Security Federal Announces The Signing of Merger Agreement to Acquire The Collier Jennings Companies.

AIKEN, S.C. -- Security Federal Corporation ("Corporation") (OTCBB: SFDL), the holding company for Security Federal Bank and Collier Jennings Financial Corporation, jointly announced that they had signed a definitive merger agreement in connection with the proposed acquisition of the Collier Jennings Companies by Security Federal Corporation.

The companies previously announced the signing of a letter of intent on June 5, 2006. The proposed transaction is subject to various conditions and is expected to close in approximately 30 days.

Collier Jennings was founded in 1974 and offers insurance and related insurance products to the retail market in the Aiken, South Carolina and Augusta, Georgia market area through its three subsidiaries: Collier-Jennings, Inc., The Auto Insurance Store, Inc. and Collier-Jennings Premium Pay Plans, Inc. Collier Jennings employs 10 licensed agents and has a total of 15 employees. Collier Jennings has offices in Aiken and North Augusta, South Carolina and Augusta, Georgia. It is currently anticipated that the number of offices will be increased to correspond to Security Federal Bank's market areas in Aiken, Lexington and Richland Counties in South Carolina and in Augusta, Georgia.

Security Federal Bank has 11 full-service banking locations in Aiken, Clearwater, Graniteville, Langley, Lexington, North Augusta, Wagener, and West Columbia, South Carolina. Construction will begin in July on a new branch location in Evans, Georgia. In addition to insurance, financial services are provided by Security Federal Investments, Inc., and Security Federal Trust, Inc. Security Federal Bank was founded in 1922 in Aiken, South Carolina.

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 Corporation operates, projections of future performance, and perceived opportunities in the market. These forward-looking statements are based upon current management expectations and may, therefore, involve risks and uncertainties. The Corporation'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 and risks. Accordingly, undue reliance should not be placed on such forward-looking statements. The Corporation undertakes no responsibility to update or revise any forward-looking statements.