Security Federal Corporation Announces Increase in Third Quarter Earnings.

AIKEN, S.C. -- 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, 2006. The Company reported net income of $958,000 or $0.38 per share (basic) for the three months ending December

31, 2005, a 5.1% increase from net income of $912,000 or $0.36 per share (basic) for the three months ending December 31, 2004. For the nine months ending December 31, 2005, net income increased 12.9% to $2.8 million or $1.12 per share (basic) from $2.5 million or $1.00 per share (basic) for the nine months ending December 31, 2004. The increase in net income is a result of a $612,000 and $1.8 million increase in net interest income offset partially by a $492,000 and $1.3 million increase in general and administrative expenses and a $112,000 and $353,000 increase in the provision for income taxes for the three and nine months ending December 31, 2005, respectively when compared to the same periods ending December 31, 2004.

Total assets at December 31, 2005 were $629.0 million compared to $586.0 million at March 31, 2005, an increase of 7.3% for the nine-month period. Net loans receivable increased $38.4 million or 12.1% to $355.3 million at December 31, 2005 from $316.9 million at March 31, 2005. Total deposits were $450.2 million at December 31, 2005 compared to $430.3 million at March 31, 2005, an increase of 4.6%. Federal Home Loan Bank advances and other borrowings increased $20.9 million or 17.8% to $138.6 million at December 31, 2005 from $117.6 million at March 31, 2005.

Security Federal Bank has 11 full service branch locations in Aiken, Clearwater, Graniteville, Langley, Lexington, North Augusta, Wagener, and West Columbia, South Carolina. Subsequent to the quarter ended December 31, 2005, the Bank opened an additional full service branch on the south side of Aiken located at 2587 Whiskey Road in the Aiken Exchange shopping center. 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.

Safe-Harbor Statement

The information contained in this press release contains forward-looking statements. These forward-looking statements are subject to the inherent uncertainties in predicting future results and conditions. Certain factors could cause actual results and conditions to differ materially from those projected in these forward-looking statements, and these factors are enumerated in the Company's filings with the Securities and Exchange Commission.