SECURITY FEDERAL CORP
For the period ended Dec 31, 2025. Filed Mar 20, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2025 · Filed Mar 20, 2026
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What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2024-12-31; filed 2025-03-14.
0001437749-25-007686
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2025-12-31; filed 2026-03-20.
0001437749-26-009181
Item 7. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 90 previous paragraphs and 93 current paragraphs.
37 unchanged; 45 reworded; 9 added; 5 removed; 3 previous and 2 current paragraphs rearranged.
Tables are not compared: 11 previous and 11 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (9)
Current report
Cash and cash equivalents decreased $102.9 million or 57.7% to $75.3 million at December 31, 2025 compared to $178.3 million at December 31, 2024, due to increased investment securities and the payoff of FRB borrowings and junior subordinated debentures during the year ended December 31, 2025.
Current report
Loans receivable, net, including loans held for sale, decreased $10.9 million or 1.6% to $676.2 million at December 31, 2025 from $687.1 million at December 31, 2024. The decrease was due to a decline in construction loan balances, which was partially offset by growth in all remaining loan categories in 2025.
Current report
Other assets decreased $3.9 million or 23.2% to $12.9 million at December 31, 2025 from $16.8 million at December 31, 2024. The decrease was primarily the result of a $3.5 million decrease in the net deferred asset associated with the change in market value of our AFS investment securities.
Current report
Non-performing commercial real estate loans declined $399,000 or 10.9% to $3.3 million at December 31, 2025, from $3.7 million at December 31, 2024. At December 31, 2025, non-performing commercial real estate loans consisted of six loans to six borrowers, with an average loan balance of $543,000, compared to seven loans to seven borrowers, with an average loan balance of $523,000 at December 31, 2024.
Current report
Non-performing HELOCs decreased $262,000 or 61.8% to $162,000 at December 31, 2025, compared to $424,000 at December 31, 2024. At December 31, 2025, non-performing HELOCs consisted of four loans to four borrowers, with an average loan balance of $40,000, compared to seven loans to seven borrowers, with an average loan balance of $61,000 at December 31, 2024.
Current report
Offsetting these decreases was a $68,000 or 87.2% increase in non-performing other consumer loans and a $45,000 increase in OREO at December 31, 2025.
Current report
Interest expense on all borrowed funds decreased $4.3 million or 77.1% to $1.3 million during 2025, compared to $5.6 million during the prior year. The decrease was attributable to both a $85.1 million or 67.1% decrease in the average balance of all borrowings and a 135 basis point decrease in the average cost of borrowings, which fell to 3.09% in 2025 from 4.44% during 2024. Most of the decrease in interest expense was for FRB and other borrowings, which decreased $3.5 million to $453,000 for 2025 due to both a $70.1 million decrease in the average balance and a 239 basis point decrease in the average cost of these liabilities in 2025.
Current report
Other non-interest income increased $658,000 or 87.2% to $1.4 million for the year ended December 31, 2025 compared to $407,000 in 2024 primarily due to increased rental income. During the first quarter of 2025, we purchased a multi-tenant property resulting in a $548,000 increase in rental income in 2025 when compared to the prior year. The property is intended to be the future site of a full-service branch for the Bank.
Current report
Occupancy expenses increased $397,000 or 12.0% to $3.7 million in 2025 from $3.3 million in 2024, primarily due to increased utilities, taxes and building maintenance costs in 2025.
Removed paragraphs (5)
Previous report
Cash and cash equivalents increased $50.0 million or 39.0% to $178.3 million at December 31, 2024 compared to $128.3 million at December 31, 2023, due to increased deposits, while certificates of deposits with other banks decreased $1.1 million or 46.8% to $1.3 million at December 31, 2024 compared to the prior year end.
Previous report
Loans receivable, net, including loans held for sale, increased $64.6 million or 10.4% to $687.1 million at December 31, 2024 from $622.5 million at December 31, 2023. The increase was due to growth across all loan categories, except other consumer loans, which declined slightly in 2024 as compared to 2023.
Previous report
Other assets decreased $12.5 million or 42.7% to $16.8 million at December 31, 2024 from $29.2 million at December 31, 2023. The decrease was primarily the result of a $10.8 million decrease in principal payments receivable on investments. The higher balance in the prior year was due to the maturity of one investment security that matured on December 31, 2023 but payment was not received until the beginning of 2024.
Previous report
Offsetting these increases was a $467,000 or 11.3% decrease in non-performing commercial real estate loans, which declined to $3.7 million at December 31, 2024, from $4.1 million at December 31, 2023. At December 31, 2024, non-performing commercial real estate loans consisted of seven loans to seven borrowers, with an average loan balance of $523,000, compared to five loans to five borrowers with an average loan balance of $825,000 at December 31, 2023.
Previous report
Interest expense on FRB and other borrowings increased $686,000 or 21.0% to $4.0 million during the year ended December 31, 2024, compared to $3.3 million during the prior year. The increase was attributable to both a $7.8 million or 8.8% increase in the average balance of borrowings and a 41 basis point increase in the average cost of borrowing, which rose to 4.08% in 2024 from 3.67% during 2023.
Reworded paragraphs (45)
Previous wording
The investment and other activities of the Company have had no significant impact on the results of operations for the periods presented in the Consolidated Financial Statements included herein. Given that all material business operations are conducted through the Bank, the following discussion of financial results primarily indicative of the activities of the Bank.
Current wording
The investment and other activities of the Company have had no significant impact on the results of operations for the periods presented in the Consolidated Financial Statements included herein. Given that all material business operations are conducted through the Bank, the following discussion of financial results is primarily indicative of the activities of the Bank.
