Security Federal Corporation Announces Increase in Quarterly and Year-To-Date Earnings

Security Federal Corporation (the “Company”) (OTCID: SFDL), the holding company for Security Federal Bank (the “Bank”), today announced earnings and financial results for the three and six months ended June 30, 2026.

Second Quarter Financial Highlights Net income available to common shareholders was $3.7 million, or $1.19 per common share, for the second quarter of 2026, an increase of $1.3 million, or 55.4% from the second quarter of 2025.

The increase in net income was driven by higher net interest income (up $1.2 million, or 10.6%) and non-interest income (up $615,000, or 23.7%), which offset increased provision for credit losses (up $240,000, or 100.0%) and non-interest expense (up $181,000, or 1.7%).

Quarter Ended (Dollars in Thousands, except for Earnings per Share) 6/30/2026 6/30/2025 Total interest income $ 18,926 $ 19,449 Total interest expense 6,417 8,137 Net interest income 12,509 11,312 Provision for credit losses 240 - Net interest income after provision for credit losses 12,269 11,312 Non-interest income 3,210 2,595 Non-interest expense 10,542 10,361 Income before income taxes 4,937 3,546 Provision for income taxes 832 756 Net income 4,105 2,790 Preferred stock dividends 415 415 Net income available to common shareholders $ 3,690 $ 2,375 Earnings per common share (basic) $ 1.19 $ 0.75

Year-to-Date (Six Months) Comparative Financial Highlights Net income available to common shareholders was $6.8 million, or $2.19 per common share, for the first six months of 2026, an increase of $1.8 million, or 36.7% from the first six months of 2025.

The increase in net income was driven by higher net interest income (up $2.2 million, or 10.0%) and non-interest income (up $1.1 million, or 21.7%), which offset increased provision for credit losses (up $465,000, or 100.0%) and non-interest expense (up $900,000, or 4.5%).

For the Six Months Ended (Dollars in Thousands, except for Earnings per Share) 6/30/2026 6/30/2025 Total interest income $ 37,747 $ 38,682 Total interest expense 12,957 16,141 Net interest income 24,790 22,541 Provision for credit losses 465 - Net interest income after provision for credit losses 24,325 22,541 Non-interest income 6,134 5,039 Non-interest expense 21,102 20,202 Income before income taxes 9,357 7,378 Provision for income taxes 1,737 1,582 Net income 7,620 5,796 Preferred stock dividends 830 830 Net income available to common shareholders $ 6,790 $ 4,966 Earnings per common share (basic) $ 2.19 $ 1.56

Credit Quality The Bank recorded a $350,000 provision for credit losses on loans and a $115,000 provision for credit losses on unfunded commitments, resulting in a total provision for credit losses of $465,000 for the first six months of 2026 compared to no provision for credit losses during the same period in 2025.

The following table shows the non-performing assets and allowance for credit losses balances at the periods indicated.

At Period End (dollars in thousands): 6/30/2026 12/31/2025 6/30/2025 Non-performing assets $ 5,945 $ 5,842 $ 5,954 Non-performing assets to total assets 0.37% 0.36% 0.37% Allowance for credit losses $ 13,685 $ 13,529 $ 14,007 Allowance for credit losses to gross loans 1.98% 1.97% 2.00%

Balance Sheet Highlights and Capital Ratios Dollars in thousands (except per share amounts) 6/30/2026 12/31/2025 6/30/2025 Total assets $ 1,603,495 $ 1,618,084 $ 1,625,236 Cash and cash equivalents 84,678 75,335 142,190 Total loans receivable, net 677,710 676,182 685,501 Investment securities 750,698 776,285 707,609 Deposits 1,360,517 1,371,777 1,383,201 Borrowings 26,107 35,262 39,566 Total shareholders' equity 205,219 200,455 191,279 Common shareholders' equity 122,270 117,506 108,330