Security Federal Corporation Reports 35.3% Increase in Net Income to $12 Million

Security Federal Corporation reported a modest increase in total assets, reaching $1.62 billion as of December 31, 2025, up from $1.61 billion in the previous year. The company's net income available to common shareholders rose significantly by 35.3% to $12.0 million, or $3.80 per share, compared to $8.9 million, or $2.77 per share, in 2024. This growth was primarily driven by an increase in net interest income, which rose by 12.8% to $47.2 million, alongside a reduction in the provision for credit losses. The company’s total deposits also increased by 3.6% to $1.37 billion, reflecting a competitive promotional environment for money market accounts.

In terms of operational changes, Security Federal experienced a decrease in loans receivable, which fell by 1.6% to $676.2 million, largely due to a significant decline in construction loans, which dropped 39.4% to $66.6 million. However, the bank saw growth in other loan categories, including residential and commercial real estate loans, which increased by 8.0% and 2.4%, respectively. The bank's non-performing assets decreased by 23.5% to $5.8 million, indicating improved asset quality, with non-accrual loans also declining across various categories.

Strategically, the company has focused on enhancing its capital position, evidenced by the redemption of its junior subordinated debentures, which reduced its outstanding balance to zero. Additionally, Security Federal has maintained a strong capital base, with a total risk-based capital ratio of 20.6% as of December 31, 2025, well above the regulatory minimum. The company also continues to engage in community development initiatives, having received grant income of $1.1 million in 2025, which supports its lending activities in economically distressed areas.

Looking ahead, Security Federal Corporation remains cautious about potential economic challenges, including inflation and interest rate fluctuations, which could impact its loan portfolio and overall financial performance. The company has indicated that it will continue to monitor economic conditions closely and adjust its strategies accordingly. Management believes that the current allowance for credit losses is adequate, but acknowledges that future adjustments may be necessary if economic conditions change significantly. The bank's focus on maintaining a well-capitalized status and enhancing its operational efficiency positions it to navigate potential market uncertainties effectively.