SECURITY BANCSHARES INC /SC/, SB-1, 2000-12-14

SECURITY BANCSHARES INC /SC/
SB-1, 2000-12-14

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As filed with the Commission on December 14, 2000
Registration No. 333-______
--------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------------------------------------------------------------
FORM SB-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SECURITY BANCSHARES, INC.
-------------------------
(Exact name of registrant as specified in its charter)

South Carolina 6711 57-1064627
-------------------------- -------------- ------------------
(State or other jurisdiction Primary Standard (I.R.S. Employer
of incorporation or Industrial Classifi- Identification No.)
organization cation Code Number

451 E. ST. JOHN STREET
SPARTANBURG, SOUTH CAROLINA 29306
(864) 621-3674
----------------------------------------
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)

MARVIN BOYD, CHIEF EXECUTIVE OFFICER
SECURITY BANCSHARES, INC.
451 E. ST. JOHN STREET
SPARTANBURG, SOUTH CAROLINA 29306
(864) 621-3674
-----------------------------------------
(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copies to:
WILLIAM P. CRAWFORD, JR. ESQ.
WYCHE, BURGESS, FREEMAN & Parham, P.A.
POST OFFICE BOX 728
GREENVILLE, SOUTH CAROLINA 29602-0728
(864) 242-8200 (TELEPHONE) (864) 235-8900 (FACSIMILE)

Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.

If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act of 1933, check the following box and
list the Securities Act of 1933 registration statement number of the earlier
effective registration statement for the same offering. |_|

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act of 1933, check the following box and list the Securities Act
of 1933 registration statement number of the earlier effective registration
statement for the same offering. |_|

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act of 1933, check the following box and list the Securities Act
of 1933 registration statement number of the earlier effective registration
statement for the same offering. |_|

If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. |_|
<TABLE>
<CAPTION>

CALCULATION OF REGISTRATION FEE
-------------------------------------------------------------------------------------------------------------------------
Proposed Maximum Proposed Maximum Amount
Title of Each Class Amount to Offering Price Aggregate of Registration
of Securities to be Registered be Registered(1) Per Unit Offering Price Fee(2)
-------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value... 1,000,000 $10.00 $10,000,000 $2,640
-------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Based on maximum offering amount.
(2) Determined pursuant to Rule 457(a) under the Securities Act of 1933, as
amended, solely for the purpose of calculating the registration fee.
</FN>
</TABLE>
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SUCH SECTION 8(A),
MAY DETERMINE.

<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SECURITIES OFFERED IN THIS PROSPECTUS MAY NOT BE SOLD UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SEC IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

THIS IS A PRELIMINARY PROSPECTUS AND IS NOT YET COMPLETE.

SECURITY BANCSHARES, INC.

A Holding Company for

SECURITY NATIONAL BANK, N.A.
(IN ORGANIZATION)

Minimum offering of 550,000 Shares of Common Stock
Maximum offering of 1,000,000 Shares of Common Stock
$10.00 per share
-------------------------------

Security Bancshares, Inc. is offering shares of its common stock to fund
the start-up of a new bank named Security National Bank, N.A.. Security
Bancshares will be the sole owner of Security National Bank, which will be
headquartered in Spartanburg County, South Carolina. Security National Bank is
expected to open in the second quarter of 2001, assuming that this offering has
been completed by then, and will provide a range of commercial and consumer
banking services to individuals and small- to medium-sized businesses. This is
Security Bancshares' first offering of stock to the public, and there is no
public market for its shares. The shares will not be listed on Nasdaq or any
national exchange.

The offering is scheduled to end on September 30, 2001, but it may be
extended to a later date at the Company's discretion. All proceeds from the sale
of shares will be placed with an independent escrow agent who will hold the
money until (1) at least 550,000 shares are sold and (2) preliminary approvals
from bank regulatory agencies to acquire the stock of the new bank have been
received. If the minimum shares are not sold before the end of the offering
period, all funds received will be returned to the subscribers promptly, without
interest. The Company has the right to raise the minimum up to 650,000 shares
under certain circumstances.
<TABLE>
<CAPTION>

=======================================================================================================================

Price To Underwriting Discounts Proceeds to Issuer
Public and Commissions or Other Persons(1)
------------ --------------- ---------------------

<S> <C> <C> <C>
Per Unit................................. $10.00 $0 $10.00

Minimum Total (550,000 shares)........... $5,500,000 $0 $5,500,000

Maximum Total (1,000,000 shares)......... $10,000,000 $0 $10,000,000
=======================================================================================================================
<FN>
(1) Before deducting estimated expenses of the Offering of
approximately $42,640.00, including registration fees, legal and
accounting fees, printing and other miscellaneous expenses
payable by Security Bancshares.
</FN>
</TABLE>

THIS IS A NEW BUSINESS. AS WITH ALL NEW BUSINESSES, AN INVESTMENT WILL
INVOLVE RISKS. IT IS NOT A DEPOSIT OR AN ACCOUNT AND IS NOT INSURED BY THE FDIC
OR ANY OTHER GOVERNMENT AGENCY. YOU SHOULD NOT INVEST IN THIS OFFERING UNLESS
YOU CAN AFFORD TO LOSE YOUR ENTIRE INVESTMENT. SOME OF THE RISKS OF THIS
INVESTMENT ARE DESCRIBED UNDER THE HEADING "RISK FACTORS" BEGINNING ON PAGE 1.

NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR
DISAPPROVED THESE SECURITIES OR DETERMINED WHETHER THIS PROSPECTUS IS TRUTHFUL
OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

December 14, 2000

<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS

<S> <C>
SUMMARY.................................................................................................................1
Reasons for Starting Security National Bank..........................................................................1
Board of Directors and Management....................................................................................1
Total Funds To Be Raised in The Offering.............................................................................2
The Offering.........................................................................................................2
Funds Received Will Be Placed in Escrow..............................................................................3
Security Bancshares Does Not Plan to Pay Dividends...................................................................3
Location of Offices..................................................................................................3
Community Development................................................................................................3

RISK FACTORS............................................................................................................4

THE OFFERING............................................................................................................7
General..............................................................................................................7
Conditions to the Offering and Release of Funds......................................................................7
Plan of Distribution.................................................................................................8
How to Subscribe.....................................................................................................8

USE OF PROCEEDS.........................................................................................................9
Use of Proceeds by Security Bancshares...............................................................................9
Use of Proceeds by Security National Bank............................................................................9

CAPITALIZATION..........................................................................................................9

DIVIDEND POLICY........................................................................................................10

PLAN OF OPERATION......................................................................................................10
General.............................................................................................................10
Expenses............................................................................................................10
Offices and Facilities..............................................................................................11

PROPOSED BUSINESS......................................................................................................11
General.............................................................................................................11
Management..........................................................................................................11
Service Area........................................................................................................12
Marketing Focus.....................................................................................................12
Lending Activities..................................................................................................13
Other Banking Services..............................................................................................16
Competition.........................................................................................................16
Community Development Services......................................................................................17
Employees...........................................................................................................17
Legal Proceedings...................................................................................................17

SUPERVISION AND REGULATION.............................................................................................17
Security Bancshares.................................................................................................17
The Bank............................................................................................................19

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<PAGE>
MANAGEMENT.............................................................................................................23
General.............................................................................................................23
Executive Officers and Directors of Security Bancshares.............................................................24
Employment Agreements and Executive Compensation....................................................................26
Director Compensation...............................................................................................26
Interests of Management and Others in Certain Transactions..........................................................26
Exculpation and Indemnification.....................................................................................27

DESCRIPTION OF CAPITAL STOCK OF SECURITY BANCSHARES....................................................................27
General.............................................................................................................27
Common Stock........................................................................................................27
Preferred Stock.....................................................................................................28
Antitakeover Effects................................................................................................28
Shares Eligible for Future Sale.....................................................................................29

LEGAL MATTERS..........................................................................................................29

EXPERTS................................................................................................................29

ADDITIONAL INFORMATION.................................................................................................30

</TABLE>

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT.
NEITHER SECURITY BANCSHARES NOR SECURITY NATIONAL BANK HAS AUTHORIZED ANYONE TO
GIVE ANY INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL
THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY
STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. THE INFORMATION IN THIS
PROSPECTUS IS COMPLETE AND ACCURATE AS OF THE DATE ON THE COVER, BUT THE
INFORMATION MAY CHANGE IN THE FUTURE.

ii
<PAGE>
SUMMARY

This summary highlights information contained elsewhere in this
prospectus. Because it is a summary, it may not contain all of the information
about the offering that is important to you. We encourage you to read the entire
prospectus carefully before investing. For your information, Security
Bancshares, Inc. is sometimes referred to in this document as the "Company" and
Security National Bank is sometimes referred to in this document as the "Bank."

Security Bancshares, Inc. is raising capital in this offering to fund
the start-up of Security National Bank, a national bank which is in the process
of being formed. The Bank will be a new locally-owned and operated bank, which
focuses in part on providing services to under-served low- and moderate-income
neighborhoods in Spartanburg and Greenville, South Carolina. Its initial office
will be located in Spartanburg, South Carolina. However, within three months of
opening, it expects to open a branch location in Greenville, South Carolina.
Security National Bank will be chartered as a national bank and will be a member
of the Federal Reserve System. Its deposits will be insured by the Federal
Deposit Insurance Corporation (the "FDIC"). Security National Bank expects to
receive its final regulatory approvals and open for business in the second
quarter of 2001, assuming that this offering has been completed by then. Its
initial principal executive offices will be located at:

451 E. St. John Street
Spartanburg, South Carolina 29306
Telephone: (864) 621-3674

REASONS FOR STARTING SECURITY NATIONAL BANK

The Bank's founders believe there is a need for a bank to provide
financial services in low- and moderate- income neighborhoods in Spartanburg and
Greenville. Consolidation in the banking industry in Spartanburg and Greenville
and the region has eliminated a number of local, non-regional banking
institutions. Although certain super regional banks provide services in
Spartanburg and Greenville low- and moderate-income neighborhoods, the founders
believe that there remains a substantial need for additional depository
institutions. In addition, the founders believe that a bank with a community
development focus, like Security National Bank intends to have, can address some
of the economic problems faced by these under-served neighborhoods, by providing
capital and other resources to these individuals and businesses residing in
these areas.

BOARD OF DIRECTORS AND MANAGEMENT

Security Bancshares was founded by the following business leaders most of
whom live in the Greenville/Spartanburg area and who will also serve as its
initial board of directors:

Marvin Boyd
Gregory Fielder
Clente Flemming
Fred D. Garrett, Sr.
Leon C. Rector, Jr.
James W. Sanders, Sr.
Albert V. Smith
Donald R. Smith
Clinton J. Thompson
William B. Whitney
John R. Williams

In addition to the founders listed above, the following individuals have
agreed to serve on the Bank's Professional Advisory Board:

1
<PAGE>
Member Title Institution Represented
------ ----- -----------------------
George Andrews President Capitol City Bank, Atlanta, GA
William S. Hummers Executive VP Carolina First Bank,
Greenville, SC
James H. Starke Executive VP Community Capital Corp.,
Greenwood, SC
Eddie Y. Francis Principal Francis & Company, CPA's,
Atlanta, GA

With respect to the management team, Marvin Boyd has agreed to serve as
President and CEO. As a result, Mr. Boyd will lead the management teams for both
Security Bancshares and Security National Bank as president and chief executive
officer. He has over 20 years of banking, finance and regulatory experience.

We are in the process of identifying and hiring other members of our
management team.

TOTAL FUNDS TO BE RAISED IN THE OFFERING

Security Bancshares seeks to raise at least $5.5 million in this
offering. Approximately $5 million will be used to fund the Bank, and the
remaining funds will be used to cover start-up expenses and for working capital.
Security Bancshares hopes to raise these funds primarily from individuals and
businesses in Greenville/Spartanburg area who share the desire to support a new
local community bank serving low- and moderate-income neighborhoods in this
area.

THE OFFERING

Common stock offered: Minimum: 550,000 shares
Maximum: 1,000,000 shares

Common stock outstanding prior to this offering 15 shares

Common stock to be outstanding after the offering: Minimum: 550,015 shares
Maximum: 1,000,015shares

Offering price per share: $10.00

Use of proceeds: Approximately $5.0 million of
the first $5.5 million raised
in this offering will be used
to capitalize Security
National Bank. Remaining
proceeds will be used to pay
start-up expenses and provide
working capital. Additional
net proceeds raised in this
offering will be used to fund
the operational expenses of
Security Bancshares and the
Bank and other general
corporate purposes, including
the provision of additional
capital for the Bank, if
necessary.

Security National Bank will
use the funds it receives
from Security Bancshares to
pay expenses, to purchase
or lease the sites of its
initial offices, to build and
furnish its offices, and to
provide working capital to
operate the Bank. See "Use of
Proceeds" on page 9.

2
<PAGE>
FUNDS RECEIVED WILL BE PLACED IN ESCROW

Because the Bank cannot be opened without the necessary regulatory
approval, all offering proceeds will be placed in escrow with Carolina First
Bank, which will serve as an independent escrow agent (the "Escrow Agent"). The
Escrow Agent will hold these funds until at least $5.5 million is raised and the
Bank obtains at least preliminary regulatory approval to open. Applications for
such approval, as well as an application for deposit insurance from the FDIC
have been filed. Security Bancshares will file applications with the Board of
Governors of the Federal Reserve System (the "Federal Reserve") and the South
Carolina State Board of Financial Institutions for Security Bancshares to own
Security National Bank. Security Bancshares and the Bank expect to receive all
preliminary regulatory approvals by the end of the first quarter of 2001 or
sooner. This offering is currently expected to be completed by September 30,
2001, but it may be extended to a later date at the Company's discretion. If
these conditions have not been met by the close of the offering, Security
Bancshares will refund your subscription in full, without interest, and likely
liquidate.

SECURITY BANCSHARES DOES NOT PLAN TO PAY DIVIDENDS

Because Security Bancshares is a new business, it does not expect to pay
dividends in the foreseeable future. Security Bancshares intends to use all
available earnings to fund the continued operation and growth of the Bank.

