Security Federal Corporation Announces Increase in Third Quarter Earnings

AIKEN, S.C.--(Business Wire)--Security Federal Corporation (OTCBB:SFDL), the holding company of
Security Federal Bank, today announced earnings for the third quarter
of its fiscal year ending March 31, 2008. The Company reported net
income of $1,041,000 or $0.40 per share (basic) for the three months
ending December 31, 2007, a 6.5% increase from net income of $977,000
or $0.37 per share (basic) for the three months ending December 31,
2006. For the nine months ending December 31, 2007, net income
increased 7.9% to $3,264,000 or $1.26 per share (basic) from
$3,026,000 or $1.17 per share (basic) for the nine months ending
December 31, 2006. The increases in earnings for the quarter and the
nine month period are primarily a result of increases in net interest
income in both periods.

Total assets at December 31, 2007 were $820.2 million compared to
$738.1 million at March 31, 2007, an increase of $82.1 million or
11.1% for the nine-month period. Net loans receivable increased $64.1
million or 14.7% to $500.1 million at December 31, 2007 from $436.0
million at March 31, 2007. Total deposits increased $50.2 million or
9.6% to $573.9 million at December 31, 2007 compared to $523.7 million
at March 31, 2007. Federal Home Loan Bank advances, other borrowings,
and junior subordinated debentures increased $29.3 million or 17.6% to
$195.6 million at December 31, 2007 from $166.3 million at March 31,
2007.

During the three months ended December 31, 2007, the Company
opened two new branches, one in Columbia, South Carolina and one in
Evans, Georgia. These additional branches will diversify the Company's
markets from primarily Aiken and Lexington Counties to also include
Richland County, South Carolina and Columbia County, Georgia.

Security Federal Bank has thirteen full service branch locations
in Aiken, Clearwater, Graniteville, Langley, Lexington, North Augusta,
Wagener, Columbia and West Columbia, South Carolina and Evans,
Georgia. Additional financial services are provided by three of the
Bank's wholly owned subsidiaries, Security Federal Insurance, Inc.,
Security Federal Investments, Inc., and Security Federal Trust, Inc.

For additional information contact Roy Lindburg, Chief Financial
Officer, at (803) 641-3070.

Forward-looking statements:

Certain matters discussed in this press release may contain
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements relate to, among other things, expectations of the business
environment in which the Company operates, projections of future
performance, perceived opportunities in the market, potential future
credit experience, and statements regarding the Company's mission and
vision. These forward-looking statements are based upon current
management expectations and may, therefore, involve risks and
uncertainties. The Company's actual results, performance, or
achievements may differ materially from those suggested, expressed, or
implied by forward-looking statements as a result of a wide variety or
range of factors including, but not limited to, interest rate
fluctuations; economic conditions in the Company's primary market
area; demand for residential, commercial business and commercial real
estate, consumer, and other types of loans; success of new products;
competitive conditions between banks and non-bank financial service
providers; regulatory and accounting changes; technology factors
affecting operations; pricing of products and services; and other
risks detailed in the Company's reports filed with the Securities and
Exchange Commission, including its Annual Report on Form 10-K for the
fiscal year ended March 31, 2007. Accordingly, these factors should be
considered in evaluating forward-looking statements, and undue
reliance should not be placed on such statements. The Company
undertakes no responsibility to update or revise any forward-looking
statement.

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SECURITY FEDERAL CORPORATION
UNAUDITED CONSOLIDATED FINANCIAL HIGHLIGHTS

INCOME STATEMENT HIGHLIGHTS

(In Thousands, except for Earnings per Share)

Quarter Ended Nine Months Ended
December 31, December 31,

2007 2006 2007 2006
----------------------- -----------------

Total interest income $12,737 $10,815 $37,290 $30,723

Total interest expense 7,759 6,380 22,174 17,338
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Net interest income 4,978 4,435 15,116 13,385

Provision for loan losses 150 150 450 450
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Net interest income after
provision for loan losses 4,828 4,285 14,666 12,935

Non-interest income 1,028 987 3,138 2,651

Non-interest expense 4,327 3,816 12,960 10,989
----------------------- -----------------

Income before income taxes 1,529 1,456 4,844 4,597

Provision for income taxes 488 479 1,580 1,571
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Net income $1,041 $977 $3,264 $3,026
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Earnings per share $0.40 $0.37 $1.26 $1.17
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BALANCE SHEET HIGHLIGHTS

(In Thousands, except for Book Value per Share)

December 31, March 31,
2007 2007
-----------------------

Total assets $820,248 $738,110

Cash and cash equivalents 12,800 13,438

Total loans receivable, net 500,091 436,038

Investment and mortgage-
backed securities 260,533 249,905

Deposits 573,915 523,738

Borrowings 195,588 166,292

Shareholders' equity 45,200 42,693

Book value per share $17.82 $16.36
*T

Security Federal Corporation
Roy Lindburg, Chief Financial Officer, 803-641-3070

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