SECURITY FEDERAL CORP

Summary Compensation Table.The following table shows information regarding compensation earned during the fiscal years ended December31, 2025 and2024, for our named executive officers: (1) J. Chris Verenes, our principal executive officer; and (2) ourtwo other most highly compensated executive officers, who are Roy G. Lindburg and Philip R. Wahl.

(1) Represents the increase of each officer’s accumulated benefit under his salary continuation agreement.

(2) See the table below for more information on the other compensation paid to our executive officers for the year ended* December 31, 2025.*

(3) Paid pursuant to the terms of the Incentive Compensation Plan described below.

Incentive Compensation Plan. Effective* August 15, 2013,the Board adopted the Senior Management Incentive Compensation Plan (“Incentive Plan”). The purpose of the Incentive Plan is to maximize the achievement of the Bank’s objectives by providing incentives and awards to those senior-level executives who attain and sustain consistently high levels of performance which exceed normal expectations and which contribute to the success and profitability of the Bank. Eligible participants are those individuals approved by the Board who, in the judgment of the Chief Executive Officer and the Board, are responsible for directing functions which have a significant bearing on the growth and profitability of the Bank. As of the beginning of each fiscal year, the Board must review and revise, if necessary, the operating rules of the Incentive Plan. The operating rules include: (1) identification of employees selected for participation; (2) position level multipliers, performance measurement factors and weightings for determining the amount of incentive compensation awards; and (3) other rules which the Board deems appropriate. For2025,* each of the named executive officers participated in the Incentive Plan.

The general formula for calculating a participant’s incentive for the plan year is the base annual salary of the participant, multiplied by the percentage base award, multiplied by the sum of the basic formula percentage for each performance measure applicable to the participant’s position, multiplied by the position level multiplier, multiplied by the individual performance adjustment. For any incentive to be paid under the Incentive Plan, the Bank must meet a predefined minimum level of performance. The performance measures for incentives are the key operating ratios, plus other pertinent measures of total Bank performance, on which the participants will be evaluated. The position level multiplier is a multiplier used to recognize the impact that each senior-level officer has on overall Bank performance. The individual performance adjustment gives the Board some subjective discretion in the determination of the final incentive award for each participant. In addition, the Board* may*take into account any extraordinary occurrences, consisting of those events which in the Board’s option are outside the significant influence of participants and would cause a significant unintended effect (whether positive or negative) on the Bank’s operating and financial performance results.

For2025, the named executive officers’ incentives were based primarily on targets for net operating income. The Bank’s net operating income was the threshold performance factor for the payment of incentives for2025. The Incentive Plan provides thatno incentive awards will be granted for2025, regardless of performance on individual goals, if the Bank’s net operating income is less than an approved minimum for the fiscal year. The Bank did meet the minimum for2025; therefore, the named executive officers will receive annual cash incentive payments in2026 for the year ended* December**31,* 2025.

**Outstanding Equity Awards.The named executive officers didnot have any equity awards outstanding at December 31, 2025.

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Potential Payments Upon Termination

We have entered into agreements with the named executive officers that provide for potential payments upon termination of employment. The following table shows, as of* December 31, 2025,*the value of potential payments and benefits following a termination of employment under a variety of scenarios.

(1) Mr. Verenes and Mr. Lindburg have each reached age65 and will receive their normal retirement benefit upon separation from service.

(2) Not yet eligible.

Salary Continuation Agreements

We entered into salary continuation agreements with Messrs. Verenes and Lindburg, on* May 16, 2006,and with Mr. Wahl on September 1, 2020.These agreements provide an annual supplemental retirement benefit for Messrs. Verenes and Lindburg, which begins on the April 1after they reach age65,* or upon the executive’s separation from service, if later. For Mr. Wahl, the benefit begins the month after reaching age67, or upon his separation from service, if later. The benefit equals20% of the executive’s final pay, payable in monthly installments over15 years. An executive’s final pay is the highest of the executive’s annual base salary over thefive-year period ending with the year he or she separates from service.