LOCATION OF OFFICES

The Bank will have its initial offices at 451 E. St. John Street in
Spartanburg. This space currently serves as a banking facility for a recently
chartered bank, and the Bank has an agreement to lease the space from January
2001 to January 2003. The current tenant will vacate the building by January 12,
2001. The Bank and the Company will share the same office.

In addition, the Bank plans to establish a branch in Greenville, South
Carolina within three months after opening. It is currently actively seeking
space for purchase or lease in Greenville. For pro-forma purposes, the Bank
estimates that the Greenville office, its fixed assets and furnishings to be
purchased for the building will be acquired for $700,000.

COMMUNITY DEVELOPMENT

Security National Bank is exploring the possibility of establishing a
not-for-profit community development corporation subsidiary. Although in the
evaluation stages, it is envisioned that the non-profit subsidiary would be
involved in outreach programs that assist with educating low- and moderate-
income consumers and to promote business and job creation within the low- and
moderate- income service areas through the Small Business Administration
Investment Division, including educating about the importance of consumer and
business reinvestment in their own communities.

3
<PAGE>
RISK FACTORS

Investing in Security Bancshares' shares is very risky. You should
invest only if you determine that you can bear a complete loss of your
investment. In your determination, you should carefully consider the following
factors, among others:

THIS IS A NEW BUSINESS; NO ONE CAN PREDICT WHETHER IT WILL BE SUCCESSFUL.

Neither Security Bancshares nor Security National Bank has any operating
history. The operations of new businesses are always risky. Because Security
National Bank has not yet opened, it does not have historical financial data and
similar information which would be available for a financial institution that
has been operating for several years.

SECURITY BANCSHARES EXPECTS TO INCUR LOSSES FOR AT LEAST TWO YEARS AND NO
ASSURANCE CAN BE GIVEN THAT IT WILL EVER BECOME PROFITABLE.

In order for Security Bancshares to become profitable, the Bank will
need to attract a large number of customers to make deposit and borrow money.
This will take time. The Bank expects to incur large initial expenses and may
not be profitable for several years. Although Security Bancshares expects to
become profitable in its third year, there is a risk that it may never become
profitable and that investors will lose part or all of their investment.

THE BANK CANNOT OPEN FOR BUSINESS UNTIL IT RECEIVES REGULATORY APPROVALS, WHICH
ARE AT THE DISCRETION OF REGULATORY AGENCIES.

Security Bancshares and the Bank cannot begin operations until they
receive all required regulatory approvals. They will not receive these approvals
until they satisfy certain rules and requirements for new banks and bank holding
companies imposed by state and federal regulatory agencies. One requirement will
be that the Bank receive capital of at least $5 million. Security Bancshares
expects to satisfy all requirements and obtain all necessary approvals by the
first quarter of 2001, but it may take longer. Because the Bank cannot be
opened without regulatory approvals, and to reduce the risks to investors in
this offering, all offering proceeds from investors will be placed in escrow as
described in the summary.

IT IS POSSIBLE THAT REGULATORY AGENCIES MAY REQUIRE A HIGHER LEVEL OF
CAPITALIZATION, WHICH WOULD REQUIRE US TO RAISE THE MINIMUM OFFERING AMOUNT.

It is possible that state or federal regulatory agencies could require
that the Bank receive capital of more than $5 million. If this capital
requirement is raised from $5 million, we will be required to increase the
minimum amount of this offering accordingly. As a result, the Company reserves
the right to raise the minimum offering amount up to $6.5 million. If you have
submitted a subscription offer, this could result in your subscription being
held longer than it otherwise would or in the Offering being terminated even
though it otherwise would not have been.

WE WILL NEED ADDITIONAL CAPITAL IN THE FUTURE AND ADDITIONAL FINANCING MAY NOT
BE AVAILABLE; THE TERMS OF ANY FUTURE ISSUED SECURITIES MAY HAVE RIGHTS
PREFERENTIAL TO YOURS.

We currently anticipate that our existing cash resources including all
available funds we can draw from our line of credit, will be sufficient to meet
our anticipated working capital requirements through 2001. If this offering is
not complete by then, we will need to raise additional capital, which could take
the form of additional debt or equity issuances or a combination of these, among
other things.

We cannot assure you that we will be able to obtain any additional capital
when needed, on terms acceptable to us or at all. If adequate funds are not
available or are not available on terms acceptable to us, we will not be able to
continue to operate beyond 2001 and will have to terminate this offering.

If we raise additional funds through issuance of additional equity or
convertible debt, these securities may have rights, preferences or privileges
equal to, or possibly senior to, the rights of the Common Stock issued in this
offering. This could adversely affect the value of your investment.

THE BANK WILL MAKE LOANS TO BORROWERS WITH NON-PRIME CREDIT HISTORIES WHO HAVE
AN INCREASED RISK OF DEFAULT.

Security Bancshares and the Bank anticipate that a number of the Bank's
loans may be made in the non-prime credit market, which consists of borrowers
who are deemed to be credit-impaired due to various factors. These factors
include, among others, the manner in which they have managed previous credit,
the existence of prior bankruptcies, the absence or limited extent of their
prior credit history or their limited financial resources. Consequently, the
Bank's loans, compared to commercial, mortgage and consumer loans made to prime
borrowers, may involve a significantly higher probability of default and greater
servicing and collection costs. The Bank's profitability will depend in part
upon its ability to properly evaluate the collateral and creditworthiness of
non-prime borrowers and to efficiently and effectively service and collect its

4
<PAGE>
loan portfolio. There can be no assurance that the performance of the Bank's
loan portfolio will be maintained, that the Bank's systems and controls will
continue to be adequate or that the rate of future defaults and/or losses will
be consistent with prior experience or at levels that will maintain the Bank's
profitability.

THE BANK WOULD SUFFER LOSSES IF ITS BORROWERS DEFAULT ON THEIR LOANS.

There are risks inherent in making all loans, and the risks of loan
defaults by borrowers is unavoidable in the banking business. These risks
include:

o Risks caused by the length of the loan repayment period. Longer repayment
periods carry higher risk because of increased uncertainty about the
future.

o Risks caused by concentrations in types of loans. For instance, a high
percentage of home mortgage loans would be susceptible to a risk of a drop
in the value of real estate.

o Risks caused by changes in the local or national economy or a downturn for
particular industries.

o Risks of nonpayment by individual borrowers.

o Risks resulting from uncertainties about the future value of collateral
used to secure loans.

Because the Bank will be smaller than most of its competitors, its loan
portfolio will not be as diverse, and these risks will be greater. Also, because
the Bank will make loans to non-prime borrowers, these risks will be greater.
The Bank will try to limit its exposure to these risks through prudent lending
practices and by carefully monitoring the amount of loans made within specific
industries, but it cannot eliminate these risks. Substantial credit losses would
result in a decrease of its net income or an increase in its net losses, and
they could cause a reduction in the amount of the Bank's capital.

SECURITY BANCSHARES AND THE BANK WILL DEPEND HEAVILY ON MR. BOYD; THE BUSINESS
WOULD SUFFER IF SOMETHING WERE TO HAPPEN TO HIM OR IF HE WERE TO LEAVE.

Marvin Boyd will be the president and chief executive officer of Security
Bancshares and the Bank. Mr. Boyd will provide valuable services and would be
difficult to replace. Security Bancshares and Mr. Boyd have an employment
agreement. Nevertheless, if he were to leave, the Bank's business would suffer.

THE OFFERING PRICE OF $10.00 WAS DETERMINED ARBITRARILY AND THE STOCK PRICE WILL
FLUCTUATE ONCE THE SHARES BECOME FREELY TRADED AFTER THE OFFERING.

Because this is a start-up operation which has no historical operations
on which to base the offering price, the market price of the stock after the
offering may be more susceptible to fluctuations than it otherwise might be. The
market price will be affected by the Bank's operating results, which could
fluctuate greatly. These fluctuations could result from expenses of operating
and expanding Security National Bank, trends in the banking industry, economic
conditions in its market area, and other factors which are beyond the Bank's
control. If the Bank's operating results are below expectations, the market
price of the common stock would probably fall.

SECURITY BANCSHARES MAY NOT HAVE A LARGE NUMBER OF SHAREHOLDERS AFTER THE
OFFERING, WHICH MAY LIMIT INVESTORS' ABILITY TO SELL OR TRADE THE SHARES AFTER
THE OFFERING.

There is currently no market for Security Bancshares common stock. The
Company does not expect a liquid market for its common stock to develop for
several years, if at all. A public market having depth and liquidity depends on
having enough buyers and sellers at any given time. Because this a relatively
small offering, the Company does not expect to have enough shareholders or
outstanding shares to support an active trading market.

5
<PAGE>
THE BANK WILL FACE STRONG COMPETITION FOR CUSTOMERS FROM LARGER AND MORE
ESTABLISHED BANKS WHICH COULD PREVENT IT FROM OBTAINING CUSTOMERS; THIS MAY
CAUSE THE BANK TO HAVE TO PAY HIGHER INTEREST RATES TO ATTRACT CUSTOMERS.

Security National Bank will encounter strong competition from existing
banks and other types of financial institutions operating in the Spartanburg and
Greenville County areas and elsewhere. Some of these competitors have been in
business for a long time and have already established their customer base and
name recognition. Most are larger than Security National Bank will be and have
greater financial and personal resources. Some are affiliated with large
regional and national banks, like BB&T, First Union and Bank of America, and
offer services, such as extensive and established branch networks and trust
services, that Security National Bank either does not expect to provide or will
not provide for some time. Due to this competition, the Bank may have to pay
higher rates of interest to attract deposits. In addition, competitors that are
not depository institutions are generally not subject to the extensive
regulations that will apply to banks. See "Proposed Business - Competition" on
page 16 and "Supervision and Regulation" starting on page 17.

A LOCAL OR NATIONAL ECONOMIC DOWNTURN COULD REDUCE THE BANK'S CUSTOMER BASE, ITS
LEVEL OF DEPOSITS, AND DEMAND FOR FINANCIAL PRODUCTS SUCH AS LOANS.

The Bank will focus its operations in specific areas within Spartanburg
and Greenville Counties, South Carolina. While the economy in Spartanburg and
Greenville Counties generally has been strong in recent years, an economic
downturn in the area would hurt its business.

THE BANK'S PROFITABILITY DEPENDS IN LARGE PART ON THE SPREAD BETWEEN THE
INTEREST RATES PAID ON DEPOSITS AND THAT COLLECTED ON LOANS. INTEREST RATES HAVE
HISTORICALLY VARIED GREATLY AND CANNOT BE PREDICTED OR CONTROLLED.

The Bank's profitability will depend to a large extent on the difference
between the income earned on loans and other assets and the interest paid on
deposits and other borrowings. This difference is largely determined by levels
of interest rates. Interest rates have historically varied widely and cannot be
controlled or predicted. Large moves in interest rates may decrease or eliminate
profitability.

THE BANK MAY NOT BE ABLE TO COMPETE WITH ITS LARGER COMPETITORS FOR LARGER
CUSTOMERS BECAUSE ITS LENDING LIMITS WILL BE LOWER THAN THEIRS.

The Bank will be limited in the amount it can loan a single borrower by
the amount of its capital. The legal lending limit is 15% of the Bank's capital
and surplus. It is expected that the Bank's initial legal lending limit will be
approximately $750,000. However, the Bank intends to impose an internal limit on
lending to 80% of this amount, or approximately $600,000. Until the Bank is
profitable, it will lose money, which will decrease its capital and therefore
its lending limit. Its lending limit will be significantly less than the limit
for most of its competitors and may affect its ability to seek relationships
with larger businesses in its market area. The Bank intends to accommodate
larger loans by selling participations in those loans to other financial
institutions.

NOTE REGARDING STATEMENTS ABOUT THE FUTURE:

This prospectus contains certain "forward-looking statements" concerning
Security Bancshares and Security National Bank and their operations,
performance, financial conditions, and likelihood of success. These statements
are based on many assumptions and estimates. Their actual results will depend on
many factors which cannot be accurately predicted, including those discussed
above. Many of these risks and factors are beyond the Company's control. The
words "may," "would," "could," "will," "expect," "anticipate," "believe,"
"intend," "plan," and "estimate," as well as similar expressions, are meant to
identify such forward-looking statements.

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THE OFFERING

GENERAL

Security Bancshares is offering a minimum of 550,000 shares and a
maximum of 1,000,000 shares of its common stock at a price of $10.00 per share
to raise between $5.5 million and $10.0 million. The minimum purchase for any
investor is fifty (50) shares and the maximum purchase is 4.9% of the offering,
although the Company may accept subscriptions for more or less. If state or
federal regulators require the bank to receive more than $5 million in
capitalization, the Company has the option to raise the minimum amount of the
offering accordingly, to a maximum of $6.5 million (650,000 shares).

The organizers may purchase a significant number of shares in the
offering, including a substantial portion of the minimum offering. All shares
purchased by the organizers will be for investment and not intended for resale.
Because purchases by the organizers may be substantial, you should not assume
that the sale of a specified minimum offering amount indicates the merits of
this offering.

The Company must receive your subscription for shares before midnight,
Eastern Standard Time, on September 30, 2001, unless all of the shares are sold
earlier or the offering is terminated or extended. The Company reserves the
right to terminate the offering at any time or to extend the expiration date to
a later date. Extension of the expiration date might cause an increase in the
Company's expenses. The Company does not have to give you any prior written
notice of an extension. If the Company extends the offering, any subscriptions
the Company has already accepted will still be binding. The Company does,
however, intend to communicate quarterly with all subscribers and inform you of
any extensions of the offering. Once the Company is subject to the reporting
requirements of the Securities Exchange Act of 1934, the Company will file
periodic reports with the Securities and Exchange Commission and will make such
reports available to shareholders who request a copy.

