real Estate	29,300		4,921,435		4,950,735
Total	$	34,200	$	8,361,014	$	8,395,214

	Allowance For Loan Losses
December 31, 2015	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	—	$	1,323,183	$	1,323,183
Consumer	32,300		1,030,853		1,063,153
Commercial Business	—		773,948		773,948
Commercial Real Estate	49,300		5,065,549		5,114,849
Total	$	81,600	$	8,193,533	$	8,275,133

The following tables present information related to impaired loans evaluated individually and collectively for impairment in loans receivable at the dates indicated:

	Loans Receivable
June 30, 2016	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	2,638,041	$	74,590,999	$	77,229,040
Consumer	191,568		49,884,797		50,076,365
Commercial Business	147,001		14,086,683		14,233,684
Commercial Real Estate	6,628,380		198,129,250		204,757,630
Total	$	9,604,990	$	336,691,729	$	346,296,719

	Loans Receivable
December 31, 2015	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	2,922,105	$	73,450,966	$	76,373,071
Consumer	372,382		50,007,907		50,380,289
Commercial Business	162,201		12,351,932		12,514,133
Commercial Real Estate	9,190,640		190,892,485		200,083,125
Total	$	12,647,328	$	326,703,290	$	339,350,618

20

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

8.    Loans Receivable, Net, Continued

Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired management measures the impairment and records the loan at fair value. Fair value is estimated using one of the following methods: fair value of the collateral less estimated costs to sale, discounted cash flows, or market value of the loan based on similar debt. The fair value of the collateral less estimated costs to sell is the most frequently used method. Typically, the Company reviews the most recent appraisal and, if it is over 24 months old, will request a new third party appraisal. Depending on the particular circumstances surrounding the loan, including the location of the collateral, the date of the most recent appraisal and the value of the collateral relative to the recorded investment in the loan, management may order an independent appraisal immediately or, in some instances, may elect to perform an internal analysis. The average balance of impaired loans was $10.3 million for the three months ended June 30, 2016 compared to $15.2 million for the three months ended June 30, 2015.

The following tables present information related to impaired loans by loan category at June 30, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015.

	June 30, 2016						December 31, 2015
Impaired Loans	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With No Related Allowance Recorded:
Residential Real Estate	$	2,638,041	$	2,734,541	$	—	$	2,922,105	$	3,033,735	$	—
Consumer	129,612		137,911		—		120,889		129,188		—
Commercial Business	147,001		997,001		—		162,201		362,201		—
Commercial Real Estate	6,201,852		8,162,393		—		8,620,301		10,969,642		—
With An Allowance Recorded:
Residential Real Estate	—		—		—		—		—		—
Consumer	61,956		61,956		4,900		251,493		256,923		32,300
Commercial Business	—		—		—		—		—		—
Commercial Real Estate	426,528		439,542		29,300		570,339		577,139		49,300
Total
Residential Real Estate	2,638,041		2,734,541		—		2,922,105		3,033,735		—
Consumer	191,568		199,867		4,900		372,382		386,111		32,300
Commercial Business	147,001		997,001		—		162,201		362,201		—
Commercial Real Estate	6,628,380		8,601,935		29,300		9,190,640		11,546,781		49,300
Total	$	9,604,990	$	12,533,344	$	34,200	$	12,647,328	$	15,328,828	$	81,600

21

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

8.    Loans Receivable, Net, Continued

	Three Months Ended June 30,
	2016				2015
Impaired Loans	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Residential Real Estate	$	2,662,040	$	—	$	2,694,645	$	486
Consumer	289,655		—		181,718		—
Commercial Business	149,801		—		192,401		—
Commercial Real Estate	6,675,462		31,353		10,485,665		76,051
With An Allowance Recorded:
Residential Real Estate	—		—		273,476		—
Consumer	62,323		1,144		68,192		1,344
Commercial Business	—		—		—		—
Commercial Real Estate	434,101		—		1,269,379		15,807
Total
Residential Real Estate	2,662,040		—		2,968,121		486
Consumer	351,978		1,144		249,910		1,344
Commercial Business	149,801		—		192,401		—
Commercial Real Estate	7,109,563		31,353		11,755,044		91,858
Total	$	10,273,382	$	32,497	$	15,165,476	$	93,688

	Six Months Ended June 30,
	2016				2015
Impaired Loans	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Residential Real Estate	$	2,790,857	$	447	$	2,717,895	$	4,397
Consumer	296,075		—		182,812		104
Commercial Business	154,316		—		211,100		—
Commercial Real Estate	8,632,348		93,284		10,926,601		153,665
With An Allowance Recorded:
Residential Real Estate	—		—		275,966		—
Consumer	62,693		1,555		69,076		2,712
Commercial Business	—		—		—		—
Commercial Real Estate	437,943		—		1,275,070		35,110
Total
Residential Real Estate	2,790,857		447		2,993,861		4,397
Consumer	358,768		1,555		251,888		2,816
Commercial Business	154,316		—		211,100		—
Commercial Real Estate	9,070,291		93,284		12,201,671		188,775
Total	$	12,374,232	$	95,286	$	15,658,520	$	195,988

22

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

8.    Loans Receivable, Net, Continued

In the course of resolving delinquent loans, the Bank may choose to restructure the contractual terms of certain loans. A troubled debt restructuring ("TDR") is a restructuring in which the Bank, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to a borrower that it would not otherwise consider (Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 310-40).  The concessions granted on TDRs generally include terms to reduce the interest rate, extend the term of the debt obligation, or modify the payment structure on the debt obligation. The Bank grants such concessions to reassess the borrower’s financial status and develop a plan for repayment.  TDRs included in impaired loans at June 30, 2016 and December 31, 2015 were$5.3 millionand $6.7 million, respectively.

Loans on nonaccrual status at the date of modification are initially classified as nonaccrual TDRs. Loans on accruing status at the date of concession are initially classified as accruing TDRs if the loan is reasonably assured of repayment and performance is expected in accordance with its modified terms. Such loans may be designated as nonaccrual loans subsequent to the concession date if reasonable doubt exists as to the collection of interest or principal under the restructuring agreement. Nonaccrual TDRs are returned to accruing status when there is economic substance to the restructuring, there is documented credit evaluation of the borrower's financial condition, the remaining balance is reasonably assured of repayment in accordance with its modified terms, and the borrower has demonstrated sustained repayment performance in accordance with the modified terms for a reasonable period of time (generally a minimum of six months).

The following table is a summary of loans restructured as TDRs during the periods indicated:

	Six Months Ended June 30,
	2016					2015
Troubled Debt Restructurings	Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial Real Estate	—	$	—	$	—	3	$	840,292	$	840,292
Total	—	$	—	$	—	3	$	840,292	$	840,292

The Bank did not modify any loans that were considered to be TDRs during the six months ended June 30, 2016.

During the six months ended June 30, 2015, the Bank modified three commercial real estate loans that were considered to be TDRs. The Bank lowered the interest rate on one loan to allow the customer to begin making monthly principal and interest payments and changed the monthly payment to interest only for an agreed upon period for the other two loans.

At June 30, 2016, six loans totaling $770,000 that had previously been restructured as TDRs were in default, including two which had been restructured within the last 12 months. Three of the loans, with a balance of $641,000, defaulted during the six month period ended June 30, 2016. In comparison, at June 30, 2015, three loans totaling $468,000 that had previously been restructured as TDRs were in default, and one of the loans, with a balance of $62,000 defaulted during the six month period. The Bank considers any loan 30 days or more past due to be in default.

Our policy with respect to accrual of interest on loans restructured as a TDR follows relevant supervisory guidance.  That is, if a borrower has demonstrated performance under the previous loan terms and shows capacity to perform under the restructured loan terms, continued accrual of interest at the restructured interest rate is probable. If a borrower was materially delinquent on payments prior to the restructuring but shows capacity to meet the restructured loan terms, the loan will likely continue as nonaccrual going forward.  Lastly, if the borrower does not perform under the restructured terms, the loan is placed on nonaccrual status.

We closely monitor these loans and will cease accruing interest on them if management believes that the borrowers may not continue performing based on the restructured note terms.  If, after previously being classified as a TDR, a loan is restructured a second time, then that loan is automatically placed on nonaccrual status.  Our policy with respect to nonperforming loans requires the borrower to make a minimum of six consecutive payments in accordance with the modified loan terms before that loan can be placed back on accrual status.  In addition to this payment history, the borrower must demonstrate an ability to continue making payments on the loan prior to restoration of accrual status.

23

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

9. Regulatory Matters

As a state-chartered, federally insured commercial bank, the Bank is subject to the capital requirements established by the FDIC. Under the FDIC’s capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of Tier 1 capital (as defined in the regulations) to total average assets (as defined), and minimum ratios of Tier 1 total capital (as defined) and common equity Tier 1 (“CET1”) capital to risk-weighted assets (as defined).

In addition to the minimum CET1, Tier 1 and total capital ratios, the Bank will have to maintain a capital conservation buffer consisting of additional CET1 capital equal to 2.5% of risk-weighted assets above the required minimum levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses based on percentages of eligible retained income that could be utilized for such actions. This new capital conservation buffer requirement began to be phased in starting in January 2016 at 0.625% of risk-weighted assets and will increase each year until fully implemented in January 2019.

The Company is a bank holding company registered with the Federal Reserve. Bank holding companies are subject to capital adequacy requirements of the Federal Reserve under the Bank Holding Company Act of 1956, as amended, and the regulations of the Federal Reserve. For a bank holding company with less than $1.0 billion in assets, the capital guidelines apply on a bank only basis and the Federal Reserve expects the holding company's subsidiary banks to be well-capitalized under the prompt corrective action regulations. If Security Federal Corporation was subject to regulatory guidelines for bank holding companies with $1.0 billion or more in assets, at June 30, 2016, it would have exceeded all regulatory capital requirements.

24

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

9. Regulatory Matters, Continued

As of June 30, 2016, the Bank and the Company exceeded all regulatory capital requirements and the Bank was considered “well capitalized” under regulatory capital guidelines of the FDIC. The following tables provide the Company’s and the Bank’s regulatory capital requirements and actual results at the dates indicated below:

	Actual				For Capital Adequacy				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
June 30, 2016
SECURITY FEDERAL CORP.
Tier 1 Risk-Based Core Capital (To Risk Weighted Assets)	$	88,132	21.6	%	$	24,486	6.0	%	N/A		N/A
Total Risk-Based Capital (To Risk Weighted Assets)	98,249		24.1	%	32,648		8.0	%	N/A		N/A
Common Equity Tier 1 Capital (To Risk Weighted Assets)	66,099		16.2	%	18,365		4.5	%	N/A		N/A
Tier 1 Leverage (Core) Capital (To Adjusted Tangible Assets)	88,132		10.9	%	32,247		4.0	%	N/A		N/A
SECURITY FEDERAL BANK
Tier 1 Risk-Based Core Capital (To Risk Weighted Assets)	$	88,209	21.6	%	$	24,523	6.0	%	$	32,698	8.0	%
Total Risk-Based Capital (To Risk Weighted Assets)	93,359		22.8	%	32,698		8.0	%	40,872		10.0	%
Common Equity Tier 1 Capital (To Risk Weighted Assets)	88,209		21.6	%	18,393		4.5	%	26,567		6.5	%
Tier 1 Leverage (Core) Capital (To Adjusted Tangible Assets)	88,209		10.9	%	32,238		4.0	%	40,297		5.0	%
December 31, 2015
SECURITY FEDERAL CORP.
Tier 1 Risk-Based Core Capital (To Risk Weighted Assets)	$	84,672	21.7	%	$	23,429	6.0	%	N/A		N/A
Total Risk-Based Capital (To Risk Weighted Assets)	95,429		24.4	%	31,239		8.0	%	N/A		N/A
Common Equity Tier 1 Capital (To Risk Weighted Assets)	63,504		16.3	%	17,572		4.5	%	N/A		N/A
Tier 1 Leverage (Core) Capital (To Adjusted Tangible Assets)	84,672		10.6	%	31,811		4.0	%	N/A		N/A
SECURITY FEDERAL BANK
Tier 1 Risk-Based Core Capital (To Risk Weighted Assets)	$	87,728	22.5	%	$	23,440	6.0	%	$	31,254	8.0	%
Total Risk-Based Capital (To Risk Weighted Assets)	92,653		23.7	%	31,254		8.0	%	39,067		10.0	%
Common Equity Tier 1 Capital (To Risk Weighted Assets)	87,728		22.5	%	17,580		4.5	%	25,394		6.5	%
Tier 1 Leverage (Core) Capital (To Adjusted Tangible Assets)	87,728		11.0	%	31,801		4.0	%	39,751		5.0	%

25

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

10. Carrying Amounts and Fair Value of Financial Instruments

The Company has adopted accounting guidance which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value under generally accepted accounting principles. This guidance applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances.

Accounting guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1	Valuation is based upon quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market, as well as U.S. Treasuries and money market funds.
Level 2	Valuation is based upon quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments, mortgage-backed securities, municipal bonds, corporate debt securities and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes certain derivative contracts.
Level 3	Valuation is generated from model-based techniques that use at least one significant assumption based on unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The following is a description of the valuation methodologies used for assets and liabilities recorded at fair value.

Investment Securities Available for Sale

Investment securities available for sale are recorded at fair value on a recurring basis. At June 30, 2016, the Company’s investment portfolio was comprised of government and agency bonds, mortgage-backed securities issued by government agencies or GSEs, private label CMO mortgage-backed securities, municipal securities, and two equity investments. Fair value measurement is based upon prices obtained from third party pricing services that use independent pricing models which rely on a variety of factors including reported trades, broker/dealer quotes, benchmark yields, economic and industry events and other relevant market information. As a result, these securities are classified as Level 2.

Mortgage Loans Held for Sale

The Company originates fixed rate residential loans on a servicing released basis in the secondary market. Loans closed but not yet settled with the FHLMC or other investors, are carried in the Company’s loans held for sale portfolio.  These loans are fixed rate residential loans that have been originated in the Company’s name and have closed.  Virtually all of these loans have commitments to be purchased by investors and the majority of these loans were locked in by price with the investors on the same day or shortly thereafter that the loan was locked in with the Company’s customers.  Therefore, these loans present very little market risk for the Company.

The Company usually delivers a commitment to, and receives funding from, the investor within 30 days.  Commitments to sell these loans to the investor are considered derivative contracts and are sold to investors on a “best efforts" basis. The Company is not obligated to deliver a loan or pay a penalty if a loan is not delivered to the investor. As a result of the short-term nature of these derivative contracts, the fair value of the mortgage loans held for sale in most cases is the same as the value of the loan amount at its origination. These loans are classified as Level 2.

26

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

10. Carrying Amounts and Fair Value of Financial Instruments, Continued

Impaired Loans

The Company does not record loans held for investment at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established as necessary. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as impaired, management measures the impairment by determining the fair value of the collateral for the loan.

Fair value is estimated using one of the following methods: fair value of the collateral less estimated costs to sell, discounted cash flows, or market value of the loan based on similar debt. The fair value of the collateral less estimated costs to sell is the most frequently used method. Typically, the Company reviews the most recent appraisal and if it is over 24 months old will request a new third party appraisal. Depending on the particular circumstances surrounding the loan, including the location of the collateral, the date of the most recent appraisal and the value of the collateral relative to the recorded investment in the loan, management may order an independent appraisal immediately or, in some instances, may elect to perform an internal analysis. Specifically as an example, in situations where the collateral on a nonperforming commercial real estate loan is out of the Company’s primary market area, management would typically order an independent appraisal immediately, at the earlier of the date the loan becomes nonperforming or immediately following the determination that the loan is impaired. However, as a second example, on a nonperforming commercial real estate loan where management is familiar with the property and surrounding areas and where the original appraisal value far exceeds the recorded investment in the loan, management may perform an internal analysis whereby the previous appraisal value would be reviewed and adjusted for current conditions including recent sales of similar properties in the area and any other relevant economic trends. These valuations are reviewed at a minimum on a quarterly basis.

Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. At June 30, 2016, most of the total impaired loans were evaluated based on the fair value of the collateral. Impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. The Company records impaired loans as nonrecurring Level 3. At June 30, 2016 and December 31, 2015, the recorded investment in impaired loans was $9.6 million and $12.6 million, respectively.

Foreclosed Assets

Foreclosed assets are adjusted to fair value upon transfer of the loans to foreclosed assets. Subsequently, foreclosed assets are carried at the lower of carrying value or fair value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the foreclosed asset as nonrecurring Level 3. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the asset as nonrecurring Level 3.

Assets measured at fair value on a recurring basis were as follows at June 30, 2016:

Assets:	Quoted Market Price In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
FNMA Bonds	$	—	$	1,023,914	$	—
SBA Bonds	—		100,885,681		—
Tax Exempt Municipal Bonds	—		85,957,882		—
Taxable Municipal Bonds			1,044,260
Mortgage-Backed Securities	—		198,731,529		—
Equity Securities	—		310,346		—
Total	$	—	$	387,953,612	$	—

27

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

10. Carrying Amounts and Fair Value of Financial Instruments, Continued

Assets measured at fair value on a recurring basis were as follows at December 31, 2015:

Assets:	Quoted Market Price In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
FHLB Securities	$	—	$	1,932,088	$	—
FFCB Securities	—		1,987,936		—
FNMA Bonds	—		1,004,331		—
SBA Bonds	—		111,416,782		—
Tax Exempt Municipal Bonds	—		76,065,619		—
Mortgage-Backed Securities	—		182,797,212		—
Equity Securities	—		309,902		—
Total	$	—	$	375,513,870	$	—

There were no liabilities measured at fair value on a recurring basis at June 30, 2016 or December 31, 2015.

The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. The table below presents assets measured at fair value on a nonrecurring basis at June 30, 2016 and December 31, 2015, aggregated by the level in the fair value hierarchy within which those measurements fall. 

Assets:	Level 1		Level 2		Level 3		Balance at June 30, 2016
Mortgage Loans Held For Sale	$	—	$	1,682,094	$	—	$	1,682,094
Collateral Dependent Impaired Loans (1)	—		—		9,570,790		9,570,790
Foreclosed Assets	—		—		2,377,793		2,377,793
Total	$	—	$	1,682,094	$	11,948,583	$	13,630,677

^{(1) IMPAIRED LOANS ARE REPORTED NET OF SPECIFIC RESERVES OF $34,200}

Assets:	Level 1		Level 2		Level 3		Balance at December 31, 2015
Mortgage Loans Held For Sale	$	—	$	2,462,559	$	—	$	2,462,559
Collateral Dependent Impaired Loans (1)	—		—		12,565,728		12,565,728
Foreclosed Assets	—		—		4,361,411		4,361,411
Total	$	—	$	2,462,559	$	16,927,139	$	19,389,698

^{(1) IMPAIRED LOANS ARE REPORTED NET OF SPECIFIC RESERVES OF $81,600}

There were no liabilities measured at fair value on a nonrecurring basis at June 30, 2016 or December 31, 2015.

28

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

10. Carrying Amounts and Fair Value of Financial Instruments, Continued

For Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis at June 30, 2016, the significant unobservable inputs used in the fair value measurements were as follows:

			Valuation	Significant
	Fair Value		Technique	Unobservable Inputs	Range
Collateral Dependent Impaired Loans	$	9,570,790	Appraised Value	Discount Rates/ Discounts to Appraised Values	0% - 16%
Foreclosed Assets	2,377,793		Appraised Value/Comparable Sales	Discount Rates/ Discounts to Appraised Values	16% - 100%

For assets and liabilities that are not presented on the balance sheet at fair value, the following methods are used to determine the fair value:

Cash and Cash Equivalents—The carrying amount of these financial instruments approximates fair value. All mature within 90 days and do not present unanticipated credit concerns.

Certificates of Deposit with Other Banks—Fair value is based on market prices for similar assets.

Investment Securities Held to Maturity—Securities held to maturity are valued at quoted market prices or dealer quotes.

Loans Receivable, Net—The fair value of loans are estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. As discount rates are based on current loan rates as well as management estimates, the fair values presented may not be indicative of the value negotiated in an actual sale.

FHLB Stock—The fair value approximates the carrying value.

Deposits—The fair value of demand deposits, savings accounts, and money market accounts is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposits is estimated by discounting the future cash flows using rates currently offered for deposits of similar remaining maturities.

FHLB Advances—Fair value is estimated based on discounted cash flows using current market rates for advances with similar terms.

Other Borrowed Money—The carrying value of these short term borrowings approximates fair value.

Senior Convertible Debentures— The fair value is estimated by discounting the future cash flows using the current rates at which similar debenture offerings with similar terms and maturities would be issued by similar institutions. As discount rates are based on current debenture rates as well as management estimates, the fair values presented may not be indicative of the value negotiated in an actual sale.

Junior Subordinated Debentures—The carrying value of junior subordinated debentures approximates fair value.

29

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

10. Carrying Amounts and Fair Value of Financial Instruments, Continued

The following tables are a summary of the carrying value and estimated fair value of the Company’s financial instruments at June 30, 2016 and December 31, 2015 presented in accordance with the applicable accounting guidance.

	June 30, 2016
	Carrying		Fair Value
(In Thousands)	Amount		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and Cash Equivalents	$	8,883	$	8,883	$	8,883	$	—	$	—
Certificates of Deposits with Other Banks	3,445		3,445		—		3,445		—
Investment and Mortgage-Backed Securities	416,462		416,916		—		416,916		—
Loans Receivable, Net	335,036		336,358		—		—		336,358
FHLB Stock	2,048		2,048		2,048		—		—
Financial Liabilities:
Deposits:
Checking, Savings, and Money Market Accounts	$	426,227	$	426,227	$	426,227	$	—	$	—
Certificate Accounts	231,375		231,673		—		231,673		—
Advances from FHLB	29,110		29,494		—		29,494		—
Other Borrowed Money	9,385		9,385		9,385		—		—
Senior Convertible Debentures	6,084		6,084		—		6,084		—
Junior Subordinated Debentures	5,155		5,155		—		5,155		—

	December 31, 2015
	Carrying		Fair Value
(In Thousands)	Amount		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and Cash Equivalents	$	8,382	$	8,382	$	8,382	$	—	$	—
Certificates of Deposits with Other Banks	3,445		3,445		—		3,445		—
Investment and Mortgage-Backed Securities	405,387		405,196		—		405,196		—
Loans Receivable, Net	330,573		327,460		—		—		327,460
FHLB Stock	2,215		2,215		2,215		—		—
Financial Liabilities:
Deposits:
Checking, Savings, and Money Market Accounts	$	415,975	$	415,975	$	415,975	$	—	$	—
Certificate Accounts	236,122		235,476		—		235,476		—
Advances from FHLB	34,640		35,676		—		35,676		—
Other Borrowed Money	6,412		6,412		6,412		—		—
Senior Convertible Debentures	6,084		6,084		—		6,084		—
Junior Subordinated Debentures	5,155		5,155		—		5,155		—

At June 30, 2016, the Bank had $59.2 million of off-balance sheet financial commitments.  These commitments are to originate loans and unused consumer lines of credit and credit card lines.  Because these obligations are based on current market rates, if funded, the original principal amount is considered to be a reasonable estimate of fair value.

Fair value estimates are made on a specific date, based on relevant market data and information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale the Bank’s entire holdings of a particular financial instrument.  

30

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

10. Carrying Amounts and Fair Value of Financial Instruments, Continued

Because no active market exists for a significant portion of the Bank’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, current interest rates and prepayment trends, risk characteristics of various financial instruments, and other factors.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in any of these assumptions used in calculating fair value would also significantly affect the estimates. Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.  For example, the Bank has significant assets and liabilities that are not considered financial assets or liabilities including deposit franchise values, loan servicing portfolios, deferred tax liabilities, and premises and equipment.

In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of these estimates. The Company has used management’s best estimate of fair value on the above assumptions.  Thus, the fair values presented may not be the amounts, which could be realized, in an immediate sale or settlement of the instrument.  In addition, any income taxes or other expenses that would be incurred in an actual sale or settlement are not taken into consideration in the fair value presented.

11. Accounting and Reporting Changes

The following is a summary of recent authoritative pronouncements that could affect accounting, reporting, and disclosure of financial information by the Company:

In January 2014, the FASB amended the Investments-Equity Method and Joint Ventures topic of the ASC to address accounting for investments in qualified affordable housing projects. If certain conditions are met, the amendments permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects by amortizing the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizing the net investment performance in the income statement as a component of income tax expense (benefit). If those conditions are not met, the investment should be accounted for as an equity method investment or a cost method investment in accordance with existing accounting guidance. The amendments were effective for the Company for interim and annual reporting periods beginning after December 15, 2014 and were applied retrospectively for all periods presented. The amendments did not have a material effect on the Company's consolidated financial statements.

In May 2014 and August 2015, the FASB issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a modified retrospective approach. The Company does not expect these amendments to have a material effect on its consolidated financial statements.

In June 2014, the FASB issued guidance which makes limited amendments to the guidance on accounting for certain repurchase agreements. The new guidance (1) requires entities to account for repurchase-to-maturity transactions as secured borrowings (rather than as sales with forward repurchase agreements), (2) eliminates accounting guidance on linked repurchase financing transactions, and (3) expands disclosure requirements related to certain transfers of financial assets that are accounted for as sales and certain transfers (specifically, repos, securities lending transactions, and repurchase-to-maturity transactions) accounted for as secured borrowings. The amendments were effective for the Company on January 1, 2015. These amendments did not have a material effect on the Company's consolidated financial statements.

In June 2014, the FASB issued guidance which clarifies that performance targets associated with stock compensation should be treated as a performance condition and should not be reflected in the grant date fair value of the stock award. The amendments were effective for the Company on January 1, 2016. These amendments did not have a material effect on the Company's consolidated financial statements.

31

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

11. Accounting and Reporting Changes, Continued

In February 2015, the FASB issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under U.S. GAAP. Although the amendments are expected to result in the deconsolidation of many entities, the Company will need to reevaluate all its previous consolidation conclusions. The amendments were effective for the Company on January 1, 2016. These amendments did not have a material effect on the Company's consolidated financial statements.

In January 2016, the FASB amended the Financial Instruments topic of the ASC to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will apply the guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values will be applied prospectively to equity investments that exist as of the date of adoption of the amendments. The Company does not expect these amendments to have a material effect on its consolidated financial statements.

In February 2016, the FASB amended the Leases topic of the ASC to revise certain aspects of recognition, measurement, presentation, and disclosure of leasing transactions. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the effect that implementation of the new standard will have on its financial position, results of operations, and cash flows.

In March 2016, the FASB amended the Revenue from Contracts with Customers topic of the ASC to clarify the implementation guidance on principal versus agent considerations and address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties.The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its consolidated financial statements.

In March 2016, the FASB issued guidance to simplify several aspects of the accounting for share-based payment award transactions including the income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. Additionally, the guidance simplifies two areas specific to entities other than public business entities allowing them apply a practical expedient to estimate the expected term for all awards with performance or service conditions that have certain characteristics and also allowing them to make a one-time election to switch from measuring all liability-classified awards at fair value to measuring them at intrinsic value. The amendments will be effective for the Company for annual periods beginning after December 15, 2016 and interim periods within those annual periods. The Company does not expect these amendments to have a material effect on its consolidated financial statements.

In April 2016, the FASB amended the Revenue from Contracts with Customers topic of the ASC to clarify guidance related to identifying performance obligations and accounting for licenses of intellectual property. The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its consolidated financial statements.

In May 2016, the FASB amended the Revenue from Contracts with Customers topic of the ASC to clarify guidance related to collectability, noncash consideration, presentation of sales tax, and transition. The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its consolidated financial statements.

In June 2016, the FASB issued guidance to change the accounting for credit losses and modify the impairment model for certain debt securities. The amendments will be effective for the Company for reporting periods beginning after December 15, 2019. The Company is currently evaluating the effect that implementation of the new standard will have on its consolidated financial position, results of operations, and cash flows.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting authorities are not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

32

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

12. Subsequent Events

Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including estimates inherent in the process of preparing financial statements. Nonrecognized subsequent events are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date.

Management has reviewed all events occurring through the date the consolidated financial statements were available to be issued and no other subsequent events occurred requiring accrual or disclosure.