Previous wording
The principal business of the Bank is accepting deposits from the general public and originating consumer and commercial business loans as well as mortgage loans that enable borrowers to purchase or refinance one-to-four family residential real estate. The Bank also originates construction loans on single-family residences, multi-family dwellings, and commercial real estate, as well as loans for the acquisition, development and construction of residential subdivisions, and commercial projects. The Bank also provides trust services and it offers property and casualty insurance products through its subsidiary, SFINS.
Current wording
The principal business of the Bank is accepting deposits from the general public and originating consumer, commercial, and mortgage loans, including loans that enable borrowers to purchase or refinance one-to-four family residential properties. The Bank also originates construction loans for single-family residences, multi-family dwellings, commercial real estate, and residential subdivisions, as well as loans for commercial development projects. The Bank also provides trust services and it offers property and casualty insurance products through its subsidiary, SFINS.
Previous wording
We prepare our consolidated financial statements in accordance with GAAP. In doing so, we have to make estimates and assumptions. Our critical accounting estimates are those estimates that involve a significant level of uncertainty at the time the estimate was made, and changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. Accordingly, actual results could differ materially from our estimates. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We have reviewed our critical accounting estimates with the audit committee of our Board of Directors.
Current wording
We prepare our consolidated financial statements in accordance with U.S. generally accepted accounting principles (“GAAP”). In doing so, we have to make estimates and assumptions. Our critical accounting estimates are those estimates that involve a significant level of uncertainty at the time the estimate was made, and changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. Accordingly, actual results could differ materially from our estimates. We base our estimates on past experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We have reviewed our critical accounting estimates with the audit committee of our Board of Directors.
Previous wording
Total assets increased $62.1 million or 4.0% to $1.61 billion at December 31, 2024 from $1.55 billion at December 31, 2023. This increase was primarily due to increases in net loans receivable and cash and cash equivalents, partially offset by a decrease in investment securities and other assets.
Current wording
Total assets increased $6.3 million or 0.4% to $1.62 billion at December 31, 2025 from $1.61 billion at December 31, 2024. This increase was primarily due to increases in investment securities and bank owned life insurance ("BOLI"), partially offset by decreases in cash and cash equivalents, net loans receivable and other assets.
Previous wording
Total investment securities decreased $39.9 million or 5.7% to $660.8 million at December 31, 2024 from $700.7 million at December 31, 2023 as maturities, sales and principal paydowns exceeded purchases of investments during the year. The Company purchased $71.9 million of investment securities during the year ended December 31, 2024 compared to $66.3 million during 2023.
Current wording
Total investment securities increased $115.5 million or 17.5% to $776.3 million at December 31, 2025 from $660.8 million at December 31, 2024 as purchases of investments exceeded maturities, sales and principal paydowns during the year. The Company purchased $228.3 million of investment securities during the year ended December 31, 2025 compared to $71.9 million during 2024.
Previous wording
The most significant growth occurred in our residential and commercial real estate loan portfolios. Residential mortgage loans held for investment increased $30.8 million or 17.8% to $203.7 million at December 31, 2024 from $172.9 million at December 31, 2023. Commercial real estate loans increased $23.7 million or 9.0% to $288.5 million at December 31, 2024, from $264.8 million at December 31, 2023. Additionally, construction loans increased by $5.4 million, commercial and agricultural loans by $3.6 million, and HELOCs by $3.3 million. These increases were partially offset by a $677,000 decline in other consumer loans.
Current wording
Construction loans decreased $43.4 million or 39.4% to $66.6 million at December 31, 2025 from $109.9 million at December 31, 2024. The decrease in construction loans was partially offset by growth in all other loan categories. The most significant growth occurred in our residential and commercial real estate loan portfolios. Residential mortgage loans held for investment increased $16.3 million or 8.0% to$219.9 million at December 31, 2025 from$203.7 million at December 31, 2024. Commercial real estate loans increased $6.8 million or 2.4% to $295.3 million at December 31, 2025, from $288.5 million at December 31, 2024. Additionally, commercial and agricultural loans increased by $1.0 million, HELOCs by $5.2 million, and other consumer loans by $21,000.
Previous wording
Loans held for sale, comprised of fixed rate residential loans, totaled $599,000 at December 31, 2024 compared to $967,000 at December 31, 2023. Typically, long-term fixed-rate residential real estate loans, when newly originated, are not retained in the portfolio but are promptly sold, unlike ARM loans, which are generally held in the portfolio. The Bank sells its fixed-rate residential loans on a service-released basis. The total value of fixed-rate residential loans sold to institutional investors on a service-released basis was $30.2 million during the year ended December 31, 2024, compared to $21.6 million during the year ended December 31, 2023.
Current wording
Loans held for sale, comprised of fixed rate residential loans, totaled $3.1 million at December 31, 2025 compared to $599,000 at December 31, 2024. Typically, long-term fixed-rate residential real estate loans, when newly originated, are not retained in the portfolio but are promptly sold, unlike ARM loans, which are generally held in the portfolio. The Bank sells its fixed-rate residential loans on a service-released basis. The total value of fixed-rate residential loans sold to institutional investors on a service-released basis was $39.8 million during the year ended December 31, 2025, compared to $30.2 million during the year ended December 31, 2024.
Previous wording
The Bank’s non-performing assets, consisting solely of nonaccrual loans, increased $811,000 or 11.9% to $7.6 million at December 31, 2024, from $6.8 million at December 31, 2023. At December 31, 2024 and 2023, the Bank did not have any loans that were 90 days or more past due and still accruing interest, or OREO. Non-performing assets represented 0.44% and 0.49% of total assets at December 31, 2024 and 2023, respectively. The ratio of the allowance for credit losses to total loans was 1.98% at both December 31, 2024 and 2023.