Accepted subscriptions will be binding and may not be revoked except
with the Company's consent. The Company reserves the right to cancel or reject
any or all of any subscription, for any reason or for no reason at all, before
or after acceptance until the proceeds of this offering are released from
escrow. The Company may also allocate shares among subscribers if the offering
is oversubscribed; however, the Company believes that it will not have to adjust
subscribers for the minimum number of shares. In deciding which subscriptions to
accept, the Company may take into account any factors, including:

o the order in which subscriptions are received,
o a subscriber's potential to do business with or to direct customers to
the Bank, and
o its desire to have a broad distribution of stock ownership.

If the Company rejects any subscription, or accepts a subscription but
subsequently elects to cancel all or part of such subscription, the Company will
refund the amount remitted for shares for which a subscription is rejected or
canceled. The Company will issue certificates for shares which have been
subscribed and paid for promptly after the Company receive the funds out of
escrow.

CONDITIONS TO THE OFFERING AND RELEASE OF FUNDS

The Company will place all subscription proceeds with an independent
Escrow Agent. The Escrow Agent will hold these funds, and no shares will be
issued, until:

o The Company has accepted subscriptions and payment in full for a
minimum of 550,000 shares at $10.00 per share;

o The Company has obtained approval from the Federal Reserve and the
South Carolina State Board of Financial Institutions for Security
Bancshares to acquire the stock of the Bank; and

If Security Bancshares terminates the offering or if the offering period expires
before these conditions are satisfied, then:

7
<PAGE>
o The Company will cancel accepted subscription agreements and
subscribers in the offering will not become shareholders;

o The funds held in the escrow account will not be subject to the claims
of any of the Company's creditors or available to defray the expenses
of this offering;

o The Company will return the full amount of all subscription funds
promptly to subscribers, with interest earned.

The Escrow Agent has not investigated the desirability, advisability, or
merits of a purchase of the shares. The Escrow Agent will invest escrowed funds
in interest-bearing savings accounts, short-term United States Treasury
securities, FDIC-insured bank deposits, or such other investments as the Company
agrees with the Escrow Agent. The Company does not intend to invest the
subscription proceeds held in escrow in instruments that would mature after the
expiration date of the offering.

If the conditions for releasing subscription funds from escrow are met
and the funds are released but the Company does not receive final regulatory
approval to operate the Bank, or if the Bank does not open for any other reason,
the Company's board of directors intends to propose that the shareholders
approve a plan to liquidate Security Bancshares. If the expenses exceeded
$350,000, which is unlikely, creditors may have some claim against subscribers
funds.

PLAN OF DISTRIBUTION

Offers and sales of the common stock will be made primarily by the
Company's officers and directors, who will be reimbursed for their reasonable
expenses but will not receive commissions or other remuneration. Security
Bancshares believes such officers and directors will not be deemed to be brokers
or dealers under the Securities Exchange Act of 1934 due to Rule 3a4-1.

Prior to this offering there has been no public market for the shares.
The Company established the initial offering price of the shares based upon its
assessment of its capital needs and the commercial potential of the services to
be offered by Security National Bank. The Company expects that a secondary
market may eventually develop for the shares, although the Company can not be
sure. In general, if a secondary market develops, the shares other than those
held by affiliates will be freely transferable in the market. See "Description
of the Capital Stock of Security Bancshares - Shares Eligible for Future Sale"
on page 29.

HOW TO SUBSCRIBE

If you desire to purchase shares of the common stock of Security
Bancshares, you should:

1. Complete, date, and execute the subscription agreement which you
received with this prospectus;

2. Make a check, bank draft, or money order payable to "Carolina First
Bank, Escrow Account for Security Bancshares, Inc.," in the amount of
$10.00 times the number of shares you wish to purchase; and

3. Deliver the completed subscription agreement and check to Security
Bancshares at the following address:

Security Bancshares, Inc.
451 E. St. John Street
Spartanburg, South Carolina 29306

If you have any questions about the offering or how to subscribe, please
call Mr. Boyd at (864) 621-3674. If you subscribe, you should retain a copy of
the completed subscription agreement for your records. You must pay the
subscription price at the time you deliver the subscription agreement.

8
<PAGE>
USE OF PROCEEDS

Below, the Company describes how it intends to use the funds received in
this offering based on its plans and estimates of start-up expenses. The
Company's actual expenses may be different. Although the Company believes that
the minimum proceeds of $5.5 million from the offering will satisfy its capital
requirements for its first five years of operation, it cannot be sure. Because
it is a new enterprise, it cannot predict with certainty the Bank's ability to
generate revenue to cover its expenses, and therefore the Company's actual use
of proceeds may differ from the following description.

USE OF PROCEEDS BY SECURITY BANCSHARES

The following table shows the Company's anticipated use of the proceeds
of the offering based on the sale of the minimum number and maximum number of
shares. As shown, approximately $5.0 million of the first $5.5 million raised in
this offering will be used to capitalize Security National Bank. Security
Bancshares will keep the proceeds which are not invested in the Bank and
initially invest them in United States government securities or deposit them
with Security National Bank. In the long-term, these remaining proceeds will be
used for the operational expenses of Security Bancshares and the Bank and for
other general corporate purposes, including the provision of additional capital
to the Bank, if necessary. Such proceeds may also be used for expansion, for
example by opening additional branches or acquiring other financial
institutions. Other than the opening of the Greenville branch, the Company does
not currently have any definitive plans for expansion.
<TABLE>
<CAPTION>

Minimum Maximum
Offering(1) Offering(2)

<S> <C> <C>
Gross proceeds from offering $5,500,000 $10,000,000
Organizational and offering expenses of Security (350,000) (500,000)
Bancorporation
Investment in capital stock of the Bank(3) (5,000,000) (8,000,000)
----------- ------------
Remaining proceeds $ 150,000 $ 1,500,000
=========== ============
-------------------------------------
<FN>
(1) Assumes that 550,000 shares of common stock are sold in the offering.
(2) Assumes that 1,000,000 shares of common stock are sold in the offering.
(3) If the total offering proceeds exceed $5.5 million; Security Bancshares
will contribute a portion of the net proceeds in excess of $6.0 million
to the Bank. This sum is included here.
</FN>
</TABLE>

USE OF PROCEEDS BY SECURITY NATIONAL BANK

As indicated in the table above, Security Bancshares intends to
capitalize the Bank with from $5.0 million (assuming gross proceeds of $5.5
million) to $8.0 million (assuming gross proceeds of $10.0 million). All
proceeds received by the Bank will be in the form of an investment in the Bank's
capital stock by Security Bancshares as described above. The Bank intends to use
approximately $700,000 of these proceeds to purchase and furnish an office in
Greenville. The remainder of the proceeds will be used for working capital
purposes and will be invested pending use in short-term government securities.
These numbers are estimates only. No assurance can be given that the Bank will
open on time or ever.

CAPITALIZATION

The following table shows Security Bancshares' capitalization as of
September 30, 2000 and the pro forma consolidated capitalization of Security
Bancshares and Security National Bank as adjusted to give effect to the sale of
the minimum and maximum number of shares. The additional paid-in capital section
shows capital to be received in the offering for the minimum and maximum
offerings, less expenses of the offering which are charged against this account.
The "As Adjusted" column reflects the estimated cost of organizing Security
Bancshares and organizing and preparing to open Security National Bank through
the expected opening date, which should be in the second quarter of 2001,
assuming that this offering has been completed. See "Use of Proceeds" above.

9
<PAGE>
Please note that you will probably experience additional dilution due to
operating losses expected during the initial years of the Company's operations.

As Adjusted for As Adjusted for
September 30, Minimum Maximum
2000 Offering Offering
------------- --------------- ---------------

<S> <C> <C> <C>
Shareholders' Equity:

Common Stock, par value $.01 per share; 3,000,000 shares authorized;
15 issued and outstanding; 550,015 issued and outstanding as
adjusted (minimum offering); 1,000,015 shares
issued and outstanding (maximum offering).................. -- 5,500 10,000

Preferred Stock, 200,000 shares authorized; no shares issued
and outstanding............................................ -- -- --

Additional paid-in capital................................. 22,000 5,494,500 9,990,000

Deficit accumulated during the pre-opening stage........... (266,255) (300,000) (300,000)
-------------- ----------------- ---------------

Total shareholders' equity (deficit)................. 244,255 5,200,000 9,700,000

</TABLE>

DIVIDEND POLICY

The Company expects to initially retain all earnings to operate and
expand the business. It is unlikely that it will pay any cash dividends in the
near future. The Company's ability to pay any cash dividends will depend
primarily on Security National Bank's ability to pay dividends to it, which
depends on the profitability of the Bank. In order to pay dividends, the Bank
must comply with the requirements of all applicable laws and regulations. See
"Supervision and Regulation - The Bank - Dividends" on page 20 and "Supervision
and Regulation - The Bank - Capital Regulations" on page 21. In addition to the
availability of funds from the Bank, the Company's dividend policy is subject to
the discretion of its board of directors and will depend upon a number of
factors, including future earnings, financial condition, cash needs, and general
business conditions.

PLAN OF OPERATION

GENERAL

Security Bancshares was formed to organize and own all of the capital
stock of Security National Bank. The organizers filed an application with the
Office of the Comptroller of the Currency on August 29, 2000 to charter the Bank
as a national bank. Whether the charter is issued will depend, among other
things, upon compliance with legal requirements imposed by the Office of the
Comptroller of the Currency, including capitalization of the Bank with at least
a specified minimum amount of capital which the Company believes will be $5.0
million. Additionally, the Company must obtain the approval of the Federal
Reserve to become a bank holding company before acquiring the capital stock of
the Bank. The Bank must also receive the approval of the FDIC to receive federal
deposit insurance. The Company expects to receive all regulatory approvals in
the first quarter of 2001.

EXPENSES

As of September 30, 2000, Security Bancshares had total assets of
$16,233, consisting of $1,233 in cash and cash equivalents and $15,000 in
deferred stock offering costs. Security Bancshares incurred a net loss of
$266,255 for the period from its inception on October 9, 1997 through September
30, 2000.

10
<PAGE>
On completion of the offering and opening of the bank, we expect that we
will have incurred the following expenses:

o $166,433 in consulting fees in connection with the offering, which
will be subtracted from the proceeds of the offering.

o $25,047 in interest accrued on the Bank's line of credit.

o $174,775 in expenses to organize and prepare to open Security National
Bank, consisting principally of salaries, travel and other operating
costs, which will be charged against the income of Security National
Bank.

OFFICES AND FACILITIES

PROPOSED BUSINESS

GENERAL

Security Bancshares was incorporated as a South Carolina corporation in
January 1999 to function as a holding company to own and control all of the
capital stock of Security National Bank. The Company initially will engage in no
business other than owning and managing the Bank.

This holding company structure was chosen because it provides certain
flexibility not otherwise available to a stand-alone bank. Subject to Federal
Reserve Board debt guidelines, the holding company structure can assist the Bank
in maintaining its required capital ratios by borrowing money and contributing
the proceeds to the Bank as primary capital. Additionally, a holding company may
engage in certain non-banking activities that the Federal Reserve Board has
deemed to be closely related to banking. Although the Company does not presently
intend to engage in other activities, it will be able to do so upon proper
filing with the Federal Reserve, if the Company believes that there is a need
for these services in its market area and that such activities could be
profitable.

The Bank is being organized as a national bank under the laws of the
United States and, subject to regulatory approval, will engage in a commercial
and consumer banking business with deposits insured by the FDIC.

MANAGEMENT

Marvin Boyd has agreed to serve as President and CEO of Security
Bancshares and the Bank. As a result, Mr. Boyd will lead the management teams
for both Security Bancshares and Security National Bank. He has over 20 years of
banking, finance and regulatory experience.

We are in the process of identifying and hiring other members of our
management team.

11
<PAGE>
SERVICE AREA

The Bank expects initially to draw a large percentage of its business
from small businesses, individuals, nonprofit organizations and churches located
in or serving the low- and moderate-income neighborhoods of Spartanburg and
Greenville.

In the past decade, Spartanburg and Greenville Counties have experienced
significant growth. Although the historical and projected socioeconomic trends
for Security National Bank's proposed service area are not in pace with
Spartanburg County and Greenville County, the Company believes that these areas
have the fundamental capacity to support the Bank's proposed banking offices in
Spartanburg and Greenville.

MARKETING FOCUS

Most of the banks in the Greenville/Spartanburg area are now local
branches of large regional banks. Although size gives the larger banks certain
advantages in competing for business from large corporations, including higher
lending limits and the ability to offer services in other areas of South
Carolina and in the Greenville/Spartanburg area, the Company believes that there
is a void in banking services for low- and moderate-income neighborhoods in the
Greenville/Spartanburg area and believe that the Bank can successfully fill this
void. The Bank will not compete with large institutions for the primary banking
relationships of large corporations, but will compete for very different market
niches with a specific focus on small business, homeowners and selected retail
customers in the Bank's target market of low- and moderate-income neighborhoods.

Security National Bank plans to cooperate intensively with the
Greenville/Spartanburg area community oriented organizations. The Company
believes that these organizations will be essential partners in identifying
business opportunities, evaluating neighborhood strengths and weaknesses,
marketing Security National Bank, and coordinating efforts of Security National
Bank with public and nonprofit institutions. Several such organizations, such as
S.H.A.R.E. and the Baptist Ministerial Association, have been involved in
establishing Security National Bank.

The Bank also plans to enlist the support and help of the
African-American churches in Greenville and Spartanburg Counties. Security
National Bank's organizers believe the ministers of these churches will suggest
to their parishioners that they use Security National Bank for deposits and
loans and that the ministers will bring to Security National Bank businesses
that they believe to be a good fit for Security National Bank. Finally, Security
National Bank hopes to be the lender of choice for these churches when they need
financing.

The Bank plans to advertise to emphasize its local ownership, community
focus, and ability to provide more personalized service than its competition. It
will also have the ability to offer large bank services. The organizers are
long-time residents and business people in the target market area and have
determined the credit needs of the area through personal experience and
communications with their colleagues and peers. The Bank believes that its
proposed community focus will succeed in this market and that the area will
react favorably to the Bank's emphasis on service to small businesses,
individuals, and professional concerns.