33

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statements and “Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995

Certain matters discussed in this Quarterly Report on Form 10-Q may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements relate to our financial condition, results of operations, plans, objectives, future performance or business. Forward-looking statements are not statements of historical fact, are based on certain assumptions and are generally identified by use of the words "believes," "expects," "anticipates," "estimates," "forecasts," "intends," "plans," "targets," "potentially," "probably," "projects," "outlook" or similar expressions or future or conditional verbs such as "may," "will," "should," "would" and "could." Forward-looking statements include statements with respect to our beliefs, plans, objectives, goals, expectations, assumptions and statements about, among other things, expectations of the business environment in which we operate, projections of future performance or financial items, perceived opportunities in the market, potential future credit experience, and statements regarding our mission and vision. These forward-looking statements are based upon current management expectations and may, therefore, involve risk and uncertainties. Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety or range of factors, including, but not limited to:

• the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs and changes in our allowance for loan losses and provision for loan losses that may be affected by deterioration in the housing and commercial real estate markets which may lead to increased losses and non-performing assets in our loan portfolio, and may result in our allowance for loan losses not being adequate to cover actual losses, and require us to materially increase our allowance for loan losses;

• changes in general economic conditions, either nationally or in our market areas;

• changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources;

• fluctuations in the demand for loans, the number of unsold homes, land and other properties and fluctuations in real estate values in our market areas;

• secondary market conditions for loans and our ability to sell loans in the secondary market;

• results of examinations of the Company by the Board of Governors of the Federal Reserve System ("Federal Reserve") and our bank subsidiary by the Federal Deposit Insurance Corporation ("FDIC") and the South Carolina State Board of Financial Institutions, or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, or impose additional requirements or restrictions on us, any of which could adversely affect our liquidity and earnings;

• legislative or regulatory changes that adversely affect our business, including the effect of the Dodd-Frank Wall Street Reform and Consumer Protection Act; changes in regulatory policies and principles, or the interpretation of regulatory capital requirements or other rules, including as a result of Basel III; and any changes in rules affecting our ability to comply with the requirements of the U. S. Department of Treasury Community Development Capital Initiative;

• our ability to attract and retain deposits;

• increases in premiums for deposit insurance;

• our ability to control operating costs and expenses;

• our ability to implement our business strategies;

• the use of estimates in determining the fair value of certain of our assets, which estimates may prove to be incorrect and result in significant declines in valuation;

• difficulties in reducing risks associated with the loans on our balance sheet;

• staffing fluctuations in response to product demand or the implementation of corporate strategies that affect our workforce and potential associated charges;

• computer systems on which we depend could fail or experience a security breach;

• our ability to retain key members of our senior management team;

• costs and effects of litigation, including settlements and judgments;

• our ability to manage loan delinquency rates;

• increased competitive pressures among financial services companies;

34

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of Operations

• changes in consumer spending, borrowing and savings habits;

• the availability of resources to address changes in laws, rules, or regulations or to respond to regulatory actions;

• our ability to pay dividends on our common stock and preferred stock;

• adverse changes in the securities markets;

• inability of key third-party providers to perform their obligations to us;

• changes in accounting policies and practices, as may be adopted by the financial institution regulatory agencies or the FASB, including additional guidance and interpretation on accounting issues and details of the implementation of new accounting methods; and

• other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services and the other risks described elsewhere in this document.

Some of these and other factors are discussed in the Company's 2015 Form 10-K under Item 1A, “Risk Factors.” Such developments could have an adverse impact on our consolidated financial position and results of operations.

Any of the forward-looking statements that we make in this quarterly report on Form 10-Q and in other public reports and statements we make may turn out to be inaccurate as a result of our beliefs and assumptions we make in connection with the factors set forth above or because of other unidentified and unpredictable factors. Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements and you should not rely on such statements. The Company undertakes no obligation to publish revised forward-looking statements to reflect the occurrence of unanticipated events or circumstances after the date hereof. These risks could cause our actual results for 2016 and beyond to differ materially from those expressed in any forward-looking statements by or on behalf of us, and could negatively affect the Company’s financial condition, liquidity and operating and stock price performance.

Financial Condition at June 30, 2016 and December 31, 2015

Assets

Total assets increased $11.0 million or 1.4% to $810.7 million at June 30, 2016 from $799.7 million at December 31, 2015. The primary reason for the increase in total assets was an increase of $12.4 million or 3.3% in investment and mortgage-backed securities available for sale. The increases and decreases in total assets were primarily concentrated in the following asset categories:

					Increase (Decrease)
	June 30, 2016		December 31, 2015		Amount			Percent
Cash and Cash Equivalents	$	8,883,215	$	8,381,951	$	501,264		6.0%
Investment and Mortgage-Backed Securities – Available For Sale	387,953,612		375,513,870		12,439,742			3.3
Investment and Mortgage-Backed Securities – Held To Maturity	28,508,469		29,873,098		(1,364,629		)	(4.6)
Loans Receivable, Net	335,036,225		330,572,729		4,463,496			1.4
OREO	2,377,793		4,361,411		(1,983,618		)	(45.5)
Premise and Equipment, Net	20,208,626		20,116,918		91,708			0.5
FHLB Stock	2,048,300		2,214,800		(166,500		)	(7.5)
Bank Owned Life Insurance	16,837,045		16,573,045		264,000			1.6
Other Assets	1,200,351		4,449,956		(3,249,605		)	(73.0)

Cash and cash equivalents increased $501,000 or 6.0% to $8.9 million at June 30, 2016 from $8.4 million at December 31, 2015. Investment and mortgage-backed securities available for sale increased $12.4 million or 3.3% to $388.0 million at June 30, 2016 from $375.5 million at December 31, 2015. Investment and mortgage-backed securities held to maturity decreased $1.4 million or 4.6% to $28.5 million at June 30, 2016 from $29.9 million at December 31, 2015. The Bank purchased 34 investment and mortgage-backed securities classified as available for sale and one mortgage-backed security classified as held to maturity during the first six months of 2016.

35

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of Operations

Loans receivable, net, increased $4.5 million or 1.4% to $335.0 million at June 30, 2016 from $330.6 million at December 31, 2015as a result of increased loan originations in the commercial and residential real estate loan categories offset by a decrease in the consumer loan category and loans held for sale. Residential real estate loans increased $856,000 or 1.1% to $77.2 million at June 30, 2016 from $76.4 million at December 31, 2015. Commercial real estate loans increased $4.7 million or 2.3% to $204.8 million at June 30, 2016 from $200.1 million at December 31, 2015. Commercial business loans increased $1.7 million or 13.7% to $14.2 million at June 30, 2016 from $12.5 million at December 31, 2015. Consumer loans decreased $304,000 or 0.6% to $50.1 million at June 30, 2016 compared to $50.4 million at December 31, 2015. Loans held for sale decreased $780,000 or 31.7% to $1.7 million at June 30, 2016 from $2.5 million at December 31, 2015.

OREO decreased $2.0 million or 45.5% to $2.4 million at June 30, 2016 from $4.4 million at December 31, 2015. The decrease was due to the sale of 10 OREO properties during the six months ended June 30, 2016 with a total book value of $2.1 million offset by the addition of one OREO property with a value of $142,000. At June 30, 2016, OREO consisted of the following real estate properties: six single-family residences and 23 lots within residential subdivisions located throughout our market areas in South Carolina and Georgia; five parcels of commercial land in South Carolina; one commercial building in South Carolina; and eight lots within a subdivision and the adjacent 22.96 acres of land in Aiken, South Carolina.

Premises and equipment, net increased $92,000 or 0.5% to $20.2 million at June 30, 2016 from $20.1 million at December 31, 2015. The increase was primarily due to additions to construction in progress related to the construction of the new branch location in Evans, Georgia, which is scheduled to open in early 2017.

The cash value of bank owned life insurance (“BOLI”) increased $264,000 or 1.6% to $16.8 million at June 30, 2016 compared to $16.6 million at December 31, 2015. BOLI, which earns tax-free yields, is utilized to partially offset the cost of the Company’s employee benefits programs and to provide key person insurance on certain officers of the Company.

FHLB stock decreased $167,000 or 7.5% to $2.0 million at June 30, 2016 compared to $2.2 million at December 31, 2015 as a result of stock redemptions by the FHLB of Atlanta. The Bank, as a member of the FHLB of Atlanta, is required to acquire and hold shares of capital stock in the FHLB of Atlanta in an amount equal to a membership component, which is 0.09% of total assets, plus a transaction component, which is 4.25% of outstanding advances (borrowings) from the FHLB of Atlanta. As the Bank's total advances have decreased, so has it’s required investment in FHLB stock.

Other assets decreased $3.2 million or 73.0% to $1.2 million at June 30, 2016 from $4.4 million at December 31, 2015. The decrease was primarily the result of a $3.0 million decrease in net deferred taxes, which was related to increased unrealized gains in the investment portfolio.

Liabilities

Deposit Accounts – The balances, weighted average rates and increases and decreases in deposit accounts were as follows at the dates indicated below:

	June 30, 2016			December 31, 2015			Balance Increase (Decrease)
	Balance		Weighted Rate	Balance		Weighted Rate	Amount			Percent
Demand Accounts:
Checking	$	159,362,528	0.02%	$	155,765,968	0.03%	$	3,596,560		2.3%
Money Market	231,385,570		0.16	229,016,993		0.16	2,368,577			1.0
Statement Savings Accounts	35,479,103		0.10	31,191,828		0.10	4,287,275			13.7
Total	$	426,227,201	0.11%	$	415,974,789	0.11%	$	10,252,412		2.5%
Certificate Accounts
0.00 – 0.99%	$	167,411,166		$	175,755,511		$	(8,344,345	)	(4.7)%
1.00 – 1.99%	61,681,649			51,479,431			10,202,218			19.8
2.00 – 2.99%	2,282,241			8,886,814			(6,604,573		)	(74.3)
Total	231,375,056		0.74%	236,121,756		0.69%	(4,746,700		)	(2.0)%
Total Deposits	$	657,602,257	0.33%	$	652,096,545	0.32%	$	5,505,712		0.8%

36

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of Operations

Included in the certificate accounts above were $41.1 million and $42.5 million in brokered deposits at June 30, 2016 and December 31, 2015, respectively, with a weighted average interest rate of 1.05% and 0.94%, respectively.

Advances From FHLB – FHLB advances are summarized by contractual year of maturity and weighted average interest rate in the table below:

	June 30, 2016			December 31, 2015			Increase (Decrease)
Year Due:	Balance		Rate	Balance		Rate	Balance			Percent
2016	$	5,000,000	4.03%	$	16,740,000	1.51%	$	(11,740,000	)	(70.13)%
2017	9,110,000		0.72	12,900,000		4.38	(3,790,000		)	(29.38)
2018	10,000,000		2.24	5,000,000		3.39	5,000,000			100.00
2019	5,000,000		1.11	—		—	5,000,000			100.00
Total Advances	$	29,110,000	1.88%	$	34,640,000	3.87%	$	(5,530,000	)	(15.96)%

Advances are secured by a blanket collateral agreement with the FHLB pledging the Bank’s portfolio of residential first mortgage loans and investment securities with an amortized cost and fair value of $68.6 million and $66.4 million at June 30, 2016, respectively, and $77.8 million and $74.7 million at December 31, 2015, respectively. Advances are subject to prepayment penalties. During the six months ended June 30, 2016, the Bank prepaid two FHLB advances totaling $12.9 million and incurred $529,000 in prepayment penalties.

The following table shows callable FHLB advances at June 30, 2016. These advances are also included in the above table. Callable advances are callable at the option of the FHLB.  If an advance is called, the Bank has the option to pay off the advance without penalty, re-borrow funds on different terms, or convert the advance to a three-month floating rate advance tied to LIBOR.

As of June 30, 2016
Borrow Date	Maturity Date	Amount		Rate	Type	Call Dates
11/29/06	11/29/16	$	5,000,000	4.03%	Multi-Call	5/29/08 and quarterly thereafter

Other Borrowings – The Bank had $9.4 million in other borrowings (non-FHLB advances) at June 30, 2016, an increase of $3.0 million or 46.4% from $6.4 million at December 31, 2015. These borrowings consist of short-term repurchase agreements with certain commercial demand deposit customers for sweep accounts. The repurchase agreements typically mature within one to three days and the interest rate paid on these borrowings floats monthly with money market type rates. At both June 30, 2016 and December 31, 2015, the interest rate paid on the repurchase agreements was 0.15%. The Bank had pledged as collateral for these repurchase agreements investment and mortgage-backed securities with amortized costs and fair values of $15.4 million and $15.7 million, respectively, at June 30, 2016 and $14.3 million and $14.6 million, respectively, at December 31, 2015.

Junior Subordinated Debentures – On September 21, 2006, Security Federal Statutory Trust (the Trust), issued and sold fixed and floating rate capital securities of the Trust (the “Capital Securities”). The Trust used the net proceeds from the sale of the Capital Securities to purchase a like amount of junior subordinated debentures (the “Debentures”) of the Company which are reported on the Consolidated Balance Sheets as junior subordinated debentures. The Capital Securities accrue and pay distributions at a floating rate of three month LIBOR plus 170 basis points annually which was equal to 2.35% at June 30, 2016. The distribution rate payable on the Capital Securities is cumulative and payable quarterly in arrears. The Capital Securities mature or are mandatorily redeemable upon maturity on December 15, 2036, or upon earlier optional redemption as provided in the indenture. The Company has the right to redeem the Capital Securities in whole or in part.

Convertible Debentures – Effective December 1, 2009, the Company issued $6.1 million in convertible senior debentures. The debentures will mature on December 1, 2029 and accrue interest at the rate of 8.0% per annum until maturity or earlier redemption or repayment. Interest on the debentures is payable on June 1 and December 1 of each year and commenced on June 1, 2010. The debentures are convertible into the Company’s common stock at a conversion price of $20 per share at the option of the holder at any time prior to maturity. The debentures are redeemable, in whole or in part, at the option of the Company at any time on or after December 1, 2019, at a price equal to 100% of the principal amount of the debentures to be purchased plus any accrued and unpaid interest to, but excluding, the date of redemption. The debentures are unsecured general obligations of the Company ranking equal in right of payment to all of our present and future unsecured indebtedness that is not expressly subordinated.

37

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of Operations

Equity – Shareholders’ equity increased $6.6 million or 7.2% to $97.6 million at June 30, 2016 from $91.0 million at December 31, 2015. Accumulated other comprehensive income, net of tax, comprised primarily of unrealized gains on securities available for sale, net of tax, increased $4.0 million or 93.7% to $8.3 million at June 30, 2016 from $4.3 million at December 31, 2015. The Company’s net income available for common shareholders was $3.1 million for the six months ended June 30, 2016, after payment of $220,000 in preferred stock dividends. The Board of Directors of the Company declared common stock dividends totaling $471,000 during the six months ended June 30, 2016. Book value per common share was $25.65 at June 30, 2016 compared to $23.41 at December 31, 2015.

Results of Operations for the Three Month Periods Ended June 30, 2016 and 2015

Net Income Available to Common Shareholders - Net income available to common shareholders increased $43,000 or 3.1% to $1.5 million or $0.47 per diluted common share for the three months ended June 30, 2016 compared to $1.4 million or $0.46 per diluted common share for the three months ended June 30, 2015. The increase in earnings was primarily the result of increases in net interest income and non-interest income offset by an increase in non-interest expense.

Net Interest Income - The net interest margin on a tax equivalent basis increased 23 basis points to 3.45% for the three months ended June 30, 2016 from 3.22% for the comparable period in 2015 as the average yield earned on interest-earning assets increased and the average cost of interest-bearing liabilities declined. Net interest income increased $307,000 or 5.1% to $6.3 million during the three months ended June 30, 2016, compared to $6.0 million for the same period in 2015. During the three months ended June 30, 2016, average interest earning assets decreased $13.1 million or 1.7% to $752.9 million from $766.0 million for the same period in 2015. Average interest-bearing liabilities decreased $19.9 million or 3.0% to $649.5 million for the three months ended June 30, 2016 from $669.4 million for the comparable period in 2015.

Interest Income - Total tax equivalent interest income increased $128,000 or 1.8% to $7.4 million during the three months ended June 30, 2016 compared to $7.2 million during the same period in 2015. This increase was primarily the result of a 14 basis point increase in the yield on interest-earning assets. Total interest income on loans increased $202,000 or 4.4% to $4.8 million during the three months ended June 30, 2016 from $4.6 million during the comparable period in 2015. The increase was the result of an $11.9 million or 3.7% increase in the average loan portfolio balance combined with a four basis point increase in the yield. Interest income from mortgage-backed securities decreased $128,000 or 9.5% to $1.2 million from $1.4 million during the same period in 2015 as a result of a seven basis point decrease in the portfolio yield combined with a $15.3 million decrease in the average balance of mortgage-backed securities. Tax equivalent interest income from investment securities increased $51,000 or 4.1% to $1.3 million during the three months ended June 30, 2016 due to a 25 basis point increase in the yield offset by an $11.0 million or 5.5% decrease in the average balance of the investment securities portfolio.

The following table compares detailed average balances, associated yields, and the resulting changes in interest income for the three months ended June 30, 2016 and 2015:

	Three Months Ended June 30,								Increase (Decrease) In Interest Income
	2016				2015
	Average Balance		Yield(1)		Average Balance		Yield(1)
Loans Receivable, Net	$	337,202,765	5.72	%	$	325,261,779	5.68	%	$	202,292
Mortgage-Backed Securities	222,667,124		2.20		237,985,120		2.27		(128,277		)
Investment Securities(2)	188,414,636		2.76		199,420,674		2.51		50,877
Overnight Time and Certificates of Deposit	4,566,884		0.40		3,314,267		0.19		3,016
Total Interest-Earning Assets	$	752,851,409	3.91	%	$	765,981,840	3.77	%	$	127,908

⁽¹⁾Annualized

⁽²⁾Tax equivalent basis recognizes the income tax savings when comparing taxable and tax-exempt assets and was calculated using an effective tax rate of 34%. The tax equivalent adjustment relates to the tax exempt municipal bonds and was $182,365 and $161,428 for the quarters ended June 30, 2016 and 2015, respectively.

38

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of Operations

Interest Expense - Total interest expense decreased $200,000 or 18.7% to $868,000 during the three months ended June 30, 2016 compared to $1.1 million for the same period in 2015. The decrease in total interest expense was attributable to decreases in interest rates paid and a $19.9 million or 3.0% decrease in the average balance of interest-bearing liabilities. Interest expense on deposits decreased $45,000 or 7.8% to $536,000 during the three months ended June 30, 2016 compared to $582,000 for the same period in 2015. The decrease was attributable to a two basis point decrease in the cost of deposit accounts combined with an $8.5 million or 1.4% decrease in average interest-bearing deposits to $599.4 million for the three months ended June 30, 2016 compared to $607.9 million for the three months ended June 30, 2015.

Interest expense on FHLB advances and other borrowings decreased $159,000 or 47.0% to $180,000 during the three months ended June 30, 2016 from $339,000 for the same period in 2015. The average balance of FHLB advances and other borrowed money decreased $11.4 million or 22.7% to $38.9 million during the three months ended June 30, 2016 from $50.3 million for the same period in 2015. During the quarter ended June 30, 2016 the Bank prepaid one FHLB advance with a balance of $7.9 million at a 4.4% rate in order to reduce interest expense in future periods and improve its net interest spread.

The following table compares detailed average balances, cost of funds, and the resulting changes in interest expense for the three months ended June 30, 2016 and 2015.

	Three Months Ended June 30,								Increase (Decrease) In Interest Expense
	2016				2015
	Average Balance		Yield(1)		Average Balance		Yield(1)
Now and Money Market Accounts	$	330,429,066	0.13	%	$	325,285,215	0.13	%	$	470
Statement Savings Accounts	34,516,049		0.10		30,587,246		0.10		984
Certificate Accounts	234,407,631		0.72		251,982,550		0.75		(46,837		)
FHLB Advances and Other Borrowed Money	38,897,335		1.85		50,328,204		2.70		(159,465		)
Junior Subordinated Debentures	5,155,000		2.36		5,155,000		2.00		4,741
Senior Convertible Debentures	6,084,000		8.00		6,084,000		8.00		—
Total Interest-Bearing Liabilities	$	649,489,081	0.53	%	$	669,422,215	0.64	%	$	(200,107	)

⁽¹⁾ Annualized

Provision for Loan Losses - The amount of the provision is determined by management’s on-going monthly analysis of the loan portfolio and the adequacy of the allowance for loan losses. The Company has policies and procedures in place for evaluating andmonitoring the overall credit quality of the loan portfolio and for timely identification of potential problem loans including internal and external loan reviews. The adequacy of the allowance for loan losses is reviewed monthly by the Asset Classification Committee and quarterly by the Board of Directors.

Management’s monthly review of the adequacy of the allowance includes three main components. The first component is an analysis of loss potential in various homogeneous segments of the loan portfolio based on historical trends and the risk inherent in each loan category. Currently, management applies a four year historical loss ratio to each loan category to estimate the inherent loss in these pooled loans.

The second component of management’s monthly analysis is the specific review and evaluation of significant problem credits identified through the Company’s internal monitoring system. These loans are evaluated for impairment and recorded in accordance with accounting guidance. For each loan deemed impaired, management calculates a specific reserve for the amount in which the recorded investment in the loan exceeds the fair value. This estimate is based on a thorough analysis of the most probable source of repayment, which is typically liquidation of the collateral underlying the loan.

The third component is an analysis of changes in qualitative factors that may affect the portfolio, including but not limited to: relevant economic trends that could impact borrowers’ ability to repay, industry trends, changes in the volume and composition of the portfolio, credit concentrations, or lending policies and the experience and ability of the staff and Board of Directors. Management also reviews and incorporates certain ratios such as percentage of classified loans, average historical loan losses by loan category, delinquency percentages, and the assignment of percentage targets of reserves in each loan category when evaluating the allowance.

39

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of Operations

Once the analysis is completed, the three components are combined and compared to the allowance amount. Based on this, charges are made to the provision as needed.

The Company had net recoveries of $122,000 for the quarter ended June 30, 2016 compared to net charge-offs of $123,000 for the same three month period in 2015. There was no provision for loan losses for the quarters ended June 30, 2016 and 2015. The following table details selected activity associated with the allowance for loan losses for the quarters ended June 30, 2016 and 2015:

	Three Months Ended June 30,
	2016		2015
Beginning Balance	$	8,273,304	$	7,918,917
Provision for Loan Losses	—		—
Charge-offs	(190,870)		(277,946)
Recoveries	312,780		154,611
Ending Balance	$	8,395,214	$	7,795,582
Allowance For Loan Losses as a % of Gross Loans Receivable, Held For Investment at the end of the period	2.5%		2.4%
Allowance For Loan Losses as a % of Impaired Loans at the end of the period	87.4%		51.9%
Impaired Loans	$	9,604,990	$	15,017,339
Gross Loans Receivable, Held For Investment (1)	$	341,749,345	$	321,943,396
Total Loans Receivable, Net	$	335,036,225	$	316,547,878

^{(1) TOTAL LOANS HELD FOR INVESTMENT, NET OF DEFERRED FEES AND LOANS IN PROCESS.} 

Our strategy is to work with our borrowers to reach acceptable payment plans while protecting our interests in the existing collateral. In the event an acceptable arrangement cannot be reached, we may need to acquire these properties through foreclosure or other means and subsequently sell, develop or liquidate them.

Non-Interest Income - Non-interest income increased $77,000 or 5.5% to $1.5 million for the three months ended June 30, 2016, compared to $1.4 million for the three months ended June 30, 2015. The following table provides a detailed analysis of the changes in the components of non-interest income:

	Three Months Ended June 30,				Increase (Decrease)
	2016		2015		Amounts			Percent
Gain on Sale of Investment Securities	$	153,650	$	181,814	$	(28,164	)	(15.5	)%
Gain on Sale of Loans	191,589		181,082		10,507			5.8
Service Fees on Deposit Accounts	265,036		274,651		(9,615		)	(3.5)
Commissions From Insurance Agency	122,143		103,547		18,596			18.0
Bank Owned Life Insurance Income	132,000		87,000		45,000			51.7
Trust Income	162,000		148,800		13,200			8.9
Check Card Fee Income	257,110		248,119		8,991			3.6
Other	180,805		162,572		18,233			11.2
Total Non-Interest Income	$	1,464,333	$	1,387,585	$	76,748		5.5	%

Gain on sale of investment securities was $154,000 during the quarter ended June 30, 2016, a decrease of $28,000 or 15.5% compared to $182,000 for the same period last year. The decrease was due to a decrease in the number of investment securities sold. The Bank sold seven investment securities during the quarter ended June 30, 2016 compared to nine during the same period in 2015.

40

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of Operations

Income from the cash value of BOLI increased $45,000 or 51.7% to $132,000 during the quarter ended June 30, 2016 from $87,000 for the same period in 2015. The Company did not receive any life insurance proceeds during the second quarter of 2016 or 2015. All BOLI income recognized during both quarters was related to accrued interest credited to the cash surrender value underlying the BOLI policies.

Non-Interest Expense –For the quarter ended June 30, 2016, non-interest expense increased $358,000 or 6.7% to $5.7 million compared to $5.3 million for the same period in 2015. The following table provides a detailed analysis of the changes in the components of non-interest expense:

	Three Months Ended June 30,				Increase (Decrease)
	2016		2015		Amounts			Percent
Compensation and Employee Benefits	$	3,177,520	$	2,986,924	$	190,596		6.4%
Occupancy	470,532		455,053		15,479			3.4
Advertising	112,806		99,564		13,242			13.3
Depreciation and Maintenance of Equipment	499,041		445,585		53,456			12.0
FDIC Insurance Premiums	127,443		155,592		(28,149		)	(18.1)
Net Cost of Operation of OREO	1,945		90,873		(88,928		)	(97.9)
Prepayment Penalties on FHLB Advances	281,206		—		281,206			100.0
Other	1,022,630		1,101,446		(78,816		)	(7.2)
Total Non-Interest Expense	$	5,693,123	$	5,335,037	$	358,086		6.7%

Compensation and employee benefits expenses increased $191,000, or 6.4% to $3.2 million for the three months ended June 30, 2016 compared to $3.0 million for the same period last year due to general cost of living increases.

Net cost of operation of OREO decreased $89,000 or 97.9% to $2,000 during the quarter ended June 30, 2016 from $91,000 during the quarter ended June 30, 2015. This amount includes all expenses associated with OREO including write-down in value and gain or loss on sales incurred during the period.

The Company incurred a prepayment penalty of $281,000 for prepaying one FHLB advance during the three months ended June 30, 2016 compared to no prepayment penalties during the same period in 2015. The Company elected to prepay this higher rate advance in order to reduce interest expense in future periods and improve net interest spread.

Other expenses increased $79,000, or 7.2% to $1.0 million for the three month period ended June 30, 2016 compared to $1.1 million for the same period in the prior year. Other expenses include legal, professional, and consulting expenses, supplies and other miscellaneous expenses.

Provision For Income Taxes – The provision for income taxes decreased $17,000 or 3.3% to $510,000 for the three months ended June 30, 2016 from $527,000 for the same period one year ago. Income before income taxes was $2.1 million for the three months ended June 30, 2016 and 2015. The Company’s combined federal and state effective income tax rate for the current quarter was 24.5% compared to 25.7% for the same quarter one year ago.

Results of Operations for the Six Month Periods Ended June 30, 2016 and 2015

Net Income Available to Common Shareholders - Net income available to common shareholders increased $255,000 or 9.1% to $3.1 million for the six months ended June 30, 2016 compared to $2.8 million for the six months ended June 30, 2015. The increase in earnings was primarily the result of an increase in net interest income combined with a decrease in non-interest expense, offset by a decrease in non-interest income.

Net Interest Income - The net interest margin on a tax equivalent basis increased 24 basis points to 3.40% for the six months ended June 30, 2016 from 3.16% for the comparable period in 2015. Net interest income increased $597,000 or 5.1% to $12.4 million for the six months ended June 30, 2016 compared to $11.8 million during the same period in 2015. During the six months ended June 30, 2016, average interest earning assets decreased $16.2 million or 2.1% to $748.3 million from $764.5 million for

41

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of Operations

the six months ended June 30, 2015, while average interest-bearing liabilities decreased $21.1 million or 3.2% to $648.7 million for the six months ended June 30, 2016 from $669.8 million for the same period in 2015.

Interest Income - Total tax equivalent interest income increased $214,000 or 1.5% to $14.5 million during the six months ended June 30, 2016 from $14.3 million for the same period in 2015. This increase was primarily the result of a 14 basis point increase in the yield on interest-earning assets. Total interest income on loans increased $307,000 or 3.4% to $9.5 million during the six months ended June 30, 2016 from $9.2 million for the same period in 2015. The increase was a result of a $4.3 million or 1.3% increase in the average loan portfolio to $335.5 million from $331.2 million for the same period in 2015 combined with an 11 basis point increase in the yield. Interest income from mortgage-backed securities decreased $298,000 or 10.7% to $2.5 million for the six months ended June 30, 2016 from $2.8 million for the same period in 2015 as a result of an eight basis point decrease in the portfolio yield combined with an $17.2 million or 7.3% decrease in the average balance of mortgage-backed securities. Tax equivalent interest income from investment securities increased $200,000 or 8.5% to $2.6 million for the six months ended June 30, 2016 from $2.4 million for the same period in 2015 due to a 25 basis point increase in the yield offset by a $2.8 million or 1.5% decrease in the average balance of the investment securities portfolio.

The following table compares detailed average balances, associated yields, and the resulting changes in interest income for the six months ended June 30, 2016 and 2015:

	Six Months Ended June 30,								Increase (Decrease) In Interest Income
	2016				2015
	Average Balance		Yield(1)		Average Balance		Yield(1)
Loans Receivable, Net	$	335,506,635	5.64	%	$	331,220,113	5.53	%	$	307,205
Mortgage-Backed Securities	218,845,272		2.27		236,022,293		2.35		(298,229)
Investment Securities(2)	189,730,241		2.70		192,535,525		2.45		200,102
Overnight Time and Certificates of Deposit	4,232,561		0.43		4,690,619		0.18		4,976
Total Interest-Earning Assets	$	748,314,709	3.88	%	$	764,468,550	3.74	%	$	214,054

⁽¹⁾Annualized

⁽²⁾Tax equivalent basis recognizes the income tax savings when comparing taxable and tax-exempt assets and was calculated using an effective tax rate of 34%. The tax equivalent adjustment relates to the tax exempt municipal bonds and was $357,098 and $286,229 for the six months ended June 30, 2016 and 2015, respectively.