Current wording
The Bank’s non-performing assets, consisting of nonaccrual loans and OREO, decreased $1.8 million or 23.5% to $5.8 million at December 31, 2025, from $7.6 million at December 31, 2024. At December 31, 2025 and 2024, the Bank did not have any loans that were 90 days or more past due and still accruing interest. Non-performing assets represented 0.36% and 0.47% of total assets at December 31, 2025 and 2024, respectively. The ratio of the allowance for credit losses to total loans was 1.97% and 1.98% at December 31, 2025 and 2024, respectively.
Previous wording
The increase in non-performing assets at December 31, 2024, was primarily driven by higher levels of non-performing construction, residential real estate, and commercial and agricultural loans. This was partially offset by a decrease in non-performing commercial real estate loans compared to the year ended December 31, 2023. The largest increase occurred in non-performing construction loans, which increased $570,000 or 65.7% to $1.4 million at December 31, 2024 , from $868,000 at December 31, 2023. At December 31, 2024, non-performing construction loans consisted of four loans to four borrowers, with an average loan balance of $252,000, compared to four loans to four borrowers with an average loan balance of $217,000 at December 31, 2023.
Current wording
The decrease in non-performing assets at December 31, 2025, was primarily driven by lower levels of non-performing loans in all categories except other consumer loans when compared to the year ended December 31, 2024. The largest decrease occurred in non-performing construction loans, which decreased $977,000 or 67.9% to $461,000 at December 31, 2025, from $1.4 million at December 31, 2024. At December 31, 2025, non-performing construction loans consisted of three loans to three borrowers, with an average loan balance of $154,000, compared to four loans to four borrowers with an average loan balance of $252,000 at December 31, 2024.
Previous wording
Non-performing residential real estate loans increased $400,000 or 30.6% to $1.7 million at December 31, 2024, up from $1.3 million at December 31, 2023. Non-performing residential real estate loans at December 31, 2024, consisted of 19 loans to 19 borrowers with an average loan balance of $113,000, the largest of which was $431,000, compared to 16 loans to 16 borrowers with an average loan balance of $82,000, the largest of which was $291,000, at December 31, 2023.
Current wording
Non-performing residential real estate loans decreased $131,000 or 7.7% to $1.6 million at December 31, 2025, up from $1.7 million at December 31, 2024. Non-performing residential real estate loans at December 31, 2025, consisted of 19 loans to 19 borrowers with an average loan balance of $83,000, compared to 19 loans to 19 borrowers with an average loan balance of $113,000, at December 31, 2024.
Previous wording
Non-performing commercial and agricultural loans increased $281,000 or 562.0% to $331,000 at December 31, 2024, compared to $50,000 at December 31, 2023. At December 31, 2024, non-performing commercial and agricultural loans consisted of five loans to five borrowers, with an average loan balance of $66,000, compared to three loans to three borrowers with an average loan balance of $17,000 at December 31, 2023.
Current wording
Non-performing commercial and agricultural loans decreased $138,000 or 41.7% to $193,000 at December 31, 2025, compared to $331,000 at December 31, 2024. At December 31, 2025, non-performing commercial and agricultural loans consisted of seven loans to seven borrowers, with an average loan balance of $24,000, compared to five loans to five borrowers, with an average loan balance of $66,000 at December 31, 2024.
Previous wording
Deterioration in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the allowance for credit losses. The ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted. In addition, bank regulatory agencies periodically review our allowance for credit losses and may require an increase in the provision for possible loan losses or the recognition of further loan charge-offs, based on judgments different than those of management. If charge-offs in future periods exceed the allowance for credit losses, we will need additional provisions to increase the allowance for credit losses. Any increases in the allowance for credit losses will result in a decrease in net income and, possibly, capital, and may have a material adverse effect on our financial condition and results of operations. Management continually monitors its loan portfolio for the impact of local economic changes.
Current wording
Deterioration in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans and other factors, both within and outside of our control, may require an increase in the allowance for credit losses. The ultimate impact will depend on future developments, which are highly uncertain and cannot be predicted. In addition, bank regulatory agencies periodically review our allowance for credit losses and may require an increase in the provision for credit losses or the recognition of further loan charge-offs, based on judgments different than those of management. If charge-offs in future periods exceed the allowance for credit losses, we will need additional provisions to increase the allowance for credit losses. Any increases in the allowance for credit losses will result in a decrease in net income and, possibly, capital, and may have a material adverse effect on our financial condition and results of operations. Management continually monitors its loan portfolio for the impact of local economic changes.
Previous wording
The majority of the Bank’s deposits are originated within the Bank’s immediate market area. Total deposits increased $129.0 million or 10.8% to $1.32 billion at December 31, 2024, up from $1.19 billion at December 31, 2023. The increase primarily was the result of an $78.8 million or 34.2% increase in certificates of deposit balances, a $41.6 million or 10.3% increase money market account balances and, to a lesser extent, a $9.3 million or 2.0% increase in checking account balances. We believe the majority of the increases in deposits were due to competitive promotional rates for certificates of deposits and money market accounts in addition to a $19.7 million increase in total brokered deposits.
Current wording
The majority of the Bank’s deposits are originated within the Bank’s immediate market area. Total deposits increased $47.7 million or 3.6% to $1.37 billion at December 31, 2025, up from $1.32 billion at December 31, 2024. The increase primarily was the result of a $46.6 million or 10.4% increase in money market account balances and, to a lesser extent, a $6.5 million or 1.3% increase in checking account balances. We believe the majority of the increases in deposits were due to competitive promotional rates for money market accounts.