The Bank expects to offer extended branch operating hours, drive-up
ATMs, same day credit for consumer deposits made by 5:00 p.m., and convenient
branch locations where road infrastructure is in place to make access easier.
The Bank will emphasize local decision-making with experienced bankers,
attention to lower employee turnover, and professional and responsive service.

The Bank intends to offer a full range of deposit services that are
typically available in most banks and savings and loan associations, including
checking accounts, commercial accounts, savings accounts, and other time
deposits of various types, ranging from daily money market accounts to
longer-term certificates of deposit. The transaction accounts and time
certificates will be tailored to its principal market area at rates competitive
to those offered in the the Greenville/Spartanburg area. In addition, the Bank
intends to offer certain retirement account services, such as Individual
Retirement Accounts (IRAs). These accounts will be solicited from individuals,
businesses, associations, organizations, and governmental authorities.

12
<PAGE>
LENDING ACTIVITIES

General. The Bank intends to emphasize a range of lending services,
including real estate, commercial, and consumer loans to individuals and small-
to medium-sized businesses and professional concerns that are located in or
conduct a substantial portion of their business in the Bank's market area.

Real Estate Loans. The Bank expects that loans secured by first or
second mortgages on real estate will make up approximately 50% of its loan
portfolio. These loans will generally fall into one of three categories:
commercial real estate loans, construction and development loans, or residential
real estate loans. Each of these categories is discussed in more detail below,
including their specific risks. Home equity loans are not included because they
are classified as consumer loans, which are discussed below. Interest rates for
all categories may be fixed or adjustable, and will more likely be fixed for
shorter-term loans. The Bank will generally charge an origination fee for each
loan.

The principal economic risk associated with real estate loans is cash
flow capability and creditworthiness of the borrowers. Other risks associated
with real estate loans vary with many economic factors, including employment
levels, strength of local and national economy, and fluctuations in the value of
real estate. Deterioration of any of these factors after a loan has been made
could negatively affect a borrower's cash flow, creditworthiness, and ability to
repay the loan. On first and second mortgage loans, the Bank would typically not
advance more than 90% of the lesser of the cost or appraised value of the
property. It will require a valid mortgage lien on all real property loans along
with a title lien policy which insures the validity and priority of the lien. It
will also generally require borrowers to obtain hazard insurance policies and
flood insurance if applicable.

The Bank will compete for these loans with competitors who are well
established in the Greenville/Spartanburg area and have greater resources and
lending limits. As a result, the Bank may have to charge lower interest rates to
attract borrowers.

The Bank may have the ability to originate real estate loans for sale
into the secondary market, although the size and credit quality of the loan will
affect its salability. The Bank can limit its interest rate and credit risk on
these loans by locking the interest rate for each loan with the secondary
investor and receiving the investor's underwriting approval prior to originating
the loan.

Commercial Real Estate Loans. Commercial real estate loans will
generally have terms of five years or less, although payments may be structured
on a longer amortization basis. Risks associated with commercial real estate
loans include the general risk of the failure of each commercial borrower, which
will be different for each type of business and commercial entity. The Bank will
evaluate each business on an individual basis and attempt to determine its
business risks and credit profile. The Bank may or may not be successful.

The Bank anticipates using a computer-calculated scoring model to
evaluate the credit risk of potential borrowers. This model will incorporate the
credit scores of the nation's three largest credit reporting agencies under the
trade names of "Beacon" and "Empirica".

Construction and Development Real Estate Loans. The Bank will offer
adjustable and fixed rate residential and commercial construction loans to
builders and developers and to consumers who wish to build their own home. The
term of construction and development loans will generally be limited to eighteen
months, although payments may be structured on a longer amortization basis. Most
loans will mature and require payment in full upon the sale of the property.
Construction and development loans generally carry a higher degree of risk than
long term financing of existing properties. Repayment depends on the ultimate
completion of the project and usually on the sale of the property. Risks
include:

o cost overruns,
o mismanaged construction,
o inferior or improper construction techniques, o economic changes or
downturns during construction,
o a downturn in the real estate market, o rising interest rates which
may prevent sale of the property, and
o failure to sell completed projects in a timely manner.

13
<PAGE>
The Bank will attempt to reduce risk by obtaining personal guarantees where
possible, and by keeping the loan to value ratio of the completed project below
specified percentages. The Bank may also reduce risk by selling participations
in larger loans to other institutions when possible.

Residential Real Estate Loans. Residential real estate loans will
generally have longer terms up to 30 years. The Bank will offer fixed and
adjustable rate mortgages. The Bank will make first mortgage loans and on a case
by case basis, may make second mortgage loans, in each case with loan-to-value
ratios of up to 90%. All mortgages that the Bank makes will be underwritten in
accordance with relevant Fannie Mae standards.

Commercial Loans. The Bank will make loans for commercial purposes in
various lines of businesses. Equipment loans will typically be made for a term
of five years or less at fixed or variable rates, with the loan fully amortized
over the term and secured by the financed equipment and with a loan-to-value
ratio of 80% or less. Working capital loans will typically have terms not
exceeding one year and will usually be secured by accounts receivable,
inventory, or personal guarantees of the principals of the business. For loans
secured by accounts receivable or inventory, principal will typically be repaid
as the assets securing the loan are converted into cash, and in other cases
principal will typically be due at maturity. Asset based lending, leasing, and
factoring will be offered through third party vendors who can handle the paper
work and servicing and generally assume most of the credit risk. Trade letters
of credit, standby letters of credit, and foreign exchange will be handled
through a correspondent bank as agent for the Bank.

The Bank also expects to offer small business loans utilizing government
enhancements such as the Small Business Administration's 7(a) program and SBA's
504 programs, and Appalachian Development Council. These loans will typically be
partially guaranteed by the government, which may help to reduce the Bank's
risk. Government guarantees of SBA loans will not exceed 80% of the loan value,
and will generally be less.

The principal economic risk associated with each category of anticipated
loans, including commercial loans, is the cash flow capability and
creditworthiness of the borrowers. The risks associated with commercial loans
vary with many economic factors, including the economy in the
Greenville/Spartanburg area. Deterioration of the economy could impact
borrowers' businesses and therefore their cash flow and ability to repay their
loans. The well established banks in the Greenville/Spartanburg area will make
proportionately more loans to medium-to large-sized businesses than the Bank
will. Many of the Bank's anticipated commercial loans will likely be made to
small- to medium-sized businesses which may be less able to withstand
competitive, economic, and financial conditions than larger borrowers.

Consumer Loans. The Bank will make a variety of loans to individuals for
personal and household purposes, including secured and unsecured installment
loans and revolving lines of credit such as credit cards. Installment loans
typically will carry balances of less than $50,000 and be amortized over periods
up to 60 months. Consumer loans may be offered on a single maturity basis where
a specific source of repayment is available. Revolving loan products will
typically require monthly payments of interest and a portion of the principal.

The principal economic risks associated with consumer loans are the
creditworthiness and cash flow of the Bank's borrowers. The principal
competition for consumer loans will be the established banks in the the
Greenville/Spartanburg area. Consumer loans are generally considered to have
greater risk than first or second mortgages on real estate.

The Bank will also offer home equity loans, including loans insured by
the government under the Federal Housing Administration's Title I program. The
Bank's underwriting criteria for and the risks associated with home equity loans
and lines of credit will generally be the same as those for first mortgage
loans. Home equity lines of credit will typically have terms of 15 years or
less, will typically carry balances less than $125,000, and may extend up to
100% of the available equity of each property.

14
<PAGE>

Loan Approval and Review. The Bank's loan approval policies will provide
for various levels of officer lending authority. When the amount of aggregate
loans to a single borrower exceeds that individual officer's lending authority,
the loan request will be considered and approved by an officer with a higher
lending limit or the officers' loan committee. The Bank will establish an
officers' loan committee that has lending limits, and any loan in excess of this
lending limit will be approved by the directors' loan committee. The Bank will
not make any loans to any director, officer, or employee of the Bank unless the
loan is approved by the board of directors of the Bank and is made on terms not
more favorable to such person than would be available to a person not affiliated
with the Bank. The Bank currently intends to adhere to Federal National Mortgage
Association and Federal Home Loan Mortgage Corporation guidelines in its
mortgage loan review process, but may choose to alter this policy in the future.

Loan and Asset Distribution. The Bank estimates that its initial
percentage distribution of its loans and deposits will be as follows:
<TABLE>
<CAPTION>

Loans Deposits
<S> <C> <C>
Real Estate 25% Regular Checking 5%

Commercial Loans 28% Interest Checking 5%

Equity Line and Consumer Loans 29% Business Checking 5%

Commercial Real Estate 18% Passbooks 25%

Money Market 15%

CD's under $100,000 20%

CD's over $100,000 10%

IRA & KEOUGH 10%

Other 5%
</TABLE>

These are estimates only. The Bank's actual deposit and loan distribution will
depend on its customers and vary initially and over time. The Bank will maintain
an allowance for loan losses, which will be established through a provision for
loan losses charged against income. The Bank will charge loans against this
allowance when it believes that the collectibility of the principal is unlikely.
The allowance will be an estimated amount that it believes will be adequate to
absorb losses inherent in the loan portfolio based on evaluations of its
collectibility. The Bank anticipates that initially its loan loss reserve will
equal approximately 1% of the average outstanding balance of its loans. Over
time, the Bank will base the allowance for loan losses on its evaluation of
factors such as changes in the nature and volume of the loan portfolio, overall
portfolio quality, specific problem loans and commitments, and current
anticipated economic conditions that may affect the borrower's ability to pay.

Lending Limits. The Bank's lending activities will be subject to a
variety of lending limits imposed by federal law. In general the Bank will be
subject to a legal limit on loans to a single borrower equal to 15% of the
Bank's capital and unimpaired surplus. Different limits may apply in certain
circumstances based on the type of loan or the nature of the borrower, including
the borrower's relationship to the Bank. These limits will increase or decrease
as the Bank's capital increases or decreases. The Bank's initial legal limit
will be approximately $750,000 based on the minimum offering. The Bank will
initially have a self-imposed loan limit of 80% of the legal limit, or
approximately $600,000. Unless the Bank is able to sell participations in its
loans to other financial institutions, it will not be able to meet all of the
lending needs of loan customers requiring aggregate extensions of credit above
these limits.

15
<PAGE>
OTHER BANKING SERVICES

Other anticipated bank services include:

o Banking hours on Saturday;
o Government benefits and payroll checks cashed for customers
o Bank-by-mail and Bank-by-phone;
o Online banking;
o Certified checks and Money Orders;
o Travelers Cheques and U.S. Savings Bonds;
o Direct deposit of payroll and government benefit checks.
o After-hours depository;
o Drive-through banking;
o Wire transfer services; and
o Utility bill payments.

The Bank expects to become associated with the Honor ATM network that may be
used by its customers throughout the Greenville/Spartanburg area and other
regions. The Bank believes that by being associated with a shared network of
ATMs, it will be better able to serve its customers and will be able to attract
customers who are accustomed to the convenience of using ATMs (although the
Company does not believe that maintaining this association will be critical to
its success). The Bank expects to begin offering these services shortly after
its opening. The Bank also plans to offer a debit card and VISA credit card
services through a correspondent bank as an agent for the Bank. The Bank does
not expect to exercise trust powers during its initial years of operation.

COMPETITION

The banking business is highly competitive. The Bank will compete as a
financial intermediary with other commercial banks, savings and loan
associations, credit unions, finance companies, and money market mutual funds
operating in the Greenville/Spartanburg area and elsewhere. In recent years, a
number of depository institutions, particularly the largest institutions in the
Bank's target market areas, have committed increased resources to meet credit
needs in the low- and moderate-income neighborhoods of Spartanburg and
Greenville. However, Security National Bank will be providing credit to a
non-traditional, and currently under-served, target market and that credit gaps
(such as commercial loans under $100,000, small consumer loans, and loans to
borrowers who are slightly outside traditional credit guidelines) exist within
its target market.

While the Bank expects to face substantial direct competition on higher
loan or deposit products, it believes that there is less direct competition for
the substantial majority of the products that it intends to offer. In addition,
it expects that the types of products and services that it plans to offer will
not become central to larger institutions' business plans.

However, to the extent that Security National Bank faces competition,
most of its competitors have substantially greater resources and lending limits
than Security National Bank will and offer certain services, such as extensive
and established branch networks and trust services, that the Bank either does
not expect to provide or will not provide initially. Its competitors include
BB&T, Carolina First Bank, First Union Bank, Bank of America and Wachovia. As a
result of these competitive factors, the Bank may have to pay higher rates of
interest to attract deposits. In 2004, deposits in its target market area in
Spartanburg are expected to be $2.2 billion, and deposits in its target market
area in Greenville are expected to be $3.9 billion. Its plan over the next five
years is to reach a 1% market share in its Spartanburg target market area and
1/2% market share in its Greenville target market area, with total deposits in
excess of $37 million. Of course, no assurance can be given that the Bank will
accomplish these objectives.

16
<PAGE>
COMMUNITY DEVELOPMENT SERVICES

EMPLOYEES

Upon commencement of operations, the Bank expects to have approximately
7 full time employees and 2 part time employees operating out of its temporary
facilities in Spartanburg. By 2005, it anticipates that it will have
approximately 26 full time employees and 4 part time employees operating out of
its permanent facilities in Spartanburg and Greenville. Security Bancshares, as
the holding company for the Bank, will not have any employees other than its
officers.

LEGAL PROCEEDINGS

Neither Security Bancshares, Security National Bank, nor any of their
properties are subject to any material legal proceedings.

SUPERVISION AND REGULATION

Both Security Bancshares and Security National Bank are subject to state
and federal banking laws and regulations which impose specific requirements or
restrictions on and provide for general regulatory oversight with respect to
virtually all aspects of operations. These laws and regulations are generally
intended to protect depositors, not shareholders. The following summary is
qualified by reference to the statutory and regulatory provisions discussed.
Changes in applicable laws or regulations may have a material effect on the
Bank's business and prospects. Beginning with the enactment of the Financial
Institution Reform Recovery and Enforcement Act in 1989 and following with the
FDIC Improvement Act in 1991, numerous additional regulatory requirements have
been placed on the banking industry in the past several years, and additional
changes have been proposed. Our operations may be affected by legislative
changes and the policies of various regulatory authorities. One cannot predict
the effect that fiscal or monetary policies, economic control, or new federal or
state legislation may have in the future on the Company's business and earnings.

