Security Federal (OTCMKTS:SFDL) and Southern First Bancshares (NASDAQ:SFST) Critical Comparison

Southern First Bancshares (NASDAQ:SFST) and Security Federal (OTCMKTS:SFDL) are both small-cap finance companies, but which is the superior business? We will compare the two businesses based on the strength of their risk, institutional ownership, earnings, dividends, valuation, profitability and analyst recommendations.

Earnings & Valuation

This table compares Southern First Bancshares and Security Federal”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Southern First Bancshares	$224.62 million	2.58	$30.37 million	$4.28	14.31
Security Federal	$90.14 million	1.30	$13.67 million	$4.00	9.50

Southern First Bancshares has higher revenue and earnings than Security Federal. Security Federal is trading at a lower price-to-earnings ratio than Southern First Bancshares, indicating that it is currently the more affordable of the two stocks.

Insider and Institutional Ownership

75.0% of Southern First Bancshares shares are held by institutional investors. 6.9% of Southern First Bancshares shares are held by company insiders. Comparatively, 36.4% of Security Federal shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Southern First Bancshares and Security Federal’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Southern First Bancshares	15.21%	9.65%	0.79%
Security Federal	15.72%	12.60%	0.88%

Analyst Ratings

This is a breakdown of recent recommendations for Southern First Bancshares and Security Federal, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Southern First Bancshares	0	1	2	0	2.67
Security Federal	0	0	0	0	0.00

Southern First Bancshares currently has a consensus target price of $64.00, suggesting a potential upside of 4.52%. Given Southern First Bancshares’ stronger consensus rating and higher possible upside, equities analysts plainly believe Southern First Bancshares is more favorable than Security Federal.

Risk & Volatility

Southern First Bancshares has a beta of 0.68, meaning that its stock price is 32% less volatile than the S&P 500. Comparatively, Security Federal has a beta of 0.43, meaning that its stock price is 57% less volatile than the S&P 500.

Summary

Southern First Bancshares beats Security Federal on 10 of the 14 factors compared between the two stocks.

About Southern First Bancshares

Southern First Bancshares, Inc. operates as the bank holding company for Southern First Bank that provides commercial, consumer, and mortgage loans to the general public in South Carolina, North Carolina, and Georgia. The company accepts various deposit products that include checking accounts, commercial checking accounts, and savings accounts, as well as other time deposits, including daily money market accounts and long-term certificates of deposit. Its loan portfolio comprises commercial real estate loans; construction real estate loans; commercial business loans for various lines of businesses, such as the manufacturing, service industry, and professional service areas; consumer real estate and home equity loans; and other consumer loans, including secured and unsecured installment loans and revolving lines of credit. In addition, the company provides other bank services, such as internet banking, cash management, safe deposit boxes, direct deposit, automatic drafts, bill payment, and mobile banking services. Southern First Bancshares, Inc. was incorporated in 1999 and is headquartered in Greenville, South Carolina.

About Security Federal

Security Federal Corporation operates as the bank holding company for Security Federal Bank that provides various banking products and services. It offers various deposit products, such as savings and checking accounts, money market accounts, fixed interest rate certificates with varying maturities, and individual retirement accounts. The company provides real estate loans comprising commercial real estate loans secured by non-residential commercial properties, churches, hotels, residential developments, and multi-family dwellings; one-to-four family residential real estate loans; and construction loans and loans for the acquisition, development, and construction of residential subdivisions and commercial projects. In addition, it offers commercial and agricultural business loans secured by business equipment, furniture and fixtures, inventory, and receivables, or unsecured; and consumer loans including home improvements, residential lots, mortgage, automobiles, boats, mobile homes, recreational vehicles, and education. The company offers trust, financial planning, and financial management services; and insurance agency services, such as auto, business, and home insurance. Additionally, it invests in various types of liquid assets, including U.S. Treasury obligations and securities of various federal agencies, certificates of deposit at insured institutions, mutual funds, bankers' acceptances, and federal funds, as well as commercial paper and corporate debt securities. It through branch offices in Aiken, Lexington, Richland and Saluda counties in South Carolina and Columbia; and Richmond counties in Georgia. Security Federal Corporation was founded in 1922 and is headquartered in Aiken, South Carolina.