Interest Expense - Interest expense decreased $454,000 or 20.3% to $1.8 million during the six months ended June 30, 2016 compared to $2.2 million for the same period in 2015. The decrease in total interest expense is attributable to decreases in interest rates paid and a $21.1 million or 3.2% decrease in the average balance of interest-bearing liabilities. Interest expense on deposits decreased $130,000 or 11.0% to $1.1 million during the six months ended June 30, 2016 compared to $1.2 million for the same period last year. The decrease was attributable to a four basis point decrease in the cost of deposit accounts combined with an $11.9 million or 2.0% decrease in average interest-bearing deposits to $595.8 million for the six month period ended June 30, 2016 compared to $607.7 million for the six month period ended June 30, 2015. The decrease was concentrated in the certificate accounts, which decreased $18.8 million or 7.4% to $234.9 million during the six months ended June 30, 2016 from $253.7 million for the same period in 2015. The Bank is focusing on increasing its core deposits, or deposits other than time deposits, and has been competing less aggressively for time deposits.

Interest expense on FHLB advances and other borrowings decreased $333,000 or 43.7% to $428,000 during the six months ended June 30, 2016 from $761,000 during the same period in 2015. The average balance of FHLB advances and other borrowed money decreased $9.3 million or 18.2% to $41.7 million during the six months ended June 30, 2016 from $50.9 million for the same period last year. During the six months ended June 30, 2015 the Bank prepaid two FHLB advances totaling $12.9 million with a weighted average rate of 4.4% in order to reduce interest expense in future periods and improve net interest spread.

42

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following table compares detailed average balances, cost of funds, and the resulting changes in interest expense for the six months ended June 30, 2016 and 2015:

	Six Months Ended June 30,								Increase (Decrease) In Interest Expense
	2016				2015
	Average Balance		Yield(1)		Average Balance		Yield(1)
Now and Money Market Accounts	$	327,839,398	0.13%		$	324,216,634	0.14	%	$	(14,844	)
Statement Savings Accounts	33,108,200		0.10		29,755,068		0.10		1,754
Certificates Accounts	234,852,628		0.71		253,702,223		0.78		(117,264		)
FHLB Advances and Other Borrowed Money	41,654,925		2.06		50,921,409		2.99		(332,561		)
Junior Subordinated Debentures	5,155,000		2.31		5,155,000		2.00		8,766
Senior Convertible Debentures	6,084,000		8.00		6,084,000		8.00		—
Total Interest-Bearing Liabilities	$	648,694,151	0.55	%	$	669,834,334	0.67	%	$	(454,149	)

⁽¹⁾ Annualized

Provision for Loan Losses - There was no provision for loan losses for the six months ended June 30, 2016 compared to $100,000 for the same period in the prior year. The decrease in the provision for loan losses is attributable to an increase in recoveries. The Company had net recoveries of $120,000 for the six months ended June 30, 2016 compared to net charge-offs of $662,000 during the comparable period in 2015. The following table details selected activity associated with the allowance for loan losses for the six months ended June 30, 2016 and 2015:

	Six Months Ended June 30,
	2016		2015
Beginning Balance	$	8,275,133	$	8,357,496
Provision for Loan Losses	—		100,000
Charge-offs	(356,499)		(896,960)
Recoveries	476,580		235,046
Ending Balance	$	8,395,214	$	7,795,582

Non-Interest Income - Non-interest income decreased $747,000 or 18.5% to $3.3 million for the six months ended June 30, 2016, compared to $4.0 million for the six months ended June 30, 2015. The following table provides a detailed analysis of the changes in the components of non-interest income:

	Six Months Ended June 30,				Increase (Decrease)
	2016		2015		Amounts			Percent
Gain on Sale of Investment Securities	$	411,718	$	1,668,753	$	(1,257,035	)	(75.3	)%
Gain on Sale of Loans	400,555		335,101		65,454			19.5
Service Fees on Deposit Accounts	505,381		532,167		(26,786		)	(5.0)
BOLI Income	264,000		174,000		90,000			51.7
Commissions From Insurance Agency	291,990		233,659		58,331			25.0
Trust Income	324,000		297,600		26,400			8.9
Check Card Fee Income	495,252		479,420		15,832			3.3
Grant Income	265,496		—		265,496			100.0
Other	333,681		317,892		15,789			5.0
Total Non-Interest Income	$	3,292,073	$	4,038,592	$	(746,519	)	(18.5	)%

43

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of Operations

Gain on sale of investment securities was $412,000 during the six months ended June 30, 2016, a decrease of $1.3 million or 75.3% compared to a gain of $1.7 million during the same period last year. The increase resulted from the sale of 11 investment securities during the six months ended June 30, 2016 compared to 41 sold during the comparable period of 2015.

The Bank received a grant of $265,000 during the six months ended June 30, 2016 compared to no grant income during the same period in 2015. The grant was awarded by the Bank Enterprise Award Program in recognition of the Bank’s investments in distressed communities and its continued commitment to community development. The amount of the award increases as the Bank’s investment in these distressed communities increases.

Non-Interest Expense – For the six months ended June 30, 2016, non-interest expense decreased $361,000 or 3.1% to $11.2 million compared to $11.6 million for the same period in 2015. The following table provides a detailed analysis of the changes in the components of non-interest expense:

	Six Months Ended June 30,					Increase (Decrease)
	2016			2015		Amounts			Percent
Compensation and Employee Benefits	$	6,508,318		$	5,973,955	$	534,363		8.9	%
Occupancy	967,250			945,711		21,539			2.3
Advertising	242,783			195,725		47,058			24.0
Depreciation and Maintenance of Equipment	975,415			862,830		112,585			13.0
FDIC Insurance Premiums	260,490			315,813		(55,323		)	(17.5)
Net Cost of Operation of OREO	(673,981		)	287,497		(961,478		)	(334.4)
Prepayment Penalties on FHLB Advances	528,712			787,851		(259,139		)	(32.9)
Other	2,420,080			2,220,250		199,830			9.0
Total Non-Interest Expense	$	11,229,067		$	11,589,632	$	(360,565	)	(3.1	)%

Compensation and employee benefits expenses were $6.5 million for the six months ended June 30, 2016, an increase of $534,000 or 8.9% from $6.0 million during the same period last year. The increase was due to general increases in the economy combined with increases related to the addition of several new hires during the six months ended June 30, 2016.

The Company had income of $674,000 from the operation of OREO properties during the six months ended June 30, 2016 compared to a net cost of $287,000 during the six months ended June 30, 2015. The majority of the current year net gain was related to the sale of one OREO property in February 2016, which resulted in a $739,000 gain that was recorded as an offset to the cost of operating OREO properties during the six months ended June 30, 2016.

The Company incurred prepayment penalties of $529,000 for prepaying two FHLB advances during the six months ended June 30, 2016 compared to penalties of $788,000 during the six months ended June 30, 2015. The Company elected to prepay these higher rate advances in order to reduce interest expense in future periods and improve net interest spread.

Provision For Income Taxes – The provision for income taxes increased $56,000 or 5.1% to $1.2 million for the six months ended June 30, 2016 from $1.1 million for the same period in 2015. Income before taxes was $4.4 million and $4.1 million for the six months ended June 30, 2016 and 2015, respectively. The Company’s combined federal and state effective income tax rate was 26.0% for the six months ended June 30, 2016 compared to 26.6% for the same period in 2015.

44

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Management's Discussion and Analysis of Financial Condition and Results of Operations

Liquidity Commitments, Capital Resources, and Impact of Inflation and Changing Prices

Liquidity – The Company actively analyzes and manages the Bank’s liquidity with the objective of maintaining an adequate level of liquidity and to ensure the availability of sufficient cash flows to support loan growth, fund deposit withdrawals, fund operations, and satisfy other financial commitments. See the “Consolidated Statements of Cash Flows” contained in Item 1 – Financial Statements, herein.

The primary sources of funds are customer deposits, loan repayments, loan sales, maturing investment securities, and advances from the FHLB. The sources of funds, together with retained earnings and equity, are used to make loans, acquire investment securities and other assets, and fund continuing operations. While maturities and the scheduled amortization of loans are a predictable source of funds, deposit flows and mortgage repayments are greatly influenced by the level of interest rates, economic conditions, and competition. Management believes that the Company’s current liquidity position and its forecasted operating results are sufficient to fund all of its existing commitments.

During the six months ended June 30, 2016 loan disbursements exceeded loan repayments resulting in a $4.5 million or 1.4% increase in total net loans receivable. During the six months ended June 30, 2016, deposits increased $5.5 million or 0.8% and FHLB advances decreased $5.5 million or 16.0%. The Bank had $214.1 million in additional borrowing capacity at the FHLB at the end of the period. At June 30, 2016, the Bank had $141.4 million of certificates of deposit maturing within one year. Based on previous experience, the Bank anticipates a significant portion of these certificates will be renewed on maturity.

At June 30, 2016, the Bank exceeded all regulatory capital requirements with Common Equity Tier 1 Capital (CET1), Tier 1 leverage-based capital, Tier 1 risk-based capital, and total risk-based capital ratios of 21.6%, 10.9%, 21.6%, and 22.8%, respectively. To be categorized as “well capitalized” under the prompt corrective action provisions the Bank must maintain minimum CET1, total risk based capital, Tier 1 risk based capital and Tier 1 leverage capital ratios of 6.5%, 10.0%, 8.0% and 5.0%, respectively.

The Company also exceeded all regulatory capital requirements with CET1, Tier 1 leverage-based capital, Tier 1 risk- based capital and total risk-based capital ratios of 16.2%, 10.9%, 21.6%, and 24.1%, respectively, at June 30, 2016.

Off-Balance Sheet Commitments – The Company is a party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments generally include commitments to originate mortgage, commercial and consumer loans, and involve to varying degrees, elements of credit and interest rate risk in excess of the amount recognized in the balance sheet. The Company’s maximum exposure to credit loss in the event of nonperformance by the borrower is represented by the contractual amount of those instruments. Since some commitments may expire without being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company uses the same credit policies in making commitments as it does for on-balance sheet instruments. Collateral is not required to support commitments.

The following table sets forth the length of time until maturity for unused commitments to extend credit and standby letters of credit at June 30, 2016.

(Dollars in thousands)	Within One Month		After One Through Three Months		After Three Through Twelve Months		Within One Year		Greater Than One Year		Total
Unused Lines of Credit	$	868	$	2,499	$	15,995	$	19,362	$	39,294	$	58,656
Standby Letters of Credit	—		—		532		532		—		532
Total	$	868	$	2,499	$	16,527	$	19,894	$	39,294	$	59,188

45

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Market risk is the risk of loss from adverse changes in market prices and rates. The Company’s market risk arises principally from interest rate risk inherent in its lending, investment, deposit and borrowing activities. Management actively monitors and manages its interest rate risk exposure. Although the Company manages other risks such as credit quality and liquidity risk in the normal course of business, management considers interest rate risk to be its most significant market risk that could potentially have the largest material effect on the Company’s financial condition and results of operations. Other types of market risks such as foreign currency exchange rate risk and commodity price do not arise in the normal course of the Company’s business activities.

The Company’sprofitability is affected by fluctuations in the market interest rate. Management’s goal is to maintain a reasonable balance between exposure to interest rate fluctuations and earnings. A sudden and substantial increase or decrease in interest rates may adversely impact the Company’s earnings to the extent that the interest rates on interest-earning assets and interest-bearing liabilities do not change at the same rate, to the same extent or on the same basis. The Company monitors the impact of changes in interest rates on its net interest income using a test that measures the impact on net interest income and net portfolio value of an immediate change in interest rates in 100 basis point increments. Net portfolio value is defined as the net present value of assets, liabilities, and off-balance sheet contracts.

For the three and six months ended June 30, 2016, the Bank's interest rate spread, defined as the average yield on interest bearing assets less the average rate paid on interest bearing liabilities was 3.37% and 3.33%, respectively.

46

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures: An evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13a - 15(e) of the Securities Exchange Act of 1934 (“Act”)) was carried out under the supervision and with the participation of the Company’s Chief Executive Officer, Chief Financial Officer and several other members of the Company’s senior management as of the end of the period covered by this quarterly report. The Company’s Chief Executive Officer and Chief Financial Officer concluded that at June 30, 2016 the Company’s disclosure controls and procedures were effective in ensuring that the information required to be disclosed by the Company in the reports it files or submits under the Act is (i) accumulated and communicated to the Company’s management (including the Chief Executive Officer and Chief Financial Officer) in a timely manner, and (ii) recorded, processed, summarized and reported within the time period specified in the Securities and Exchange Commission’s rules and forms. There have been no significant changes in our internal controls over financial reporting during the quarter ended June 30, 2016 that have materially affected or are reasonably likely to affect our internal controls over financial reporting.

The Company does not expect that its disclosure controls and procedures will prevent all error and or fraud. A control procedure, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control procedure are met. Because of the inherent limitations in all control procedures, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any control procedure also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control procedure, misstatements due to error or fraud may occur and not be detected.

Part II: Other Information

Item 1    Legal Proceedings

The Company is not engaged in any legal proceedings of a material nature at the present time. From time to time, the Company is a party to legal proceedings in the ordinary course of business wherein it enforces its security interest in mortgage loans it has made.

Item 1A    Risk Factors

There have been no material changes in the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Item 2    Unregistered Sales of Equity Securities and Use Of Proceeds

None

Item 3    Defaults Upon Senior Securities

None

Item 4    Mine Safety Disclosures

Not applicable

Item 5    Other Information

None

47

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Item 6    Exhibits

3.1	Articles of Incorporation, as amended (1)
3.2	Articles of Amendment, including Certificate of Designation relating to the Company's Fixed Rate Cumulative Perpetual Preferred Stock Series B (2)
3.3	Amended and Restated Bylaws (3)
4.1	Form of Stock Certificate of the Company and other instruments defining the rights of security holders, including indentures (4)
4.2	Form of Certificate for the Series B Preferred Shares (2)
4.3	Form of Indenture with respect to the Company's 8.0% Convertible Senior Debentures Due 2029 (5)
4.4	Specimen Convertible Senior Debenture Due 2029 (5)
4.5	Letter Agreement (including Securities Exchange Agreement B Standard Terms, attached as Exhibit A) dated September 29, 2010 between the Company and the United States Department of the Treasury (2)
4.6	Letter Agreement (including Securities Purchase Agreement B Standard Terms, attached as Exhibit A) dated September 29, 2010 between the Company and the United States Department of the Treasury (2)
10.1	1993 Salary Continuation Agreements (6)
10.2	Amendment One to 1993 Salary Continuation Agreements (7)
10.3	Form of 2006 Salary Continuation Agreement (8)
10.4	Form of Security Federal Split Dollar Agreement (8)
10.5	1999 Stock Option Plan (9)
10.6	2002 Stock Option Plan (10)
10.7	2006 Stock Option Plan (11)
10.8	2008 Equity Incentive Plan (12)
10.9	Form of incentive stock option agreement and non-qualified stock option agreement pursuant to the 2006 Stock Option Plan (11)
10.10	2004 Employee Stock Purchase Plan (13)
10.11	Incentive Compensation Plan (6)
10.12	Form of Compensation Modification Agreement (14)
14	Code of Ethics (15)
25	Subsidiaries of Registrant
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act
32	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act
101	The following materials from Security Federal Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, formatted in Extensible Business Reporting Language (XBRL): (a) Consolidated Balance Sheets; (b) Consolidated Statements of Income; (c) Consolidated Statements of Comprehensive Income (Loss); (d) Consolidated Statements of Changes in Shareholders’ Equity; (e) Consolidated Statements of Cash Flows; and (f) Notes to Consolidated Financial Statements

_____________

(1) Filed on June 26, 1998, as an exhibit to the Company’s Proxy Statement and incorporated herein by reference.

(2) Incorporated by reference to the Company’s Current Report on Form 8-K filed on September 30, 2010.    

(3) Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 16, 2015.

(4) Filed on August 12, 1987, as an exhibit to the Company’s Registration Statement on Form 8-A and incorporated herein by reference.

(5) Filed on July 13, 2009 as an exhibit to the Company’s Registration Statement on Form S-1 (File No. 333-160553) and incorporated herein by reference.

(6) Filed on June 28, 1993, as an exhibit to the Company’s Annual Report on Form 10-KSB and incorporated herein by reference.

48

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

(7) Filed as an exhibit to the Company’s Quarterly Report on Form 10-QSB for the quarter ended September 30, 1993 and incorporated herein by reference.

(8) Filed on May 24, 2006 as an exhibit to the Company’s Current Report on Form 8-K dated May 18, 2006 and incorporated herein by reference.

(9) Filed on March 2, 2000, as an exhibit to the Company's Registration Statement on Form S-8 and incorporated herein by reference

(10) Filed on January 3, 2003, as an exhibit to the Company's Registration Statement on Form S-8 and incorporated herein by reference.

(11) Filed on August 22, 2006, as an exhibit to the Company's Registration Statement on Form S-8 (Registration Statement No. 333-136813) and incorporated herein by reference.

(12) Filed on November 12, 2008, as an exhibit to the Company's Registration Statement on Form S-8 and incorporated herein by reference.

(13) Filed on June 18, 2004, as an exhibit to the Company’s Proxy Statement and incorporated herein by reference.

(14) Incorporated by reference to the Company's Current Report on Form 8-K filed on December 23, 2008.

(15) Filed on June 29, 2006, as an exhibit to the Company’s Annual Report on Form 10-K and incorporated herein by reference.

49

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SECURITY FEDERAL CORPORATION

Date:	August 12, 2016	By:	/s/J. Chris Verenes
				J. Chris Verenes
				Chief Executive Officer
				Duly Authorized Representative

Date:	August 12, 2016	By:	/s/Jessica T. Cummins
				Jessica T. Cummins
				Chief Financial Officer
				Duly Authorized Representative

50

SECURITY FEDERAL CORPORATION AND SUBSIDIARIES

EXHIBIT INDEX

31.1 Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act

31.2 Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act

32 Certification of the Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act

101 The following materials from Security Federal Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, formatted in Extensible Business Reporting Language (XBRL): (a) Consolidated Balance Sheets; (b) Consolidated Statements of Income; (c) Consolidated Statements of Comprehensive Income (Loss); (d) Consolidated Statements of Changes in Shareholders’ Equity; (e) Consolidated Statements of Cash Flows; and (f) Notes to Consolidated Financial Statements

51

EX-31.1

Exhibit 31.1

Certification Required

by Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934

I, J. Chris Verenes, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Security Federal Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 12, 2016

/s/J. Chris Verenes

J. Chris Verenes

Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Required

by Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934

I, Jessica T. Cummins, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Security Federal Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 12, 2016

/s/Jessica T. Cummins

Jessica T. Cummins

Chief Financial Officer 

EX-32

Exhibit 32

CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

OF SECURITY FEDERAL CORPORATION

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

The undersigned hereby certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 and in connection with this Quarterly Report on Form 10-Q, that:

1. the report fully complies with the requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, and

2. the information contained in the report fairly presents, in all material respects, the company's financial condition and results of operations.

/s/J. Chris Verenes	/s/Jessica T. Cummins
J. Chris Verenes	Jessica T. Cummins
Chief Executive Officer	Chief Financial Officer

Dated: August 12, 2016

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2016	Aug. 12, 2016
Document and Entity Information [Abstract]
Entity Registrant Name	Security Federal Corporation
Document Type	10-Q
Document Period End Date	Jun. 30, 2016
Amendment Flag	false
Entity Central Index Key	0000818677
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		2,945,474
Entity Filer Category	Smaller Reporting Company
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q2

XML

Consolidated Balance Sheets (Unaudited) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
ASSETS:
Cash and Cash Equivalents	$ 8,883,215	$ 8,381,951
Certificates of Deposit with Other Banks	3,445,005	3,445,005
Investment and Mortgage-Backed Securities:
Available For Sale	387,953,612	375,513,870
Investment and Mortgage-Backed Securities, Held to Maturity	28,508,469	29,873,098
Total Investments And Mortgage-Backed Securities	416,462,081	405,386,968
Loans Receivable, Net:
Held For Sale	1,682,094	2,462,559
Held For Investment (Net of Allowance of $8,395,214 and $8,275,133 at June 30, 2016 and December 31, 2015, Respectively)	333,354,131	328,110,170
Total Loans Receivable, Net	335,036,225	330,572,729
Accrued Interest Receivable:
Loans	872,097	886,968
Mortgage-Backed Securities	648,502	614,925
Investment Securities	1,478,781	1,523,200
Total Accrued Interest Receivable	2,999,380	3,025,093
Premises and Equipment, Net	20,208,626	20,116,918
Federal Home Loan Bank (FHLB) Stock, at Cost	2,048,300	2,214,800
Other Real Estate Owned (OREO)	2,377,793	4,361,411
Bank Owned Life Insurance	16,837,045	16,573,045
Goodwill	1,199,754	1,199,754
Other Assets	1,200,351	4,449,956
Total Assets	810,697,775	799,727,630
Liabilities:
Deposit Accounts	657,602,257	652,096,545
Advances From FHLB	29,110,000	34,640,000
Other Borrowings	9,384,881	6,411,977
Junior Subordinated Debentures	5,155,000	5,155,000
Advance Payments By Borrowers For Taxes And Insurance	576,367	256,730
Senior Convertible Debentures	6,084,000	6,084,000
Other Liabilities	5,228,151	4,115,956
Total Liabilities	713,140,656	708,760,208
Shareholders' Equity:
Serial Preferred Stock, $.01 Par Value; Authorized 200,000 Shares; Issued and Outstanding Shares, 22,000	22,000,000	22,000,000
Common Stock, $.01 Par Value; Authorized 5,000,000 Shares; Issued and Outstanding Shares, 3,146,407 and 2,945,474, Respectively	31,464	31,464
Additional Paid-In Capital	12,032,816	12,028,832
Treasury Stock, at Cost (200,933 Shares)	(4,330,712)	(4,330,712)
Nonvested Restricted Stock	(25,358)	(25,358)
Accumulated Other Comprehensive Income	8,256,333	4,262,361
Retained Earnings	59,592,576	57,000,835
Total Shareholders' Equity	97,557,119	90,967,422
Total Liabilities And Shareholders' Equity	$ 810,697,775	$ 799,727,630

XML

Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Statement of Financial Position [Abstract]
Amortized Cost of Investment And Mortgage-Backed Securities Available For Sale	$ 375,048,343	$ 369,140,098
Fair Value of Investment And Mortgage-Backed Securities Held To Maturity	28,961,965	29,681,280
Allowance For Loan Losses	$ 8,395,214	$ 8,275,133
Serial Preferred Stock Par Value Per Share	$ 0.01	$ 0.01
Serial Preferred Stock Shares Authorized	200,000	200,000
Serial Preferred Stock Shares Issued	22,000	22,000
Serial Preferred Stock Shares Outstanding	22,000	22,000
Common Stock Par Value Per Share	$ 0.01	$ 0.01
Common Stock Shares Authorized	5,000,000	5,000,000
Common Stock Shares Issued	3,146,407	3,144,934
Common Stock, Shares, Outstanding	2,945,474	2,944,001
Treasury Stock Shares Held	200,933	200,933

XML

Consolidated Statements of Income (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Interest Income:
Loans	$ 4,824,401	$ 4,622,109	$ 9,466,509	$ 9,159,304
Mortgage-Backed Securities	1,225,059	1,353,336	2,479,460	2,777,689
Investment Securities	1,118,693	1,088,753	2,203,092	2,073,859
Other	4,603	1,587	9,113	4,137
Total Interest Income	7,172,756	7,065,785	14,158,174	14,014,989
Interest Expense:
NOW and Money Market Accounts	104,321	103,851	207,436	222,280
Statement Savings Accounts	8,594	7,610	16,484	14,730
Certificate Accounts	423,267	470,104	831,999	949,263
FHLB Advances and Other Borrowed Money	179,768	339,233	428,427	760,988
Senior Convertible Debentures	121,680	121,680	243,360	243,360
Junior Subordinated Debentures	30,454	25,713	59,557	50,791
Total Interest Expense	868,084	1,068,191	1,787,263	2,241,412
Net Interest Income	6,304,672	5,997,594	12,370,911	11,773,577
Provision For Loan Losses	0	0	0	100,000
Net Interest Income After Provision For Loan Losses	6,304,672	5,997,594	12,370,911	11,673,577
Non-Interest Income:
Gain on Sale of Investment Securities	153,650	181,814	411,718	1,668,753
Gain on Sale of Loans	191,589	181,082	400,555	335,101
Service Fees on Deposit Accounts	265,036	274,651	505,381	532,167
Commissions From Insurance Agency	122,143	103,547	291,990	233,659
Trust Income	162,000	148,800	324,000	297,600
Bank Owned Life Insurance Income	132,000	87,000	264,000	174,000
Check Card Fee Income	257,110	248,119	495,252	479,420
Grant Income	0	0	265,496	0
Other	180,805	162,572	333,681	317,892
Total Non-Interest Income	1,464,333	1,387,585	3,292,073	4,038,592
Non-Interest Expense:
Compensation and Employee Benefits	3,177,520	2,986,924	6,508,318	5,973,955
Occupancy	470,532	455,053	967,250	945,711
Advertising	112,806	99,564	242,783	195,725
Depreciation and Maintenance of Equipment	499,041	445,585	975,415	862,830
Federal Deposit Insurance Corporation (FDIC) Insurance Premiums	127,443	155,592	260,490	315,813
Net Cost (Benefit) of Operation of OREO	1,945	90,873	(673,981)	287,497
Prepayment Penalties on Federal Home Loan Bank Advances	281,206	0	528,712	787,851
Other	1,022,630	1,101,446	2,420,080	2,220,250
Total Non-Interest Expense	5,693,123	5,335,037	11,229,067	11,589,632
Income Before Income Taxes	2,075,882	2,050,142	4,433,917	4,122,537
Provision For Income Taxes	509,608	527,054	1,150,900	1,094,822
Net Income	1,566,274	1,523,088	3,283,017	3,027,715
Preferred Stock Dividends	110,000	110,000	220,000	220,000
Net Income Available to Common Shareholders	$ 1,456,274	$ 1,413,088	$ 3,063,017	$ 2,807,715
Net Income Per Common Share (Basic)	$ 0.49	$ 0.48	$ 1.04	$ 0.95
Net Income Per Common Share (Diluted)	0.47	0.46	0.99	0.91
Cash Dividend Per Share on Common Stock	$ 0.08	$ 0.08	$ 0.16	$ 0.16
Weighted Average Shares Outstanding (Basic)	2,944,001	2,944,001	2,944,001	2,944,001
Weighted Average Shares Outstanding (Diluted)	3,248,444	3,248,249	3,248,445	3,248,240

XML

Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Net Income	$ 1,566,274	$ 1,523,088	$ 3,283,017	$ 3,027,715
Unrealized Gains On Securities:
Unrealized Holding Gains (Losses) on Securities Available For Sale, Net of Taxes of $1,928,197 and $(1,494,172) at June 30, 2016 and 2015, Respectively	(3,151,680)	2,441,980	(4,307,424)	1,240,793
Reclassification Adjustment for Gains Included in Net Income, Net of Taxes of $58,387 and $69,089 at June 30, 2016 and 2015, Respectively	(95,263)	(112,725)	(255,265)	(1,034,627)
Amortization of Unrealized Gains on AFS Securities Transferred to HTM	(17,955)		(58,187)
Other Comprehensive Income (Loss), Transfers from Held-to-maturity to Available-for-Sale Securities, Net of Tax		(10,363)		(10,363)
Other Comprehensive Income (Loss)	3,038,462	(2,565,068)	3,993,972	(2,285,783)
Comprehensive Income (Loss)	$ 4,604,736	$ (1,041,980)	$ 7,276,989	$ 741,932

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Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parenthetical) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Statement of Comprehensive Income [Abstract]
Other Comprehensive Income, Amortization on Unrealized Gain on AFS Transfer to HTM, Tax	$ (10,986)		$ (35,602)
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax	1,928,197	$ (1,494,172)
Available-for-sale Securities, Income Tax Expense on Change in Unrealized Holding Gain (Loss)			2,635,791	$ (758,513)
Other Comprehensive Income (Loss), Available-for-sale Securities, before Reclassification Adjustments, Tax	$ 58,387	$ 69,089
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, Tax			$ 156,453	$ 634,126