SECURITY BANCSHARES

Because it will own the outstanding capital stock of the Bank, Security
Bancshares will be a bank holding company within the meaning of the federal Bank
Holding Company Act of 1956 and the South Carolina Bank Holding Company Act. Our
activities will also be governed by the Glass-Steagall Act of 1933.

The Bank Holding Company Act. Under the Bank Holding Company Act,
Security Bancshares will be subject to periodic examination by the Federal
Reserve and required to file periodic reports of its operations and such
additional information as the Federal Reserve may require. Our activities at the
Bank and holding company level will be limited to:

o banking, managing, or controlling banks;
o furnishing services to or performing services for its subsidiaries;
and
o engaging in other activities that the Federal Reserve determines to be
so closely related to banking, managing, or controlling banks as to be
a proper incident thereto.

Investments, Control, and Activities. With certain limited exceptions,
the Bank Holding Company Act requires every bank holding company to obtain the
prior approval of the Federal Reserve before:

o acquiring substantially all the assets of any bank,

17
<PAGE>
o acquiring direct or indirect ownership or control of any voting shares
of any bank if after such acquisition it would own or control more
than 5% of the voting shares of such bank (unless it already owns or
controls the majority of such shares), or
o merging or consolidating with another bank holding company.

In addition, and subject to certain exceptions, the Bank Holding Company
Act and the Change in Bank Control Act, together with regulations thereunder,
require Federal Reserve approval prior to any person or company acquiring
"control" of a bank holding company. Control is conclusively presumed to exist
if an individual or company acquires 25% or more of any class of voting
securities of the bank holding company. Control is rebuttably presumed to exist
if a person acquires 10% or more but less than 25% of any class of voting
securities and either Security Bancshares has registered securities under
Section 12 of the Securities Exchange Act of 1934 or no other person owns a
greater percentage of that class of voting securities immediately after the
transaction. The Company most likely will be required to register under the
Securities Exchange Act of 1934 once it has more than 500 shareholders of
record. The regulations provide a procedure for challenge of the rebuttable
control presumption.

Under the Bank Holding Company Act, a bank holding company is generally
prohibited from engaging in, or acquiring direct or indirect control of more
than 5% of the voting shares of any company engaged in nonbanking activities
unless the Federal Reserve Board, by order or regulation, has found those
activities to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto. Some of the activities that the Federal
Reserve Board has determined by regulation to be proper incidents to the
business of a bank holding company include:

o making or servicing loans and certain types of leases,
o engaging in certain insurance and discount brokerage activities,
o performing certain data processing services,
o acting in certain circumstances as a fiduciary or investment or
financial adviser,
o owning savings associations, and
o making investments in certain corporations or projects designed
primarily to promote community welfare.

The Federal Reserve Board imposes certain capital requirements on
Security Bancshares under the Bank Holding Company Act, including a minimum
leverage ratio and a minimum ratio of "qualifying" capital to risk-weighted
assets. These requirements are described on page 21 under "Capital Regulations."
Subject to its capital requirements and certain other restrictions, Security
Bancshares is able to borrow money to make a capital contribution to the Bank,
and such loans may be repaid from dividends paid from the Bank to Security
Bancshares. Our ability to pay dividends will be subject to regulatory
restrictions as described on page 20 under "Dividends". Security Bancshares is
also able to raise capital for contribution to the Bank by issuing securities
without having to receive regulatory approval, subject to compliance with
federal and state securities laws.

Source of Strength; Cross-Guarantee. In accordance with Federal Reserve
Board policy, Security Bancshares will be expected to act as a source of
financial strength to the Bank and to commit resources to support the Bank in
circumstances in which Security Bancshares might not otherwise do so. Under the
Bank Holding Company Act, the Federal Reserve Board may require a bank holding
company to terminate any activity or relinquish control of a nonbank subsidiary,
other than a nonbank subsidiary of a bank, upon the Federal Reserve Board's
determination that such activity or control constitutes a serious risk to the
financial soundness or stability of any subsidiary depository institution of the
bank holding company. Further, federal bank regulatory authorities have
additional discretion to require a bank holding company to divest itself of any
bank or nonbank subsidiary if the agency determines that divestiture may aid the
depository institution's financial condition.

Glass-Steagall Act. The Company will also be restricted by the
provisions of the Glass-Steagall Act, which prohibits it from owning
subsidiaries that are engaged principally in the issue, flotation, underwriting,
public sale, or distribution of securities. The interpretation, scope, and

18
<PAGE>
application of the provisions of the Glass-Steagall Act currently are being
considered and reviewed by regulators and legislators, and the interpretation
and application of those provisions have been challenged in the federal courts.

South Carolina Act. As a bank holding company registered under the South
Carolina Bank Holding Company Act, the Company will be subject to regulation by
the South Carolina Board of Financial Institutions. Consequently, the Company
must receive its approval prior to engaging in the acquisition of banking or
nonbanking institutions or assets. The Company must also file periodic reports
with respect to its financial condition and operations, management, and
intercompany relationships between it and its subsidiaries.

THE BANK

The Bank will operate as a national banking association incorporated
under the laws of the United States and subject to examination by the Office of
the Comptroller of the Currency. Deposits in the Bank will be insured by the
FDIC up to a maximum amount, which is generally $100,000 per depositor subject
to aggregation rules.

The Office of the Comptroller of the Currency and the FDIC will regulate
or monitor virtually all areas of the Bank's operations, including:

o security devices and procedures,
o adequacy of capitalization and loss reserves,
o loans,
o investments,
o borrowings,
o deposits,
o mergers,
o issuances of securities,
o payment of dividends,
o interest rates payable on deposits,
o interest rates or fees chargeable on loans,
o establishment of branches,
o corporate reorganizations,
o maintenance of books and records, and
o adequacy of staff training to carry on safe lending and deposit
gathering practices.

The Office of the Comptroller of the Currency will require the Bank to
maintain certain capital ratios and imposes limitations on the Bank's aggregate
investment in real estate, bank premises, and furniture and fixtures and to
prepare quarterly reports on the Bank's financial condition and to conduct an
annual audit of its financial affairs in compliance with its minimum standards
and procedures.

Under the FDIC Improvement Act, all insured institutions must undergo
regular on site examinations by their appropriate banking agency. The cost of
examinations of insured depository institutions and any affiliates may be
assessed by the appropriate agency against each institution or affiliate as it
deems necessary or appropriate. Insured institutions are required to submit
annual reports to the FDIC, their federal regulatory agency, and state
supervisor when applicable. The FDIC Improvement Act directs the FDIC to develop
a method for insured depository institutions to provide supplemental disclosure
of the estimated fair market value of assets and liabilities, to the extent
feasible and practicable, in any balance sheet, financial statement, report of
condition or any other report of any insured depository institution. The FDIC
Improvement Act also requires the federal banking regulatory agencies to
prescribe, by regulation, standards for all insured depository institutions and
depository institution holding companies relating, among other things, to the
following:

o internal controls
o information systems and audit systems
o loan documentation
o credit underwriting

19
<PAGE>
o interest rate risk exposure; and
o asset quality.

National banks and their holding companies which have been chartered or
registered or have undergone a change in control within the past two years or
which have been deemed by the Office of the Comptroller of the Currency or the
Federal Reserve Board to be troubled institutions must give the Office of the
Comptroller of the Currency or the Federal Reserve Board thirty days prior
notice of the appointment of any senior executive officer or director. Within
the thirty day period, the Office of the Comptroller of the Currency or the
Federal Reserve Board, as the case may be, may approve or disapprove any such
appointment.

Deposit Insurance. The FDIC establishes rates for the payment of
premiums by federally insured banks and thrifts for deposit insurance. A
separate Bank Insurance Fund and Savings Association Insurance Fund are
maintained for commercial banks and savings associations with insurance premiums
from the industry used to offset losses from insurance payouts when banks and
thrifts fail. In 1993, the FDIC adopted a rule which establishes a risk-based
deposit insurance premium system for all insured depository institutions. Under
this system, until mid-1995 depository institutions paid to the Bank Insurance
Fund or the Savings Association Insurance Fund from $0.23 to $0.31 per $100 of
insured deposits depending on its capital levels and risk profile, as determined
by its primary federal regulator on a semiannual basis. Once the Bank Insurance
Fund reached its legally mandated reserve ratio in mid-1995, the FDIC lowered
premiums for well-capitalized banks, eventually to $.00 per $100, with a minimum
semiannual assessment of $1,000. However, in 1996 Congress enacted the Deposit
Insurance Funds Act of 1996, which eliminated even this minimum assessment. It
also separated the Financial Corporation (FICO) assessment to service the
interest on its bond obligations. The amount assessed on individual
institutions, including the Bank, by FICO is in addition to the amount paid for
deposit insurance according to the risk-related assessment rate schedule.
Increases in deposit insurance premiums or changes in risk classification will
increase the Bank's cost of funds, and there can be no assurance that such cost
can be passed on to the Bank's customers.

Transactions With Affiliates and Insiders. The Bank will be subject to
the provisions of Section 23A of the Federal Reserve Act, which place limits on
the amount of loans or extensions of credit to, or investments in, or certain
other transactions with, affiliates and on the amount of advances to third
parties collateralized by the securities or obligations of affiliates. The
aggregate of all covered transactions is limited in amount, as to any one
affiliate, to 10% of the Bank's capital and surplus and, as to all affiliates
combined, to 20% of the Bank's capital and surplus. Furthermore, within the
foregoing limitations as to amount, each covered transaction must meet specified
collateral requirements. Compliance is also required with certain provisions
designed to avoid the taking of low quality assets.

The Bank will also be subject to the provisions of Section 23B of the
Federal Reserve Act which, among other things, prohibits an institution from
engaging in certain transactions with certain affiliates unless the transactions
are on terms substantially the same, or at least as favorable to such
institution or its subsidiaries, as those prevailing at the time for comparable
transactions with nonaffiliated companies. The Bank will be subject to certain
restrictions on extensions of credit to executive officers, directors, certain
principal shareholders, and their related interests. Such extensions of credit
(1) must be made on substantially the same terms, including interest rates and
collateral, as those prevailing at the time for comparable transactions with
third parties and (2) must not involve more than the normal risk of repayment or
present other unfavorable features.

Dividends. A national bank may not pay dividends from its capital. All
dividends must be paid out of undivided profits then on hand, after deducting
expenses, including reserves for losses and bad debts. In addition, a national
bank is prohibited from declaring a dividend on its shares of common stock until
its surplus equals its stated capital, unless there has been transferred to
surplus no less than one-tenth of the Bank's net profits of the preceding two
consecutive half-year periods (in the case of an annual dividend). The approval
of the Office of the Comptroller of the Currency is required if the total of all
dividends declared by a national bank in any calendar year exceeds the total of
its net profits for that year combined with its retained net profits for the
preceding two years, less any required transfers to surplus.

Branching. National banks are required by the National Bank Act to
adhere to branch office banking laws applicable to state banks in the states in
which they are located. Under current South Carolina law, the Bank may open

20
<PAGE>
branch offices throughout South Carolina with the prior approval of the Office
of the Comptroller of the Currency. In addition, with prior regulatory approval,
the Bank will be able to acquire existing banking operations in South Carolina.
Furthermore, federal legislation has recently been passed which permits
interstate branching. The new law permits out-of-state acquisitions by bank
holding companies, interstate branching by banks if allowed by state law, and
interstate merging by banks.

Community Reinvestment Act. The Community Reinvestment Act requires
that, in connection with examinations of financial institutions within their
respective jurisdictions, the Federal Reserve, the FDIC, or the Office of the
Comptroller of the Currency shall evaluate the record of each financial
institution in meeting the credit needs of its local community, including low
and moderate income neighborhoods. These factors are also considered in
evaluating mergers, acquisitions, and applications to open a branch or facility.
Failure to adequately meet these criteria could impose additional requirements
and limitations on the Bank.

Other Regulations. Interest and certain other charges collected or
contracted for by the Bank are subject to state usury laws and certain federal
laws concerning interest rates. The Bank's loan operations are also subject to
certain federal laws applicable to credit transactions, such as:

o the federal Truth-In-Lending Act, governing disclosures of credit
terms to consumer borrowers;
o the Home Mortgage Disclosure Act of 1975, requiring financial
institutions to provide information to enable the public and public
officials to determine whether a financial institution is fulfilling
its obligation to help meet the housing needs of the community it
serves;
o the Equal Credit Opportunity Act, prohibiting discrimination on the
basis of race, creed or other prohibited factors in extending credit;
o the Fair Credit Reporting Act of 1978, governing the use and provision
of information to credit reporting agencies;
o the Fair Debt Collection Practices Act, governing the manner in which
consumer debts may be collected by collection agencies; and
o the rules and regulations of the various federal agencies charged with
the responsibility of implementing such federal laws.

The deposit operations of the Bank also are subject to:

o the Right to Financial Privacy Act, which imposes a duty to maintain
confidentiality of consumer financial records and prescribes
procedures for complying with administrative subpoenas of financial
records, and

o the Electronic Funds Transfer Act and Regulation E issued by the
Federal Reserve Board to implement that act, which governs automatic
deposits to and withdrawals from deposit accounts and customers'
rights and liabilities arising from the use of automated teller
machines and other electronic banking services.

Capital Regulations. The federal bank regulatory authorities have
adopted risk-based capital guidelines for banks and bank holding companies that
are designed to make regulatory capital requirements more sensitive to
differences in risk profiles among banks and bank holding companies and account
for off-balance sheet items. The guidelines are minimums, and the federal
regulators have noted that banks and bank holding companies contemplating
significant expansion programs should not allow expansion to diminish their
capital ratios and should maintain ratios in excess of the minimums. The Company
has not received any notice indicating that either Security Bancshares or
Security National Bank is subject to higher capital requirements. The current
guidelines require all bank holding companies and federally-regulated banks to
maintain a minimum risk-based total capital ratio equal to 8%, of which at least
4% must be Tier 1 capital. Tier 1 capital includes common shareholders' equity,
qualifying perpetual preferred stock, and minority interests in equity accounts
of consolidated subsidiaries, but excludes goodwill and most other intangibles
and excludes the allowance for loan and lease losses. Tier 2 capital includes
the excess of any preferred stock not included in Tier 1 capital, mandatory
convertible securities, hybrid capital instruments, subordinated debt and
intermediate term-preferred stock, and general reserves for loan and lease
losses up to 1% of risk-weighted assets.