The agreements also provide an early termination benefit if the executive terminates employment with the Bank prior to attaining age65. The early termination benefit is an annual benefit based on the executive’s vested accrued balance under the agreement, determined when the executive separates from service from the Bank, adjusted monthly by an interest factor until the executive’s attainment of age65. The rate at which the executive vests in the early termination benefit is set forth in the executive’s agreement, with the vesting rate ranging from between10% per year to25% per year, depending on the executive. As of* December 31, 2025,Mr. Verenes and Mr. Lindburg had attained age65* and Mr. Wahl was50% vested. The early termination benefit is payable in monthly installments over15 years, commencing on thefirst day of the month after the executive attains age65. During the payout period, the remaining accrued balance will be credited monthly by an interest factor. The agreements also provide a disability termination benefit if the executive terminates employment with the Bank on account of disability prior to attaining age65. In the event an executive becomes disabled, the executive is entitled to his or her accrued account balance. That amount, plus interest until age65, would be paid to the executive upon reaching age65 over a15-year period.

In the event of a change in control, followed by a separation from service, the executive will receive an annual change in control benefit equal to20% of the executive’s projected final pay. An executive’s projected final pay is his or her final pay, as defined above, adjusted at a rate of4% per year until the executive attains age65. The annual change in control benefit will be paid in monthly installments over15 years, commencing on thefirst day of the month after the executive attains age65.

Non-distributed benefits will be forfeited if within24 months of the executive’s termination of employment if the executive violates the noncompetition, nondisclosure or nonsolicitation provisions described in the agreement. This forfeiture provision doesnot apply if there is a change in control.

If the executive dies while in the active service of the Bank but before attaining age65, the executive’s beneficiary will receive a lump sum benefit based on the executive’s accrued balance that is paid within60 days of death. If the executive dies after the benefit has commenced, the remaining benefits will be paid to the executive’s beneficiaries at the same time and the same amounts they would have been paid to the executive. If the executive dies after he or she has become entitled to a benefit, but before the benefit commences, the benefit will commence to be paid to the executive’s beneficiaries within30 days following the date the Bank or its successor receives a copy of the executive’s death certificate. In addition to the death benefit described above, the executive will receive under a split dollar agreement an additional death benefit, equal to50% of the “net death proceeds.” The net death proceeds is the death benefit received by the Bank under a life insurance policy taken out on the life of the executive, reduced by the greater of the cash surrender value of the policy or the aggregate premiums paid by the Bank on the policy.

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Change in Control Severance Agreements

On* March 29, 2018,the Company and the Bank entered into change in control severance agreements with Messrs. Verenes and Lindburg. The agreements provide an initial term until December 31, 2018and will be extended forone* year on each anniversary date, provided that the Board of Directors of hasnot given the executive notice of non-renewal. If, withinsix months before or24 months following a change in control, the officer experiences an involuntary termination, the Company and the Bank will pay to the executive, a lump sum cash payment equal to2.4 times the executive’s annual base salary. The Bank entered into a similar agreement with Mr. Wahl on* January 3, 2022which provides for a lump sum cash payment equal to1.2* times Mr. Wahl’s annual base salary.