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Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($)	Total	Preferred Stock	Common Stock	Additional Paid-In Capital	Treasury Stock	Accumulated Other Comprehensive Income	Retained Earnings
Balance at at Dec. 31, 2014	$ 87,435,385	$ 22,000,000	$ 31,449	$ 11,990,813	$ (4,330,712)	$ 5,476,375	$ 52,267,460
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	3,027,715						3,027,715
Other Comprehensive Income, Net Of Tax:	(2,285,783)					(2,285,783)
Stock Issued During Period, Value, Other	15
Stock Issued During Period, Value, Share-based Compensation, Net of Forfeitures	(25,358)
Adjustments to Additional Paid in Capital, Other	25,343
Stock Compensation Expense	6,338			6,338
Cash Dividends on Preferred Stock	(220,000)						(220,000)
Cash Dividends on Common Stock	(471,275)						(471,275)
Balance at at Jun. 30, 2015	87,492,380	22,000,000	31,464	12,022,494	(4,330,712)	3,190,592	54,603,900
Nonvested Restricted Stock	(25,358)
Nonvested Restricted Stock	(25,358)
Balance at at Dec. 31, 2015	90,967,422	22,000,000	31,464	12,028,832	(4,330,712)	4,262,361	57,000,835
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income	3,283,017						3,283,017
Other Comprehensive Income, Net Of Tax:	3,993,972					3,993,972
Stock Compensation Expense	3,984			3,984
Cash Dividends on Preferred Stock	(220,000)						(220,000)
Cash Dividends on Common Stock	(471,276)						(471,276)
Balance at at Jun. 30, 2016	97,557,119	$ 22,000,000	$ 31,464	$ 12,032,816	$ (4,330,712)	$ 8,256,333	$ 59,592,576
Nonvested Restricted Stock	$ (25,358)

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$ 3,283,017	$ 3,027,715
Adjustments To Reconcile Net Income To Net Cash Provided By Operating Activities:
Depreciation Expense	698,002	609,013
Stock Option Compensation Expense	3,984	6,338
Discount Accretion and Premium Amortization	2,660,159	2,044,787
Provisions for Losses on Loans	0	100,000
Income From Bank Owned Life Insurance	(264,000)	(174,000)
Gain on Sales of Loans	(400,555)	(335,101)
Gain on Sales of Mortgage-Backed Securities	(46,040)	(503,051)
Gain on Sales of Investment Securities	(365,678)	(1,165,702)
Gain on Sale of OREO	(781,363)	(104,813)
Write Down on OREO	40,000	174,400
Amortization of Deferred Costs on Loans	57,977	24,866
Proceeds From Sale of Loans Held For Sale	14,835,314	11,772,855
Origination of Loans Held For Sale	(13,654,294)	(11,972,819)
Decrease (Increase) in Accrued Interest Receivable:
Loans	14,871	105,860
Mortgage-Backed Securities	(33,577)	18,722
Investment Securities	44,419	(115,003)
Increase in Advance Payments By Borrowers	319,637	298,720
Other, Net	1,824,276	997,909
Net Cash Provided By Operating Activities	8,236,149	4,810,696
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of Mortgage-Backed Securities Available For Sale	(31,230,934)	(27,734,716)
Principal Repayments on Mortgage-Backed Securities Available For Sale	13,928,123	14,907,051
Principal Repayments on Mortgage-Backed Securities Held To Maturity	2,613,163	1,014,906
Payments to Acquire Mortgage Backed Securities (MBS) categorized as Held-to-maturity	(1,507,125)
Purchase of Investment Securities Available For Sale	(18,938,907)	(60,620,546)
Payments for (Proceeds from) Other Investing Activities	8,729,548
Maturities of Investment Securities Available For Sale	5,032,629	15,329,891
Proceeds From Sale of Investment Securities Available For Sale	12,158,368	30,890,194
Proceeds From Sale Of Mortgage-Backed Securities Available For Sale	2,423,078	23,333,612
Purchase of FHLB Stock	(2,827,100)	(2,020,700)
Redemption of FHLB Stock	2,993,600	3,130,700
Increase (Decrease) In Loans Receivable	(5,444,078)	20,012,876
Proceeds From Sale of OREO	2,867,121	1,300,046
Purchase and Improvement of Premises and Equipment	(789,711)	(1,286,685)
Net Cash Provided (Used) By Investing Activities	(9,992,225)	18,256,629
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (Decrease) in Deposit Accounts	5,505,712	(910,323)
Proceeds from FHLB Advances	132,705,000	174,790,000
Repayment of FHLB Advances	(138,235,000)	(197,290,000)
Increase in Other Borrowings, Net	2,972,904	362,107
Dividends to Preferred Stock Shareholders	(220,000)	(220,000)
Dividends to Common Stock Shareholders	(471,276)	(471,275)
Net Cash Provided (Used) By Financing Activities	2,257,340	(23,739,491)
Net Increase (Decrease) in Cash and Cash Equivalents	501,264	(672,166)
Cash and Cash Equivalents at Beginning of Period	8,381,951	10,192,702
Cash and Cash Equivalents at End of Period	8,883,215	9,520,536
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest	1,857,994	2,404,297
Income Taxes	155,242	672,388
Supplemental Schedule of Non Cash Transactions:
Transfers From Loans Receivable to OREO	142,140	$ 3,723,940
Transfers of AFS Mortgage Backed Securities to HTM	0
Transfers of Held to Maturity Mortgage Baked Securities to Available For Sale	$ 32,811,452

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Basis of Presentation

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and accounting principles generally accepted in the United States of America ("U.S. GAAP"); therefore, they do not include all disclosures necessary for a complete presentation of financial condition, results of operations, and cash flows.  Such statements are unaudited but, in the opinion of management, reflect all adjustments, which are of a normal recurring nature and necessary for a fair presentation of results for the selected interim periods.  Users of financial information produced for interim periods are encouraged to refer to the footnotes contained in the audited consolidated financial statements appearing in Security Federal Corporation’s (the “Company”) 2015 Annual Report to Shareholders which was filed as an exhibit to our Annual Report on Form 10-K for the year ended December 31, 2015 (“2015 10-K”) when reviewing interim financial statements. 

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Principles of Consolidation

6 Months Ended

Jun. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Principles of Consolidation

Principles of Consolidation

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Critical Accounting Policies

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Critical Accounting Policies

Critical Accounting Policies

The Company has adopted various accounting policies, which govern the application of accounting principles generally accepted in the United States in the preparation of our financial statements.  Our significant accounting policies are described in the footnotes to the audited consolidated financial statements at December 31, 2015 included in our 2015 Annual Report to Shareholders.  Certain accounting policies involve significant judgments and assumptions by management, which have a material impact on the carrying value of certain assets and liabilities, and, as such, have a greater possibility of producing results that could be materially different than originally reported.  We consider these accounting policies to be critical accounting policies.  The judgments and assumptions we use are based on historical experience and other factors, which we believe to be reasonable under the circumstances.  Because of the nature of the judgments and assumptions we make, actual results could differ from these judgments and estimates which could have a material impact on our carrying values of assets and liabilities and our results of operations.

The Company believes the allowance for loan losses is a critical accounting policy that requires the most significant judgments and estimates used in preparation of the consolidated financial statements.  The impact of an unexpected and sudden large loss could deplete the allowance and potentially require increased provisions to replenish the allowance, which would negatively affect earnings. The Company provides for loan losses using the allowance method.  Accordingly, all loan losses are charged to the related allowance and all recoveries are credited to the allowance for loan losses.  Additions to the allowance for loan losses are provided by charges to operations based on various factors, which, in management’s judgment, deserve current recognition in estimating possible losses.  Such factors considered by management include the fair value of the underlying collateral, stated guarantees by the borrower (if applicable), the borrower’s ability to repay from other economic resources, growth and composition of the loan portfolio, the relationship of the allowance for loan losses to the outstanding loans, loss experience, delinquency trends, and general economic conditions.  Management evaluates the carrying value of the loans periodically and the allowance is adjusted accordingly.

3. Critical Accounting Policies, Continued

While management uses the best information available to make evaluations, future adjustments may be necessary if economic conditions differ substantially from the assumptions used in making these evaluations.  The allowance for loan losses is subject to periodic evaluations by our bank regulatory agencies, including the Board of Governors of the Federal Reserve System ("Federal Reserve"), the FDIC and the South Carolina Board of Financial Institutions, that may require adjustments to be made to the allowance based upon the information that is available at the time of their examination.

The Company values impaired loans at the loan’s fair value if it is probable that the Company will be unable to collect all amounts due according to the terms of the loan agreement at the present value of expected cash flows, the market price of the loan, if available, or the value of the underlying collateral.  Expected cash flows are required to be discounted at the loan’s effective interest rate.  When the ultimate collectibility of an impaired loan’s principal is in doubt, wholly or partially, all cash receipts are applied to principal.  When this doubt does not exist, cash receipts are applied under the contractual terms of the loan agreement first to interest and then to principal.  Once the recorded principal balance has been reduced to zero, future cash receipts are applied to interest income to the extent that any interest has been foregone.  Further cash receipts are recorded as recoveries of any amounts previously charged off.

The Company uses assumptions and estimates in determining income taxes payable or refundable for the current year, deferred income tax liabilities and assets for events recognized differently in its financial statements and income tax returns, and income tax expense. Determining these amounts requires analysis of certain transactions and interpretation of tax laws and regulations. The Company exercises considerable judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets. These judgments and estimates are reevaluated on a continual basis as regulatory and business factors change. No assurance can be given that either the tax returns submitted by us or the income tax reported on the Consolidated Financial Statements will not be adjusted by either adverse rulings by the United States Tax Court, changes in the tax code, or assessments made by the Internal Revenue Service.

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Earnings Per Common Share

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Earnings Per Share [Text Block]

Earnings Per Common Share

Accounting guidance specifies the computation, presentation and disclosure requirements for earnings per share (“EPS”) for entities with publicly held common stock or potential common stock such as options, warrants, convertible securities or contingent stock agreements if those securities trade in a public market. Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding.  Diluted EPS is similar to the computation of basic EPS except that the denominator is increased to include the number of additional common shares that would have been outstanding if the dilutive common shares had been issued.  The dilutive effect of options outstanding under the Company’s stock option plan is reflected in diluted EPS by application of the treasury stock method.

Net income available to common shareholders represents consolidated net income adjusted for preferred dividends declared, accretions of discounts and amortization of premiums on preferred stock issuances and cumulative dividends related to the current dividend period that have not been declared as of period end.

The following table provides a reconciliation of net income to net income available to common shareholders for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Earnings Available To Common Shareholders:
Net Income		$1,566,274		$1,523,088		$3,283,017		$3,027,715
Preferred Stock Dividends	110,000		110,000		220,000		220,000
Net Income Available To Common Shareholders		$1,456,274		$1,413,088		$3,063,017		$2,807,715

4. Earnings Per Common Share, Continued

The following tables include a summary of the Company's basic and diluted EPS for the periods indicated.

	Three Months Ended June 30,
	2016					2015
	Income		Shares	Per Share Amounts		Income		Shares	Per Share Amounts
Basic EPS	$	1,456,274	2,944,001	$	0.49	$	1,413,088	2,944,001	$	0.48
Effect of Dilutive Securities:
Senior Convertible Debentures	75,442		304,200	(0.02)		75,442		304,200	(0.02)
Unvested Restricted Stock	—		243	—		—		48	—
Diluted EPS	$	1,531,716	3,248,444	$	0.47	$	1,488,530	3,248,249	$	0.46

	Six Months Ended June 30,
	2016					2015
	Income		Shares	Per Share Amounts		Income		Shares	Per Share Amounts
Basic EPS	$	3,063,017	2,944,001	$	1.04	$	2,807,715	2,944,001	$	0.95
Effect of Dilutive Securities:
Senior Convertible Debentures	150,883		304,200	(0.04)		150,883		304,200	(0.04)
Unvested Restricted Stock	—		244	(0.01)		—		39	—
Diluted EPS	$	3,213,900	3,248,445	$	0.99	$	2,958,598	3,248,240	$	0.91

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Stock-Based Compensation

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Employee Benefit Plans

Stock-Based Compensation

Certain officers and directors of the Company participate in incentive and non-qualified stock option plans. Options are granted at exercise prices not less than the fair value of the Company’s common stock on the date of the grant. The following is a summary of the activity under the Company’s stock option plans for the periods presented:

	Three Months Ended June 30,
	2016			2015
	Shares		Weighted Average Exercise Price	Shares	Weighted Average Exercise Price
Balance, Beginning of Period	26,000		$23.50	29,500	$23.55
Options Granted	—		—	—	—
Options Exercised	—		—	—	—
Options Forfeited	(1,000	)	23.49	—	—
Balance, End of Period	25,000		$23.50	29,500	$23.55

5. Stock-Based Compensation, Continued

	Six Months Ended June 30,
	2016			2015
	Shares		Weighted Average Exercise Price	Shares		Weighted Average Exercise Price
Balance, Beginning of Period	29,500		$23.55	47,500		$22.41
Options Granted	—		—	—		—
Options Exercised	—		—	—		—
Options Forfeited	(4,500	)	23.82	(18,000	)	20.55
Balance, End of Period	25,000		$23.50	29,500		$23.55
Options Exercisable	20,700			19,800
Options Available For Grant	50,000			50,000

At June 30, 2016, the Company had the following options outstanding:

Grant Date	Outstanding Options	Option Price	Expiration Date
08/24/06	3,500	$23.03	08/24/16
05/24/07	2,000	$24.34	05/24/17
07/09/07	1,000	$24.61	07/09/17
10/01/07	2,000	$24.28	10/01/17
01/01/08	12,000	$23.49	01/01/18
05/19/08	2,500	$22.91	05/19/18
07/01/08	2,000	$22.91	07/01/18

None of the options outstanding at June 30, 2016 or 2015 had an exercise price below the average market price during the three or six month periods ended June 30, 2016 or 2015. Therefore, these options were not deemed to be dilutive to EPS in those periods.

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Investment and Mortgage-Backed Securities, Available for Sale

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Investment and Mortgage-Backed Securities, Available for Sale

Investment and Mortgage-Backed Securities, Available For Sale

The amortized cost, gross unrealized gains, gross unrealized losses, and fair values of investment and mortgage-backed securities available for sale at the dates indicated were as follows:

	June 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Federal National Mortgage Association ("FNMA") Bonds	$	997,940	$	25,974	$	—	$	1,023,914
Small Business Administration (“SBA”) Bonds	99,488,051		1,525,658		128,028		100,885,681
Tax Exempt Municipal Bonds	79,348,443		6,609,439		—		85,957,882
Taxable Municipal Bonds	1,015,365		28,895		—		1,044,260
Mortgage-Backed Securities	193,948,106		5,103,368		319,945		198,731,529
Equity Securities	250,438		59,908		—		310,346
Total Available For Sale	$	375,048,343	$	13,353,242	$	447,973	$	387,953,612
	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
FHLB Securities	$	2,000,000	$	—	$	67,912	$	1,932,088
Federal Farm Credit Bank ("FFCB") Securities	2,000,000		—		12,064		1,987,936
FNMA Bonds	997,564		6,767		—		1,004,331
SBA Bonds	110,195,113		1,415,464		193,795		111,416,782
Tax Exempt Municipal Bonds	73,499,636		2,770,115		204,132		76,065,619
Mortgage-Backed Securities	180,197,347		3,281,116		681,251		182,797,212
Equity Securities	250,438		59,464		—		309,902
Total Available For Sale	$	369,140,098	$	7,532,926	$	1,159,154	$	375,513,870

The FHLB, FFCB, FNMA and the Federal Home Loan Mortgage Corporation (“FHLMC”) are government sponsored enterprises ("GSEs") and the securities and bonds issued by GSEs are not backed by the full faith and credit of the United States government.  SBA bonds are backed by the full faith and credit of the United States government. Included in the tables above and below in mortgage-backed securities are Government National Mortgage Association ("GNMA") mortgage-backed securities, which are also backed by the full faith and credit of the United States government.  At June 30, 2016 the Bank held an amortized cost and fair value of $116.2 million and $119.2 million, respectively, in GNMA mortgage-backed securities included in mortgage-backed securities listed above compared to an amortized cost and fair value of $116.8 million and $118.5 million, respectively, at December 31, 2015.

Also included in mortgage-backed securities in the tables above and below are private label collateralized mortgage obligation ("CMO") securities. These securities are issued by non-governmental real estate mortgage investment conduits, which are not backed by the full faith and credit of the United States government.  At June 30, 2016 the Bank held an amortized cost and fair value of $16.6 million and $16.3 million, respectively, in private label CMO mortgage-backed securities, which are included in mortgage-backed securities in the table above, compared to an amortized cost and fair value of $3.8 million at December 31, 2015.

6. Investment and Mortgage-Backed Securities, Available For Sale, Continued

The amortized cost and fair value of investment and mortgage-backed securities available for sale at June 30, 2016 are shown below by contractual maturity.  Expected maturities will differ from contractual maturities because borrowers have the right to prepay obligations with or without call or prepayment penalties. Since mortgage-backed securities are not due at a single maturity date, they are disclosed separately, rather than allocated over the maturity groupings below.

Investment Securities	Amortized Cost		Fair Value
Less Than One Year	$	395,682	$	396,538
One – Five Years	14,763,466		15,081,296
Over Five – Ten Years	44,939,410		46,178,065
More Than Ten Years	121,001,679		127,566,184
Mortgage-Backed Securities	193,948,106		198,731,529
	$	375,048,343	$	387,953,612

At June 30, 2016 the amortized cost and fair value of investment and mortgage-backed securities available for sale pledged as collateral for certain deposit accounts, FHLB advances and other borrowings were $76.0 million and $78.7 million, respectively, compared to an amortized cost and fair value of $81.0 million and $83.2 million, respectively, at December 31, 2015.

The Bank received $11.4 million and $17.9 million in gross proceeds from sales of available for sale securities during the three months ended June 30, 2016 and 2015, respectively. As a result, the Bank recognized gross gains of $154,000 and $182,000, respectively, for the three months endedJune 30, 2016 and 2015, with no gross losses recognized for the same periods.

During the six months ended June 30, 2016 and 2015, the Bank received $14.6 million and $54.2 million, respectively, in gross proceeds from sales of available for sale securities. As a result, the Bank recognized gross gains of $412,000 and $1.7 million, respectively, and gross losses of $0 and $47,000, respectively, for the six months ended June 30, 2016 and 2015.

The following tables show gross unrealized losses and fair value, aggregated by investment category, and length of time that the individual available for sale securities have been in a continuous unrealized loss position at the dates indicated.

	June 30, 2016
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
SBA Bonds	$	15,665,655	$	71,059	$	9,429,862	$	56,969	$	25,095,517	$	128,028
Mortgage-Backed Securities	15,222,552		261,125		5,728,889		58,820		20,951,441		319,945
	$	30,888,207	$	332,184	$	15,158,751	$	115,789	$	46,046,958	$	447,973

	December 31, 2015
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
FHLB Securities	$	—	$	—	$	1,932,088	$	67,912	$	1,932,088	$	67,912
FFCB Securities	1,987,936		12,064		—		—		1,987,936		12,064
SBA Bonds	25,090,453		119,533		7,982,777		74,262		33,073,230		193,795
Tax Exempt Municipal Bonds	13,668,473		175,020		709,800		29,112		14,378,273		204,132
Mortgage-Backed Securities	63,273,417		648,862		1,706,086		32,389		64,979,503		681,251
	$	104,020,279	$	955,479	$	12,330,751	$	203,675	$	116,351,030	$	1,159,154

6. Investment and Mortgage-Backed Securities, Available For Sale, Continued

Securities classified as available for sale are recorded at fair market value.  At June 30, 2016 and December 31, 2015, 25.8% and17.6% of the unrealized losses, representing12and nine individual securities, respectively, consisted of securities in a continuous loss position for 12 months or more. The Company has the ability and intent to hold these securities until such time as the value recovers or the securities mature.  The Company believes, based on industry analyst reports and credit ratings, that the deterioration in value is attributable to changes in market interest rates and is not in the credit quality of the issuer and therefore, these losses are not considered other-than-temporary. The Company reviews its investment securities portfolio at least quarterly and more frequently when economic conditions warrant, assessing whether there is any indication of other-than-temporary impairment (“OTTI”).

Factors considered in the review include estimated future cash flows, length of time and extent to which market value has been less than cost, the financial condition and near term prospects of the issuer, and our intent and ability to retain the security to allow for an anticipated recovery in market value. If the review determines that there is OTTI, then an impairment loss is recognized in earnings equal to the entire difference between the investment’s cost and its fair value at the balance sheet date of the reporting period for which the assessment is made, or the Company may recognize a portion in other comprehensive income. The fair value of investments on which OTTI is recognized then becomes the new cost basis of the investment. There was no OTTI recognized during the six months ended June 30, 2016.

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Investment and Mortgage-Backed Securities, Held to Maturity

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Investment and Mortgage-Backed Securities, Held to Maturity

7. Investment and Mortgage-Backed Securities, Held to Maturity

The amortized cost, gross unrealized gains, gross unrealized losses, and fair values of held to maturity securities at the dates indicated below were as follows:

	June 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Mortgage-Backed Securities (1)	$	28,508,469	$	459,443	$	5,947	$	28,961,965
Total Held To Maturity	$	28,508,469	$	459,443	$	5,947	$	28,961,965

^{(1) COMPRISED OF GSEs OR GNMA MORTGAGE-BACKED SECURITIES} 

	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Mortgage-Backed Securities (1)	$	29,873,098	$	22,600	$	214,418	$	29,681,280
Total Held To Maturity	$	29,873,098	$	22,600	$	214,418	$	29,681,280

^{(1) COMPRISED OF GSEs OR GNMA MORTGAGE-BACKED SECURITIES} 

Other than the mortgage-backed securities included above, there were no other investment securities classified as held to maturity at June 30, 2016 and December 31, 2015.

At June 30, 2016, the Bank held an amortized cost and fair value of $18.4 million and $18.7 million, respectively in GNMA mortgage-backed securities, which are included in the table above, compared to an amortized cost and fair value of $20.5 million and $20.4 million, respectively, at December 31, 2015. The Company has not invested in any private label mortgage-backed securities classified as held to maturity.

At June 30, 2016, the amortized cost and fair value of mortgage-backed securities held to maturity that were pledged as collateral for certain deposit accounts, FHLB advances and other borrowings were $23.4 million and $23.7 million, respectively, compared to an amortized cost and fair value of $26.0 million and $25.8 million, respectively, at December 31, 2015.

7. Investment and Mortgage-Backed Securities, Held to Maturity, Continued

The following tables show gross unrealized losses, fair value, and length of time that individual held to maturity securities have been in a continuous unrealized loss position at the dates indicated below.

	June 30, 2016
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Mortgage-Backed Securities (1)	$	1,495,145	$	2,709	$	1,473,129	$	3,238	$	2,968,274	$	5,947
	$	1,495,145	$	2,709	$	1,473,129	$	3,238	$	2,968,274	$	5,947

^{(1) COMPRISED OF GSEs OR GNMA MORTGAGE-BACKED SECURITIES} 

	December 31, 2015
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
Mortgage-Backed Securities (1)	$	25,484,972	$	214,418	$	—	$	—	$	25,484,972	$	214,418
	$	25,484,972	$	214,418	$	—	$	—	$	25,484,972	$	214,418

^{(1) COMPRISED OF GSEs OR GNMA MORTGAGE-BACKED SECURITIES} 

The Company’s held to maturity portfolio is recorded at amortized cost.  The Company has the ability and intent to hold these securities to maturity.

XML

Loans Receivable, Net

6 Months Ended

Jun. 30, 2016

Loans Receivable, Net [Abstract]

Financing Receivables [Text Block]

Loans Receivable, Net

Loans receivable, net, consisted of the following as of the dates indicated below:

	June 30, 2016		December 31, 2015
Residential Real Estate Loans	$	77,229,040	$	76,373,071
Consumer Loans	50,076,365		50,380,289
Commercial Business Loans	14,233,684		12,514,133
Commercial Real Estate Loans	204,757,630		200,083,125
Total Loans Held For Investment	346,296,719		339,350,618
Loans Held For Sale	1,682,094		2,462,559
Total Loans Receivable, Gross	347,978,813		341,813,177
Less:
Allowance For Loan Losses	8,395,214		8,275,133
Loans In Process	4,438,089		2,902,849
Deferred Loan Fees	109,285		62,466
	12,942,588		11,240,448
Total Loans Receivable, Net	$	335,036,225	$	330,572,729

The Company uses a risk based approach based on the following credit quality measures when analyzing the loan portfolio: pass, caution, special mention, and substandard. These indicators are used to rate the credit quality of loans for the purposes of determining the Company’s allowance for loan losses. Pass loans are loans that are performing and are deemed adequately protected by the net worth of the borrower or the underlying collateral value. These loans are considered to have the least amount of risk in terms of determining the allowance for loan losses. Loans that are graded as substandard are considered to have the most risk. These loans typically have an identified weakness or weaknesses and are inadequately protected by the net worth of the borrower or collateral value. All loans 90 days or more past due are automatically classified in this category. The caution and special mention categories fall in between the pass and substandard grades and consist of loans that do not currently expose the Company to sufficient risk to warrant adverse classification but possess weaknesses.

The following tables list the loan grades used by the Company as credit quality indicators and the balance for each loan category at the dates presented, excluding loans held for sale.

	Credit Quality Measures
June 30, 2016	Pass		Caution		Special Mention		Substandard		Total Loans
Residential Real Estate	$	69,300,706	$	711,846	$	699,591	$	6,516,897	$	77,229,040
Consumer	46,068,672		2,552,834		88,022		1,366,837		50,076,365
Commercial Business	12,059,122		1,730,675		59,175		384,712		14,233,684
Commercial Real Estate	126,085,696		56,069,386		15,175,709		7,426,839		204,757,630
Total	$	253,514,196	$	61,064,741	$	16,022,497	$	15,695,285	$	346,296,719

	Credit Quality Measures
December 31, 2015	Pass		Caution		Special Mention		Substandard		Total Loans
Residential Real Estate	$	67,605,311	$	1,264,415	$	607,336	$	6,896,009	$	76,373,071
Consumer	46,344,056		2,510,519		81,617		1,444,097		50,380,289
Commercial Business	10,519,123		1,465,136		102,046		427,828		12,514,133
Commercial Real Estate	129,242,390		43,863,659		17,304,431		9,672,645		200,083,125
Total	$	253,710,880	$	49,103,729	$	18,095,430	$	18,440,579	$	339,350,618

8.    Loans Receivable, Net, Continued

The following tables present an age analysis of past due balances by category at June 30, 2016 and December 31, 2015:

June 30, 2016	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable
Residential Real Estate	$	—	$	491,302	$	3,057,525	$	3,548,827	$	73,680,213	$	77,229,040
Consumer	686,826		100,051		319,099		1,105,976		48,970,389		50,076,365
Commercial Business	511,435		—		147,002		658,437		13,575,247		14,233,684
Commercial Real Estate	3,175,585		562,456		2,764,842		6,502,883		198,254,747		204,757,630
Total	$	4,373,846	$	1,153,809	$	6,288,468	$	11,816,123	$	334,480,596	$	346,296,719

December 31, 2015	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable
Residential Real Estate	$	—	$	1,144,381	$	3,306,675	$	4,451,056	$	71,922,015	$	76,373,071
Consumer	710,881		282,314		575,866		1,569,061		48,811,228		50,380,289
Commercial Business	101,201		—		178,076		279,277		12,234,856		12,514,133
Commercial Real Estate	3,309,287		929,819		2,973,135		7,212,241		192,870,884		200,083,125
Total	$	4,121,369	$	2,356,514	$	7,033,752	$	13,511,635	$	325,838,983	$	339,350,618

At June 30, 2016 and December 31, 2015, the Company did not have any loans that were 90 days or more past due and still accruing interest. Our strategy is to work with our borrowers to reach acceptable payment plans while protecting our interests in the existing collateral.  In the event an acceptable arrangement cannot be reached, we may have to acquire these properties through foreclosure or other means and subsequently sell, develop, or liquidate them.