21
<PAGE>
Under these guidelines, banks' and bank holding companies' assets are
given risk-weights of 0%, 20%, 50%, or 100%. In addition, certain off-balance
sheet items are given credit conversion factors to convert them to asset
equivalent amounts to which an appropriate risk-weight applies. These
computations result in the total risk-weighted assets. Most loans are assigned
to the 100% risk category, except for first mortgage loans fully secured by
residential property and, under certain circumstances, residential construction
loans, both of which carry a 50% rating. Most investment securities are assigned
to the 20% category, except for municipal or state revenue bonds, which have a
50% rating, and direct obligations of or obligations guaranteed by the United
States Treasury or United States Government agencies, which have a 0% rating.

The federal bank regulatory authorities have also implemented a leverage
ratio, which is equal to Tier 1 capital as a percentage of average total assets
less intangibles, to be used as a supplement to the risk-based guidelines. The
principal objective of the leverage ratio is to place a constraint on the
maximum degree to which a bank holding company may leverage its equity capital
base. The minimum required leverage ratio for top-rated institutions is 3%, but
most institutions are required to maintain an additional cushion of at least 100
to 200 basis points.

The FDIC Improvement Act established a new capital-based regulatory
scheme designed to promote early intervention for troubled banks which requires
the FDIC to choose the least expensive resolution of bank failures. The new
capital-based regulatory framework contains five categories of compliance with
regulatory capital requirements, including "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized," and
"critically undercapitalized." To quality as a "well capitalized" institution, a
bank must have a leverage ratio of no less than 5%, a Tier 1 risk-based ratio of
no less than 6%, and a total risk-based capital ratio of no less than 10%, and
the Bank must not be under any order or directive from the appropriate
regulatory agency to meet and maintain a specific capital level. Initially, the
Bank will qualify as "well capitalized."

Under the FDIC Improvement Act regulations, the applicable agency can
treat an institution as if it were in the next lower category if the agency
determines (after notice and an opportunity for hearing) that the institution is
in an unsafe or unsound condition or is engaging in an unsafe or unsound
practice. The degree of regulatory scrutiny of a financial institution
increases, and the permissible activities of the institution decreases, as it
moves downward through the capital categories. Institutions that fall into one
of the three undercapitalized categories may be required to do some or all of
the following:

o submit a capital restoration plan
o raise additional capital
o restrict their growth, deposit interest rates, and other activities
o improve their management
o eliminate management fees; or
o divest themselves of all or a part of their operations.

Bank holding companies controlling financial institutions can be called upon to
boost the institutions' capital and to partially guarantee the institutions'
performance under their capital restoration plans.

These capital guidelines can affect the Company in several ways. If its
grows at a rapid pace, a premature "squeeze" on capital could occur making a
capital infusion necessary. The requirements could impact its ability to pay
dividends. Its capital levels will initially be more than adequate; however,
rapid growth, poor loan portfolio performance or poor earnings performance or a
combination of these factors could change its capital position in a relatively
short period of time.

The FDIC Improvement Act requires the federal banking regulators to
revise the risk-based capital standards to provide for explicit consideration of
interest-rate risk, concentration of credit risk, and the risks of untraditional
activities. The effect of these regulations cannot be predicted.

Failure to meet these capital requirements would mean that a bank would
be required to develop and file a plan with its primary federal banking
regulator describing the means and a schedule for achieving the minimum capital

22
<PAGE>
requirements. In addition, such a bank would generally not receive regulatory
approval of any application that requires the consideration of capital adequacy,
such as a branch or merger application, unless the Bank could demonstrate a
reasonable plan to meet the capital requirement within a reasonable period of
time.

Enforcement Powers. The Financial Institution Reform Recovery and
Enforcement Act expanded and increased civil and criminal penalties available
for use by the federal regulatory agencies against depository institutions and
certain "institution-affiliated parties." Institution-affiliated parties
primarily include management, employees, and agents of a financial institution,
as well as independent contractors and consultants such as attorneys and
accountants and others who participate in the conduct of the financial
institution's affairs. These practices can include the failure of an institution
to timely file required reports or the filing of false or misleading information
or the submission of inaccurate reports. Civil penalties may be as high as
$1,000,000 a day for such violations. Criminal penalties for some financial
institution crimes have been increased to twenty years. In addition, regulators
are provided with greater flexibility to commence enforcement actions against
institutions and institution-affiliated parties. Possible enforcement actions
include the termination of deposit insurance. Furthermore, banking agencies'
power to issue cease-and-desist orders were expanded. Such orders may, among
other things, require affirmative action to correct any harm resulting from a
violation or practice, including restitution, reimbursement, indemnifications or
guarantees against loss. A financial institution may also be ordered to restrict
its growth, dispose of certain assets, rescind agreements or contracts, or take
other actions as determined by the ordering agency to be appropriate.

Recent Legislative Developments. From time to time, various bills are
introduced in the United States Congress with respect to the regulation of
financial institutions. Some of these proposals, if adopted, could significantly
change the regulation of banks and the financial services industry. The Company
cannot predict whether any of these proposals will be adopted or, if adopted,
what effect these would have.

Effect of Governmental Monetary Policies. Our earnings are affected by
domestic economic conditions and the monetary and fiscal policies of the United
States government and its agencies. The Federal Reserve Bank's monetary policies
have had, and are likely to continue to have, an important impact on the
operating results of commercial banks through its power to implement national
monetary policy in order, among other things, to curb inflation or combat a
recession. The monetary policies of the Federal Reserve Board have major effects
upon the levels of bank loans, investments and deposits through its open market
operations in United States government securities and through its regulation of
the discount rate on borrowings of member banks and the reserve requirements
against member bank deposits. It is not possible to predict the nature or impact
of future changes in monetary and fiscal policies.

MANAGEMENT

GENERAL

The following table sets forth the number and percentage of outstanding
shares of common stock beneficially owned as of the date of this prospectus by
all officers and directors of Security Bancshares. This table also reflects the
anticipated purchases by these officers and directors in the offering. No
shareholders owns more than 10 percent of any class of the stock of Security
Bancshares. Information relating to the beneficial ownership of common stock is
based upon "beneficial ownership" concepts set forth in rules of the SEC under
Section 13(d) of the Securities Exchange Act of 1934. Under these rules a person
is deemed to be a "beneficial owner" of a security if that person has or shares
"voting power," which includes the power to vote or direct the voting of each
security, or "investment power," which includes the power to dispose or to
direct the disposition of such security. A person is also deemed to be a
beneficial owner of any security of which that person has the right to acquire
beneficial ownership within 60 days, including, without limitation, shares of
common stock subject to currently exercisable options. Under the rules, more
than one person may be deemed to be a beneficial owner of the same securities,
and a person may be deemed to be a beneficial owner of securities as to which he
has no beneficial interest. For instance, beneficial ownership includes spouses,
minor children, and other relatives residing in the same household, and trusts,
partnerships, corporations or deferred compensation plans which are affiliated
with the principal.

23
<PAGE>
<TABLE>
<CAPTION>

SHARES BENEFICIALLY OWNED SHARES ANTICIPATED TO BE OWNED
PRIOR TO THE OFFERING FOLLOWING THE OFFERING*
------------------------- --------------------------------------
PERCENTAGE PERCENTAGE
OF MINIMUM OF MAXIMUM
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER PERCENTAGE NUMBER OFFERING OFFERING
------------------------------------ ------ ---------- ------ -------------- -----------
<S> <C> <C> <C> <C> <C>
Marvin Boyd -- -- 5,000 0.9 0.5
110 South Port Road, #31
Spartanburg, SC 29306

Gregory Fielder 1 6.7 5,001 0.9 0.5
160 Washington Street
Laurens, SC 29360

Clente Flemming -- -- 2,500 0.5
4949 Two Notch Road, Suite 111
Columbia, SC 29204

Fred D. Garrett, Sr. 1 6.7 10,001 1.8 1.0
701 Jacob Road
P.O. Box 9051
Greenville, Sc 29604

Leon C. Rector, Jr. -- -- 750 0.1 0.1
104 North Dantzler Road
Duncan, SC 29334

James W. Sanders, Sr. -- -- 2,500 0.5 0.3
1909 West Buford Street
Gaffney, SC 29342

Albert V. Smith -- -- 5,000 0.9 0.5
103 Plantation Drive
Moore, SC 29609

Donald R. Smith 1 6.7 5,001 0.9 0.5
211 A. Buist Avenue
Greenville, SC 29609

Clinton J. Thompson 1 6.7 5,001 0.9 0.5
218 Silver Creek Road
Greer, SC 29650

William B. Whitney -- -- 5,000 0.9 0.5
9 Partridge Drive
Greenville, SC 29609

John R. Williams 1 6.7 5,001 0.9 0.5
8131 Richard Street
Columbia, SC 29209

Officers and directors as a group 5 33.3 50,755 9.2 5.2
<FN>
* For all shares anticipated to be purchased in the Offering by listed
individuals, the relevant individual has indicated his or her intention to
purchase the shares but is not obligated in any way to purchase them.
</FN>
</TABLE>

EXECUTIVE OFFICERS AND DIRECTORS OF SECURITY BANCSHARES

The following sets forth certain information about executive officers
and directors. Security Bancshares' articles of incorporation provide for a
classified board of directors if there are more than six directors, in which
case, as nearly as possible, one-third of the directors are elected each year to
serve three-year terms. The terms of office of the classes of directors expire
as follows: Class II at the 2001 annual meeting of shareholders, Class III at
the 2002 annual meeting of shareholders and Class I at the 2003 annual meeting
of shareholders,. Executive officers serve at the discretion of the board of
directors.

24
<PAGE>
NAME AGE POSITION WITH SECURITY BANCSHARES
---- --- ---------------------------------

Marvin Boyd 48 President, CEO and Director

Gregory Fielder 46 Director

Clente Fleming 50 Director

Fred D. Garrett, Sr. 75 Director

Leon C. Rector, Jr. 64 Director

James W. Sanders, Sr. 70 Director

Albert V. Smith 54 Director

Donald R. Smith 51 Director

Clinton J. Thompson 51 Director

William B. Whitney 61 Director

John R. Williams 63 Director

Marvin Boyd has been President, CEO and Director of Security Bancshares and
the Bank since August 1999. From 1994 to 1999, he was the CEO of the Gulf
Federal Bank FSB in Mobile, Alabama, a $22 million savings and loan association.
Before that, he served as an examiner with the Federal Reserve Bank of Atlanta
from 1978 to 1988.

Gregory Fielder has served as Director since 1997. He is the founder and
has been the President of #1 C.U.T.S., a barber college, since 1991.

Clente Flemming has served as Director since November 2000. He is President
of The Flemming Group, a human resources management, consulting and employment
agency. Prior to January 2000, he was Senior Vice President of Bank of America
from 1970 through 1999.

Fred D. Garrett, Sr., a Director since 1998, has served as the President of
Watkins, Garrett & Woods Mortuary, Inc., since 1960.

Leon C. Rector, Jr., a Director since 1999, has served as Pastor with the
Harrison Grove Baptist Church in Roebuck, South Carolina, since 1971.

James W. Sanders, Sr., a Director since March 2000, has served as Pastor
for the Bethel Baptist Church in Gaffney, South Carolina, for over 50 years,
and has also served as Pastor at the Island Creek Baptist Church in Cowpens,
South Carolina for the past 28 years.

Albert V. Smith, a Director since March 2000, has been the owner of the
Albert V. Smith, P.A. legal practice since 1980. He is also a partner in two
real estate investment companies, Magnolia Association and Trey Enterprise.

Donald R. Smith, a Director since 1999, has been the minister and CEO of
the Lighthouse Ministries in Greenville, South Carolina since 1996. He has also
operated a distributorship with Maxxis Group, a consulting group, since 1996.

Clinton J. Thompson, a Director since 1997, has served as Human Resource
Director with WCRSA, a waste water treatment company, since 1986. Mr. Thompson
previously served as finance director of the City of Greenville, from 1979 to
1985.

William B. Whitney, a Director since March 2000, has been the
President/CEO of The Urban League of the Upstate since 1988. He is also the
owner for over 21 years of the Whitney Corporation and Whitney Place, an
assisted living center, and has served as president of The GUL Senior Housing
Corporation and The GUL Community Housing Corporation, an assisted living
center, since 1992.

25
<PAGE>
John R. Williams, a Director since 1997, has been the Owner/Operator
for 20 years of Tax Associates, a tax preparation and accounting company in
Columbia, South Carolina.

EMPLOYMENT AGREEMENTS AND EXECUTIVE COMPENSATION

Security Bancshares entered into a three-year employment agreement in
February 2000 with Marvin Boyd pursuant to which Mr. Boyd serves as President
and Chief Executive Officer. Pursuant to the agreement, Security Bancshares
agrees to nominate Mr. Boyd to serve as a director. Mr. Boyd's compensation
includes a base salary of $75,000, to be increased a minimum of 7% per year. Mr.
Boyd may also be entitled to bonus payments based on a proportion of Security
Bancshares' income and depending on its ratio of nonperforming assets to total
loans and its CAMELS rating. In addition, the agreement provides that Mr. Boyd
will receive a $400 monthly car allowance, a $300,000 life insurance policy
(with a beneficiary chosen by Mr. Boyd), all welfare and benefit plans
applicable to executive officers.

