Security Federal Corporation Announces Increase in Annual Earnings

Business Wire, April 21, 2008

AIKEN, S.C. -- Security Federal Corporation (OTCBB:SFDL), the holding company for Security Federal Bank, today announced earnings for its fiscal year and for the fourth quarter of its fiscal year both ending March 31, 2008. The Company reported net income of $4.3 million or $1.66 per share (basic) for its fiscal year ending March 31, 2008, a 3.7% increase from net income of $4.1 million or $1.59 per share (basic) for its prior fiscal year ending March 31, 2007. The increase in net income is primarily a result of an increase in net interest income during the period.

Net income for the quarter ending March 31, 2008 decreased 7.7% to $1.0 million or $0.40 per share (basic), from $1.1 million or $0.42 per share (basic) for the quarter ending March 31, 2007. The decrease in net income is primarily a result of the Federal Reserve's precipitous decrease in interest rates during the quarter in conjunction with the Company's decision to increase the provision for loan losses. The Company anticipates the decrease in the prime rate will continue to negatively impact its net interest margin in future periods. Additions to the provision for loan losses resulted from a general decline in economic conditions and an increase in non- performing assets within the Company's loan portfolio. Specifically, impaired loans increased to 0.6% of total loans outstanding at March 31, 2008 from 0.3% at March 31, 2007 while classified assets increased to 3.4% of total loans outstanding at March 31, 2008 from 3.0% in the previous year.

Total assets at March 31, 2008 were $840.0 million compared to $738.1 million at March 31, 2007, an increase of 13.8% for the year. Net loans receivable increased $81.9 million or 18.8% to $517.9 million at March 31, 2008 from $436.0 million at March 31, 2007. Total deposits were $590.9 million at March 31, 2008 compared to $523.7 million at March 31, 2007, an increase of 12.8%. Federal Home Loan Bank advances, other borrowings, and subordinated debentures increased $29.9 million or 18.5% to $196.2 million at March 31, 2008 from $166.3 million at March 31, 2007.

Security Federal Bank has 13 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 offered through the Bank's three 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 ending March 31, 2007, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K. 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.

[TABLE OMITTED]