Security Federal (SFDL 0.32%), a regional bank focused on retail and commercial banking across South Carolina and Georgia, released its earnings for the quarter ended June 30, 2025, on July 30, 2025. The release highlights double-digit year-over-year growth in net interest income and earnings per share (GAAP), although loan balances slightly contracted. No analyst estimates are available for comparison. The quarter showed healthy trends in profitability and capital metrics, but non-interest expense and a surge in preferred stock dividends partially offset those gains. Overall, the company posted a strong period.
| Metric | Q2 2025 | Q2 2024 | Y/Y Change |
|---|---|---|---|
| EPS (GAAP) | $0.75 | $0.66 | 13.6% |
| Net Income Available to Common Shareholders | $2.4 million | $2.13 million | 11.6% |
| Net Interest Income | $11.3 million | $10.2 million | 10.8% |
| Non-interest Income | $2.6 million | $2.45 million | 6.1% |
| Non-interest Expense | $10.4 million | $9.7 million | 7.2% |
| Total Assets (period end) | $1.63 billion | $1.54 billion | 5.3% |
Security Federal’s Business and Focus Areas
Security Federal operates as a community-oriented bank, with a focus on serving local businesses and individuals through a network of 19 full-service branches across South Carolina and Georgia. Its business centers on gathering deposits and offering a broad suite of loans, including commercial real estate, residential real estate, construction, and consumer lending products.
Security Federal's income is derived primarily from interest and fees earned through its lending activities. Security Federal is also designated as a Certified Community Development Financial Institution (CDFI), which brings a regulatory focus on lending to low- and moderate-income areas. This adds a layer of responsibility for market impact, as well as access to specialized grant funding. Meanwhile, its capital structure, compliance with regulatory minimums, and ability to attract deposits are ongoing factors supporting operations and business expansion.
Quarterly Highlights and Financial Developments
net income available to common shareholders (GAAP) increased 11.5% compared to Q2 2024, bringing earnings per share (GAAP) to $0.75. While it was achieved despite a marginal decline in total loans receivable to $685.5 million as of June 30, 2025, down 0.2% since year-end 2024.
Net interest income rose 11.1% compared to the prior year period, supported by higher interest income from loans even as investment income trailed. Lower interest expense, due in part to reduced balances of borrowings repaid to the Federal Reserve, helped sustain the net interest margin. Non-interest income rose 5.7% (GAAP), helped by higher rental income stemming from the purchase of a multi-tenant property intended to become a new full-service branch and a modest gain from land sales. This suggests ongoing investment in both geographic reach and product offerings.
On the cost side, non-interest expense climbed 7.2% over the prior year, with most of the increase attributed to salaries, employee benefits, occupancy, debit card, and technology spending.
Another notable development is the sharp increase in preferred stock dividends, which were $415,000—more than four times the prior year’s $97,000. Year-to-date, these dividends reached $830,000, compared to $97,000 the year before. This directly reduces net income available to common shareholders. Meanwhile, net income before preferred dividends (GAAP) rose 25.4% compared to Q2 2024 as income tax provisions also rose.
Credit quality saw solid momentum, with non-performing assets falling to $5.95 million or 0.37% of total assets, from 0.47% at December 31, 2024. An allowance for credit losses equal to 2.00% of gross loans, up modestly since year-end. Regulatory capital ratios, including a total risk-based capital ratio of 20.46%, remain well above minimum required levels, giving Security Federal flexibility for growth or risk absorption. The company’s book value per common share rose to $34.02, up from $31.21 at year-end 2024.
Security Federal’s commitment to community development continues to influence its strategy. Alongside traditional banking services -- such as checking, savings, and time deposit accounts -- Security Federal provides wealth management through its trust and investment platform, as well as insurance brokerage services via Security Federal Insurance, Inc.
There was also no mention of material regulatory changes or compliance challenges impacting operations in the earnings release.
Looking Ahead: Management’s Outlook and Key Investor Considerations
Security Federal did not provide explicit financial guidance for the rest of fiscal 2025 in its latest release. The management team referenced general macroeconomic, interest rate, regulatory, competitive, and environmental risks, but did not address specific targets or expectations for loan growth, earnings, or capital deployment. As such, investors have little formal direction from the company regarding expectations for the second half or the remainder of the year.
Given the trends seen this quarter, investors may wish to monitor the trajectory of loan balances for signs of renewed growth, the pace of non-interest expense increases, and the ongoing impact of preferred dividend outflows. The combination of solid capital positions and improving credit quality gives Security Federal financial flexibility. However, with no forward guidance provided, future periods may depend on management’s ability to convert these strengths into sustained loan and income growth.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