Previous wording
We had brokered time deposits of $25.8 million and $6.5 million at December 31, 2024 and 2023, respectively. We use brokered time deposits as part of our interest rate risk management strategy, as they provide access to large deposit amounts at competitive rates that are typically slightly higher than those available in our market areas. A portion of these brokered time deposits includes a call option, allowing the Bank to redeem them early should interest rates shift. Additionally, the Bank maintained $5.4 million and $5.0 million in non-certificate brokered deposits at December 31, 2024 and 2023, respectively. Brokered deposits were 2.5% and 1.0% of total deposits at December 31, 2024 and 2023, respectively.
Current wording
We had brokered time deposits of $5.1 million and $25.8 million at December 31, 2025 and 2024, respectively. We use brokered time deposits as part of our interest rate risk management strategy, as they provide access to large deposit amounts at competitive rates that are typically slightly higher than those available in our market areas. A portion of these brokered time deposits includes a call option, allowing the Bank to redeem them early should interest rates shift. Additionally, the Bank maintained $6.3 million and $5.4 million in non-certificate brokered deposits at December 31, 2025 and 2024, respectively. Brokered deposits were 0.8% and 2.5% of total deposits at December 31, 2025 and 2024, respectively.
Previous wording
Total uninsured deposits (those that exceeded the FDIC insurance limit of $250,000) were $365.8 million and $327.7 million at December 31, 2024 and 2023, respectively. These estimates are based on methodologies and assumptions used for the Bank’s regulatory reporting requirements. Certificates of deposits exceeding the FDIC insurance limit totaled $96.0 million and $50.2 million at December 31, 2024 and 2023, respectively. The following table summarizes the maturity schedule of certificates of deposit with a balance of $250,000 or more at December 31, 2024:
Current wording
Total uninsured deposits (those that met or exceeded the FDIC insurance limit of $250,000) totaled$334.4 million and$365.8 million at December 31, 2025 and 2024, respectively. The uninsured amounts are estimates based on the methodologies and assumptions used for the Bank's regulatory reporting requirements. The Bank had no deposit relationships greater than 5.0% of outstanding deposits at either December 31, 2025 or 2024.
Previous wording
We had no outstanding FHLB advances at December 31, 2024 and 2023. We had $50.0 million in outstanding borrowings under the FRB's BTFP with a weighted average borrowing rate of 4.76% at December 31, 2024, compared to $119.2 million at December 31, 2023, with a weighted average borrowing rate of 4.60%. During 2023, we elected to participate in the BTFP to refinance existing FRB discount window borrowings at a lower fixed rate. Advances under the program have a one-year term and are priced at the OIS rate plus 10 basis points on the day the advance is made. Effective January 24, 2024, the FRB announced that future advances through the program’s expiration on March 11, 2024, would be set at no lower than the interest rate on reserve balances in effect at the time of the advance. At December 31, 2024, we had pledged investment securities with an amortized cost of $370.2 million and a fair value of $341.0 million as collateral for these borrowings compared to an amortized cost and fair value of $381.0 million and $350.6 million, respectively, at December 31, 2023, respectively.
Current wording
We had no outstanding FHLB advances at December 31, 2025 and 2024. We also had no outstanding borrowings from the FRB at December 31, 2025, compared to $50.0 million in outstanding borrowings under the FRB's BTFP with a weighted average borrowing rate of 4.76% at December 31, 2024. The Company originally elected to participate in the BTFP during 2023 to refinance existing FRB discount window borrowings at a lower fixed rate. Advances under that program had a one-year term and were priced at the one year overnight index swap (“OIS”) rate plus 10 basis points on the day the advance was made. Effective January 24, 2024, the FRB announced that future advances through the BTFP’s expiration on March 11, 2024, would be set at no lower than the interest rate on reserve balances in effect at the time of the advance. At December 31, 2025, we had pledged investment securities with an amortized cost of $312.9 million and a fair value of $293.9 million as collateral for FRB borrowings compared to an amortized cost and fair value of $370.2 million and a fair value of $341.0 million, respectively, at December 31, 2024, respectively.
Previous wording
Other borrowings increased $8.6 million or 45.0% to $27.8 million at December 31, 2024 from $19.2 million at December 31, 2023. 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. The interest rate paid on the repurchase agreements was 1.49% at both December 31, 2024 and 2023, respectively. We had pledged, as collateral for these repurchase agreements, investment securities with amortized costs and fair values of $42.1 million and $39.7 million at December 31, 2024, and $44.7 million and $42.0 million at December 31, 2023, respectively.
Current wording
Other borrowings decreased $2.5 million or 9.2% to $25.3 million at December 31, 2025 from $27.8 million at December 31, 2024. 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. The interest rate paid on the repurchase agreements was 1.49% at both December 31, 2025 and 2024, respectively. We had pledged, as collateral for these repurchase agreements, investment securities with amortized costs and fair values of $36.4 million and $34.4 million at December 31, 2025, and $42.1 million and $39.7 million at December 31, 2024, respectively.
Previous wording
At both December 31, 2024 and 2023, the Company had $5.2 million in junior subordinated debentures outstanding. In addition, at December 31, 2024, the Company had $10.0 million in subordinated debentures (“Notes”) outstanding compared to $26.5 million at December 31, 2023. During the year ended December 31, 2024, the Company repurchased $16.5 million in principal of the Notes. For additional information, refer to Notes 12 and 13 of the Notes to Consolidated Financial Statements included under "Item 8. Financial Statements and Supplementary Data" in this 2024 Form 10-K.
