Security Federal (SFDL) sets the stage with higher recent earnings power

Security Federal (SFDL) has come into its Q1 2026 update on the back of trailing twelve month net income of US$12.0 million and EPS of US$3.80, with those earnings supported by US$58.9 million in revenue over the same period. Over the last reported quarters, revenue has moved from US$13.8 million in Q4 2024 to US$16.4 million in Q4 2025, while quarterly EPS has shifted from US$0.94 to US$1.24. This gives investors a clearer picture of how recent earnings power has built on top of prior results. With net profit margin at 20.4% over the last year and earnings up 35.3%, the latest numbers frame a story where profitability is front and center for anyone tracking this report.

See our full analysis for Security Federal.

With the headline figures in place, the next step is to set these results against the most common narratives around Security Federal to see which views the numbers support and which they call into question.

Net interest margin holds near 3.1%

• On a trailing twelve month basis, net interest margin sits at 3.13%, up from 2.85% in the earlier 12 month snapshot, alongside TTM revenue of US$58.9 million and net income of US$12.0 million.
• What stands out for a more bullish take is that this 3.13% margin lines up with stronger profitability, with net profit margin at 20.4% and TTM EPS of US$3.80, even though the five year average earnings growth figure of 0.1% per year highlights how unusual the recent 35.3% earnings growth is compared with the longer trend.
  • Supporters can point to the combination of a 20.4% net margin and 35.3% earnings growth as evidence that recent profitability is backed by solid spread income rather than just a one off outcome.
  • Skeptics can counter that the contrast between the 35.3% one year growth and the 0.1% five year average leaves open the question of how repeatable this earnings run rate is if net interest margin were to move.

Asset quality metrics show fewer problem loans

• Non performing loans are reported at US$5.8 million at the end of Q4 2025, compared with US$7.6 million in Q4 2024 and US$7.3 million in Q1 2025, while total loans have stayed close to the US$689.7 million to US$704.1 million range across these periods.
• What is interesting for a more cautious, bearish angle is that even as non performing loans moved down in dollar terms, bears can still question how concentrated credit exposure might behave over time given the loan book has remained in the high US$600 million range.
  • Critics can highlight that US$5.8 million of non performing loans on US$689.7 million of total loans is a small slice of the portfolio but still a direct link to credit risk that can affect earnings if conditions change.
  • Supporters of the cautious view can also focus on how the earlier TTM snapshots showed non performing loans above US$7 million, which reminds investors that credit metrics can move around even when the headline earnings picture looks strong.

Mixed valuation signals at US$35.75 share price

• The shares trade on a trailing P/E of 9.2x at a price of US$35.75, with a trailing dividend yield of 1.79%, while a DCF fair value of US$21.08 sits well below the current market price and below the DCF based future cash flow value reference of US$15.39 mentioned in the analysis.
• What creates real tension in the bearish narrative is that valuation metrics point in different directions, with the low 9.2x P/E and 1.79% yield often seen as supportive, yet the DCF fair value of US$21.08 and the earlier DCF estimate of US$15.39 both sit materially under the US$35.75 share price.
  • Bears can argue that the gap between US$35.75 and the DCF figures, together with the flag that the shares are highly illiquid, suggests market pricing is rich relative to cash flow based estimates and may be hard to trade around in size.
  • Fans of the lower P/E can respond that trading below the US Banks industry P/E of 11.4x and the broader US market P/E of 19.4x keeps a value style argument on the table even if cash flow models are more conservative.

To see how these valuation cross checks tie into the broader story on growth, risks, and long term potential around this price, check the wider community discussion for Security Federal via Curious how numbers become stories that shape markets? Explore Community Narratives.

Next Steps

Don't just look at this quarter; the real story is in the long-term trend. We've done an in-depth analysis on Security Federal's growth and its valuation to see if today's price is a bargain. Add the company to your watchlist or portfolio now so you don't miss the next big move.

If this mix of strong recent earnings, improving credit data, and mixed valuation signals feels balanced on a knife edge, use the full dataset to pressure test the bullish and bearish angles for yourself, starting with the 3 key rewards and 1 important warning sign.

See What Else Is Out There

Security Federal combines strong recent earnings with a DCF fair value range that sits well below the US$35.75 share price and a relatively modest 1.79% dividend yield. This mix may leave some investors uncomfortable with the balance of income and valuation signals.

If you want alternatives where the income profile is more central to the story, check out 13 dividend fortresses and compare how those yields stack up today.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.