For purposes of the change in control severance agreements, “change in control” means: (1) an offeror other than the Company purchases shares of stock of the Company or the Bank pursuant to a tender or exchange offer; (2) an event that results in the acquisition of control of the Company or the Bank within the meaning of the Bank Holding Company Act of1956 or requires the filing of a change of control notice with the Federal Reserve Board or the Federal Deposit Insurance Corporation; (3) any person that is or becomes the beneficial owner directly or indirectly of securities of the Company or the Bank representing35% or more of the combined voting power of the Company’s or the Bank’s outstanding securities; (4) the members of the incumbent Board of Directors cease to constitute at least a majority of the directors, subject to limited exception; or (5) consummation of a plan of reorganization, merger, acquisition, consolidation, sale of all or substantially all of the assets of the Company or a similar transaction in which the Company isnot the resulting entity. “Involuntary termination” means the termination of an executive’s employment: (i) by the Company or the Bank, without the executive’s express written consent; or (ii) by the executive by reason of a material diminution of or interference with the executive’s duties, responsibilities or benefits, including any of the following unless consented to by the executive: (1) a requirement that the executive be based at any placenot within a radius of30 miles of the executive’s current location, except for reasonable travel the Company or Bank business; (2) a material demotion of the executive; (3) a material reduction in the number or seniority of personnel reporting to the executive, other than as part of a company-wide reduction in staff; (4) a reduction in the executive’s salary other than as part of an overall program applied uniformly to all members of senior management; (5) a material permanent increase in the required work hours or workload of the executive; or (6) any purported termination of the executive’s employment.

Policies and Practices Related to the Timing of the Grant of Certain Equity Awards. We donot currently grant new awards of stock options, stock appreciation rights or similar option-like instruments. Accordingly, we donot have a specific policy or practice regarding the timing of these awards in relation to our disclosure of material nonpublic information. If we decide to grant these types of awards in the future, we will evaluate the appropriate steps to be taken with respect to a policy regarding the timing of awarding stock options, stock appreciation rights or similar option-like instruments.

Compensation Policies and Risk. The Compensation Committee meets at least annually and reviews the compensation of its officers and has determined that the risks arising from the Company’s compensation policies and practices for all employees arenot likely to have a material adverse effect on the Company.

Directors’** Compensation.The following table shows the compensation paid to our directors for the year ended December 31, 2025,except for those who are our named executive officers. Compensation for Directors J. Chris Verenes and Roy G. Lindburg is included in the section above entitled “Executive Compensation.” The directors below didnot receive any stock or option awards, nor do they have any non-equity incentive plan compensation, change in pension value or non-qualified deferred compensation earnings; therefore, these columns have been omitted from the table below.

(1) Payments received pursuant to Salary Continuation Agreement (described below).

(2) Received for service on the North Augusta area and Midland Valley area advisory boards. These committees consist of local business people who meet quarterly to advise the Bank on how it can better serve the community.

The Company doesnot compensate the members of its Board of Directors for service on the Board or committees; all fees are paid by Security Federal Bank for service to the Bank. The directors of the Bank receive fees of*$2,883* per month. Members of the Bank’s Executive Committee receive*$2,758* per month for membership on this Committee, with the exception of Messrs. Verenes and Lindburg, who donot receive a fee for service on this Committee. Members of the Audit Committee receive*$1,583* per meeting attended and the Chairman of the Audit Committee also receives*$392* per month. Members of the Trust and Investment Committees receive*$600* per month.No fee is paid for service on the Bank’s Compensation or Loan Committees.

Salary Continuation Agreement. Effective* May 16, 2006,we entered into salary continuation agreements with Timothy W. Simmons, then President and Chief Executive Officer of the Company, and Frank M. Thomas, Jr., then* President of the Bank. Effective October 1, 2008,we entered into a salary continuation agreement with Richard T. Harmon, then an Executive Vice President and later President of the Bank. The agreements provide an annual supplemental retirement benefit to begin on the last day of the year in which the executive attains age65, or upon his separation from service, if later. The benefit equals20% of the executive’s final pay, payable in monthly installments over15 years. Mr. Simmons turned65 in2010 and retired effective* January 1, 2012.He began receiving a monthly benefit of$4,057* on* January 1, 2012.Mr. Thomas turned65* in2012 and retired effective* June 6, 2014.He began receiving a monthly benefit of$3,133* on* July 1, 2014.Mr. Harmon retired on August 1, 2019,at the age of63* and therefore, willnot receive his full benefit. Mr. Harmon began receiving a monthly benefit of*$2,963* on* April**1,* 2021.

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