Current wording
During 2025, the Company redeemed its junior subordinated debentures leaving no remaining balance at December 31, 2025 compared to $5.2 million in junior subordinated debentures outstanding at December 31, 2024. In addition, the Company had $10.0 million in subordinated debentures (“Notes”) outstanding compared at both December 31, 2025 and 2024. During the year ended December 31, 2024, the Company repurchased $16.5 million in principal of the Notes. For additional information, refer to Notes 12 and 13 of the Notes to Consolidated Financial Statements included under "Item 8. Financial Statements and Supplementary Data" in this 2025 Form 10-K.
Previous wording
Total shareholders' equity increased $10.0 million or 5.8% to $182.4 million at December 31, 2024 from $172.4 million at December 31, 2023. The increase was primarily attributable to net income available to common shareholders of $8.9 million during 2024 and a $3.9 million decrease in accumulated other comprehensive loss, net of tax, related to the unrecognized gain in value of AFS securities during the year ended December 31, 2024. These increases were partially offset by $1.8 million in dividends paid to common shareholders and $926,000 in dividends paid to preferred shareholders. Book value per common share was $31.21 at December 31, 2024 compared to $27.69 at December 31, 2023.
Current wording
Total shareholders' equity increased $18.1 million or 9.9% to $200.5 million at December 31, 2025 from $182.4 million at December 31, 2024. The increase was primarily attributable to net income available to common shareholders of $13.7 million during 2025 and a $10.5 million decrease in accumulated other comprehensive loss, net of tax, related to the unrecognized gain in value of AFS securities during the year ended December 31, 2025. These increases were partially offset by $2.2 million in dividends paid to common shareholders, $1.7 million in dividends paid to preferred shareholders and $2.3 million paid for share repurchases. Book value per common share was$37.74 at December 31, 2025 compared to $31.21 at December 31, 2024.
Previous wording
Net income available to common shareholders was $8.9 million or $2.77 per basic common share for the year ended December 31, 2024, compared to $10.2 million, or $3.14 per common share, for the year ended December 31, 2023. The decrease in net income was primarily due to increases in the provision for credit losses, non-interest expense and the provision for income taxes, partially offset by increases in net interest income and non-interest income.
Current wording
Net income available to common shareholders increased $3.1 million or 35.3% to $12.0 million or $3.80 per basic common share for the year ended December 31, 2025, compared to $8.9 million or $2.77 per basic common share for the year ended December 31, 2024. The increase in net income was primarily due to increases in net interest income and non-interest income and a reduction to the provision for credit losses, which were partially offset by an increase in non-interest expense.
Previous wording
Net interest income increased $2.6 million or 6.6% to $41.8 million for the year ended December 31, 2024, compared to $39.2 million in 2023. The increase was due to higher interest income from loans, deposits in other banks and, to a lesser extent, investments, partially offset by an increase in interest expense, principally on deposits. The net interest margin on a tax-equivalent basis decreased four basis points to 2.85% for the year ended December 31, 2024 from 2.89% for the year ended December 31, 2023.
Current wording
Net interest income increased $5.3 million or 12.8% to $47.2 million for the year ended December 31, 2025, compared to $41.8 million in 2024. The increase was due to higher interest income from loans and taxable investment securities combined with a decrease in interest expense on long term debt and non certificate deposit accounts. These were partially offset by lower interest income from deposits in other banks and an increase in interest expense on certificate of deposit accounts. The net interest margin on a tax-equivalent basis increased 28 basis points to 3.13% for the year ended December 31, 2025 from 2.85% for the year ended December 31, 2024.
Previous wording
Total average interest-earning assets increased $107.9 million or 7.9% to $1.47 billion for the year ended December 31, 2024 from $1.36 billion for the year ended December 31, 2023, with a 48 basis point increase in the average yield earned on these assets. Similarly, average interest-bearing liabilities increased $107.1 million or 10.5% to $1.13 billion for the year ended December 31, 2024 from $1.02 billion for the year ended December 31, 2023, with an increase of 62 basis points in the average cost. The interest rate spread on a tax-equivalent basis decreased 14 basis points to 2.12% for the year ended December 31, 2024 from 2.26% in 2023.
Current wording
Total average interest-earning assets increased $41.5 million or 2.8% to $1.51 billion for the year ended December 31, 2025 from $1.47 billion for the year ended December 31, 2024, despite a five basis point decrease in the average yield earned on these assets. Similarly, average interest-bearing liabilities increased $10.9 million or 1.0% to $1.14 billion for the year ended December 31, 2025 from $1.13 billion for the year ended December 31, 2024, while the average cost of these liabilities decreased 38 basis points to 2.76%. The interest rate spread on a tax-equivalent basis increased 33 basis points to 2.45% for the year ended December 31, 2025 from 2.12% in 2024.
Previous wording
Interest income on loans increased $8.5 million or 25.8% to $41.3 million for the year ended December 31, 2024 compared to $32.8 million for the year ended December 31, 2023. The increase was due to a $71.3 million increase in the average balance of loans outstanding during the year ended December 31, 2024 combined with a 63 basis point increase in the average loan yield.
Current wording
Total interest income increased $1.3 million or 1.7% to $78.6 million for the year ended December 31, 2025, compared to $77.3 million for the year ended December 31, 2024, as a result of increased interest income on loans and taxable investments. Interest income on loans increased $2.8 million or 6.8% to $44.1 million for the year ended December 31, 2025 compared to $41.3 million for the year ended December 31, 2024. The increase was due to a $23.0 million increase in the average balance of loans outstanding combined with a 20 basis point increase in the average loan yield during the year ended December 31, 2025.