The following table shows non-accrual loans by category at June 30, 2016 compared to December 31, 2015:

	June 30, 2016				December 31, 2015				$			%
	Amount		Percent (1)		Amount		Percent (1)		Increase (Decrease)			Increase (Decrease)
Non-accrual Loans:
Residential Real Estate	$	3,057,525	0.90	%	$	3,306,675	0.98	%	$	(249,150	)	(7.5	)%
Consumer	319,099		0.09		575,866		0.17		(256,767		)	(44.6	)
Commercial Business	147,002		0.04		178,076		0.05		(31,074		)	(17.4	)
Commercial Real Estate	2,764,842		0.81		2,973,135		0.80		(208,293		)	(7.0	)
Total Non-accrual Loans	$	6,288,468	1.84	%	$	7,033,752	2.09	%	$	(745,284	)	(10.6	)%

^{(1) PERCENT OF TOTAL LOANS HELD FOR INVESTMENT, NET OF DEFERRED FEES AND LOANS IN PROCESS.} 

8.    Loans Receivable, Net, Continued

The following tables show the activity in the allowance for loan losses by category for the three and six months ended June 30, 2016 and 2015:

	Three Months Ended June 30, 2016
	Residential Real Estate		Consumer			Commercial Business		Commercial Real Estate			Total
Beginning Balance	$	1,399,703	$	1,042,530		$	803,146	$	5,027,925		$	8,273,304
Provision for Loan Losses	52,888		104,830			62,721		(220,439		)	—
Charge-Offs	—		(59,452		)	—		(131,418		)	(190,870		)
Recoveries	10,045		28,068			—		274,667			312,780
Ending Balance	$	1,462,636	$	1,115,976		$	865,867	$	4,950,735		$	8,395,214

	Six Months Ended June 30, 2016
	Residential Real Estate		Consumer			Commercial Business		Commercial Real Estate			Total
Beginning Balance	$	1,323,183	$	1,063,153		$	773,948	$	5,114,849		$	8,275,133
Provision for Loan Losses	129,408		153,797			91,919		(375,124		)	—
Charge-Offs	—		(153,881		)	—		(202,618		)	(356,499		)
Recoveries	10,045		52,907			—		413,628			476,580
Ending Balance	$	1,462,636	$	1,115,976		$	865,867	$	4,950,735		$	8,395,214

	Three Months Ended June 30, 2015
	Residential Real Estate			Consumer			Commercial Business		Commercial Real Estate			Total
Beginning Balance	$	1,354,435		$	1,141,797		$	496,803	$	4,925,882		$	7,918,917
Provision for Loan Losses	(44,208		)	125,774			246,264		(327,830		)	—
Charge-Offs	(916		)	(273,007		)	—		(4,023		)	(277,946		)
Recoveries	767			13,420			4,000		136,424			154,611
Ending Balance	$	1,310,078		$	1,007,984		$	747,067	$	4,730,453		$	7,795,582

	Six Months Ended June 30, 2015
	Residential Real Estate			Consumer			Commercial Business			Commercial Real Estate			Total
Beginning Balance	$	1,392,065		$	886,716		$	159,353		$	5,919,362		$	8,357,496
Provision for Loan Losses	(36,838		)	456,705			591,341			(911,208		)	100,000
Charge-Offs	(45,916		)	(393,625		)	(10,947		)	(446,472		)	(896,960		)
Recoveries	767			58,188			7,320			168,771			235,046
Ending Balance	$	1,310,078		$	1,007,984		$	747,067		$	4,730,453		$	7,795,582

8.    Loans Receivable, Net, Continued

The following tables present information related to impaired loans evaluated individually and collectively for impairment in the allowance for loan losses at the dates indicated:

	Allowance For Loan Losses
June 30, 2016	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	—	$	1,462,636	$	1,462,636
Consumer	4,900		1,111,076		1,115,976
Commercial Business	—		865,867		865,867
Commercial Real Estate	29,300		4,921,435		4,950,735
Total	$	34,200	$	8,361,014	$	8,395,214

	Allowance For Loan Losses
December 31, 2015	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	—	$	1,323,183	$	1,323,183
Consumer	32,300		1,030,853		1,063,153
Commercial Business	—		773,948		773,948
Commercial Real Estate	49,300		5,065,549		5,114,849
Total	$	81,600	$	8,193,533	$	8,275,133

The following tables present information related to impaired loans evaluated individually and collectively for impairment in loans receivable at the dates indicated:

	Loans Receivable
June 30, 2016	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	2,638,041	$	74,590,999	$	77,229,040
Consumer	191,568		49,884,797		50,076,365
Commercial Business	147,001		14,086,683		14,233,684
Commercial Real Estate	6,628,380		198,129,250		204,757,630
Total	$	9,604,990	$	336,691,729	$	346,296,719

	Loans Receivable
December 31, 2015	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	2,922,105	$	73,450,966	$	76,373,071
Consumer	372,382		50,007,907		50,380,289
Commercial Business	162,201		12,351,932		12,514,133
Commercial Real Estate	9,190,640		190,892,485		200,083,125
Total	$	12,647,328	$	326,703,290	$	339,350,618

8.    Loans Receivable, Net, Continued

Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as individually impaired management measures the impairment and records the loan at fair value. Fair value is estimated using one of the following methods: fair value of the collateral less estimated costs to sale, discounted cash flows, or market value of the loan based on similar debt. The fair value of the collateral less estimated costs to sell is the most frequently used method. Typically, the Company reviews the most recent appraisal and, if it is over 24 months old, will request a new third party appraisal. Depending on the particular circumstances surrounding the loan, including the location of the collateral, the date of the most recent appraisal and the value of the collateral relative to the recorded investment in the loan, management may order an independent appraisal immediately or, in some instances, may elect to perform an internal analysis. The average balance of impaired loans was $10.3 million for the three months ended June 30, 2016 compared to $15.2 million for the three months ended June 30, 2015.

The following tables present information related to impaired loans by loan category at June 30, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015.

	June 30, 2016						December 31, 2015
Impaired Loans	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With No Related Allowance Recorded:
Residential Real Estate	$	2,638,041	$	2,734,541	$	—	$	2,922,105	$	3,033,735	$	—
Consumer	129,612		137,911		—		120,889		129,188		—
Commercial Business	147,001		997,001		—		162,201		362,201		—
Commercial Real Estate	6,201,852		8,162,393		—		8,620,301		10,969,642		—
With An Allowance Recorded:
Residential Real Estate	—		—		—		—		—		—
Consumer	61,956		61,956		4,900		251,493		256,923		32,300
Commercial Business	—		—		—		—		—		—
Commercial Real Estate	426,528		439,542		29,300		570,339		577,139		49,300
Total
Residential Real Estate	2,638,041		2,734,541		—		2,922,105		3,033,735		—
Consumer	191,568		199,867		4,900		372,382		386,111		32,300
Commercial Business	147,001		997,001		—		162,201		362,201		—
Commercial Real Estate	6,628,380		8,601,935		29,300		9,190,640		11,546,781		49,300
Total	$	9,604,990	$	12,533,344	$	34,200	$	12,647,328	$	15,328,828	$	81,600

8.    Loans Receivable, Net, Continued

	Three Months Ended June 30,
	2016				2015
Impaired Loans	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Residential Real Estate	$	2,662,040	$	—	$	2,694,645	$	486
Consumer	289,655		—		181,718		—
Commercial Business	149,801		—		192,401		—
Commercial Real Estate	6,675,462		31,353		10,485,665		76,051
With An Allowance Recorded:
Residential Real Estate	—		—		273,476		—
Consumer	62,323		1,144		68,192		1,344
Commercial Business	—		—		—		—
Commercial Real Estate	434,101		—		1,269,379		15,807
Total
Residential Real Estate	2,662,040		—		2,968,121		486
Consumer	351,978		1,144		249,910		1,344
Commercial Business	149,801		—		192,401		—
Commercial Real Estate	7,109,563		31,353		11,755,044		91,858
Total	$	10,273,382	$	32,497	$	15,165,476	$	93,688

	Six Months Ended June 30,
	2016				2015
Impaired Loans	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Residential Real Estate	$	2,790,857	$	447	$	2,717,895	$	4,397
Consumer	296,075		—		182,812		104
Commercial Business	154,316		—		211,100		—
Commercial Real Estate	8,632,348		93,284		10,926,601		153,665
With An Allowance Recorded:
Residential Real Estate	—		—		275,966		—
Consumer	62,693		1,555		69,076		2,712
Commercial Business	—		—		—		—
Commercial Real Estate	437,943		—		1,275,070		35,110
Total
Residential Real Estate	2,790,857		447		2,993,861		4,397
Consumer	358,768		1,555		251,888		2,816
Commercial Business	154,316		—		211,100		—
Commercial Real Estate	9,070,291		93,284		12,201,671		188,775
Total	$	12,374,232	$	95,286	$	15,658,520	$	195,988

8.    Loans Receivable, Net, Continued

In the course of resolving delinquent loans, the Bank may choose to restructure the contractual terms of certain loans. A troubled debt restructuring ("TDR") is a restructuring in which the Bank, for economic or legal reasons related to a borrower’s financial difficulties, grants a concession to a borrower that it would not otherwise consider (Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 310-40).  The concessions granted on TDRs generally include terms to reduce the interest rate, extend the term of the debt obligation, or modify the payment structure on the debt obligation. The Bank grants such concessions to reassess the borrower’s financial status and develop a plan for repayment.  TDRs included in impaired loans at June 30, 2016 and December 31, 2015 were$5.3 millionand $6.7 million, respectively.

Loans on nonaccrual status at the date of modification are initially classified as nonaccrual TDRs. Loans on accruing status at the date of concession are initially classified as accruing TDRs if the loan is reasonably assured of repayment and performance is expected in accordance with its modified terms. Such loans may be designated as nonaccrual loans subsequent to the concession date if reasonable doubt exists as to the collection of interest or principal under the restructuring agreement. Nonaccrual TDRs are returned to accruing status when there is economic substance to the restructuring, there is documented credit evaluation of the borrower's financial condition, the remaining balance is reasonably assured of repayment in accordance with its modified terms, and the borrower has demonstrated sustained repayment performance in accordance with the modified terms for a reasonable period of time (generally a minimum of six months).

The following table is a summary of loans restructured as TDRs during the periods indicated:

	Six Months Ended June 30,
	2016					2015
Troubled Debt Restructurings	Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial Real Estate	—	$	—	$	—	3	$	840,292	$	840,292
Total	—	$	—	$	—	3	$	840,292	$	840,292

The Bank did not modify any loans that were considered to be TDRs during the six months ended June 30, 2016.

During the six months ended June 30, 2015, the Bank modified three commercial real estate loans that were considered to be TDRs. The Bank lowered the interest rate on one loan to allow the customer to begin making monthly principal and interest payments and changed the monthly payment to interest only for an agreed upon period for the other two loans.

At June 30, 2016, six loans totaling $770,000 that had previously been restructured as TDRs were in default, including two which had been restructured within the last 12 months. Three of the loans, with a balance of $641,000, defaulted during the six month period ended June 30, 2016. In comparison, at June 30, 2015, three loans totaling $468,000 that had previously been restructured as TDRs were in default, and one of the loans, with a balance of $62,000 defaulted during the six month period. The Bank considers any loan 30 days or more past due to be in default.

Our policy with respect to accrual of interest on loans restructured as a TDR follows relevant supervisory guidance.  That is, if a borrower has demonstrated performance under the previous loan terms and shows capacity to perform under the restructured loan terms, continued accrual of interest at the restructured interest rate is probable. If a borrower was materially delinquent on payments prior to the restructuring but shows capacity to meet the restructured loan terms, the loan will likely continue as nonaccrual going forward.  Lastly, if the borrower does not perform under the restructured terms, the loan is placed on nonaccrual status.

We closely monitor these loans and will cease accruing interest on them if management believes that the borrowers may not continue performing based on the restructured note terms.  If, after previously being classified as a TDR, a loan is restructured a second time, then that loan is automatically placed on nonaccrual status.  Our policy with respect to nonperforming loans requires the borrower to make a minimum of six consecutive payments in accordance with the modified loan terms before that loan can be placed back on accrual status.  In addition to this payment history, the borrower must demonstrate an ability to continue making payments on the loan prior to restoration of accrual status.

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Regulatory Matters

6 Months Ended

Jun. 30, 2016

Banking and Thrift [Abstract]

Regulatory Matters

Regulatory Matters

As a state-chartered, federally insured commercial bank, the Bank is subject to the capital requirements established by the FDIC. Under the FDIC’s capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios (set forth in the table below) of Tier 1 capital (as defined in the regulations) to total average assets (as defined), and minimum ratios of Tier 1 total capital (as defined) and common equity Tier 1 (“CET1”) capital to risk-weighted assets (as defined).

In addition to the minimum CET1, Tier 1 and total capital ratios, the Bank will have to maintain a capital conservation buffer consisting of additional CET1 capital equal to 2.5% of risk-weighted assets above the required minimum levels in order to avoid limitations on paying dividends, engaging in share repurchases, and paying discretionary bonuses based on percentages of eligible retained income that could be utilized for such actions. This new capital conservation buffer requirement began to be phased in starting in January 2016 at 0.625% of risk-weighted assets and will increase each year until fully implemented in January 2019.

The Company is a bank holding company registered with the Federal Reserve. Bank holding companies are subject to capital adequacy requirements of the Federal Reserve under the Bank Holding Company Act of 1956, as amended, and the regulations of the Federal Reserve. For a bank holding company with less than $1.0 billion in assets, the capital guidelines apply on a bank only basis and the Federal Reserve expects the holding company's subsidiary banks to be well-capitalized under the prompt corrective action regulations. If Security Federal Corporation was subject to regulatory guidelines for bank holding companies with $1.0 billion or more in assets, at June 30, 2016, it would have exceeded all regulatory capital requirements.

9. Regulatory Matters, Continued

As of June 30, 2016, the Bank and the Company exceeded all regulatory capital requirements and the Bank was considered “well capitalized” under regulatory capital guidelines of the FDIC. The following tables provide the Company’s and the Bank’s regulatory capital requirements and actual results at the dates indicated below:

	Actual				For Capital Adequacy				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
June 30, 2016
SECURITY FEDERAL CORP.
Tier 1 Risk-Based Core Capital (To Risk Weighted Assets)	$	88,132	21.6	%	$	24,486	6.0	%	N/A		N/A
Total Risk-Based Capital (To Risk Weighted Assets)	98,249		24.1	%	32,648		8.0	%	N/A		N/A
Common Equity Tier 1 Capital (To Risk Weighted Assets)	66,099		16.2	%	18,365		4.5	%	N/A		N/A
Tier 1 Leverage (Core) Capital (To Adjusted Tangible Assets)	88,132		10.9	%	32,247		4.0	%	N/A		N/A
SECURITY FEDERAL BANK
Tier 1 Risk-Based Core Capital (To Risk Weighted Assets)	$	88,209	21.6	%	$	24,523	6.0	%	$	32,698	8.0	%
Total Risk-Based Capital (To Risk Weighted Assets)	93,359		22.8	%	32,698		8.0	%	40,872		10.0	%
Common Equity Tier 1 Capital (To Risk Weighted Assets)	88,209		21.6	%	18,393		4.5	%	26,567		6.5	%
Tier 1 Leverage (Core) Capital (To Adjusted Tangible Assets)	88,209		10.9	%	32,238		4.0	%	40,297		5.0	%
December 31, 2015
SECURITY FEDERAL CORP.
Tier 1 Risk-Based Core Capital (To Risk Weighted Assets)	$	84,672	21.7	%	$	23,429	6.0	%	N/A		N/A
Total Risk-Based Capital (To Risk Weighted Assets)	95,429		24.4	%	31,239		8.0	%	N/A		N/A
Common Equity Tier 1 Capital (To Risk Weighted Assets)	63,504		16.3	%	17,572		4.5	%	N/A		N/A
Tier 1 Leverage (Core) Capital (To Adjusted Tangible Assets)	84,672		10.6	%	31,811		4.0	%	N/A		N/A
SECURITY FEDERAL BANK
Tier 1 Risk-Based Core Capital (To Risk Weighted Assets)	$	87,728	22.5	%	$	23,440	6.0	%	$	31,254	8.0	%
Total Risk-Based Capital (To Risk Weighted Assets)	92,653		23.7	%	31,254		8.0	%	39,067		10.0	%
Common Equity Tier 1 Capital (To Risk Weighted Assets)	87,728		22.5	%	17,580		4.5	%	25,394		6.5	%
Tier 1 Leverage (Core) Capital (To Adjusted Tangible Assets)	87,728		11.0	%	31,801		4.0	%	39,751		5.0	%

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Carrying Amounts and Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Carrying Amounts and Fair Value of Financial Instruments

Carrying Amounts and Fair Value of Financial Instruments

The Company has adopted accounting guidance which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value under generally accepted accounting principles. This guidance applies to reported balances that are required or permitted to be measured at fair value under existing accounting pronouncements; accordingly, the standard does not require any new fair value measurements of reported balances.

Accounting guidance emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, the guidance establishes a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy).

Level 1	Valuation is based upon quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 1 assets and liabilities include debt and equity securities and derivative contracts that are traded in an active exchange market, as well as U.S. Treasuries and money market funds.
Level 2	Valuation is based upon quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments, mortgage-backed securities, municipal bonds, corporate debt securities and derivative contracts whose value is determined using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. This category generally includes certain derivative contracts.
Level 3	Valuation is generated from model-based techniques that use at least one significant assumption based on unobservable inputs for the asset or liability, which are typically based on an entity’s own assumptions, as there is little, if any, related market activity. In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability.

The following is a description of the valuation methodologies used for assets and liabilities recorded at fair value.

Investment Securities Available for Sale

Investment securities available for sale are recorded at fair value on a recurring basis. At June 30, 2016, the Company’s investment portfolio was comprised of government and agency bonds, mortgage-backed securities issued by government agencies or GSEs, private label CMO mortgage-backed securities, municipal securities, and two equity investments. Fair value measurement is based upon prices obtained from third party pricing services that use independent pricing models which rely on a variety of factors including reported trades, broker/dealer quotes, benchmark yields, economic and industry events and other relevant market information. As a result, these securities are classified as Level 2.

Mortgage Loans Held for Sale

The Company originates fixed rate residential loans on a servicing released basis in the secondary market. Loans closed but not yet settled with the FHLMC or other investors, are carried in the Company’s loans held for sale portfolio.  These loans are fixed rate residential loans that have been originated in the Company’s name and have closed.  Virtually all of these loans have commitments to be purchased by investors and the majority of these loans were locked in by price with the investors on the same day or shortly thereafter that the loan was locked in with the Company’s customers.  Therefore, these loans present very little market risk for the Company.

The Company usually delivers a commitment to, and receives funding from, the investor within 30 days.  Commitments to sell these loans to the investor are considered derivative contracts and are sold to investors on a “best efforts" basis. The Company is not obligated to deliver a loan or pay a penalty if a loan is not delivered to the investor. As a result of the short-term nature of these derivative contracts, the fair value of the mortgage loans held for sale in most cases is the same as the value of the loan amount at its origination. These loans are classified as Level 2.

10. Carrying Amounts and Fair Value of Financial Instruments, Continued

Impaired Loans

The Company does not record loans held for investment at fair value on a recurring basis. However, from time to time, a loan is considered impaired and an allowance for loan losses is established as necessary. Loans for which it is probable that payment of interest and principal will not be made in accordance with the contractual terms of the loan agreement are considered impaired. Once a loan is identified as impaired, management measures the impairment by determining the fair value of the collateral for the loan.

Fair value is estimated using one of the following methods: fair value of the collateral less estimated costs to sell, discounted cash flows, or market value of the loan based on similar debt. The fair value of the collateral less estimated costs to sell is the most frequently used method. Typically, the Company reviews the most recent appraisal and if it is over 24 months old will request a new third party appraisal. Depending on the particular circumstances surrounding the loan, including the location of the collateral, the date of the most recent appraisal and the value of the collateral relative to the recorded investment in the loan, management may order an independent appraisal immediately or, in some instances, may elect to perform an internal analysis. Specifically as an example, in situations where the collateral on a nonperforming commercial real estate loan is out of the Company’s primary market area, management would typically order an independent appraisal immediately, at the earlier of the date the loan becomes nonperforming or immediately following the determination that the loan is impaired. However, as a second example, on a nonperforming commercial real estate loan where management is familiar with the property and surrounding areas and where the original appraisal value far exceeds the recorded investment in the loan, management may perform an internal analysis whereby the previous appraisal value would be reviewed and adjusted for current conditions including recent sales of similar properties in the area and any other relevant economic trends. These valuations are reviewed at a minimum on a quarterly basis.

Those impaired loans not requiring an allowance represent loans for which the fair value of the expected repayments or collateral exceed the recorded investments in such loans. At June 30, 2016, most of the total impaired loans were evaluated based on the fair value of the collateral. Impaired loans where an allowance is established based on the fair value of collateral require classification in the fair value hierarchy. The Company records impaired loans as nonrecurring Level 3. At June 30, 2016 and December 31, 2015, the recorded investment in impaired loans was $9.6 million and $12.6 million, respectively.

Foreclosed Assets

Foreclosed assets are adjusted to fair value upon transfer of the loans to foreclosed assets. Subsequently, foreclosed assets are carried at the lower of carrying value or fair value. Fair value is based upon independent market prices, appraised values of the collateral or management’s estimation of the value of the collateral. When the fair value of the collateral is based on an observable market price or a current appraised value, the Company records the foreclosed asset as nonrecurring Level 3. When an appraised value is not available or management determines the fair value of the collateral is further impaired below the appraised value and there is no observable market price, the Company records the asset as nonrecurring Level 3.

Assets measured at fair value on a recurring basis were as follows at June 30, 2016:

Assets:	Quoted Market Price In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
FNMA Bonds	$	—	$	1,023,914	$	—
SBA Bonds	—		100,885,681		—
Tax Exempt Municipal Bonds	—		85,957,882		—
Taxable Municipal Bonds			1,044,260
Mortgage-Backed Securities	—		198,731,529		—
Equity Securities	—		310,346		—
Total	$	—	$	387,953,612	$	—

10. Carrying Amounts and Fair Value of Financial Instruments, Continued

Assets measured at fair value on a recurring basis were as follows at December 31, 2015:

Assets:	Quoted Market Price In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
FHLB Securities	$	—	$	1,932,088	$	—
FFCB Securities	—		1,987,936		—
FNMA Bonds	—		1,004,331		—
SBA Bonds	—		111,416,782		—
Tax Exempt Municipal Bonds	—		76,065,619		—
Mortgage-Backed Securities	—		182,797,212		—
Equity Securities	—		309,902		—
Total	$	—	$	375,513,870	$	—

There were no liabilities measured at fair value on a recurring basis at June 30, 2016 or December 31, 2015.

The Company may be required, from time to time, to measure certain assets at fair value on a nonrecurring basis. These include assets that are measured at the lower of cost or market that were recognized at fair value below cost at the end of the period. The table below presents assets measured at fair value on a nonrecurring basis at June 30, 2016 and December 31, 2015, aggregated by the level in the fair value hierarchy within which those measurements fall. 

Assets:	Level 1		Level 2		Level 3		Balance at June 30, 2016
Mortgage Loans Held For Sale	$	—	$	1,682,094	$	—	$	1,682,094
Collateral Dependent Impaired Loans (1)	—		—		9,570,790		9,570,790
Foreclosed Assets	—		—		2,377,793		2,377,793
Total	$	—	$	1,682,094	$	11,948,583	$	13,630,677

^{(1) IMPAIRED LOANS ARE REPORTED NET OF SPECIFIC RESERVES OF $34,200}

Assets:	Level 1		Level 2		Level 3		Balance at December 31, 2015
Mortgage Loans Held For Sale	$	—	$	2,462,559	$	—	$	2,462,559
Collateral Dependent Impaired Loans (1)	—		—		12,565,728		12,565,728
Foreclosed Assets	—		—		4,361,411		4,361,411
Total	$	—	$	2,462,559	$	16,927,139	$	19,389,698

^{(1) IMPAIRED LOANS ARE REPORTED NET OF SPECIFIC RESERVES OF $81,600}

There were no liabilities measured at fair value on a nonrecurring basis at June 30, 2016 or December 31, 2015.

10. Carrying Amounts and Fair Value of Financial Instruments, Continued

For Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis at June 30, 2016, the significant unobservable inputs used in the fair value measurements were as follows:

			Valuation	Significant
	Fair Value		Technique	Unobservable Inputs	Range
Collateral Dependent Impaired Loans	$	9,570,790	Appraised Value	Discount Rates/ Discounts to Appraised Values	0% - 16%
Foreclosed Assets	2,377,793		Appraised Value/Comparable Sales	Discount Rates/ Discounts to Appraised Values	16% - 100%

For assets and liabilities that are not presented on the balance sheet at fair value, the following methods are used to determine the fair value:

Cash and Cash Equivalents—The carrying amount of these financial instruments approximates fair value. All mature within 90 days and do not present unanticipated credit concerns.

Certificates of Deposit with Other Banks—Fair value is based on market prices for similar assets.

Investment Securities Held to Maturity—Securities held to maturity are valued at quoted market prices or dealer quotes.

Loans Receivable, Net—The fair value of loans are estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. As discount rates are based on current loan rates as well as management estimates, the fair values presented may not be indicative of the value negotiated in an actual sale.

FHLB Stock—The fair value approximates the carrying value.

Deposits—The fair value of demand deposits, savings accounts, and money market accounts is the amount payable on demand at the reporting date. The fair value of fixed-maturity certificates of deposits is estimated by discounting the future cash flows using rates currently offered for deposits of similar remaining maturities.

FHLB Advances—Fair value is estimated based on discounted cash flows using current market rates for advances with similar terms.

Other Borrowed Money—The carrying value of these short term borrowings approximates fair value.

Senior Convertible Debentures— The fair value is estimated by discounting the future cash flows using the current rates at which similar debenture offerings with similar terms and maturities would be issued by similar institutions. As discount rates are based on current debenture rates as well as management estimates, the fair values presented may not be indicative of the value negotiated in an actual sale.

Junior Subordinated Debentures—The carrying value of junior subordinated debentures approximates fair value.

10. Carrying Amounts and Fair Value of Financial Instruments, Continued

The following tables are a summary of the carrying value and estimated fair value of the Company’s financial instruments at June 30, 2016 and December 31, 2015 presented in accordance with the applicable accounting guidance.

	June 30, 2016
	Carrying		Fair Value
(In Thousands)	Amount		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and Cash Equivalents	$	8,883	$	8,883	$	8,883	$	—	$	—
Certificates of Deposits with Other Banks	3,445		3,445		—		3,445		—
Investment and Mortgage-Backed Securities	416,462		416,916		—		416,916		—
Loans Receivable, Net	335,036		336,358		—		—		336,358
FHLB Stock	2,048		2,048		2,048		—		—
Financial Liabilities:
Deposits:
Checking, Savings, and Money Market Accounts	$	426,227	$	426,227	$	426,227	$	—	$	—
Certificate Accounts	231,375		231,673		—		231,673		—
Advances from FHLB	29,110		29,494		—		29,494		—
Other Borrowed Money	9,385		9,385		9,385		—		—
Senior Convertible Debentures	6,084		6,084		—		6,084		—
Junior Subordinated Debentures	5,155		5,155		—		5,155		—

	December 31, 2015
	Carrying		Fair Value
(In Thousands)	Amount		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and Cash Equivalents	$	8,382	$	8,382	$	8,382	$	—	$	—
Certificates of Deposits with Other Banks	3,445		3,445		—		3,445		—
Investment and Mortgage-Backed Securities	405,387		405,196		—		405,196		—
Loans Receivable, Net	330,573		327,460		—		—		327,460
FHLB Stock	2,215		2,215		2,215		—		—
Financial Liabilities:
Deposits:
Checking, Savings, and Money Market Accounts	$	415,975	$	415,975	$	415,975	$	—	$	—
Certificate Accounts	236,122		235,476		—		235,476		—
Advances from FHLB	34,640		35,676		—		35,676		—
Other Borrowed Money	6,412		6,412		6,412		—		—
Senior Convertible Debentures	6,084		6,084		—		6,084		—
Junior Subordinated Debentures	5,155		5,155		—		5,155		—

At June 30, 2016, the Bank had $59.2 million of off-balance sheet financial commitments.  These commitments are to originate loans and unused consumer lines of credit and credit card lines.  Because these obligations are based on current market rates, if funded, the original principal amount is considered to be a reasonable estimate of fair value.

Fair value estimates are made on a specific date, based on relevant market data and information about the financial instrument.  These estimates do not reflect any premium or discount that could result from offering for sale the Bank’s entire holdings of a particular financial instrument.  

10. Carrying Amounts and Fair Value of Financial Instruments, Continued

Because no active market exists for a significant portion of the Bank’s financial instruments, fair value estimates are based on judgments regarding future expected loss experience, current economic conditions, current interest rates and prepayment trends, risk characteristics of various financial instruments, and other factors.  These estimates are subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision.  Changes in any of these assumptions used in calculating fair value would also significantly affect the estimates. Fair value estimates are based on existing on- and off-balance sheet financial instruments without attempting to estimate the value of anticipated future business and the value of assets and liabilities that are not considered financial instruments.  For example, the Bank has significant assets and liabilities that are not considered financial assets or liabilities including deposit franchise values, loan servicing portfolios, deferred tax liabilities, and premises and equipment.

In addition, the tax ramifications related to the realization of the unrealized gains and losses can have a significant effect on fair value estimates and have not been considered in any of these estimates. The Company has used management’s best estimate of fair value on the above assumptions.  Thus, the fair values presented may not be the amounts, which could be realized, in an immediate sale or settlement of the instrument.  In addition, any income taxes or other expenses that would be incurred in an actual sale or settlement are not taken into consideration in the fair value presented.

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Accounting and Reporting Changes

6 Months Ended

Jun. 30, 2016

Accounting Changes and Error Corrections [Abstract]

Accounting and Reporting Changes

Accounting and Reporting Changes

The following is a summary of recent authoritative pronouncements that could affect accounting, reporting, and disclosure of financial information by the Company:

In January 2014, the FASB amended the Investments-Equity Method and Joint Ventures topic of the ASC to address accounting for investments in qualified affordable housing projects. If certain conditions are met, the amendments permit reporting entities to make an accounting policy election to account for their investments in qualified affordable housing projects by amortizing the initial cost of the investment in proportion to the tax credits and other tax benefits received and recognizing the net investment performance in the income statement as a component of income tax expense (benefit). If those conditions are not met, the investment should be accounted for as an equity method investment or a cost method investment in accordance with existing accounting guidance. The amendments were effective for the Company for interim and annual reporting periods beginning after December 15, 2014 and were applied retrospectively for all periods presented. The amendments did not have a material effect on the Company's consolidated financial statements.