The agreement between Security Bancshares and Mr. Boyd terminates upon
mutual agreement, by Mr. Boyd upon 180 days' notice, by Security Bancshares for
"Cause", or upon Mr. Boyd's death or disability (as defined in the agreement).
"Cause" includes Mr. Boyd's failure to perform his job up to standards
reasonably established by the Board of Directors, fraud, gross negligence,
dereliction of duty, intentional misconduct or damage to the property or
business of Security Bancshares, or commission of a felony, or the failure of
applicable regulatory authorities to confirm Mr. Boyd's position or issuance of
a directive prohibiting him from serving as President or Chief Executive
Officer.

Although there are no currently outstanding options, warrants or rights
to purchase securities of Security Bancshares held by any of its officers or
directors, Mr. Boyd's employment agreement provides for the grant of 30,000
options in respect of common stock with an exercise price of $10.00 per share
upon completion of this Offering. 10,000 of these options will vest on the first
anniversary of the grant date, 10,000 will vest on the second anniversary and
10,000 will vest on the third anniversary. However, some or all of the options
are subject to cancellation and reclamation rights if Security Bancshares does
not meet specified performance targets.

DIRECTOR COMPENSATION

Directors (including advisory directors) currently receive no compensation
for their service and will continue to receive no compensation until the Bank
becomes profitable, if ever. After the Bank becomes profitable and if the board
believes it is prudent to do so, directors may receive compensation for their
services in the form of customary fees for director's meetings which may be paid
in cash or stock, although no plans have been adopted at this time.

INTERESTS OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS

The Bank expects to have banking and other transactions in the ordinary
course of business with the organizers, directors, and officers and their
affiliates, including members of their families or corporations, partnerships,
or other organizations in which such organizers, officers, or directors have a
controlling interest, on substantially the same terms, including price, or
interest rates and collateral, as those prevailing at the time for comparable
transactions with unrelated parties. Such transactions are not expected to
involve more than the normal risk of collectibility nor present other
unfavorable features. Loans to individual directors and officers must also
comply with the Bank's lending policies and statutory lending limits, and
directors with a personal interest in any loan application will be excluded from
the consideration of such loan application. The Bank intends for all of its
transactions with organizers or other affiliates to be on terms no less
favorable than could be obtained from an unaffiliated third party and to be
approved by a majority of our disinterested directors.

26
<PAGE>
EXCULPATION AND INDEMNIFICATION

Security Bancshares' articles of incorporation contain a provision
which, subject to certain limited exceptions, limits the liability of a director
for any breach of duty as a director. There is no limitation of liability for:

o a breach of the director's duty of loyalty to the corporation or its
shareholders;
o an act or omission not in good faith or which involves gross
negligence, intentional misconduct or a knowing violation of law;
o any payments of a dividend or any other type of distribution that is
illegal under Section 33-8-330 of the South Carolina Business
Corporation Act of 1988; or
o any transaction from which the director derives an improper personal
benefit;

Security Bancshares' articles and bylaws contain certain provisions
which provide indemnification to directors that is broader than the protection
expressly mandated in Sections 33-8-510 and 33-8-520 of the South Carolina
Business Corporation Act. To the extent that a director or officer has been
successful, on the merits or otherwise, in the defense of any action or
proceeding brought by reason of the fact that such person was a director or
officer, Sections 33-8-510 and 33-8-520 of such act would require Security
Bancshares to indemnify such persons against expenses, including attorney's
fees, actually and reasonably incurred in connection therewith. The South
Carolina Business Corporation Act expressly allows Security Bancshares to
provide for greater indemnification rights to its officers and directors,
subject to shareholder approval, which the company obtained prior to this
offering.

Our board of directors also has the authority to extend to officers,
employees, and agents the same indemnification rights held by directors, subject
to all of the accompanying conditions and obligations. The board of directors
intends to extend indemnification rights to all of its executive officers. The
SEC has advised us that it believes indemnification of directors and officers
for liabilities arising under the Securities Act of 1933 is against public
policy and therefore unenforceable.

DESCRIPTION OF CAPITAL STOCK OF SECURITY BANCSHARES

GENERAL

The authorized capital stock of Security Bancshares consists of
3,000,000 shares of common stock, par value $0.01 per share, and 200,000 shares
of "blank check" preferred stock. The following summary describes the material
terms of Security Bancshares' capital stock.

COMMON STOCK

Holders of shares of the common stock are entitled to receive such
dividends as may from time to time be declared by the board of directors out of
funds legally available therefor. The Company does not plan to declare any
dividends in the immediate future. See "Dividend Policy." Holders of common
stock are entitled to one vote per share on all matters on which the holders of
common stock are entitled to vote and do not have any cumulative voting rights.
Shareholders have no preemptive, conversion, redemption or sinking fund rights.
In the event of a liquidation, dissolution or winding-up of the company, holders
of common stock are entitled to share equally and ratably in the assets of the
company, if any, remaining after the payment of all debts and liabilities of the
company and the liquidation preference of any outstanding preferred stock. The
outstanding shares of common stock are, and the shares of common stock offered
by the company hereby when issued will be, fully paid and nonassessable. The
rights, preferences and privileges of holders of common stock are subject to any
classes or series of preferred stock that the company may issue in the future.

27
<PAGE>
PREFERRED STOCK

Security Bancshares' articles of incorporation provide that the board of
directors is authorized, without further action by the holders of the common
stock, to provide for the issuance of up to 200,000 shares of preferred stock in
one or more classes or series and to fix the designations, powers, preferences,
and relative, participating, optional and other rights, qualifications,
limitations, and restrictions thereof, including the dividend rate, conversion
rights, voting rights, redemption price, and liquidation preference, and to fix
the number of shares to be included in any such classes or series. Any preferred
stock so issued may rank senior to the common stock with respect to the payment
of dividends or amounts upon liquidation, dissolution or winding-up, or both. In
addition, any such shares of preferred stock may have class or series voting
rights. Upon completion of this offering, the Company will not have any shares
of preferred stock outstanding. Issuances of preferred stock, while providing
the company with flexibility in connection with general corporate purposes, may,
among other things, have an adverse effect on the rights of holders of common
stock (for example, the issuance of any preferred stock with voting or
conversion rights may adversely affect the voting power of the holders of common
stock), and in certain circumstances such issuances could have the effect of
decreasing the market price of the common stock. The Company does not have any
current plans to issue any shares of preferred stock.

ANTITAKEOVER EFFECTS

The provisions of the articles, the bylaws, and South Carolina law
summarized in the following paragraphs may have antitakeover effects and may
delay, defer, or prevent a tender offer or takeover attempt that a shareholder
might consider to be in such shareholder's best interest, including those
attempts that might result in a premium over the market price for the shares
held by shareholders, and may make removal of management more difficult.

Authorized but Unissued Stock. The authorized but unissued shares of
common stock and preferred stock will be available for future issuance without
shareholder approval. These additional shares may be used for a variety of
corporate purposes, including future public offerings to raise additional
capital, corporate acquisitions, and employee benefit plans. The existence of
authorized but unissued and unreserved shares of common stock and preferred
stock may enable the board of directors to issue shares to persons friendly to
current management, which could render more difficult or discourage any attempt
to obtain control of Security Bancshares by means of a proxy contest, tender
offer, merger or otherwise, and thereby protect the continuity of the company's
management.

Number of Directors. The bylaws provide that the number of directors
shall be fixed from time to time by action of the board or shareholders at a
board meeting or annual shareholders meeting. Currently, there are 11 directors.

Classified Board of Directors. The articles of incorporation provide
that, if the board of directors consists of six or more members, then the board
of directors is divided into three classes of directors serving staggered
three-year terms. As a result, approximately one-third of the board of directors
will be elected at each annual meeting of shareholders. The classification of
directors, together with the provisions in the articles and bylaws described
below that limit the ability of shareholders to remove directors and that permit
the remaining directors to fill any vacancies on the board of directors, will
have the effect of making it more difficult for shareholders to change the
composition of the board of directors. As a result, at least two annual meetings
of shareholders may be required for the shareholders to change a majority of the
directors, whether or not a change in the board of directors would be beneficial
and whether or not a majority of shareholders believe that such a change would
be desirable.

Removal of Directors and Filling Vacancies. The bylaws provide that all
vacancies on the board of directors, including those resulting from an increase
in the number of directors, may be filled by a majority of the remaining
directors, even if they do not constitute a quorum. When one or more directors
resign from the board of directors effective at a future date, a majority of
directors then in office, including the directors who are to resign, may vote on
filling the vacancy.

28
<PAGE>
Advance Notice Requirements for Shareholder Proposals and Director
Nominations. The bylaws establish advance notice procedures with regard to
shareholder proposals and the nomination, other than by or at the direction of
the board of directors or a committee thereof, of candidates for election as
directors. These procedures provide that the notice of shareholder proposals and
shareholder nominations for the election of directors at any meeting of
shareholders must be in writing and be received by the company not later than 90
days prior to the meeting. The Company may reject a shareholder proposal or
nomination that is not made in accordance with such procedures.

Nomination Requirements. Pursuant to the bylaws, the Company has
established certain nomination requirements for an individual to be elected as a
director, including that the nominating party provide (i) notice that such party
intends to nominate the proposed director; (ii) the name of and certain
biographical information on the nominee; and (iii) a statement that the nominee
has consented to the nomination. The chairman of any shareholders' meeting may,
for good cause shown, waive the operation of these provisions. These provisions
could reduce the likelihood that a third party would nominate and elect
individuals to serve on the board of directors.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this offering, the Company will have a minimum of
550,000 and a maximum of 1,000,000 shares of common stock outstanding. The
shares sold in this offering will be freely tradable, without restriction or
registration under the Securities Act of 1933, except for shares purchased by
"affiliates" of Security Bancshares, which will be subject to resale
restrictions under the Securities Act of 1933. An affiliate of the issuer is
defined in Rule 144 under the Securities Act of 1933 as a person that directly
or indirectly, through one or more intermediaries, controls, is controlled by,
or is under common control with the issuer. Rule 405 under the Securities Act of
1933 defines the term "control" to mean the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of the
person whether through the ownership of voting securities, by contract or
otherwise. Directors will likely be deemed to be affiliates. These securities
held by affiliates may be sold without registration in accordance with the
provisions of Rule 144 or another exemption from registration.

In general, under Rule 144, an affiliate of the company or a person
holding restricted shares may sell, within any three-month period, a number of
shares no greater than 1% of the then outstanding shares of the common stock or
the average weekly trading volume of the common stock during the four calendar
weeks preceding the sale, whichever is greater. Rule 144 also requires that the
securities must be sold in "brokers' transactions," as defined in the Securities
Act of 1933, and the person selling the securities may not solicit orders or
make any payment in connection with the offer or sale of securities to any
person other than the broker who executes the order to sell the securities. This
requirement may make the sale of the common stock by affiliates of Security
Bancshares pursuant to Rule 144 difficult if no trading market develops in the
common stock. Rule 144 also requires persons holding restricted securities to
hold the shares for at least one year prior to sale.

LEGAL MATTERS

The validity of the common stock offered hereby will be passed upon
by Wyche, Burgess, Freeman & Parham, P.A., Greenville, South Carolina.

EXPERTS

Security Bancshares' financial statements dated September 30, 2000 have
been audited by Elliott, Davis & Company, L.L.P., as stated in their report
appearing elsewhere herein, and have been so included in reliance on the report
of such firm given upon their authority as an expert in accounting and auditing.

29
<PAGE>
ADDITIONAL INFORMATION

The Company has filed a registration statement on Form SB-1 with the
SEC, under the Securities Act of 1933 and the rules and regulations thereunder.
This prospectus forms a part of the registration statement and does not contain
all of the information set forth in the registration statement. For further
information with respect to Security Bancshares, Security National Bank, and the
common stock, you should refer to the registration statement and its exhibits.

You can examine and obtain copies of the registration statement at the
Public Reference Section of the SEC, Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549. The SEC also maintains a Web site at http://www.sec.gov
that contains all of the reports, proxy and information statements and other
information regarding registrants that file electronically with the SEC using
the EDGAR filing system, including Security Bancshares.

The Company has filed or will file various applications with the Office
of the Comptroller of the Currency, the Federal Reserve Board, the South
Carolina State Board of Financial Institutions and the FDIC. You should rely
only on information in this prospectus and in our related registration statement
in making an investment decision. If other available information is inconsistent
with information in this prospectus, including information in public files or
provided by the Office of the Comptroller of the Currency, the Federal Reserve
Board, the South Carolina State Board of Financial Institutions and the FDIC,
such other information is superseded by the information in this prospectus.
Projections appearing in the applications to such agencies were based on
assumptions that the organizers believed were reasonable at the time, but which
may have changed or otherwise be wrong. Security Bancshares and Security
National Bank specifically disclaim all projections for purposes of this
prospectus and caution prospective investors against placing reliance on them
for purposes of making an investment decision. Statements contained in this
prospectus regarding the contents of any contract or other document referred to
are not necessarily complete. If such contract or document is an exhibit to the
registration statement, you may obtain and read such document or contract for
more information.

30
<PAGE>

1,000,000 SHARES
COMMON STOCK

SECURITY BANCSHARES, INC.
A Holding Company For

[INSERT COMPANY LOGO]

Security National Bank

December 14, 2000

<PAGE>

PART II

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Item 24. Indemnification of Directors and Officers

Security Bancshares' articles of incorporation contain a provision
which, subject to certain limited exceptions, limits the liability of a director
to Security Bancshares or its shareholders for any breach of duty as a director.
There is no limitation of liability for: a breach of the director's duty of
loyalty to shareholders or the corporation, an act or omission not in good faith
or which involves gross negligence, intentional misconduct or a knowing
violation of law; any transaction from which the director derives an improper
personal benefit; or any payments of a dividend or any other type of
distribution that is illegal under Section 33-8-330 of the South Carolina
Business Corporation Act of 1988 (the "Corporation Act"). The provision does not
limit the right of Security Bancshares or its shareholders to seek injunctive or
other equitable relief not involving payments in the nature of monetary damages.