Previous wording
Interest income on taxable investment securities increased $729,000, or 2.5%, due to a 30 basis point increase in the average yield earned on these assets during 2024 compared to 2023, partially offset by a $29.7 million decrease in the aggregate average balance of these interest-earning assets. Conversely, tax equivalent interest income on non-taxable investment securities decreased $239,000 or 31.2%, due to a $8.8 million decrease in the aggregate average balance of and a 16 basis point decrease in the average yield earned on these assets during 2024 compared to 2023.
Current wording
Interest income on taxable investment securities increased $511,000, or 1.7%, due to a $45.9 million increase in the aggregate average balance of these interest-earning assets, partially offset by a 22 basis point decrease in the average yield earned during 2025 compared to 2024. Conversely, tax equivalent interest income on non-taxable investment securities decreased $70,000 or 13.3%, due to a $4.3 million decrease in the aggregate average balance of these assets, which was partially offset by a decrease of 79 basis points in the average yield earned on these assets during 2025 compared to 2024.
Previous wording
Interest income on deposits with other banks increased $3.3 million or 121.0% to $6.1 million for the year ended December 31, 2024 compared to $2.8 million for prior year. This increase was due to a $67.1 million increase in the average balance of deposits with other banks. The average yield earned on these deposits was 5.11% for the year ended December 31, 2023, compared to 5.26% in 2023.
Current wording
Interest income on deposits with other banks decreased $2.0 million or 31.9% to $4.2 million for the year ended December 31, 2025, compared to $6.1 million for prior year. This decrease was due to a $23.2 million decrease in the average balance of deposits with other banks. The average yield earned on these deposits was 4.31% for the year ended December 31, 2025, compared to 5.11% in 2024.
Previous wording
Total interest expense increased $9.8 million or 37.9% to $35.5 million for the year ended December 31, 2024, compared to $25.7 million for the year ended December 31, 2023, due to a 62 basis point increase in the average cost of interest-bearing liabilities and a $107.1 million or 10.5% increase in their average balance. Higher deposit rates were the primary reason, with the average rate paid on deposits increasing 68 basis points to 2.98% in 2024 from 2.30% in 2023. The average balance of interest-bearing deposits increased $101.1 million or 11.2% to $1.0 billion during the year ended December 31, 2024 compared to $900.5 million during 2023.
Current wording
Total interest expense decreased $4.0 million or 11.4% to $31.4 million for the year ended December 31, 2025, compared to $35.5 million for the year ended December 31, 2024, due to a 38 basis point decrease in the average cost of interest-bearing liabilities, which was partially offset by a $10.9 million increase in their average balance. Interest expense on deposits increased $304,000 or 1.0% to $30.2 million for the year ended December 31, 2025. The average balance of interest-bearing deposits increased $96.0 million or 9.6% to $1.1 billion during the year ended December 31, 2025, compared to $1.0 billion during 2024 while the average cost of these deposits decreased 23 basis points to 2.75% in 2025 from 2.98% in 2024.
Previous wording
We recorded a provision for credit losses of $1.4 million for the year ended December 31, 2024. This consisted of a $1.5 million provision for credit losses on loans and a $110,000 reversal of the provision credit losses on unfunded commitments, compared to a $246,000 provision for credit losses for the year ended December 31, 2023, which consisted of a $601,000 provision for credit losses on loans and a $355,000 reversal of the provision credit losses on unfunded commitments. The increase in the provision was due to overall growth in the loan portfolio, increased substandard loans and higher charge-offs during the year. Net charge-offs for the year ended December 31, 2024 totaled $155,000, compared to net recoveries of $6,000 in 2023. Non-performing assets, consisting solely of nonaccrual loans, increased $811,000, or 11.9%, to $7.6 million at December 31, 2024 from $6.8 million at December 31, 2023. Non-performing assets represented 0.47% and 0.44% of total assets at December 31, 2024 and 2023, respectively.
Current wording
We recorded a $235,000 reversal of credit losses for the year ended December 31, 2025. This consisted of a $194,000 reversal of credit losses on loans and a $41,000 reversal of credit losses on unfunded commitments, compared to a $1.4 million provision for credit losses for the year ended December 31, 2024, which consisted of a $1.5 million provision for credit losses on loans and a $110,000 reversal of credit losses on unfunded commitments. The decrease in the provision was due to a reduction in loan balances and a decrease in substandard loans. Non-performing assets represented 0.36% and 0.47% of total assets at December 31, 2025 and 2024, respectively. Net charge-offs totaled $171,000 for the year ended December 31, 2025, compared to $155,000 in 2024. Non-performing assets, consisting of nonaccrual loans and OREO, decreased $1.8 million, or 23.5%, to $5.8 million at December 31, 2025 from $7.6 million at December 31, 2024.
Previous wording
Non-interest income increased $857,000 or 9.1% to $10.2 million for the year ended December 31, 2024 from $9.4 million for the year ended December 31, 2023, with increases occurring in all categories except other income. Increases in gain on sales of loans, trust income, and ATM and check card fee income were the primary drivers.
Current wording
Non-interest income increased $1.3 million or 12.5% to $11.5 million for the year ended December 31, 2025 from $10.2 million for the year ended December 31, 2024, with increases occurring in all categories except gain on sale of investment securities, net and trust income. Increases in gain on sales of loans, grant income, and other non-interest income, which includes rental income, were the primary drivers of the increase in non-interest income.
