Code of Ethics for Directors

THE BUSINESS OF SECURITY FEDERAL CORPORATION
The business of Security Federal Corporation and its subsidiaries (“Security Federal”) includes a full array of retail banking and related services. During the performance of our duties, it is necessary to interact with many constituencies. These groups place their trust in us and accordingly, we have the responsibility to keep this trust and be in strict compliance with all applicable laws and regulations. Security Federal requires corporate and affiliate directors to observe a high standard of ethics in business and personal matters. The following Code of Ethics specifies certain standards for the guidance of directors. The Code should be considered as illustrative, but not regarded as all-inclusive.


CONFLICT OF INTEREST/OUTSIDE INTERESTS
Directors should avoid situations which could result in, or give the appearance of, a conflict of interest concerning either Security Federal or its stockholders, or any affiliate or its customers. Personal interest which could affect the proper exercise of judgment must be avoided. In those cases where personal interests do exist, or may appear to exist, the director in question should disqualify himself or herself and abstain from participating in the discussion of and voting on the matter. In determining whether a conflict of interest could exist, directors should remember that the rules also apply to their spouses and adult children, where appropriate.


CONFIDENTIAL INFORMATION
The confidential nature of bank accounts and financial information in general is a fundamental precept in financial services. It is important that our directors be constantly alert to the responsibility of maintaining confidentiality. Confidential information must not be disclosed to anyone except as required for board business or as required by law. When disclosing confidential information, board members must do so in a manner that does not risk violating confidentiality. In certain instances, confidential information could be considered “insider information” within the meaning of federal and state securities laws. Disclosure or use of such information for personal gain or for avoiding personal loss could result in substantial civil and criminal penalties to individuals who disclose or who use this information. Directors must be extremely cautious in discussing the corporate affairs of Security Federal with customers or outsiders, including with stockholders of Security Federal who do not have a right to such information before an announcement is made to all stockholders of Security Federal.


TRADING IN SECURITY FEDERAL’S STOCK
Directors are encouraged to participate and maintain ownership in the stock of Security Federal. While there are occasions that dictate the purchase or sale of any investment, active buying and selling of Security Federal’s common stock in order to make short term profits is discouraged. Directors are cautioned that the Securities and Exchange Commission has stringent rules and regulations related to trading securities while in the possession of material, non-public information. There may be occasions when directors will become aware of certain facts related to Security Federal such as earnings, expansion plans, potential acquisition or other similar situations which may reasonably be expected to be important to the investing public. Insider information is information that has not been publicly released and which a reasonable person would consider important in determining whether to buy, sell or hold securities. Until such information is disseminated to the general public through a press release or other public announcement, directors are prohibited from either purchasing or selling Security Federal’s stock. Violation of this policy could subject directors to possible action by the Securities and Exchange Commission, the result of which may include fines and/or imprisonment. Should any director desire to acquire or sell Security Federal’s stock while knowledgeable of information which has not been released to the public, inquiries for advice should be made to the Board Chairman.


Code of Ethics for Principal Executive Officers


INTRODUCTION
The business of Security Federal Corporation and its subsidiaries (“Security Federal”) is built on trust. Our stockholders, customers and employees depend upon our honesty and integrity. Accordingly, the Board of Directors of Security Federal has adopted this Code of Ethics (“Code”) to express a code of conduct applicable to our Chairman, Chief Executive Officer, President, Chief Operating Officer and Chief Financial Officer (collectively, the “Senior Financial Officers”). This Code does not constitute a new set of requirements to which the Senior Financial Officers must adhere, but simply reduces to writing the behavior that has always been required of the Senior Financial Officers. The Code sets forth certain standards for the guidance of the Senior Financial Officers. The Code should be considered as illustrative, but not regarded as all-inclusive. The Senior Financial Officers are also subject to Security Federal’s Code of Ethics applicable to all officers and employees.


HONEST AND ETHICAL CONDUCT
Each Senior Financial Officer must act honestly and ethically. Senior Financial Officers should also promote honest and ethical behavior within Security Federal. Acting honestly and ethically includes the duty to avoid actual or apparent conflicts of interest, as well as situations which could result in an actual or apparent conflict of interest. A conflict of interest may arise when personal or financial interest is adverse to, or appears adverse to, the interests of Security Federal. Each Senior Financial Officer should report any material transaction or relationship that reasonably could be expected to result in a conflict of interest to the Board Audit Committee. In addition to their duty to avoid conflicts of interest, Senior Financial Officers must treat confidential information properly. All information obtained by virtue of employment with Security Federal should be held in strictest confidence. Confidential information must not be disclosed to anyone except as required for business transactions or as required by law. When confidential information is disclosed, it must be done in a manner that does not risk violating confidentiality.


PREPARATION OF PUBLIC DOCUMENTS
Each Senior Financial Officer must ensure that all public documents and documents filed with the Securities and Exchange Commission which he or she is involved in preparing or reviewing, contain full, fair, accurate, timely and understandable disclosure. In order to ensure this, the Senior Financial Officers must maintain the skills relevant to Security Federal’s needs. The Senior Financial Officers are also responsible for establishing and maintaining appropriate disclosure controls and procedures and internal controls.


COMPLIANCE WITH LAWS, RULES AND REGULATIONS
Each Senior Financial Officer must comply with all local, state and federal laws, rules and regulations. Any Senior Financial Officer engaged in activities found to be in conflict with and against these laws, rules and regulations will be subject to termination of employment. The Senior Financial Officers should also cause other officers and employees to comply with all local, state and federal laws, rules and regulations.


ADMINISTRATION OF THE CODE

Any violation or suspected violation of this Code of Ethics must be promptly reported to the Audit Committee of the Board of Directors. Violators of the Code may be subject to disciplinary action, up to and including termination of employment. Questions regarding the Code and requests for a waiver from the Code should be brought to the Audit Committee. The Audit Committee will administer the Code and will make periodic reports to the Board of Directors, as necessary. This Code of Ethics shall be publicly available. Changes to, and waivers from, the Code shall also be disclosed to the public.


 

   

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