In May 2014 and August 2015, the FASB issued guidance to change the recognition of revenue from contracts with customers. The core principle of the new guidance is that an entity should recognize revenue to reflect the transfer of goods and services to customers in an amount equal to the consideration the entity receives or expects to receive. The guidance will be effective for the Company for reporting periods beginning after December 15, 2017. The Company will apply the guidance using a modified retrospective approach. The Company does not expect these amendments to have a material effect on its consolidated financial statements.

In June 2014, the FASB issued guidance which makes limited amendments to the guidance on accounting for certain repurchase agreements. The new guidance (1) requires entities to account for repurchase-to-maturity transactions as secured borrowings (rather than as sales with forward repurchase agreements), (2) eliminates accounting guidance on linked repurchase financing transactions, and (3) expands disclosure requirements related to certain transfers of financial assets that are accounted for as sales and certain transfers (specifically, repos, securities lending transactions, and repurchase-to-maturity transactions) accounted for as secured borrowings. The amendments were effective for the Company on January 1, 2015. These amendments did not have a material effect on the Company's consolidated financial statements.

In June 2014, the FASB issued guidance which clarifies that performance targets associated with stock compensation should be treated as a performance condition and should not be reflected in the grant date fair value of the stock award. The amendments were effective for the Company on January 1, 2016. These amendments did not have a material effect on the Company's consolidated financial statements.

11. Accounting and Reporting Changes, Continued

In February 2015, the FASB issued guidance which amends the consolidation requirements and significantly changes the consolidation analysis required under U.S. GAAP. Although the amendments are expected to result in the deconsolidation of many entities, the Company will need to reevaluate all its previous consolidation conclusions. The amendments were effective for the Company on January 1, 2016. These amendments did not have a material effect on the Company's consolidated financial statements.

In January 2016, the FASB amended the Financial Instruments topic of the ASC to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. The amendments will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company will apply the guidance by means of a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. The amendments related to equity securities without readily determinable fair values will be applied prospectively to equity investments that exist as of the date of adoption of the amendments. The Company does not expect these amendments to have a material effect on its consolidated financial statements.

In February 2016, the FASB amended the Leases topic of the ASC to revise certain aspects of recognition, measurement, presentation, and disclosure of leasing transactions. The amendments will be effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the effect that implementation of the new standard will have on its financial position, results of operations, and cash flows.

In March 2016, the FASB amended the Revenue from Contracts with Customers topic of the ASC to clarify the implementation guidance on principal versus agent considerations and address how an entity should assess whether it is the principal or the agent in contracts that include three or more parties.The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its consolidated financial statements.

In March 2016, the FASB issued guidance to simplify several aspects of the accounting for share-based payment award transactions including the income tax consequences, the classification of awards as either equity or liabilities, and the classification on the statement of cash flows. Additionally, the guidance simplifies two areas specific to entities other than public business entities allowing them apply a practical expedient to estimate the expected term for all awards with performance or service conditions that have certain characteristics and also allowing them to make a one-time election to switch from measuring all liability-classified awards at fair value to measuring them at intrinsic value. The amendments will be effective for the Company for annual periods beginning after December 15, 2016 and interim periods within those annual periods. The Company does not expect these amendments to have a material effect on its consolidated financial statements.

In April 2016, the FASB amended the Revenue from Contracts with Customers topic of the ASC to clarify guidance related to identifying performance obligations and accounting for licenses of intellectual property. The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its consolidated financial statements.

In May 2016, the FASB amended the Revenue from Contracts with Customers topic of the ASC to clarify guidance related to collectability, noncash consideration, presentation of sales tax, and transition. The amendments will be effective for the Company for reporting periods beginning after December 15, 2017. The Company does not expect these amendments to have a material effect on its consolidated financial statements.

In June 2016, the FASB issued guidance to change the accounting for credit losses and modify the impairment model for certain debt securities. The amendments will be effective for the Company for reporting periods beginning after December 15, 2019. The Company is currently evaluating the effect that implementation of the new standard will have on its consolidated financial position, results of operations, and cash flows.

Other accounting standards that have been issued or proposed by the FASB or other standards-setting authorities are not expected to have a material impact on the Company’s consolidated financial position, results of operations or cash flows.

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Subsequent Events

6 Months Ended

Jun. 30, 2016

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Subsequent events are events or transactions that occur after the balance sheet date but before financial statements are issued. Recognized subsequent events are events or transactions that provide additional evidence about conditions that existed at the date of the balance sheet, including estimates inherent in the process of preparing financial statements. Nonrecognized subsequent events are events that provide evidence about conditions that did not exist at the date of the balance sheet but arose after that date.

Management has reviewed all events occurring through the date the consolidated financial statements were available to be issued and no other subsequent events occurred requiring accrual or disclosure.

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Critical Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2016

Accounting Policies [Abstract]

Allowance for Loan Losses

The Company believes the allowance for loan losses is a critical accounting policy that requires the most significant judgments and estimates used in preparation of the consolidated financial statements.  The impact of an unexpected and sudden large loss could deplete the allowance and potentially require increased provisions to replenish the allowance, which would negatively affect earnings. The Company provides for loan losses using the allowance method.  Accordingly, all loan losses are charged to the related allowance and all recoveries are credited to the allowance for loan losses.  Additions to the allowance for loan losses are provided by charges to operations based on various factors, which, in management’s judgment, deserve current recognition in estimating possible losses.  Such factors considered by management include the fair value of the underlying collateral, stated guarantees by the borrower (if applicable), the borrower’s ability to repay from other economic resources, growth and composition of the loan portfolio, the relationship of the allowance for loan losses to the outstanding loans, loss experience, delinquency trends, and general economic conditions.  Management evaluates the carrying value of the loans periodically and the allowance is adjusted accordingly.

3. Critical Accounting Policies, Continued

While management uses the best information available to make evaluations, future adjustments may be necessary if economic conditions differ substantially from the assumptions used in making these evaluations.  The allowance for loan losses is subject to periodic evaluations by our bank regulatory agencies, including the Board of Governors of the Federal Reserve System ("Federal Reserve"), the FDIC and the South Carolina Board of Financial Institutions, that may require adjustments to be made to the allowance based upon the information that is available at the time of their examination.

The Company values impaired loans at the loan’s fair value if it is probable that the Company will be unable to collect all amounts due according to the terms of the loan agreement at the present value of expected cash flows, the market price of the loan, if available, or the value of the underlying collateral.  Expected cash flows are required to be discounted at the loan’s effective interest rate.  When the ultimate collectibility of an impaired loan’s principal is in doubt, wholly or partially, all cash receipts are applied to principal.  When this doubt does not exist, cash receipts are applied under the contractual terms of the loan agreement first to interest and then to principal.  Once the recorded principal balance has been reduced to zero, future cash receipts are applied to interest income to the extent that any interest has been foregone.  Further cash receipts are recorded as recoveries of any amounts previously charged off.

Income Taxes

The Company uses assumptions and estimates in determining income taxes payable or refundable for the current year, deferred income tax liabilities and assets for events recognized differently in its financial statements and income tax returns, and income tax expense. Determining these amounts requires analysis of certain transactions and interpretation of tax laws and regulations. The Company exercises considerable judgment in evaluating the amount and timing of recognition of the resulting tax liabilities and assets. These judgments and estimates are reevaluated on a continual basis as regulatory and business factors change. No assurance can be given that either the tax returns submitted by us or the income tax reported on the Consolidated Financial Statements will not be adjusted by either adverse rulings by the United States Tax Court, changes in the tax code, or assessments made by the Internal Revenue Service.

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Earnings Per Common Share (Tables)

6 Months Ended

Jun. 30, 2016

Earnings Per Share [Abstract]

Reconciliation of net income to net income available to common shareholders

The following table provides a reconciliation of net income to net income available to common shareholders for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
	2016		2015		2016		2015
Earnings Available To Common Shareholders:
Net Income		$1,566,274		$1,523,088		$3,283,017		$3,027,715
Preferred Stock Dividends	110,000		110,000		220,000		220,000
Net Income Available To Common Shareholders		$1,456,274		$1,413,088		$3,063,017		$2,807,715

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Stock-Based Compensation (Tables)

6 Months Ended

Jun. 30, 2016

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Activity under stock option plans

	Three Months Ended June 30,
	2016			2015
	Shares		Weighted Average Exercise Price	Shares	Weighted Average Exercise Price
Balance, Beginning of Period	26,000		$23.50	29,500	$23.55
Options Granted	—		—	—	—
Options Exercised	—		—	—	—
Options Forfeited	(1,000	)	23.49	—	—
Balance, End of Period	25,000		$23.50	29,500	$23.55

5. Stock-Based Compensation, Continued

	Six Months Ended June 30,
	2016			2015
	Shares		Weighted Average Exercise Price	Shares		Weighted Average Exercise Price
Balance, Beginning of Period	29,500		$23.55	47,500		$22.41
Options Granted	—		—	—		—
Options Exercised	—		—	—		—
Options Forfeited	(4,500	)	23.82	(18,000	)	20.55
Balance, End of Period	25,000		$23.50	29,500		$23.55
Options Exercisable	20,700			19,800
Options Available For Grant	50,000			50,000

Options outstanding

At June 30, 2016, the Company had the following options outstanding:

Grant Date	Outstanding Options	Option Price	Expiration Date
08/24/06	3,500	$23.03	08/24/16
05/24/07	2,000	$24.34	05/24/17
07/09/07	1,000	$24.61	07/09/17
10/01/07	2,000	$24.28	10/01/17
01/01/08	12,000	$23.49	01/01/18
05/19/08	2,500	$22.91	05/19/18
07/01/08	2,000	$22.91	07/01/18

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Investment and Mortgage-Backed Securities, Available for Sale (Tables)

6 Months Ended

Jun. 30, 2016

Investments, Debt and Equity Securities [Abstract]

Schedule of Available for Sale Securities

The amortized cost, gross unrealized gains, gross unrealized losses, and fair values of investment and mortgage-backed securities available for sale at the dates indicated were as follows:

	June 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
Federal National Mortgage Association ("FNMA") Bonds	$	997,940	$	25,974	$	—	$	1,023,914
Small Business Administration (“SBA”) Bonds	99,488,051		1,525,658		128,028		100,885,681
Tax Exempt Municipal Bonds	79,348,443		6,609,439		—		85,957,882
Taxable Municipal Bonds	1,015,365		28,895		—		1,044,260
Mortgage-Backed Securities	193,948,106		5,103,368		319,945		198,731,529
Equity Securities	250,438		59,908		—		310,346
Total Available For Sale	$	375,048,343	$	13,353,242	$	447,973	$	387,953,612
	December 31, 2015
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
FHLB Securities	$	2,000,000	$	—	$	67,912	$	1,932,088
Federal Farm Credit Bank ("FFCB") Securities	2,000,000		—		12,064		1,987,936
FNMA Bonds	997,564		6,767		—		1,004,331
SBA Bonds	110,195,113		1,415,464		193,795		111,416,782
Tax Exempt Municipal Bonds	73,499,636		2,770,115		204,132		76,065,619
Mortgage-Backed Securities	180,197,347		3,281,116		681,251		182,797,212
Equity Securities	250,438		59,464		—		309,902
Total Available For Sale	$	369,140,098	$	7,532,926	$	1,159,154	$	375,513,870

Schedule of Available For Sale Securities, Contractual Maturities

Investment Securities	Amortized Cost		Fair Value
Less Than One Year	$	395,682	$	396,538
One – Five Years	14,763,466		15,081,296
Over Five – Ten Years	44,939,410		46,178,065
More Than Ten Years	121,001,679		127,566,184
Mortgage-Backed Securities	193,948,106		198,731,529
	$	375,048,343	$	387,953,612

Schedule of Temporarily Impaired Securities, Fair Value and Unrealized Losses

The following tables show gross unrealized losses and fair value, aggregated by investment category, and length of time that the individual available for sale securities have been in a continuous unrealized loss position at the dates indicated.

	June 30, 2016
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
SBA Bonds	$	15,665,655	$	71,059	$	9,429,862	$	56,969	$	25,095,517	$	128,028
Mortgage-Backed Securities	15,222,552		261,125		5,728,889		58,820		20,951,441		319,945
	$	30,888,207	$	332,184	$	15,158,751	$	115,789	$	46,046,958	$	447,973

	December 31, 2015
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
FHLB Securities	$	—	$	—	$	1,932,088	$	67,912	$	1,932,088	$	67,912
FFCB Securities	1,987,936		12,064		—		—		1,987,936		12,064
SBA Bonds	25,090,453		119,533		7,982,777		74,262		33,073,230		193,795
Tax Exempt Municipal Bonds	13,668,473		175,020		709,800		29,112		14,378,273		204,132
Mortgage-Backed Securities	63,273,417		648,862		1,706,086		32,389		64,979,503		681,251
	$	104,020,279	$	955,479	$	12,330,751	$	203,675	$	116,351,030	$	1,159,154

following tables show gross unrealized losses and fair value, aggregated by investment category, and length of time that the individual available for sale securities have been in a continuous unrealized loss position at the dates indicated.

	June 30, 2016
	Less than 12 Months				12 Months or More				Total
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
SBA Bonds	$	15,665,655	$	71,059	$	9,429,862	$	56,969	$	25,095,517	$	128,028
Mortgage-Backed Securities	15,222,552		261,125		5,728,889		58,820		20,951,441		319,945
	$	30,888,207	$	332,184	$	15,158,751	$	115,789	$	46,046,958	$	447,973

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Loans Receivable, Net (Tables)

6 Months Ended

Jun. 30, 2016

Loans Receivable, Net [Abstract]

Schedule of Financing Receivables, Non Accrual Status [Table Text Block]

The following table shows non-accrual loans by category at June 30, 2016 compared to December 31, 2015:

	June 30, 2016				December 31, 2015				$			%
	Amount		Percent (1)		Amount		Percent (1)		Increase (Decrease)			Increase (Decrease)
Non-accrual Loans:
Residential Real Estate	$	3,057,525	0.90	%	$	3,306,675	0.98	%	$	(249,150	)	(7.5	)%
Consumer	319,099		0.09		575,866		0.17		(256,767		)	(44.6	)
Commercial Business	147,002		0.04		178,076		0.05		(31,074		)	(17.4	)
Commercial Real Estate	2,764,842		0.81		2,973,135		0.80		(208,293		)	(7.0	)
Total Non-accrual Loans	$	6,288,468	1.84	%	$	7,033,752	2.09	%	$	(745,284	)	(10.6	)%

^{(1) PERCENT OF TOTAL LOANS HELD FOR INVESTMENT, NET OF DEFERRED FEES AND LOANS IN PROCESS.}

Impaired Financing Receivables [Table Text Block]

The following tables present information related to impaired loans by loan category at June 30, 2016 and December 31, 2015 and for the three and six months ended June 30, 2016 and 2015.

	June 30, 2016						December 31, 2015
Impaired Loans	Recorded Investment		Unpaid Principal Balance		Related Allowance		Recorded Investment		Unpaid Principal Balance		Related Allowance
With No Related Allowance Recorded:
Residential Real Estate	$	2,638,041	$	2,734,541	$	—	$	2,922,105	$	3,033,735	$	—
Consumer	129,612		137,911		—		120,889		129,188		—
Commercial Business	147,001		997,001		—		162,201		362,201		—
Commercial Real Estate	6,201,852		8,162,393		—		8,620,301		10,969,642		—
With An Allowance Recorded:
Residential Real Estate	—		—		—		—		—		—
Consumer	61,956		61,956		4,900		251,493		256,923		32,300
Commercial Business	—		—		—		—		—		—
Commercial Real Estate	426,528		439,542		29,300		570,339		577,139		49,300
Total
Residential Real Estate	2,638,041		2,734,541		—		2,922,105		3,033,735		—
Consumer	191,568		199,867		4,900		372,382		386,111		32,300
Commercial Business	147,001		997,001		—		162,201		362,201		—
Commercial Real Estate	6,628,380		8,601,935		29,300		9,190,640		11,546,781		49,300
Total	$	9,604,990	$	12,533,344	$	34,200	$	12,647,328	$	15,328,828	$	81,600

8.    Loans Receivable, Net, Continued

	Three Months Ended June 30,
	2016				2015
Impaired Loans	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Residential Real Estate	$	2,662,040	$	—	$	2,694,645	$	486
Consumer	289,655		—		181,718		—
Commercial Business	149,801		—		192,401		—
Commercial Real Estate	6,675,462		31,353		10,485,665		76,051
With An Allowance Recorded:
Residential Real Estate	—		—		273,476		—
Consumer	62,323		1,144		68,192		1,344
Commercial Business	—		—		—		—
Commercial Real Estate	434,101		—		1,269,379		15,807
Total
Residential Real Estate	2,662,040		—		2,968,121		486
Consumer	351,978		1,144		249,910		1,344
Commercial Business	149,801		—		192,401		—
Commercial Real Estate	7,109,563		31,353		11,755,044		91,858
Total	$	10,273,382	$	32,497	$	15,165,476	$	93,688

	Six Months Ended June 30,
	2016				2015
Impaired Loans	Average Recorded Investment		Interest Income Recognized		Average Recorded Investment		Interest Income Recognized
With No Related Allowance Recorded:
Residential Real Estate	$	2,790,857	$	447	$	2,717,895	$	4,397
Consumer	296,075		—		182,812		104
Commercial Business	154,316		—		211,100		—
Commercial Real Estate	8,632,348		93,284		10,926,601		153,665
With An Allowance Recorded:
Residential Real Estate	—		—		275,966		—
Consumer	62,693		1,555		69,076		2,712
Commercial Business	—		—		—		—
Commercial Real Estate	437,943		—		1,275,070		35,110
Total
Residential Real Estate	2,790,857		447		2,993,861		4,397
Consumer	358,768		1,555		251,888		2,816
Commercial Business	154,316		—		211,100		—
Commercial Real Estate	9,070,291		93,284		12,201,671		188,775
Total	$	12,374,232	$	95,286	$	15,658,520	$	195,988

8.    Loans Receivable, Net, Continued

Troubled Debt Restructurings on Financing Receivables [Table Text Block]

The following table is a summary of loans restructured as TDRs during the periods indicated:

	Six Months Ended June 30,
	2016					2015
Troubled Debt Restructurings	Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment		Number of Contracts	Pre- Modification Outstanding Recorded Investment		Post- Modification Outstanding Recorded Investment
Commercial Real Estate	—	$	—	$	—	3	$	840,292	$	840,292
Total	—	$	—	$	—	3	$	840,292	$	840,292

Schedule of Credit Losses Related to Financing Receivables, Current and Noncurrent [Table Text Block]

The following tables show the activity in the allowance for loan losses by category for the three and six months ended June 30, 2016 and 2015:

	Three Months Ended June 30, 2016
	Residential Real Estate		Consumer			Commercial Business		Commercial Real Estate			Total
Beginning Balance	$	1,399,703	$	1,042,530		$	803,146	$	5,027,925		$	8,273,304
Provision for Loan Losses	52,888		104,830			62,721		(220,439		)	—
Charge-Offs	—		(59,452		)	—		(131,418		)	(190,870		)
Recoveries	10,045		28,068			—		274,667			312,780
Ending Balance	$	1,462,636	$	1,115,976		$	865,867	$	4,950,735		$	8,395,214

	Six Months Ended June 30, 2016
	Residential Real Estate		Consumer			Commercial Business		Commercial Real Estate			Total
Beginning Balance	$	1,323,183	$	1,063,153		$	773,948	$	5,114,849		$	8,275,133
Provision for Loan Losses	129,408		153,797			91,919		(375,124		)	—
Charge-Offs	—		(153,881		)	—		(202,618		)	(356,499		)
Recoveries	10,045		52,907			—		413,628			476,580
Ending Balance	$	1,462,636	$	1,115,976		$	865,867	$	4,950,735		$	8,395,214

	Three Months Ended June 30, 2015
	Residential Real Estate			Consumer			Commercial Business		Commercial Real Estate			Total
Beginning Balance	$	1,354,435		$	1,141,797		$	496,803	$	4,925,882		$	7,918,917
Provision for Loan Losses	(44,208		)	125,774			246,264		(327,830		)	—
Charge-Offs	(916		)	(273,007		)	—		(4,023		)	(277,946		)
Recoveries	767			13,420			4,000		136,424			154,611
Ending Balance	$	1,310,078		$	1,007,984		$	747,067	$	4,730,453		$	7,795,582

	Six Months Ended June 30, 2015
	Residential Real Estate			Consumer			Commercial Business			Commercial Real Estate			Total
Beginning Balance	$	1,392,065		$	886,716		$	159,353		$	5,919,362		$	8,357,496
Provision for Loan Losses	(36,838		)	456,705			591,341			(911,208		)	100,000
Charge-Offs	(45,916		)	(393,625		)	(10,947		)	(446,472		)	(896,960		)
Recoveries	767			58,188			7,320			168,771			235,046
Ending Balance	$	1,310,078		$	1,007,984		$	747,067		$	4,730,453		$	7,795,582

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

Loans receivable, net, consisted of the following as of the dates indicated below:

	June 30, 2016		December 31, 2015
Residential Real Estate Loans	$	77,229,040	$	76,373,071
Consumer Loans	50,076,365		50,380,289
Commercial Business Loans	14,233,684		12,514,133
Commercial Real Estate Loans	204,757,630		200,083,125
Total Loans Held For Investment	346,296,719		339,350,618
Loans Held For Sale	1,682,094		2,462,559
Total Loans Receivable, Gross	347,978,813		341,813,177
Less:
Allowance For Loan Losses	8,395,214		8,275,133
Loans In Process	4,438,089		2,902,849
Deferred Loan Fees	109,285		62,466
	12,942,588		11,240,448
Total Loans Receivable, Net	$	335,036,225	$	330,572,729

Schedule of Allowance for Loan Losses

Financing Receivable Credit Quality Indicators [Table Text Block]

The following tables list the loan grades used by the Company as credit quality indicators and the balance for each loan category at the dates presented, excluding loans held for sale.

	Credit Quality Measures
June 30, 2016	Pass		Caution		Special Mention		Substandard		Total Loans
Residential Real Estate	$	69,300,706	$	711,846	$	699,591	$	6,516,897	$	77,229,040
Consumer	46,068,672		2,552,834		88,022		1,366,837		50,076,365
Commercial Business	12,059,122		1,730,675		59,175		384,712		14,233,684
Commercial Real Estate	126,085,696		56,069,386		15,175,709		7,426,839		204,757,630
Total	$	253,514,196	$	61,064,741	$	16,022,497	$	15,695,285	$	346,296,719

	Credit Quality Measures
December 31, 2015	Pass		Caution		Special Mention		Substandard		Total Loans
Residential Real Estate	$	67,605,311	$	1,264,415	$	607,336	$	6,896,009	$	76,373,071
Consumer	46,344,056		2,510,519		81,617		1,444,097		50,380,289
Commercial Business	10,519,123		1,465,136		102,046		427,828		12,514,133
Commercial Real Estate	129,242,390		43,863,659		17,304,431		9,672,645		200,083,125
Total	$	253,710,880	$	49,103,729	$	18,095,430	$	18,440,579	$	339,350,618

Past Due Financing Receivables [Table Text Block]

The following tables present an age analysis of past due balances by category at June 30, 2016 and December 31, 2015:

June 30, 2016	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable
Residential Real Estate	$	—	$	491,302	$	3,057,525	$	3,548,827	$	73,680,213	$	77,229,040
Consumer	686,826		100,051		319,099		1,105,976		48,970,389		50,076,365
Commercial Business	511,435		—		147,002		658,437		13,575,247		14,233,684
Commercial Real Estate	3,175,585		562,456		2,764,842		6,502,883		198,254,747		204,757,630
Total	$	4,373,846	$	1,153,809	$	6,288,468	$	11,816,123	$	334,480,596	$	346,296,719

December 31, 2015	30-59 Days Past Due		60-89 Days Past Due		90 Days or More Past Due		Total Past Due		Current		Total Loans Receivable
Residential Real Estate	$	—	$	1,144,381	$	3,306,675	$	4,451,056	$	71,922,015	$	76,373,071
Consumer	710,881		282,314		575,866		1,569,061		48,811,228		50,380,289
Commercial Business	101,201		—		178,076		279,277		12,234,856		12,514,133
Commercial Real Estate	3,309,287		929,819		2,973,135		7,212,241		192,870,884		200,083,125
Total	$	4,121,369	$	2,356,514	$	7,033,752	$	13,511,635	$	325,838,983	$	339,350,618

Allowance for Credit Losses on Financing Receivables [Table Text Block]

	Loans Receivable
June 30, 2016	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	2,638,041	$	74,590,999	$	77,229,040
Consumer	191,568		49,884,797		50,076,365
Commercial Business	147,001		14,086,683		14,233,684
Commercial Real Estate	6,628,380		198,129,250		204,757,630
Total	$	9,604,990	$	336,691,729	$	346,296,719

	Loans Receivable
December 31, 2015	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	2,922,105	$	73,450,966	$	76,373,071
Consumer	372,382		50,007,907		50,380,289
Commercial Business	162,201		12,351,932		12,514,133
Commercial Real Estate	9,190,640		190,892,485		200,083,125
Total	$	12,647,328	$	326,703,290	$	339,350,618

The following tables present information related to impaired loans evaluated individually and collectively for impairment in the allowance for loan losses at the dates indicated:

	Allowance For Loan Losses
June 30, 2016	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	—	$	1,462,636	$	1,462,636
Consumer	4,900		1,111,076		1,115,976
Commercial Business	—		865,867		865,867
Commercial Real Estate	29,300		4,921,435		4,950,735
Total	$	34,200	$	8,361,014	$	8,395,214

	Allowance For Loan Losses
December 31, 2015	Individually Evaluated For Impairment		Collectively Evaluated For Impairment		Total
Residential Real Estate	$	—	$	1,323,183	$	1,323,183
Consumer	32,300		1,030,853		1,063,153
Commercial Business	—		773,948		773,948
Commercial Real Estate	49,300		5,065,549		5,114,849
Total	$	81,600	$	8,193,533	$	8,275,133

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Regulatory Matters (Tables)

6 Months Ended

Jun. 30, 2016

Banking and Thrift [Abstract]

Regulatory capital amounts and ratios

	Actual				For Capital Adequacy				To Be Well Capitalized Under Prompt Corrective Action Provisions
	Amount		Ratio		Amount		Ratio		Amount		Ratio
	(Dollars in Thousands)
June 30, 2016
SECURITY FEDERAL CORP.
Tier 1 Risk-Based Core Capital (To Risk Weighted Assets)	$	88,132	21.6	%	$	24,486	6.0	%	N/A		N/A
Total Risk-Based Capital (To Risk Weighted Assets)	98,249		24.1	%	32,648		8.0	%	N/A		N/A
Common Equity Tier 1 Capital (To Risk Weighted Assets)	66,099		16.2	%	18,365		4.5	%	N/A		N/A
Tier 1 Leverage (Core) Capital (To Adjusted Tangible Assets)	88,132		10.9	%	32,247		4.0	%	N/A		N/A
SECURITY FEDERAL BANK
Tier 1 Risk-Based Core Capital (To Risk Weighted Assets)	$	88,209	21.6	%	$	24,523	6.0	%	$	32,698	8.0	%
Total Risk-Based Capital (To Risk Weighted Assets)	93,359		22.8	%	32,698		8.0	%	40,872		10.0	%
Common Equity Tier 1 Capital (To Risk Weighted Assets)	88,209		21.6	%	18,393		4.5	%	26,567		6.5	%
Tier 1 Leverage (Core) Capital (To Adjusted Tangible Assets)	88,209		10.9	%	32,238		4.0	%	40,297		5.0	%
December 31, 2015
SECURITY FEDERAL CORP.
Tier 1 Risk-Based Core Capital (To Risk Weighted Assets)	$	84,672	21.7	%	$	23,429	6.0	%	N/A		N/A
Total Risk-Based Capital (To Risk Weighted Assets)	95,429		24.4	%	31,239		8.0	%	N/A		N/A
Common Equity Tier 1 Capital (To Risk Weighted Assets)	63,504		16.3	%	17,572		4.5	%	N/A		N/A
Tier 1 Leverage (Core) Capital (To Adjusted Tangible Assets)	84,672		10.6	%	31,811		4.0	%	N/A		N/A
SECURITY FEDERAL BANK
Tier 1 Risk-Based Core Capital (To Risk Weighted Assets)	$	87,728	22.5	%	$	23,440	6.0	%	$	31,254	8.0	%
Total Risk-Based Capital (To Risk Weighted Assets)	92,653		23.7	%	31,254		8.0	%	39,067		10.0	%
Common Equity Tier 1 Capital (To Risk Weighted Assets)	87,728		22.5	%	17,580		4.5	%	25,394		6.5	%
Tier 1 Leverage (Core) Capital (To Adjusted Tangible Assets)	87,728		11.0	%	31,801		4.0	%	39,751		5.0	%

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Carrying Amounts and Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2016

Fair Value Disclosures [Abstract]

Fair value measurements, recurring basis

Assets measured at fair value on a recurring basis were as follows at June 30, 2016:

Assets:	Quoted Market Price In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
FNMA Bonds	$	—	$	1,023,914	$	—
SBA Bonds	—		100,885,681		—
Tax Exempt Municipal Bonds	—		85,957,882		—
Taxable Municipal Bonds			1,044,260
Mortgage-Backed Securities	—		198,731,529		—
Equity Securities	—		310,346		—
Total	$	—	$	387,953,612	$	—

10. Carrying Amounts and Fair Value of Financial Instruments, Continued

Assets measured at fair value on a recurring basis were as follows at December 31, 2015:

Assets:	Quoted Market Price In Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
FHLB Securities	$	—	$	1,932,088	$	—
FFCB Securities	—		1,987,936		—
FNMA Bonds	—		1,004,331		—
SBA Bonds	—		111,416,782		—
Tax Exempt Municipal Bonds	—		76,065,619		—
Mortgage-Backed Securities	—		182,797,212		—
Equity Securities	—		309,902		—
Total	$	—	$	375,513,870	$	—

Fair value measurements, nonrecurring basis

The table below presents assets measured at fair value on a nonrecurring basis at June 30, 2016 and December 31, 2015, aggregated by the level in the fair value hierarchy within which those measurements fall. 