Previous wording
Gain on sales of loans increased $153,000 or 24.4% to $779,000 for the year ended December 31, 2024, compared to the prior year, as the dollar volume of loans sold to investors increased. The Bank sold $31.3 million of loans in 2024 compared to $22.1 million during 2023.
Current wording
Gain on sales of loans increased $115,000 or 14.8% to $894,000 for the year ended December 31, 2025, compared to the prior year, as the dollar volume of loans sold to investors increased. The Bank sold $39.8 million of loans in 2025 compared to $31.3 million during 2024.
Previous wording
We received $500,000 and $437,000 in grant income during the years ended December 31, 2024 and 2023, respectively. The grant income received in 2024 included a $220,000 CDFI Assistance Award and $280,000 through the CDFI Fund Bank Enterprise Award ("BEA") program. All grant income received in 2023 was from the BEA program. These grants were allocated to support the Bank's ongoing initiatives in community development financing and service activities within the most economically distressed communities.
Current wording
We received $1.1 million and $500,000 in grant income during the years ended December 31, 2025 and 2024, respectively. All grant income received in 2025 was from a Community Development Financial Institution (“CDFI”) Financial Assistance ("FA") Award, while the grant income received in 2024 included a $220,000 CDFI FA Award and $280,000 through the CDFI Fund Bank Enterprise Award ("BEA") program. These grants were allocated to support the Bank's ongoing initiatives in community development financing and service activities within the most economically distressed communities.
Previous wording
Trust income increased $405,000 or 21.8% to $2.3 million for the year ended December 31, 2024 compared to $1.9 million in 2023 primarily due to non-recurring estate settlement fees received in 2024. ATM and check card fee income increased $152,000 or 4.9% to $3.2 million for the year ended December 31, 2024 compared to $3.0 million in 2023 reflecting higher transaction volume.
Current wording
These increases were offset by a $371,000 decrease in trust income to $1.9 million for the year ended December 31, 2025 compared to $2.3 million in 2024 primarily due to non-recurring estate settlement fees received in 2024.
Previous wording
Non-interest expense increased $2.2 million or 6.2% to $38.1 million during the year ended December 31, 2024 compared to $35.9 million in 2023. This increase was primarily a result of increases in compensation and employee benefits, cloud service expense, and other non-interest expense, partially offset by a decrease in depreciation and maintenance of equipment expenses.
Current wording
Non-interest expense increased $3.5 million or 9.1% to $41.6 million during the year ended December 31, 2025 compared to $38.1 million in 2024. This increase was primarily a result of increases in compensation and employee benefits, occupancy expense, debit card expenses and data processing expenses in 2025.
Previous wording
Compensation and employee benefits increased $1.5 million or 7.3% to $21.8 million during the year ended December 31, 2024 from $20.3 million in 2023. This increase was primarily due to an increase in employee salaries and annual cost-of-living adjustments.
Current wording
Compensation and employee benefits increased $2.2 million or 10.1% to $24.0 million during the year ended December 31, 2025 from $21.8 million in 2024. This increase was primarily due to an increase in employee salaries and annual cost-of-living adjustments.
Previous wording
Debit card expenses increased $125,000 or 8.7% to $1.6 million during the year ended December 31, 2024 from $1.4 million in 2023, primarily due higher transaction volumes and rising transaction costs. Occupancy expenses increased $121,000 or 3.8% to $3.3 million in 2024 from $3.2 million in 2023, primarily due to the addition of our newest branch in the second quarter of 2023.
Current wording
Debit card expenses increased $378,000 or 24.2% to $1.9 million during the year ended December 31, 2025 from $1.6 million in 2024, primarily due higher transaction volumes and rising transaction costs.
Previous wording
Data processing expenses increased $105,000 or 8.0% to $1.4 million during the year ended December 31, 2024 and cloud services expenses increased $218,000 or 30.5% to $932,000 in 2024. These increases were the result of increases in the cost of services provided by third-party vendors and higher transaction volume when compared to the prior year.
Current wording
Data processing expenses increased $230,000 or 16.3% to $1.6 million during the year ended December 31, 2025 as a result of increases in the cost of services provided by third-party vendors and higher transaction volume when compared to the prior year.
Previous wording
The provision for income taxes increased $469,000 or 20.5% to $2.8 million during the year ended December 31, 2024 compared to $2.3 million for the year ended December 31, 2023, despite lower pre-tax income. The increase was primarily due to a $396,000 reduction in income tax expense in 2023 resulting from tax credits associated with the new branch opened during that year, partially offset by an increase in pre-tax net income. The Company's combined federal and state effective income tax rate was 21.9% for 2024 compared to 18.3% for 2023.
Current wording
The provision for income taxes increased $901,000 or 32.7% to $3.7 million during the year ended December 31, 2025 compared to $2.8 million for the year ended December 31, 2024 due to an increase in pre-tax income. The Company's combined federal and state effective income tax rate was 21.1% for 2025 compared to 21.9% for 2024.
Previous wording
The Bank is subject to minimum capital requirements imposed by the FDIC. Based on capital levels at December 31, 2024, the Bank was considered to be well capitalized. At December 31, 2024, the Bank exceeded all regulatory capital requirements with Tier 1 leverage-based capital, Tier 1 risk-based capital, total risk-based capital, and common equity Tier 1 (CET1) capital ratios of 9.9%, 18.7%, 20.0%, and 18.7%, respectively. CET1 consists of Tier 1 capital less all capital components that are not considered common equity.