Security Bancshares' articles and bylaws contain certain provisions
which provide indemnification to directors that is broader than the protection
expressly mandated in Sections 33-8-510 and 33-8-520 of the Corporation Act. To
the extent that a director or officer has been successful, on the merits or
otherwise, in the defense of any action or proceeding brought by reason of the
fact that such person was a director or officer, Sections 33-8-510 and 33-8-520
of the Corporation Act would require Security Bancshares to indemnify such
persons against expenses (including attorney's fees) actually and reasonably
incurred in connection therewith. The Securities Act expressly allows Security
Bancshares to provide for greater indemnification rights to its officers and
directors, subject to shareholder approval.

Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons to
the articles of incorporation or bylaws, or otherwise, the Company has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.

The board of directors also has the authority to extend to officers,
employees and agents the same indemnification rights held by directors, subject
to all of the accompanying conditions and obligations. The board of directors
has extended or intends to extend indemnification rights to all of its executive
officers.

The Company has the power to purchase and maintain insurance on behalf
of any person who is or was a director, officer, employee or agent against any
liability asserted against him or incurred by him in any such capacity, whether
or not it would have the power to indemnify him against such liability under the
bylaws.

Item 25. Other Expenses of Issuance and Distribution.

Estimated expenses (other than underwriting commissions) at September
30, 2000 of the sale of the shares of common stock are as follows:

Registration Fee $ 2,640
Printing and Engraving 5,000
Legal Fees and Expenses 20,000
Accounting Fees 5,000
Blue Sky Fees and Expenses 5,000
Miscellaneous Disbursements 5,000

TOTAL $ 42,640

These estimates may change as the offering continues.

II-1
<PAGE>
Item 26. Recent Sales of Unregistered Securities.

From inception, Security Bancshares has issued a total of 15 shares of
its common stock to its organizers. The price per share was $10.00 for a total
purchase price of $150. There were no underwriting discounts or commissions paid
with respect to these transactions. All purchasers represented their intention
to acquire the securities for investment purposes only, and not for resale or
distribution. All purchasers were founders of the company and have adequate
access to information regarding Security Bancshares. All sales were completed
prior to the filing of this registration statement and were exempt under Section
4(2) of the Securities Act of 1933.

Item 27. Exhibits.

Exhibit
3.1 -- Articles of Incorporation.
3.2 -- Bylaws
4.1 -- Specimen Security Bancshares Common Stock certificate.*
5.1 -- Opinion of Wyche, Burgess, Freeman & Parham, P.A. regarding legality of
shares of the Security Bancshares, Inc.*
10.1-- Employment Agreement between Security Bancshares, Inc. and Marvin Boyd
23.1- Consent of Elliott, Davis & Company, L.L.P.
23.2- Consent of Wyche, Burgess, Freeman & Parham, P.A.: Contained in Exhibit
5.1.*
24.1- The Power of Attorney: Contained on the signature page of the initial
filing of this Registration Statement.
27.1- Financial Data Schedule.

* To be filed by amendment at a later date.

Item 28. Undertakings.

The undersigned Company will:

(a)(1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:

(i) Include any prospectus required by Section 10(a)(3) of the Securities
Act of 1933;

(ii) Reflect in the prospectus any facts or events which, individually or
together, represent a fundamental change in the information in the
registration statement; and

(iii) Include any additional or changed material information on the plan of
distribution.

(2) For determining liability under the Securities Act of 1933, treat
each post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.

(3) File a post-effective amendment to remove from registration any of
the securities that remain unsold at the end of the offering.

(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers and
controlling persons of Security Bancshares pursuant to the provisions described
in Item 24 above, or otherwise, Security Bancshares has been advised that in the
opinion of the SEC such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable.

If a claim for indemnification against such liabilities (other than the
payment by Security Bancshares of expenses incurred or paid by a director,
officer or controlling person of Security Bancshares in the successful defense
of any action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered, Security

II-2
<PAGE>
Bancshares will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act of 1933 and will be governed by the final
adjudication of such issue.

II-3
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act, the registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Greenville, State of
South Carolina, on December 14, 2000.

SECURITY BANCSHARES, INC.

By: /s/ Marvin Boyd
-------------------------------------------
Marvin Boyd

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Marvin Boyd and Clinton J. Thompson, and each of
them, as true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution for him or her and in his or her name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and to file the same,
with all annexes thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all which said attorneys-in-fact and
agents or any of them, or their or his or her substitute or substitutes, may
lawfully do, or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and as of the dates indicated:

Signature Title Date

/s/ Marvin Boyd President and Chief December 14, 2000
----------------------------- Executive Officer;
Marvin Boyd Director
(Principal Executive Officer)

/s/ Gregory Fielder Director December 14, 2000
-----------------------------
Gregory Fielder

----------------------------- Director
Clente Flemming

Director
-----------------------------
Fred D. Garrett, Sr.

Director
-----------------------------
Leon C. Rector, Jr.

Director
-----------------------------
James W. Sanders, Sr.

Director
-----------------------------
Albert V. Smith

/s/ Donald R. Smith Director December 14, 2000
-----------------------------
Donald R. Smith

II-4
<PAGE>

/s/ Clinton J. Thompson Treasurer, Director December 14, 2000
----------------------------- (Principal Financial
Clinton J. Thompson Officer)

/s/ William B. Whitney Director December 14, 2000
-----------------------------
William B. Whitney

/s/ John R. Williams Director December 14, 2000
-----------------------------
John R. Williams

II-5
<PAGE>

EXHIBIT INDEX

3.1 -- Articles of Incorporation.
3.2 -- Bylaws
4.1 -- Specimen Security Bancshares Common Stock certificate.*
5.1 -- Opinion of Wyche, Burgess, Freeman & Parham, P.A. regarding legality of
shares of the Security Bancshares, Inc.*
10.1-- Employment Agreement between Security Bancshares, Inc. and Marvin Boyd
23.1-- Consent of Elliott, Davis & Company, L.L.P.
23.2-- Consent of Wyche, Burgess, Freeman & Parham, P.A.: Contained in Exhibit
5.1.*
24.1-- The Power of Attorney: Contained on the signature page of the initial
filing of this Registration Statement.
27.1-- Financial Data Schedule.

* To be filed by amendment at a later date.

II-6

<PAGE>

SECURITY BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)

REPORT ON FINANCIAL STATEMENTS

FOR THE PERIOD FROM OCTOBER 9, 1997 (inception)
THROUGH SEPTEMBER 30, 2000

<PAGE>

SECURITY BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
SPARTANBURG, SOUTH CAROLINA

CONTENTS

Page

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS F-2

FINANCIAL STATEMENTS
Balance sheet F-3
Statement of operations F-4
Statement of changes in shareholders' deficit F-5
Statement of cash flows F-6

NOTES TO FINANCIAL STATEMENTS F-7 and F-8

F-1

<PAGE>

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Directors
Security Bancshares, Inc.
Spartanburg, South Carolina

We have audited the accompanying balance sheet of Security Bancshares, Inc.
(a development stage enterprise) as of September 30, 2000 and the related
statements of operations, changes in shareholders' deficit and cash flows for
the period from October 9, 1997 (inception) through September 30, 2000. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Security Bancshares, Inc. (a
development stage enterprise) as of September 30, 2000 and the results of its
operations and its cash flows for the period from October 9, 1997 through
September 30, 2000 in conformity with generally accepted accounting principles.

October 11, 2000

F-2
<PAGE>

SECURITY BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
SEPTEMBER 30, 2000

ASSETS

ASSETS
Cash and cash equivalents $ 1,233
Deferred stock offering costs 15,000
-----------
Total assets $ 16,233
===========

LIABILITIES AND SHAREHOLDERS' DEFICIT

LIABILITIES
Line of credit $ 254,321
Interest 2,000
Salaries 2,163
Payroll taxes 2,004
-----------
Total liabilities 260,488
-----------

COMMITMENTS AND CONTINGENCIES - Note 3

SHAREHOLDERS' DEFICIT
Preferred stock, 200,000 shares authorized, none issued -
Common stock, par value $.01 per share, 3,000,000 shares
authorized, 15 shares issued -
Additional paid-in capital 22,000
Retained deficit accumulated during the development stage (266,255)
-----------
Total shareholders' deficit (244,255)
-----------
Total liabilities and shareholders' deficit $ 16,233
===========

The accompanying notes are an integral part of this financial statement.

F-3

<PAGE>

SECURITY BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
For the period from October 9, 1997 (inception)
through September 30, 2000

EXPENSES
Consulting fees $ 166,433
Salariesand payroll taxes 53,523
Interest 25,047
Travel 4,420
Occupancy 4,021
Other 12,811
---------------
Total expenses and loss from pre-operating activities $ (266,255)
===============

The accompanying notes are an integral part of this financial statement.

F-4

SECURITY BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT
FOR THE PERIOD FROM OCTOBER 9, 1997 (INCEPTION)
THROUGH SEPTEMBER 30, 2000

RETAINED
DEFICIT
ACCUMULATED
ADDITIONAL DURING THE TOTAL
COMMON STOCK PAID-IN DEVELOPMENT SHAREHOLDERS'
SHARES AMOUNT CAPITAL STAGE DEFICIT
------ ------ ----------- ------------ -------------
<S> <C> <C> <C> <C> <C>

Proceeds from the sale of stock to
shareholders and contributions by
organizers 15 $ - $ 22,000 $ - $ 22,000

Loss from pre-operating activities - - - (266,255) (266,255)
----- -------- ----------- ------------- -------------

Balance, September 30, 2000 15 $ - $ 22,000 $ (266,255) $ (244,255)
===== ======== =========== ============= =============

</TABLE>

The accompanying notes are an integral part of this financial statement.

F-5

<PAGE>

SECURITY BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
For the period from October 9, 1997 (inception)
through September 30, 2000

NET CASH USED FOR PRE-OPERATING ACTIVITIES
Net loss $ (266,255)
Deferred stock offering costs (15,000)
Interest payable 2,000
Salaries payable 2,163
Taxes payable 2,004
---------------
Net cash used for pre-operating activities (275,088)
---------------

FINANCING ACTIVITIES
Proceeds from borrowings on line of credit 254,321
Proceeds from sale of stock 22,000
---------------
Net cash provided by financing activities 276,321
---------------
Net increase in cash 1,233

CASH AND CASH EQUIVALENTS, OCTOBER 9, 1997 (inception) -
---------------

CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,233
===============

The accompanying notes are an integral part of this financial statement.

F-6

<PAGE>

SECURITY BANCSHARES, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND ACTIVITIES

Security Bancshares, Inc. (the "Company") is a South Carolina corporation
organized for the purpose of owning and controlling all of the capital stock of
Security National Bank (in organization) (the "Bank"). The Bank is being
organized as a national bank under the laws of the United States with the
purpose of becoming a new bank to be located in Spartanburg County, South
Carolina. The Company has filed a charter application with the Office of the
Comptroller of the Currency ("OCC") and an application for deposit insurance
with the Federal Deposit Insurance Corporation ("FDIC"). Provided that the
applications are timely approved and the necessary capital is raised, it is
expected that banking operations will commence in the third quarter of 2001.

The Company is a development stage enterprise as defined by Statement of
Financial Accounting Standards (SFAS) No. 7, "Accounting and Reporting by
Development Stage Enterprises", as it devotes substantially all its efforts to
establishing a new business. The Company's planned principal operations have not
commenced and revenue has not been recognized from the planned principal
operations.

The Company intends to sell a minimum of 550,000 shares and up to a maximum
of 1,000,000 shares of its common stock at $10 per share. The offering will
raise between $5,500,000 (minimum) and $10,000,000 (maximum) net of estimated
underwriting discounts and commissions and offering expenses. The directors and
executive officers of the Company plan to purchase 48,250 shares of common stock
at $10 per share, for a total of $482,500. The organizers of the Company will be
refunded initial contributions totaling $22,000.

YEAR-END
The Company has adopted December 31 as its fiscal year end, effective for
the period ending December 31, 2000. A minimal amount of organizational
transactions occurring prior to the Company's incorporation have been
combined in these financial statements for ease of presentation.

CASH EQUIVALENTS
The Company considers all highly liquid investments with original
maturities of three months or less to be cash equivalents.

DEFERRED STOCK OFFERING COSTS
Deferred stock offering costs are expenses incurred by the Company in
connection with the offering and issuance of its stock. The deferred stock
offering costs will be deducted from the Company's additional paid-in
capital after the stock offering. If the stock offering is deemed
unsuccessful, all deferred stock offering costs will be charged to
operations during the period in which the offering is deemed unsuccessful.

ORGANIZATION COSTS
Organization costs include incorporation, legal and consulting fees
incurred in connection with establishing the Company. In accordance with
Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up
Activities," organization costs are expensed when incurred.

INCOME TAXES
At September 30, 2000, no taxable income has been generated and therefore,
no tax provision has been included in these financial statements. A net
operating loss of $266,255 is available for carryforward to offset future
taxable income.

F-7
<PAGE>
NOTE 2 - LINE OF CREDIT
-----------------------

The Company has established a $350,000 line of credit with a bank to fund
operating expenses of the Company during the development stage. The line is
uncollateralized and is guaranteed by the organizers. The line bears interest at
the prime rate plus .5 percent and expires February 5, 2001. As of September 30,
2000, $254,321 is outstanding on this line of credit.

NOTE 3 - COMMITMENTS AND CONTINGENCIES
--------------------------------------

The Company has engaged a law firm to assist in preparing and filing all
organizational, incorporation, and bank applications and to assist in preparing
stock offering documents and consummating the Company's initial offering. The
aggregate cost of the services is expected to approximate $40,000 of which
$9,000 has been expensed through September 30, 2000.

The Company has entered into a 12-month operating lease for a building to
serve as its first commercial bank office. The lease requires monthly payments
of approximately $2,500, beginning in January, 2001.

The Company engaged a bank consultant to assist in establishing the Bank
and bank holding company. The aggregate cost of the services was $47,000.

The Company has entered into an employment agreement with its president and
chief executive officer that includes a three year compensation term, annual
bonus, life insurance and stock options.

The Company has entered into an option to purchase land in downtown
Spartanburg. The option expires on January 27, 2001 and allows the Company to
purchase the property for $7,500. Future plans are to construct its main office
on this site.

F-8