Assets:	Level 1		Level 2		Level 3		Balance at June 30, 2016
Mortgage Loans Held For Sale	$	—	$	1,682,094	$	—	$	1,682,094
Collateral Dependent Impaired Loans (1)	—		—		9,570,790		9,570,790
Foreclosed Assets	—		—		2,377,793		2,377,793
Total	$	—	$	1,682,094	$	11,948,583	$	13,630,677

^{(1) IMPAIRED LOANS ARE REPORTED NET OF SPECIFIC RESERVES OF $34,200}

Assets:	Level 1		Level 2		Level 3		Balance at December 31, 2015
Mortgage Loans Held For Sale	$	—	$	2,462,559	$	—	$	2,462,559
Collateral Dependent Impaired Loans (1)	—		—		12,565,728		12,565,728
Foreclosed Assets	—		—		4,361,411		4,361,411
Total	$	—	$	2,462,559	$	16,927,139	$	19,389,698

^{(1) IMPAIRED LOANS ARE REPORTED NET OF SPECIFIC RESERVES OF $81,600}

Significant unobservable inputs used in the fair value measurements

For Level 3 assets and liabilities measured at fair value on a recurring or non-recurring basis at June 30, 2016, the significant unobservable inputs used in the fair value measurements were as follows:

			Valuation	Significant
	Fair Value		Technique	Unobservable Inputs	Range
Collateral Dependent Impaired Loans	$	9,570,790	Appraised Value	Discount Rates/ Discounts to Appraised Values	0% - 16%
Foreclosed Assets	2,377,793		Appraised Value/Comparable Sales	Discount Rates/ Discounts to Appraised Values	16% - 100%

Summary of the carrying value and estimated fair value of financial instruments

The following tables are a summary of the carrying value and estimated fair value of the Company’s financial instruments at June 30, 2016 and December 31, 2015 presented in accordance with the applicable accounting guidance.

	June 30, 2016
	Carrying		Fair Value
(In Thousands)	Amount		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and Cash Equivalents	$	8,883	$	8,883	$	8,883	$	—	$	—
Certificates of Deposits with Other Banks	3,445		3,445		—		3,445		—
Investment and Mortgage-Backed Securities	416,462		416,916		—		416,916		—
Loans Receivable, Net	335,036		336,358		—		—		336,358
FHLB Stock	2,048		2,048		2,048		—		—
Financial Liabilities:
Deposits:
Checking, Savings, and Money Market Accounts	$	426,227	$	426,227	$	426,227	$	—	$	—
Certificate Accounts	231,375		231,673		—		231,673		—
Advances from FHLB	29,110		29,494		—		29,494		—
Other Borrowed Money	9,385		9,385		9,385		—		—
Senior Convertible Debentures	6,084		6,084		—		6,084		—
Junior Subordinated Debentures	5,155		5,155		—		5,155		—

	December 31, 2015
	Carrying		Fair Value
(In Thousands)	Amount		Total		Level 1		Level 2		Level 3
Financial Assets:
Cash and Cash Equivalents	$	8,382	$	8,382	$	8,382	$	—	$	—
Certificates of Deposits with Other Banks	3,445		3,445		—		3,445		—
Investment and Mortgage-Backed Securities	405,387		405,196		—		405,196		—
Loans Receivable, Net	330,573		327,460		—		—		327,460
FHLB Stock	2,215		2,215		2,215		—		—
Financial Liabilities:
Deposits:
Checking, Savings, and Money Market Accounts	$	415,975	$	415,975	$	415,975	$	—	$	—
Certificate Accounts	236,122		235,476		—		235,476		—
Advances from FHLB	34,640		35,676		—		35,676		—
Other Borrowed Money	6,412		6,412		6,412		—		—
Senior Convertible Debentures	6,084		6,084		—		6,084		—
Junior Subordinated Debentures	5,155		5,155		—		5,155		—

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Earnings Per Common Share (Reconciliation of Net Income to Net Income Available to Common Shareholders) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Earnings Available To Common Shareholders
Net Income	$ 1,566,274	$ 1,523,088	$ 3,283,017	$ 3,027,715
Preferred Stock Dividends	110,000	110,000	220,000	220,000
Income	$ 1,456,274	$ 1,413,088	$ 3,063,017	$ 2,807,715

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Earnings Per Common Share (Narrative) (Details) - shares	3 Months Ended
	Jun. 30, 2016	Jun. 30, 2015
Earnings Per Share [Abstract]
Weighted Average Number Diluted Shares Outstanding Adjustment	0	0

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Earnings Per Common Share Diluted EPS (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Net Income (Loss) Available to Common Stockholders, Basic	$ 1,456,274	$ 1,413,088	$ 3,063,017	$ 2,807,715
Weighted Average Shares Outstanding (Basic)	2,944,001	2,944,001	2,944,001	2,944,001
Net Income Per Common Share (Basic)	$ 0.49	$ 0.48	$ 1.04	$ 0.95
Dilutive Securities, Effect on Basic Earnings Per Share, Dilutive Convertible Securities	$ 75,442	$ 75,442	$ 150,883	$ 150,883
Weighted Average Shares Outstanding, Senior Convertible Debentures	304,200	304,200	304,200	304,200
Weighted Average Number Diluted Shares Outstanding Adjustment	0	0
Incremental Common Shares Attributable to Dilutive Effect of Conversion of Debt Securities	(0.02)	(0.02)	(0.04)	(0.04)
Dilutive Securities, Effect on Basic Earnings Per Share, Options and Restrictive Stock Units	$ 0	$ 0	$ 0	$ 0
Weighted Average Number of Shares, Restricted Stock	243	48	244	39
Incremental Common Shares Attributable to Dilutive Effect of Nonvested Shares with Forfeitable Dividends	(0.00)	(0.00)	(0.01)	(0.00)
Net Income (Loss) Available to Common Stockholders, Diluted	$ 1,531,716	$ 1,488,530	$ 3,213,900	$ 2,958,598
Weighted Average Shares Outstanding (Diluted)	3,248,444	3,248,249	3,248,445	3,248,240
Net Income Per Common Share (Diluted)	$ 0.47	$ 0.46	$ 0.99	$ 0.91

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Stock-Based Compensation (Stock Option Plans) (Details) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding [Roll Forward]
Balance, Beginning of Period, Shares	26,000	29,500	29,500	47,500
Options Granted, Shares	0	0	0	0
Options Exercised, Shares	0	0	0	0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period	(1,000)	0	(4,500)	(18,000)
Balance, End of Period, Shares	25,000	29,500	25,000	29,500
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price [Roll Forward]
Balance, Beginning of Period, Weighted Avg. Exercise Price	$ 23.50	$ 23.55	$ 23.55	$ 22.41
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	0.00	0.00	0.00	0.00
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price	0.00	0.00	0.00	0.00
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price	23.49	0.00	23.82	20.55
Balance, End of Period, Weighted Avg. Exercise Price	$ 23.50	$ 23.55	$ 23.50	$ 23.55
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Options Exercisable, Shares	20,700	19,800	20,700	19,800
Options Available For Grant	50,000	50,000	50,000	50,000

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Stock-Based Compensation (Options Outstanding) (Details) - $ / shares	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Mar. 31, 2016	Dec. 31, 2015	Mar. 31, 2015	Dec. 31, 2014
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number	25,000	29,500	25,000	29,500	26,000	29,500	29,500	47,500
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Weighted Average Exercise Price	$ 23.50	$ 23.55	$ 23.50	$ 23.55	$ 23.50	$ 23.55	$ 23.55	$ 22.41
Options Granted, Shares	0	0	0	0
Share-based Compensation Arrangements by Share-based Payment Award, Options, Grants in Period, Weighted Average Exercise Price	$ 0.00	$ 0.00	$ 0.00	$ 0.00
Options Exercised, Shares	0	0	0	0
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price	$ 0.00	$ 0.00	$ 0.00	$ 0.00
Share-based Compensation Arrangement by Share-based Payment Award, Options, Forfeitures in Period	(1,000)	0	(4,500)	(18,000)
Share-based Compensation Arrangements by Share-based Payment Award, Options, Forfeitures in Period, Weighted Average Exercise Price	$ 23.49	$ 0.00	$ 23.82	$ 20.55
$23.03
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Outstanding Options	3,500		3,500
Option Price	$ 23.03		$ 23.03
$24.34
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Outstanding Options	2,000		2,000
Option Price	$ 24.34		$ 24.34
$24.61
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Outstanding Options	1,000		1,000
Option Price	$ 24.61		$ 24.61
$24.28
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Outstanding Options	2,000		2,000
Option Price	$ 24.28		$ 24.28
$23.49
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Outstanding Options	12,000		12,000
Option Price	$ 23.49		$ 23.49
$22.91
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Outstanding Options	2,500		2,500
Option Price	$ 22.91		$ 22.91
$22.91
Share-based Compensation, Shares Authorized under Stock Option Plans, Exercise Price Range [Line Items]
Outstanding Options	2,000		2,000
Option Price	$ 22.91		$ 22.91

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Investment and Mortgage-Backed Securities, Available for Sale (Schedule of Available for Sale Securities) (Details) - USD ($)	3 Months Ended		6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Gross Realized Losses	$ 0		$ 0	$ 47,000
Available For Sale Securities Pledged as Collateral, Amortized Cost Basis	76,000,000		76,000,000		$ 81,000,000
Available-for-sale Securities Pledged as Collateral, Fair Value	78,700,000		78,700,000		83,200,000
Amortized Cost of Investment And Mortgage-Backed Securities Available For Sale	375,048,343		375,048,343		369,140,098
Available-for-sale Securities, Gross Unrealized Gains			13,353,242		7,532,926
Available-for-sale Securities, Gross Unrealized Losses			447,973		1,159,154
Available-for-sale Securities, Fair Value Disclosure	387,953,612		387,953,612		375,513,870
Proceeds From Sale of Available For Sale Securities Including Mortgage Backed Securities	11,400,000	$ 17,900,000	14,600,000	54,200,000
US States and Political Subdivisions Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of Investment And Mortgage-Backed Securities Available For Sale	79,348,443		79,348,443		73,499,636
Available-for-sale Securities, Gross Unrealized Gains			6,609,439		2,770,115
Available-for-sale Securities, Gross Unrealized Losses			0		204,132
Mortgage-backed Securities, Issued by Private Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of Investment And Mortgage-Backed Securities Available For Sale	16,600,000		16,600,000		3,800,000
Available-for-sale Securities, Fair Value Disclosure	16,300,000		16,300,000
Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Gross Realized Gains	154,000	$ 182,000	412,000	$ 1,700,000
FHLB Securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of Investment And Mortgage-Backed Securities Available For Sale					2,000,000
Available-for-sale Securities, Gross Unrealized Gains					0
Available-for-sale Securities, Gross Unrealized Losses					67,912
US Treasury and Government [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of Investment And Mortgage-Backed Securities Available For Sale					2,000,000
Available-for-sale Securities, Gross Unrealized Gains					0
Available-for-sale Securities, Gross Unrealized Losses					12,064
Available-for-sale Securities, Fair Value Disclosure					1,987,936
US Government-sponsored Enterprises Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of Investment And Mortgage-Backed Securities Available For Sale	997,940		997,940		997,564
Available-for-sale Securities, Gross Unrealized Gains			25,974		6,767
Available-for-sale Securities, Gross Unrealized Losses			0		0
Available-for-sale Securities, Fair Value Disclosure	1,023,914		1,023,914		1,004,331
SBA Bonds
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of Investment And Mortgage-Backed Securities Available For Sale	99,488,051		99,488,051		110,195,113
Available-for-sale Securities, Gross Unrealized Gains			1,525,658		1,415,464
Available-for-sale Securities, Gross Unrealized Losses			128,028		193,795
Mortgage-Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of Investment And Mortgage-Backed Securities Available For Sale	193,948,106		193,948,106		180,197,347
Available-for-sale Securities, Gross Unrealized Gains			5,103,368		3,281,116
Available-for-sale Securities, Gross Unrealized Losses			319,945		681,251
Equity Securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of Investment And Mortgage-Backed Securities Available For Sale	250,438		250,438		250,438
Available-for-sale Securities, Gross Unrealized Gains			59,908		59,464
Available-for-sale Securities, Gross Unrealized Losses			0		0
Taxable Municipal Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of Investment And Mortgage-Backed Securities Available For Sale	1,015,365		1,015,365
Available-for-sale Securities, Gross Unrealized Gains			28,895
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | US States and Political Subdivisions Debt Securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Fair Value Disclosure	85,957,882		85,957,882		76,065,619
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | FHLB Securities
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Fair Value Disclosure					1,932,088
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | SBA Bonds
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Fair Value Disclosure	100,885,681		100,885,681		111,416,782
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Mortgage-Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Fair Value Disclosure	198,731,529		198,731,529		182,797,212
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Equity Securities
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Fair Value Disclosure	310,346		310,346		$ 309,902
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | Taxable Municipal Bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Fair Value Disclosure	$ 1,044,260		$ 1,044,260

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Investment and Mortgage-Backed Securities, Available for Sale (Schedule of Held to Maturity Securities, Contractual Maturities) (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2016	Jun. 30, 2016	Jun. 30, 2015
Investments, Debt and Equity Securities [Abstract]
Available-for-sale Securities, Gross Realized Losses	$ 0	$ 0	$ 47,000
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis, Fiscal Year Maturity [Abstract]
Less Than One Year, Amortized Cost	395,682	395,682
One – Five Years, Amortized Cost	14,763,466	14,763,466
Five – Ten Years, Amortized Cost	44,939,410	44,939,410
After Ten Years, Amortized Cost	121,001,679	121,001,679
Available-for-sale Securities, Debt Maturities, Amortized Cost Basis	375,048,343	375,048,343
Available-for-sale Securities, Debt Maturities, Fair Value, Fiscal Year Maturity [Abstract]
Less Than One Year, Fair Value	396,538	396,538
One – Five Years, Fair Value	15,081,296	15,081,296
Five – Ten Years, Fair Value	46,178,065	46,178,065
After Ten Years, Fair Value	127,566,184	127,566,184
Available-for-sale Securities, Debt Maturities, without Single Maturity Date, Fair Value	$ 387,953,612	$ 387,953,612

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Investment and Mortgage-Backed Securities, Available for Sale (Schedule of Temporarily Impaired Securities, Fair Value and Unrealized losses) (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Schedule of Available-for-sale Securities [Line Items]
Available For Sale, Percent of Unrealized Losses for Securities in a Continuous Loss Position, 12 Months or Longer	25.80%	17.60%
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 30,888,207	$ 104,020,279
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	15,158,751	12,330,751
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	46,046,958	116,351,030
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	332,184	955,479
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Unrealized Losses	115,789	203,675
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses	447,973	1,159,154
FHLB Securities
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value		0
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value		1,932,088
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value		1,932,088
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses		0
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Unrealized Losses		67,912
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses		67,912
Federal Farm Credit Securities [Member]
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value		1,987,936
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value		0
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value		1,987,936
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses		12,064
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Unrealized Losses		0
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses		12,064
SBA Bonds
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	15,665,655	25,090,453
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	9,429,862	7,982,777
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	25,095,517	33,073,230
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	71,059	119,533
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Unrealized Losses	56,969	74,262
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses	128,028	193,795
Tax Exempt Municipal Bonds
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value		13,668,473
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value		709,800
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value		14,378,273
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses		175,020
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Unrealized Losses		29,112
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses		204,132
Mortgage-Backed Securities
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	15,222,552	63,273,417
Available-for-sale Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	5,728,889	1,706,086
Available-for-sale Securities, Continuous Unrealized Loss Position, Fair Value	20,951,441	64,979,503
Available-for-sale Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Available-for-sale Securities, Continuous Unrealized Loss Position, Less than 12 Months, Unrealized Losses	261,125	648,862
Available-for-sale Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Unrealized Losses	58,820	32,389
Available-for-sale Securities, Continuous Unrealized Loss Position, Unrealized Losses	$ 319,945	$ 681,251

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Investment and Mortgage-Backed Securities, Available for Sale (Narrative) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2016 USD ($) security	Jun. 30, 2015 USD ($)	Jun. 30, 2016 USD ($) security	Jun. 30, 2015 USD ($)	Dec. 31, 2015 USD ($) security
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of Investment And Mortgage-Backed Securities Available For Sale	$ 375,048,343		$ 375,048,343		$ 369,140,098
Available-for-sale Securities, Fair Value Disclosure	387,953,612		387,953,612		375,513,870
Available For Sale Securities Pledged as Collateral, Amortized Cost Basis	76,000,000		76,000,000		81,000,000
Available-for-sale Securities Pledged as Collateral, Fair Value	78,700,000		78,700,000		$ 83,200,000
Proceeds From Sale of Available For Sale Securities Including Mortgage Backed Securities	$ 11,400,000	$ 17,900,000	$ 14,600,000	$ 54,200,000
Percent of unrealized losses for securities in a continuous loss position for 12 months or more	25.80%		25.80%		17.60%
Available-for-sale, Securities in Unrealized Loss Positions, Qualitative Disclosure, Number of Positions | security	12		12		9
Available-for-sale Securities, Gross Realized Losses	$ 0		$ 0	47,000
GNMA Mortgage-Backed Securities
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of Investment And Mortgage-Backed Securities Available For Sale	116,200,000		116,200,000		$ 116,800,000
Available-for-sale Securities, Fair Value Disclosure	119,200,000		119,200,000		118,500,000
Mortgage-backed Securities, Issued by Private Enterprises [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost of Investment And Mortgage-Backed Securities Available For Sale	16,600,000		16,600,000		$ 3,800,000
Available-for-sale Securities, Fair Value Disclosure	16,300,000		16,300,000
Investments [Member]
Schedule of Available-for-sale Securities [Line Items]
Available-for-sale Securities, Gross Realized Gains	$ 154,000	$ 182,000	$ 412,000	$ 1,700,000

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Investment and Mortgage-Backed Securities, Held to Maturity (Schedule of investment and mortgage-backed securities held to maturity) (Details) - USD ($)	3 Months Ended	6 Months Ended		12 Months Ended
	Jun. 30, 2016	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Schedule of Held-to-maturity Securities [Line Items]
Held to maturity, gross unrealized gains				$ 22,600
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	$ 28,508,469	$ 28,508,469		29,873,098
Held to maturity, gross unrealized losses		5,947		214,418
Held-to-maturity Securities, Fair Value	28,961,965	28,961,965		29,681,280
Available-for-sale Securities, Gross Realized Losses	0	0	$ 47,000
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity Securities	28,508,469	28,508,469		29,873,098
Held to maturity, gross unrealized gains		459,443		22,600
Held to maturity, gross unrealized losses		5,947		214,418
Held-to-maturity Securities, Fair Value	$ 28,961,965	$ 28,961,965		$ 29,681,280

XML

Investment and Mortgage-Backed Securities, Held to Maturity (Schedule of Held-to-maturity Securities) (Details)	6 Months Ended
	Jun. 30, 2016 USD ($)
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	$ 1,495,145
Held-to-maturity Securities, Continuous Unrealized Loss Position, Aggregate Loss	5,947
Held-to-maturity Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Loss	2,709
Held-to-maturity Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	1,473,129
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Loss	3,238
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value	2,968,274
Mortgage-backed Securities, Issued by US Government Sponsored Enterprises [Member]
Schedule of Held-to-maturity Securities [Line Items]
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than Twelve Months, Fair Value	1,495,145
Held-to-maturity Securities, Continuous Unrealized Loss Position, Aggregate Loss	5,947
Held-to-maturity Securities, Continuous Unrealized Loss Position, Aggregate Losses [Abstract]
Held-to-maturity Securities, Continuous Unrealized Loss Position, Less than 12 Months, Aggregate Loss	2,709
Held-to-maturity Securities, Continuous Unrealized Loss Position, Twelve Months or Longer, Fair Value	1,473,129
Held-to-maturity Securities, Continuous Unrealized Loss Position, 12 Months or Longer, Aggregate Loss	3,238
Held-to-maturity Securities, Continuous Unrealized Loss Position, Fair Value	$ 2,968,274

XML

Investment and Mortgage-Backed Securities, Held to Maturity (Narrative) (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Proceeds from Sale of Held-to-maturity Securities	$ 0
Held-to-maturity Securities, Fair Value	28,961,965	$ 29,681,280
Held-to-maturity Securities Pledged as Collateral	23,400,000	26,000,000
Held to maturity pledged as collateral, fair value	23,700,000	25,800,000
US Government Agencies Debt Securities [Member]
Held-to-maturity Securities, Fair Value	18,700,000	20,400,000
Held-to-maturity Securities, Amortized Cost before Other than Temporary Impairment	$ 18,400,000	$ 20,500,000

XML

Loans Receivable, Net (Schedule of Accounts, Notes, Loans and Financing Receivable) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Gross	$ 346,296,719	$ 339,350,618
Loans Held For Sale	1,682,094	2,462,559
Total Loans Receivable, Gross	347,978,813	341,813,177
Allowance For Loan Losses	8,395,214	8,275,133
Loans and Leases Receivable, Loans in Process	4,438,089	2,902,849
Loans and Leases Receivable, Deferred Income	109,285	62,466
Loans Receivable, Allowance, Loans in Process, and Deferred Loan Fees	12,942,588	11,240,448
Total Loans Receivable, Net	335,036,225	330,572,729
Residential Mortgage [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Gross	77,229,040	76,373,071
Consumer Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Gross	50,076,365	50,380,289
Commercial Loan [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Gross	14,233,684	12,514,133
Commercial Real Estate [Member]
Accounts, Notes, Loans and Financing Receivable [Line Items]
Financing Receivable, Gross	$ 204,757,630	$ 200,083,125

XML

Loans Receivable, Net (Schedule of Allowance for Loan Losses) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance At Beginning of Period	$ 8,273,304	$ 7,918,917	$ 8,275,133	$ 8,357,496
Provision for Loan Losses	0	0	0	100,000
Charge Offs	(190,870)	(277,946)	(356,499)	(896,960)
Recoveries	312,780	154,611	476,580	235,046
Balance At End of Period	8,395,214	7,795,582	8,395,214	7,795,582
Residential Real Estate 1 [Member]
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance At Beginning of Period	1,399,703	1,354,435	1,323,183	1,392,065
Provision for Loan Losses	52,888	(44,208)	129,408	(36,838)
Charge Offs	0	(916)	0	(45,916)
Recoveries	10,045	767	10,045	767
Balance At End of Period	1,462,636	1,310,078	1,462,636	1,310,078
Consumer [Member]
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance At Beginning of Period	1,042,530	1,141,797	1,063,153	886,716
Provision for Loan Losses	104,830	125,774	153,797	456,705
Charge Offs	(59,452)	(273,007)	(153,881)	(393,625)
Recoveries	28,068	13,420	52,907	58,188
Balance At End of Period	1,115,976	1,007,984	1,115,976	1,007,984
Commercial Business [Member]
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance At Beginning of Period	803,146	496,803	773,948	159,353
Provision for Loan Losses	62,721	246,264	91,919	591,341
Charge Offs	0	0	0	(10,947)
Recoveries	0	4,000	0	7,320
Balance At End of Period	865,867	747,067	865,867	747,067
Commercial Real Estate 1 [Member]
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance At Beginning of Period	5,027,925	4,925,882	5,114,849	5,919,362
Provision for Loan Losses	(220,439)	(327,830)	(375,124)	(911,208)
Charge Offs	(131,418)	(4,023)	(202,618)	(446,472)
Recoveries	274,667	136,424	413,628	168,771
Balance At End of Period	$ 4,950,735	$ 4,730,453	$ 4,950,735	$ 4,730,453

XML

Loans Receivable, Net (Financing Receivable Credit Quality Indicators) (Details) - USD ($)

6 Months Ended

Jun. 30, 2016

Dec. 31, 2015

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable Credit Quality Indicators [Table Text Block]

The following tables list the loan grades used by the Company as credit quality indicators and the balance for each loan category at the dates presented, excluding loans held for sale.

