SOURCE: Timberland Bancorp, Inc.

December 17, 2008 16:30 ET

Timberland Bancorp Receives a $16.6 Million Commitment From the U.S. Treasury's Capital Purchase Program

HOQUIAM, WA--(Marketwire - December 17, 2008) - Timberland Bancorp, Inc. ("Company") (NASDAQ: TSBK), the parent company of Timberland Bank ("Bank"), today announced that it has received preliminary approval to participate in the U.S. Treasury Department's Capital Purchase Program. As a participant, the Company plans to issue $16.6 million in senior preferred stock, with related warrants to purchase up to $2.5 million in common stock, to the U.S. Treasury. The anticipated sale of the preferred stock and warrants is expected to close in approximately 30 days and is contingent upon completion of standard closing documents and subsequent registration with the Securities and Exchange Commission.

"We are pleased that we have been selected to participate in this voluntary program, which is an important recognition of the strength and financial health of the Company," said Michael R. Sand, President and Chief Executive Officer. "The additional capital will enhance our capacity to support the communities we serve through expanded lending activities and economic development. At September 30, 2008, we were well capitalized and will continue to be well capitalized following the addition of new capital through the Treasury program. We believe that participation in this program should be beneficial for the employees, customers and shareholders of the Company."

The preferred stock will pay a 5% dividend for the first five years, after which the rate will increase to 9% if the preferred shares are not redeemed by the Company. The terms and conditions of the transaction and the preferred stock will conform to those provided by the U.S. Treasury. A summary of the Capital Purchase Program can be found on the Treasury's web site at www.ustreas.gov/initiatives/eesa.

About Timberland Bancorp, Inc.

Timberland Bancorp operates 21 branches in the state of Washington in Hoquiam, Aberdeen, Ocean Shores, Montesano, Elma, Olympia, Lacey, Tumwater, Yelm, Puyallup, Edgewood, Tacoma, Spanaway (Bethel Station), Gig Harbor, Poulsbo, Silverdale, Auburn, Winlock, and Toledo.

At September 30, 2008, Timberland Bancorp had consolidated total assets of $681.9 million and shareholders' equity of $74.8 million.

This press release contains statements that the Company believes are "forward-looking statements." These statements relate to the Company's financial condition, results of operations, plans, objectives, future performance or business. You should not place undue reliance on these statements, as they are subject to risks and uncertainties. When considering these forward-looking statements, you should keep in mind these risks and uncertainties, as well as any cautionary statements the Company may make. Moreover, you should treat these statements as speaking only as of the date they are made and based only on information then actually known to the Company. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors which could cause actual results to differ materially include, but are not limited to, (1) adverse developments in the capital markets in general or in the markets for financial institutions stock in particular; (2) changes in legislation or regulatory requirements affecting financial institutions, including the current debate in Congress as to restructuring the financial services industry; (3) changes in the interest rate environment; and (4) adverse changes in general economic conditions and other risks detailed in Security Federal Corporation's reports filed with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the fiscal year ended September 30, 2008. Accordingly, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements.

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