Current wording
The Bank is subject to minimum capital requirements imposed by the FDIC. Based on capital levels at December 31, 2025, the Bank was considered to be well capitalized. At December 31, 2025, the Bank exceeded all regulatory capital requirements with Tier 1 leverage-based capital, Tier 1 risk-based capital, total risk-based capital, and common equity Tier 1 (CET1) capital ratios of 10.2%, 19.3%, 20.6%, and 19.3%, respectively. CET1 consists of Tier 1 capital less all capital components that are not considered common equity.
Previous wording
In addition to the FDIC’s minimum capital ratios, the Bank is required to maintain a capital conservation buffer consisting of additional CET1 capital greater than 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. At December 31, 2024, the Bank’s capital conservation buffer was 12.0%.
Current wording
In addition to the FDIC’s minimum capital ratios, the Bank is required to maintain a capital conservation buffer consisting of additional CET1 capital greater than 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. At December 31, 2025, the Bank’s capital conservation buffer was 12.6%.
Previous wording
Our principal use of funds is the origination of mortgages and other loans, and the purchase of investment securities. The Bank’s liquidity is impacted by the volume of loans sold and principal payments received. During the years ended December 31, 2024 and 2023, the Bank sold $31.3 million and $22.1 million in loans, respectively. During the same periods, the net increase in loans outstanding, accounting for originations and principal repayments (excluding loans held for sale), totaled $66.5 million and $74.7 million, respectively. Further, purchases of investment securities totaled $71.9 million during 2024 compared to $66.3 million during 2023. Other uses of funds in 2024 included debt repayment, property and equipment purchases and improvements, and $2.7 million in dividend payments to common and preferred shareholders.
Current wording
Our principal use of funds is the origination of mortgages and other loans, and the purchase of investment securities. The Bank’s liquidity is impacted by the volume of loans sold and principal payments received. During the years ended December 31, 2025 and 2024, the Bank sold $39.8 million and $31.3 million in loans, respectively. During the same periods, the change in loans outstanding, accounting for originations and principal repayments (excluding loans held for sale), was a net decrease $13.6 million and a net increase of $66.5 million, respectively. Further, purchases of investment securities totaled $228.3 million during 2025 compared to $71.9 million during 2024. Other uses of funds in 2025 included repayment of FRB borrowings and junior subordinated debentures, property and equipment purchases and improvements, repurchases of common stock and $3.9 million in dividend payments to common and preferred shareholders.
Previous wording
Commitments to extend credit are subject to the Bank’s normal credit policies. At December 31, 2024, unused lines of credit on HELOCs, credit cards, and commercial loans totaled $147.1 million. The Bank also had undisbursed loans-in-process of $11.3 million, included in total unused commitments. These commitments are expected to be funded through loan amortizations, deposit inflows, principal payments on investments, and short-term borrowing capacity. See Note 18 of the Notes to the Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" in this 2024 Form 10-K for additional information regarding our commitments and off-balance sheet arrangements.
Current wording
Commitments to extend credit are subject to the Bank’s normal credit policies. At December 31, 2025, unused lines of credit on HELOCs, credit cards, and commercial loans totaled $136.4 million. The Bank also had undisbursed loans-in-process of $6.2 million, included in total unused commitments. These commitments are expected to be funded through loan amortizations, deposit inflows, principal payments on investments, and short-term borrowing capacity. See Note 18 of the Notes to the Consolidated Financial Statements included in "Item 8. Financial Statements and Supplementary Data" in this 2025 Form 10-K for additional information regarding our commitments and off-balance sheet arrangements.
Showing the first 40 of 45 pairs. Open the source sections for the rest.
Rearranged current paragraphs (2)
Current report — wording carried from elsewhere
Certificates of deposits exceeding the FDIC insurance limit totaled $81.1 million and $96.0 million at December 31, 2025 and 2024, respectively. The following table summarizes the maturity schedule of certificates of deposit with a balance of $250,000 or more at December 31, 2025:
Current report — wording carried from elsewhere
Primary sources of short-term liquidity for the Bank include borrowings from the FRB, the FHLB of Atlanta, and a $50.0 million line of credit with the Pacific Coast Bankers Bank. We had no outstanding FRB borrowings at December 31, 2025, compared to $50.0 million in outstanding borrowings under the FRB's BTFP with a weighted average borrowing rate of 4.76% at December 31, 2024. At December 31, 2025, we had pledged investment securities with an amortized cost of $312.9 million and a fair value of $293.9 million as collateral for these borrowings.
Rearranged previous paragraphs (3)
Previous report — wording carried elsewhere
Total interest income increased $12.3 million or 19.0% to $77.3 million for the year ended December 31, 2024, compared to $65.0 million for the year ended December 31, 2023, as a result of increased interest income on loans, deposits in other banks and, to a lesser extent, investments.
Previous report — wording carried elsewhere
Primary sources of short-term liquidity for the Bank include borrowings from the FRB, the FHLB of Atlanta, and a $50.0 million line of credit with the Pacific Coast Bankers Bank.
Previous report — wording carried elsewhere
We had $50.0 million in outstanding borrowings under the FRB's BTFP with a weighted average borrowing rate of 4.76% at December 31, 2024, compared to $119.2 million at December 31, 2023, with a weighted average borrowing rate of 4.60%. During 2023, the Company elected to participate in the BTFP to refinance existing FRB discount window borrowings at a lower fixed rate. Advances under the program have a one-year term and are priced at the OIS rate plus 10 basis points on the day the advance is made. Effective January 24, 2024, the FRB announced that future advances through the program’s expiration on March 11, 2024, would be set at no lower than the interest rate on reserve balances in effect at the time of the advance. At December 31, 2024, we had pledged investment securities with an amortized cost of $370.2 million and a fair value of $341.0 million as collateral for these borrowings.