	Credit Quality Measures
June 30, 2016	Pass		Caution		Special Mention		Substandard		Total Loans
Residential Real Estate	$	69,300,706	$	711,846	$	699,591	$	6,516,897	$	77,229,040
Consumer	46,068,672		2,552,834		88,022		1,366,837		50,076,365
Commercial Business	12,059,122		1,730,675		59,175		384,712		14,233,684
Commercial Real Estate	126,085,696		56,069,386		15,175,709		7,426,839		204,757,630
Total	$	253,514,196	$	61,064,741	$	16,022,497	$	15,695,285	$	346,296,719

	Credit Quality Measures
December 31, 2015	Pass		Caution		Special Mention		Substandard		Total Loans
Residential Real Estate	$	67,605,311	$	1,264,415	$	607,336	$	6,896,009	$	76,373,071
Consumer	46,344,056		2,510,519		81,617		1,444,097		50,380,289
Commercial Business	10,519,123		1,465,136		102,046		427,828		12,514,133
Commercial Real Estate	129,242,390		43,863,659		17,304,431		9,672,645		200,083,125
Total	$	253,710,880	$	49,103,729	$	18,095,430	$	18,440,579	$	339,350,618

Financing Receivable, Gross

$ 346,296,719

$ 339,350,618

Residential Real Estate 1 [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

77,229,040

76,373,071

Consumer [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

50,076,365

50,380,289

Commercial Business [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

14,233,684

12,514,133

Commercial Real Estate 1 [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

204,757,630

200,083,125

Substandard [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

15,695,285

18,440,579

Substandard [Member] | Residential Real Estate 1 [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

6,516,897

6,896,009

Substandard [Member] | Consumer [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

1,366,837

1,444,097

Substandard [Member] | Commercial Business [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

384,712

427,828

Substandard [Member] | Commercial Real Estate 1 [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

7,426,839

9,672,645

Special Mention [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

16,022,497

18,095,430

Special Mention [Member] | Residential Real Estate 1 [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

699,591

607,336

Special Mention [Member] | Consumer [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

88,022

81,617

Special Mention [Member] | Commercial Business [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

59,175

102,046

Special Mention [Member] | Commercial Real Estate 1 [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

15,175,709

17,304,431

Caution [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

61,064,741

49,103,729

Caution [Member] | Residential Real Estate 1 [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

711,846

1,264,415

Caution [Member] | Consumer [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

2,552,834

2,510,519

Caution [Member] | Commercial Business [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

1,730,675

1,465,136

Caution [Member] | Commercial Real Estate [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

56,069,386

43,863,659

Pass [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

253,514,196

253,710,880

Pass [Member] | Residential Real Estate 1 [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

69,300,706

67,605,311

Pass [Member] | Consumer [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

46,068,672

46,344,056

Pass [Member] | Commercial Business [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

12,059,122

10,519,123

Pass [Member] | Commercial Real Estate 1 [Member]

Financing Receivable, Recorded Investment [Line Items]

Financing Receivable, Gross

$ 126,085,696

$ 129,242,390

XML

Loans Receivable, Net (Past Due Financing Receivables) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	$ 11,816,123	$ 13,511,635
Financing Receivable, Recorded Investment, Current	334,480,596	325,838,983
Financing Receivable, Gross	346,296,719	339,350,618
Residential Real Estate 1 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	3,548,827	4,451,056
Financing Receivable, Recorded Investment, Current	73,680,213	71,922,015
Financing Receivable, Gross	77,229,040	76,373,071
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	1,105,976	1,569,061
Financing Receivable, Recorded Investment, Current	48,970,389	48,811,228
Financing Receivable, Gross	50,076,365	50,380,289
Commercial Business [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	658,437	279,277
Financing Receivable, Recorded Investment, Current	13,575,247	12,234,856
Financing Receivable, Gross	14,233,684	12,514,133
Commercial Real Estate 1 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	6,502,883	7,212,241
Financing Receivable, Recorded Investment, Current	198,254,747	192,870,884
Financing Receivable, Gross	204,757,630	200,083,125
Financing Receivables, 30 to 59 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	4,373,846	4,121,369
Financing Receivables, 30 to 59 Days Past Due [Member] | Residential Real Estate 1 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Financing Receivables, 30 to 59 Days Past Due [Member] | Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	686,826	710,881
Financing Receivables, 30 to 59 Days Past Due [Member] | Commercial Business [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	511,435	101,201
Financing Receivables, 30 to 59 Days Past Due [Member] | Commercial Real Estate 1 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	3,175,585	3,309,287
Financing Receivables, 60 to 89 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	1,153,809	2,356,514
Financing Receivables, 60 to 89 Days Past Due [Member] | Residential Real Estate 1 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	491,302	1,144,381
Financing Receivables, 60 to 89 Days Past Due [Member] | Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	100,051	282,314
Financing Receivables, 60 to 89 Days Past Due [Member] | Commercial Business [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	0	0
Financing Receivables, 60 to 89 Days Past Due [Member] | Commercial Real Estate 1 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	562,456	929,819
Financing Receivables, Equal to Greater than 90 Days Past Due [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	6,288,468	7,033,752
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Residential Real Estate 1 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	3,057,525	3,306,675
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	319,099	575,866
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Business [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	147,002	178,076
Financing Receivables, Equal to Greater than 90 Days Past Due [Member] | Commercial Real Estate 1 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Past Due	$ 2,764,842	$ 2,973,135

XML

Loans Receivable, Net (Schedule of non-accrual loans by category) (Details) - USD ($)		6 Months Ended
		Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status		$ 6,288,468	$ 7,033,752
FInancing Receivable, Recorded Investment, Nonaccrual Status, Percentage	[1]	1.80%	2.10%
Financing Receivable Recorded Investment in Non-accrual Status, Increase (Decrease)		$ (745,284)
Financing Receivable Recorded Investment in Non-accrual Status, Percent, Increase (Decrease)		(10.60%)
Financing Receivable, Recorded Investment, Past Due		$ 11,816,123	$ 13,511,635
Residential Real Estate 1 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status			$ 3,306,675
FInancing Receivable, Recorded Investment, Nonaccrual Status, Percentage	[1]	0.90%	1.00%
Financing Receivable Recorded Investment in Non-accrual Status, Increase (Decrease)		$ (249,150)
Financing Receivable Recorded Investment in Non-accrual Status, Percent, Increase (Decrease)		(7.50%)
Financing Receivable, Recorded Investment, Past Due		$ 3,548,827	$ 4,451,056
Commercial Business [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status			$ 178,076
FInancing Receivable, Recorded Investment, Nonaccrual Status, Percentage	[1]	0.00%	0.10%
Financing Receivable Recorded Investment in Non-accrual Status, Increase (Decrease)		$ (31,074)
Financing Receivable Recorded Investment in Non-accrual Status, Percent, Increase (Decrease)		(17.40%)
Financing Receivable, Recorded Investment, Past Due		$ 658,437	$ 279,277
Commercial Real Estate 1 [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status			$ 2,973,135
FInancing Receivable, Recorded Investment, Nonaccrual Status, Percentage	[1]	0.80%	0.80%
Financing Receivable Recorded Investment in Non-accrual Status, Increase (Decrease)		$ (208,293)
Financing Receivable Recorded Investment in Non-accrual Status, Percent, Increase (Decrease)		(7.00%)
Financing Receivable, Recorded Investment, Past Due		$ 6,502,883	$ 7,212,241
Consumer [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
Financing Receivable, Recorded Investment, Nonaccrual Status			$ 575,866
FInancing Receivable, Recorded Investment, Nonaccrual Status, Percentage	[1]	0.10%	0.20%
Financing Receivable Recorded Investment in Non-accrual Status, Increase (Decrease)		$ (256,767)
Financing Receivable Recorded Investment in Non-accrual Status, Percent, Increase (Decrease)		(44.60%)
Financing Receivable, Recorded Investment, Past Due		$ 1,105,976	$ 1,569,061

[1] PERCENT OF TOTAL LOANS HELD FOR INVESTMENT, NET OF DEFERRED FEES AND LOANS IN PROCESS.

XML

Loans Receivable, Net (Schedule of loans evaluated individually for impairment and collectively evaluated for impairment in the allowance for loan losses) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	$ 34,200		$ 34,200		$ 81,600
Balance At Beginning of Period	8,273,304	$ 7,918,917	8,275,133	$ 8,357,496
Provision for Loan Losses	0	0	0	100,000
Charge Offs	190,870	277,946	356,499	896,960
Recoveries	312,780	154,611	476,580	235,046
Balance At End of Period	8,395,214	7,795,582	8,395,214	7,795,582
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	8,361,014		8,361,014		8,193,533
Financing Receivable, Allowance for Credit Losses	8,395,214		8,395,214		8,275,133
Commercial Real Estate 1 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	29,300		29,300		49,300
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	4,921,435		4,921,435		5,065,549
Financing Receivable, Allowance for Credit Losses	4,950,735		4,950,735		5,114,849
Commercial Business [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	0		0		0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	865,867		865,867		773,948
Financing Receivable, Allowance for Credit Losses	865,867		865,867		773,948
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	4,900		4,900		32,300
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	1,111,076		1,111,076		1,030,853
Financing Receivable, Allowance for Credit Losses	1,115,976		1,115,976		1,063,153
Residential Real Estate 1 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	0		0		0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	1,462,636		1,462,636		1,323,183
Financing Receivable, Allowance for Credit Losses	1,462,636		1,462,636		$ 1,323,183
Residential Real Estate 1 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance At Beginning of Period	1,399,703	1,354,435	1,323,183	1,392,065
Provision for Loan Losses	52,888	(44,208)	129,408	(36,838)
Charge Offs	0	916	0	45,916
Recoveries	10,045	767	10,045	767
Balance At End of Period	1,462,636	1,310,078	1,462,636	1,310,078
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance At Beginning of Period	1,042,530	1,141,797	1,063,153	886,716
Provision for Loan Losses	104,830	125,774	153,797	456,705
Charge Offs	59,452	273,007	153,881	393,625
Recoveries	28,068	13,420	52,907	58,188
Balance At End of Period	1,115,976	1,007,984	1,115,976	1,007,984
Commercial Business [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance At Beginning of Period	803,146	496,803	773,948	159,353
Provision for Loan Losses	62,721	246,264	91,919	591,341
Charge Offs	0	0	0	10,947
Recoveries	0	4,000	0	7,320
Balance At End of Period	865,867	747,067	865,867	747,067
Commercial Real Estate 1 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Balance At Beginning of Period	5,027,925	4,925,882	5,114,849	5,919,362
Provision for Loan Losses	(220,439)	(327,830)	(375,124)	(911,208)
Charge Offs	131,418	4,023	202,618	446,472
Recoveries	274,667	136,424	413,628	168,771
Balance At End of Period	$ 4,950,735	$ 4,730,453	$ 4,950,735	$ 4,730,453

XML

Loans Receivable, Net (Schedule of loans evaluated individually for impairment and collectively evaluated for impairment in loans receivable) (Details) - USD ($)	6 Months Ended
	Jun. 30, 2016	Dec. 31, 2015
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	$ 34,200	$ 81,600
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	8,361,014	8,193,533
Financing Receivable, Allowance for Credit Losses	8,395,214	8,275,133
Financing Receivable, Individually Evaluated for Impairment	9,604,990	12,647,328
Financing Receivable, Collectively Evaluated for Impairment	336,691,729	326,703,290
Financing Receivable, Gross	$ 346,296,719	339,350,618
Loans and Leases Receivable, Valuation Period for New Appraisal	24 months
Residential Real Estate 1 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	$ 0	0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	1,462,636	1,323,183
Financing Receivable, Allowance for Credit Losses	1,462,636	1,323,183
Financing Receivable, Individually Evaluated for Impairment	2,638,041	2,922,105
Financing Receivable, Collectively Evaluated for Impairment	74,590,999	73,450,966
Financing Receivable, Gross	77,229,040	76,373,071
Consumer [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	4,900	32,300
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	1,111,076	1,030,853
Financing Receivable, Allowance for Credit Losses	1,115,976	1,063,153
Financing Receivable, Individually Evaluated for Impairment	191,568	372,382
Financing Receivable, Collectively Evaluated for Impairment	49,884,797	50,007,907
Financing Receivable, Gross	50,076,365	50,380,289
Commercial Business [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	0	0
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	865,867	773,948
Financing Receivable, Allowance for Credit Losses	865,867	773,948
Financing Receivable, Individually Evaluated for Impairment	147,001	162,201
Financing Receivable, Collectively Evaluated for Impairment	14,086,683	12,351,932
Financing Receivable, Gross	14,233,684	12,514,133
Commercial Real Estate 1 [Member]
Financing Receivable, Allowance for Credit Losses [Line Items]
Financing Receivable, Allowance for Credit Losses, Individually Evaluated for Impairment	29,300	49,300
Financing Receivable, Allowance for Credit Losses, Collectively Evaluated for Impairment	4,921,435	5,065,549
Financing Receivable, Allowance for Credit Losses	4,950,735	5,114,849
Financing Receivable, Individually Evaluated for Impairment	6,628,380	9,190,640
Financing Receivable, Collectively Evaluated for Impairment	198,129,250	190,892,485
Financing Receivable, Gross	$ 204,757,630	$ 200,083,125

XML

Loans Receivable, Net (Impaired Financing Receivables) (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2016	Jun. 30, 2015	Jun. 30, 2016	Jun. 30, 2015	Dec. 31, 2015
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivables, Loans Defaulted	$ 770,000	$ 468,000	$ 770,000	$ 468,000
Impaired financing receivable, recorded investment	9,604,990		9,604,990		$ 12,647,328
Impaired Financing Receivable, Unpaid Principal Balance	12,533,344		12,533,344		15,328,828
Impaired Financing Receivable, Average Recorded Investment	10,273,382	15,165,476	12,374,232	15,658,520
Impaired Financing Receivable, Interest Income, Accrual Method	32,497	93,688	95,286	195,988
Residential Real Estate 1 [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	2,638,041		2,638,041		2,922,105
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	2,734,541		2,734,541		3,033,735
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	2,662,040	2,694,645	2,790,857	2,717,895
Impaired Financing Receivable, with No Related Allowance, Interest Income, Accrual Method	0	486	447	4,397
Impaired Financing Receivable, with Related Allowance, Recorded Investment	0		0		0
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	0		0		0
Impaired financing receivable, related allowance	0		0		0
Impaired financing receivable, recorded investment	2,638,041		2,638,041		2,922,105
Impaired Financing Receivable, Unpaid Principal Balance	2,734,541		2,734,541		3,033,735
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	0	273,476	0	275,966
Impaired Financing Receivable, with Related Allowance, Interest Income, Accrual Method	0	0	0	0
Impaired Financing Receivable, Average Recorded Investment	2,662,040	2,968,121	2,790,857	2,993,861
Impaired Financing Receivable, Interest Income, Accrual Method	0	486	447	4,397
Consumer [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	129,612		129,612		120,889
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	137,911		137,911		129,188
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	289,655	181,718	296,075	182,812
Impaired Financing Receivable, with No Related Allowance, Interest Income, Accrual Method	0	0	0	104
Impaired Financing Receivable, with Related Allowance, Recorded Investment	61,956		61,956		251,493
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	61,956		61,956		256,923
Impaired financing receivable, related allowance	4,900		4,900		32,300
Impaired financing receivable, recorded investment	191,568		191,568		372,382
Impaired Financing Receivable, Unpaid Principal Balance	199,867		199,867		386,111
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	62,323	68,192	62,693	69,076
Impaired Financing Receivable, with Related Allowance, Interest Income, Accrual Method	1,144	1,344	1,555	2,712
Impaired Financing Receivable, Average Recorded Investment	351,978	249,910	358,768	251,888
Impaired Financing Receivable, Interest Income, Accrual Method	1,144	1,344	1,555	2,816
Commercial Business [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	147,001		147,001		162,201
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	997,001		997,001		362,201
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	149,801	192,401	154,316	211,100
Impaired Financing Receivable, with No Related Allowance, Interest Income, Accrual Method	0	0	0	0
Impaired Financing Receivable, with Related Allowance, Recorded Investment	0		0		0
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	0		0		0
Impaired financing receivable, related allowance	0		0		0
Impaired financing receivable, recorded investment	147,001		147,001		162,201
Impaired Financing Receivable, Unpaid Principal Balance	997,001		997,001		362,201
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	0	0	0	0
Impaired Financing Receivable, with Related Allowance, Interest Income, Accrual Method	0	0	0	0
Impaired Financing Receivable, Average Recorded Investment	149,801	192,401	154,316	211,100
Impaired Financing Receivable, Interest Income, Accrual Method	0	0	0	0
Commercial Real Estate 1 [Member]
Financing Receivable, Impaired [Line Items]
Impaired Financing Receivable, with No Related Allowance, Recorded Investment	6,201,852		6,201,852		8,620,301
Impaired Financing Receivable, with No Related Allowance, Unpaid Principal Balance	8,162,393		8,162,393		10,969,642
Impaired Financing Receivable, with No Related Allowance, Average Recorded Investment	6,675,462	10,485,665	8,632,348	10,926,601
Impaired Financing Receivable, with No Related Allowance, Interest Income, Accrual Method	31,353	76,051	93,284	153,665
Impaired Financing Receivable, with Related Allowance, Recorded Investment	426,528		426,528		570,339
Impaired Financing Receivable, with Related Allowance, Unpaid Principal Balance	439,542		439,542		577,139
Impaired financing receivable, related allowance	29,300		29,300		49,300
Impaired financing receivable, recorded investment	6,628,380		6,628,380		9,190,640
Impaired Financing Receivable, Unpaid Principal Balance	8,601,935		8,601,935		11,546,781
Impaired Financing Receivable, with Related Allowance, Average Recorded Investment	434,101	1,269,379	437,943	1,275,070
Impaired Financing Receivable, with Related Allowance, Interest Income, Accrual Method	0	15,807	0	35,110
Impaired Financing Receivable, Average Recorded Investment	7,109,563	11,755,044	9,070,291	12,201,671
Impaired Financing Receivable, Interest Income, Accrual Method	31,353	$ 91,858	93,284	$ 188,775
Fair Value, Measurements, Nonrecurring | Impaired Loans [Member]
Financing Receivable, Impaired [Line Items]
Impaired financing receivable, related allowance	$ 34,200		$ 34,200		$ 81,600

XML

Loans Receivable, Net (Summary of loans restructured as Troubled Debt Restructurings) (Details)	6 Months Ended
	Jun. 30, 2016 USD ($) loan	Jun. 30, 2015 USD ($) loan
Financing Receivable, Modifications [Line Items]
Financing Receivable, Modifications, Subsequent Default During Reporting Period, Number of Contracts | loan	3	1
Financing Receivable Restructured, Number of Contracts | loan	0	3
Financing Receivable, Pre Modification Recorded Investment	$ 0	$ 840,292
Financing Receivable, Post Modification Recorded Investment	0	840,292
Impaired Financing Receivables, Loans Defaulted during year to date period	$ 641,000	$ 62,000
Commercial Real Estate 1 [Member]
Financing Receivable, Modifications [Line Items]
Financing Receivable Restructured, Number of Contracts | loan	0	3
Financing Receivable, Pre Modification Recorded Investment	$ 0	$ 840,292
Financing Receivable, Post Modification Recorded Investment	$ 0	$ 840,292

XML

Loans Receivable, Net (Narrative) (Details)	3 Months Ended	6 Months Ended
	Jun. 30, 2016 USD ($) loan payments	Jun. 30, 2016 USD ($) loan	Dec. 31, 2015 USD ($)	Jun. 30, 2015 loan
Financing Receivable, Recorded Investment, Past Due [Line Items]
Nonperforming Loans, Accrual Status, Minimum Consecutive Payments	6	90
TDRs included in impaired loans	$ 5,300,000.0	$ 5,300,000.0	$ 6,700,000.0
Financing Receivable, Modifications, Subsequent Default, Aggregate Number of Contracts | loan	6	6		3
Days Past Due to Be Considered In Default		30
Review period to request a new third party appraisal		24 months
Impaired Financing Receivable, Recorded Investment	$ 9,604,990	$ 9,604,990	$ 12,647,328

XML

Regulatory Matters (Regulatory capital amounts and ratios) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Tier 1 Risk-Based Core Capital (To Risk Weighted Assets)
Actual, Amount	$ 88,132	$ 84,671,763
Actual, Ratio	21.60%	21.70%
For Capital Adequacy, Amount	$ 24,486	$ 23,429,060
For Capital Adequacy, Ratio	6.00%	6.00%
Total Risk-Based Capital (To Risk Weighted Assets)
Actual, Amount	$ 98,249	$ 95,428,763
Actual, Ratio	24.10%	24.40%
For Capital Adequacy, Amount	$ 32,648	$ 31,238,746
For Capital Adequacy, Ratio	8.00%	8.00%
Common Equity Tier One Capital	$ 66,099
Tier 1 Leverage (Core) Capital (To Adjusted Tangible Assets)
Actual, Amount	$ 88,132	$ 84,672,000
Actual, Ratio	10.90%	10.60%
For Capital Adequacy, Amount	$ 32,247	$ 31,810,743
For Capital Adequacy, Ratio	4.00%	4.00%
Security Federal Bank [Member]
Tier 1 Risk-Based Core Capital (To Risk Weighted Assets)
Actual, Amount	$ 88,209,000	$ 87,728,000
Actual, Ratio	21.60%	22.50%
For Capital Adequacy, Amount	$ 24,523,000	$ 23,440,440
For Capital Adequacy, Ratio	6.00%	6.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 32,698	$ 31,253,920
To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	8.00%	8.00%
Total Risk-Based Capital (To Risk Weighted Assets)
Actual, Amount	$ 93,359,000	$ 92,653,000
Actual, Ratio	22.80%	23.70%
For Capital Adequacy, Amount	$ 32,698,000	$ 31,253,920
For Capital Adequacy, Ratio	8.00%	8.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 40,872	$ 39,067,400
To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	10.00%	10.00%
Common Equity Tier One Capital	$ 88,209,000
Tier 1 Leverage (Core) Capital (To Adjusted Tangible Assets)
Actual, Amount	$ 88,209,000	$ 87,728,000
Actual, Ratio	10.90%	11.00%
For Capital Adequacy, Amount	$ 32,238,000	$ 31,800,960
For Capital Adequacy, Ratio	4.00%	4.00%
To Be Well Capitalized Under Prompt Corrective Action Provisions, Amount	$ 40,297	$ 39,751,200
To Be Well Capitalized Under Prompt Corrective Action Provisions, Ratio	5.00%	5.00%

XML

Carrying Amounts and Fair Value of Financial Instruments (Fair value measurements, recurring basis) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015
Fair Value Disclosures [Abstract]
Liabilities, Fair Value Disclosure, Recurring	$ 0
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	387,953,612	$ 375,513,870
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Recurring	387,953,612	375,513,870
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
US Government Agencies Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
US Government Agencies Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
Federal Farm Credit Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Recurring		0
Federal Farm Credit Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Recurring		0
US Government Sponsored Enterprises Debt Securities, FHLB Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Recurring		0
US Government Sponsored Enterprises Debt Securities, FHLB Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Recurring		0
SBA Bonds | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
SBA Bonds | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
Collateralized Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
Collateralized Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
Equity Securities | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
Equity Securities | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Recurring	0	0
Taxable Municipal Bonds [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	1,044,260
US Government-sponsored Enterprises Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	1,023,914	1,004,331
US Government Agencies Debt Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	119,200,000	118,500,000
Federal Farm Credit Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure		1,987,936
Equity Securities | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	310,346	309,902
Collateralized Mortgage Backed Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	198,731,529	182,797,212
US States and Political Subdivisions Debt Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	85,957,882	76,065,619
SBA Bonds | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure	$ 100,885,681	111,416,782
US Government Sponsored Enterprises Debt Securities, FHLB Securities [Member] | Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available-for-sale Securities, Fair Value Disclosure		$ 1,932,088

XML

Carrying Amounts and Fair Value of Financial Instruments (Fair value measurements, nonrecurring basis) (Details) - USD ($)		Jun. 30, 2016		Dec. 31, 2015
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Other Real Estate Owned (OREO)		$ 2,377,793		$ 4,361,411
Held For Sale		1,682,094		2,462,559
Fair Value, Measurements, Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		13,630,677		19,389,698
Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		0		0
Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		1,682,094		2,462,559
Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		11,948,583		16,927,139
Mortgage Loans Held For Sale | Fair Value, Measurements, Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		1,682,094		2,462,559
Mortgage Loans Held For Sale | Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		0		0
Mortgage Loans Held For Sale | Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring				2,462,559
Mortgage Loans Held For Sale | Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		0		0
Collateral Dependent Impaired Loans (1) | Fair Value, Measurements, Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	[1]			12,565,728
Impaired financing receivable, related allowance		34,200		81,600
Collateral Dependent Impaired Loans (1) | Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		0	[2]	0	[1]
Collateral Dependent Impaired Loans (1) | Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		0	[2]	0	[1]
Collateral Dependent Impaired Loans (1) | Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		9,570,790	[2]	12,565,728	[1]
Foreclosed Assets | Fair Value, Measurements, Nonrecurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		2,377,793		4,361,411
Foreclosed Assets | Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		0		0
Foreclosed Assets | Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		$ 0		0
Foreclosed Assets | Fair Value, Measurements, Nonrecurring | Fair Value, Inputs, Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets, Fair Value Disclosure, Nonrecurring				$ 4,361,411

[1] IMPAIRED LOANS ARE REPORTED NET OF SPECIFIC RESERVES OF $81,600

[2] {F|ahBzfndlYmZpbGluZ3MtaHJkcmoLEgZYTUxEb2MiXlhCUkxEb2NHZW5JbmZvOjZmZmM1ZTc2OTk1ZjRkYmFhZjY5OTBmYTA3NjAyZjdifFRleHRTZWxlY3Rpb246OUNBNDBENzc1QUFBMUJFRjgyNEY3M0E5MERFRDdBOUUM}

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Carrying Amounts and Fair Value of Financial Instruments (Significant unobservable inputs used in the fair value measurements) (Details) - USD ($)		3 Months Ended		6 Months Ended
		Jun. 30, 2016		Jun. 30, 2016		Dec. 31, 2015
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Other Real Estate Owned (OREO)		$ 2,377,793		$ 2,377,793		$ 4,361,411
Fair Value, Measurements, Nonrecurring
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		$ 13,630,677		13,630,677		19,389,698
Impaired Loans [Member] | Fair Value, Measurements, Nonrecurring
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Assets, Fair Value Disclosure, Nonrecurring	[1]					12,565,728
Fair Value Measurements, Valuation Techniques		Appraised Value
Significant Unobservable Inputs		Discount Rates/ Discounts to Appraised Values
Foreclosed Assets | Fair Value, Measurements, Nonrecurring
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		$ 2,377,793		$ 2,377,793		4,361,411
Fair Value Measurements, Valuation Techniques		Appraised Value/Comparable Sales
Significant Unobservable Inputs		Discount Rates/ Discounts to Appraised Values
Minimum | Impaired Loans [Member] | Fair Value, Measurements, Nonrecurring
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Significant Unobservable Inputs, Percentage Range				0.00%
Minimum | Foreclosed Assets | Fair Value, Measurements, Nonrecurring
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Significant Unobservable Inputs, Percentage Range				13.00%
Maximum | Impaired Loans [Member] | Fair Value, Measurements, Nonrecurring
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Significant Unobservable Inputs, Percentage Range				70.00%
Maximum | Foreclosed Assets | Fair Value, Measurements, Nonrecurring
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Significant Unobservable Inputs, Percentage Range				82.00%
Fair Value, Inputs, Level 3 | Fair Value, Measurements, Nonrecurring
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		$ 11,948,583		$ 11,948,583		16,927,139
Fair Value, Inputs, Level 3 | Impaired Loans [Member] | Fair Value, Measurements, Nonrecurring
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Assets, Fair Value Disclosure, Nonrecurring		$ 9,570,790	[2]	$ 9,570,790	[2]	12,565,728	[1]
Fair Value, Inputs, Level 3 | Foreclosed Assets | Fair Value, Measurements, Nonrecurring
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Assets, Fair Value Disclosure, Nonrecurring						$ 4,361,411

[1] IMPAIRED LOANS ARE REPORTED NET OF SPECIFIC RESERVES OF $81,600

[2] {F|ahBzfndlYmZpbGluZ3MtaHJkcmoLEgZYTUxEb2MiXlhCUkxEb2NHZW5JbmZvOjZmZmM1ZTc2OTk1ZjRkYmFhZjY5OTBmYTA3NjAyZjdifFRleHRTZWxlY3Rpb246OUNBNDBENzc1QUFBMUJFRjgyNEY3M0E5MERFRDdBOUUM}

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Carrying Amounts and Fair Value of Financial Instruments (Summary of the carrying value and estimated fair value of financial instruments) (Details) - USD ($)	Jun. 30, 2016	Dec. 31, 2015	Jun. 30, 2015	Dec. 31, 2014
Financial Assets:
Cash And Cash Equivalents	$ 8,883,000	$ 8,382,000
Cash and Cash Equivalents	8,883,215	8,381,951	$ 9,520,536	$ 10,192,702
Certificates of Deposits With Other Banks	3,445,000	3,445,000
Investment And Mortgage-Backed Securities, Carrying Value Disclosure		405,387,000
Investments	416,462,081	405,386,968
Certificates of Deposit with Other Banks	3,445,005	3,445,005
Investment And Mortgage-Backed Securities	416,916,000	405,196,000
Loans Receivable, Net	335,036,225	330,572,729
Loans Receivable, Net	336,358,000	327,460,000
Investment in Federal Home Loan Bank Stock, Carrying Value		2,215,000
FHLB Stock	2,048,000	2,215,000
Federal Home Loan Bank (FHLB) Stock, at Cost	2,048,300	2,214,800
Checking, Savings, And Money Market Accounts, Carrying Value Disclosure		415,975,000
Financial Liabilities:
Checking, Savings, And Money Market Accounts	426,227,000	415,975,000
Certificate Accounts, Carrying Value	231,375,000	236,122,000
Certificate Accounts	231,673,000	235,476,000
FHLB Advances, Carrying Value		34,640,000
Advances From FHLB	29,110,000	34,640,000
Advances From FHLB	29,494,000	35,676,000
Other Borrowed Money	9,385,000	6,412,000
Other Borrowings	9,384,881	6,411,977
Senior Convertible Debentures	6,084,000	6,084,000
Junior Subordinated Debentures	5,155,000	5,155,000
Junior Subordinated Debentures	5,155,000	5,155,000
Senior Convertible Debentures	6,084,000	6,084,000
Fair Value, Inputs, Level 1
Financial Assets:
Cash And Cash Equivalents		8,382,000
Cash and Cash Equivalents	8,883,000
Certificates of Deposits With Other Banks	0	0
Investment And Mortgage-Backed Securities	0	0
Loans Receivable, Net	0	0
FHLB Stock		2,215,000
Federal Home Loan Bank (FHLB) Stock, at Cost	2,048,000
Financial Liabilities:
Checking, Savings, And Money Market Accounts	426,227,000	415,975,000
Certificate Accounts	0	0
Advances From FHLB	0	0
Other Borrowed Money		6,412,000
Other Borrowings	9,385,000
Senior Convertible Debentures	0	0
Junior Subordinated Debentures	0	0
Fair Value, Inputs, Level 2 [Member]
Financial Assets:
Cash And Cash Equivalents	0	0
Certificates of Deposits With Other Banks		3,445,000
Certificates of Deposit with Other Banks	3,445,000
Investment And Mortgage-Backed Securities	416,916,000	405,196,000
Loans Receivable, Net	0	0
FHLB Stock	0	0
Financial Liabilities:
Checking, Savings, And Money Market Accounts	0	0
Certificate Accounts	231,673,000	235,476,000
Advances From FHLB	29,494,000	35,676,000
Other Borrowed Money	0	0
Senior Convertible Debentures		6,084,000
Junior Subordinated Debentures	6,084,000
Junior Subordinated Debentures		5,155,000
Senior Convertible Debentures	5,155,000
Fair Value, Inputs, Level 3
Financial Assets:
Cash And Cash Equivalents	0	0
Certificates of Deposits With Other Banks	0	0
Investment And Mortgage-Backed Securities	0	0
Loans Receivable, Net	336,358,000	327,460,000
FHLB Stock	0	0
Financial Liabilities:
Checking, Savings, And Money Market Accounts	0	0
Certificate Accounts	0	0
Advances From FHLB	0	0
Other Borrowed Money	0	0
Senior Convertible Debentures	0	0
Junior Subordinated Debentures	$ 0	$ 0

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Carrying Amounts and Fair Value of Financial Instruments (Narrative) (Details)	6 Months Ended
	Jun. 30, 2016 USD ($) investment	Dec. 31, 2015 USD ($)
Fair Value Disclosures [Abstract]
Number of equity investments | investment	2
Investor funding period	30 days
Review period to request a new third party appraisal	24 months
Impaired financing receivable, recorded investment	$ 9,604,990	$ 12,647,328
Fair value disclosure, off-balance sheet risks, amount, liability	$ 59,200,000