SOUTH ALABAMA BANCORPORATION INC /DE/
S-4, 1999-07-02
NATIONAL COMMERCIAL BANKS
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As filed with the Securities and Exchange Commission on _____________, 1999
Registration No. 33-


                SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549
                       ____________________
                             Form S-4
                      REGISTRATION STATEMENT
                              Under
                    THE SECURITIES ACT OF 1933
                       ____________________
                SOUTH ALABAMA BANCORPORATION, INC.
      (Exact name of registrant as specified in its charter)

Alabama                              6712                 63-0909434
(State or other
jurisdiction         (Primary Standard Industrial         (I.R.S. Employer
of incorporation      Classification Code Number)         Identification No.)
or organization)
                       ____________________

                     100 Saint Joseph Street
                          P. O. Box 3067
                      Mobile, Alabama  36652
                          (334) 431-7800
(Address, including zip code, and telephone number of registrant's principal
executive office)
                       ____________________

                        F. MICHAEL JOHNSON
              Secretary and Chief Financial Officer
                     100 Saint Joseph Street
                          P. O. Box 3067
                      Mobile, Alabama  36652
                          (334) 431-7800
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
                       ____________________

                            Copies to:

BROOKS P. MILLING
Hand Arendall, L.L.C.
3000 AmSouth Bank Bldg.
107 Saint Francis Street
Mobile, Alabama 36602
(334) 432-5511

HUGH C. NICKSON
Miller Hamilton Snider & Odom,
L.L.C.
One Commerce Street, Suite 305
Montgomery, Alabama    36104
(334) 834-5550



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

     If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box.  [ ]

     If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act 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, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ].................
<TABLE>

                 CALCULATION OF REGISTRATION FEE

<CAPTION>
                                              Proposed Maximum    Proposed Maximum    Amount of
Title of each class of         Amount to be   Offering Price per  Aggregate Offering  Registration
Securities to be registered    Registered(2)  Unit                Price(1)            Fee
<S>                            <C>            <C>                 <C>                 <C>
Common Stock (par value $0.01) 850,200 shares Not Applicable      $5,820,952          $1,618.22


 (1)  Determined pursuant to Rule 457(f)(2).
 (2)  Estimated solely for the purpose of calculating the registration fee.
      The number of shares is subject  to adjustment pursuant to the Merger
      Agreement, as described in the Registration Statement, and this
      Registration Statement covers such additional indeterminate number of
      shares.
</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 said Section 8(a), may determine.


                SWEET WATER STATE BANCSHARES, INC.
                         101 Main Street
                 Sweet Water, Alabama  36782-0128


                      ________________, 1999



Dear Shareholder:

     You are cordially invited to attend a special meeting of the
shareholders of Sweet Water State Bancshares, Inc., to be held at Sweet
Water's principal executive office, 101 Main Street, Sweet Water, Alabama, on
___________________, 1999, at ______ local time.

     At this important meeting, you will be asked to consider and vote upon
the approval of an Agreement and Plan of Merger, dated as of April 5, 1999
(the "Merger Agreement"), which provides for the merger of Sweet Water with
and into South Alabama Bancorporation, Inc. (the "Merger").   If the Merger
is consummated, outstanding shares of Sweet Water common stock will be
converted into the right to receive 14.17 shares of the common stock, par
value $.01, of South Alabama Bancorporation, Inc., subject to adjustment for
fluctuations in South Alabama's stock price. The accompanying Prospectus,
which also serves as a Proxy Statement, provides a detailed description of
the proposed Merger, including the proposed exchange ratio and the conditions
to consummation of the Merger.

     The affirmative vote of the holders of at least two-thirds of the shares
of Sweet Water's common stock entitled to vote at the special meeting is
required for approval of the Merger Agreement.  Accordingly, your vote is
important, no matter how large or how small your holdings are.

     Enclosed are the Notice of Special Meeting, Prospectus and proxy for the
Special Meeting, together with copies of the South Alabama Bancorporation,
Inc. 1998 Annual Report to Shareholders and 1999 First Quarter Report on Form
10-Q.  Please give this information your careful attention.

     The Board of Directors of Sweet Water has carefully reviewed and
considered the terms and conditions of the proposed Merger Agreement and has
received an opinion from its financial advisor, Alex Sheshunoff & Co.
Investment Banking, that the Merger is fair to the Sweet Water shareholders
from a financial point of view.  The Board of Directors has unanimously
approved the Merger Agreement and unanimously recommends that you vote FOR
approval of the Merger Agreement.

     In view of the importance of the action to be taken, we urge you to
complete, sign and date the enclosed proxy and to return it promptly in the
enclosed envelope, whether or not you plan to attend the Special Meeting.
Sending in your proxy now will not interfere with your rights to attend the
Special Meeting or to vote your shares personally at the Special Meeting if
you wish to do so.

                              Sincerely,

                      SWEET WATER STATE BANCSHARES, INC.
                                101Main Street
                       Sweet Water, Alabama  36782-0128
                                 ____________

                  NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
                    TO BE HELD ON _________________, 1999
                              __________________

                                                               ________, 1999

To the Shareholders of Sweet Water State Bancshares, Inc.

     NOTICE IS HEREBY GIVEN that a special meeting of shareholders (the
"Special Meeting") of Sweet Water State Bancshares, Inc.  ("Sweet Water")
will be held at Sweet Water's principal executive office, 101 Main Street,
Sweet Water, Alabama, on _______, 1999, at ______ a.m. local time, for the
following purposes:

     1.   To consider and vote upon a proposal to approve the Agreement and
Plan of Merger dated as of April 5, 1999 (the "Merger Agreement"), by and
between Sweet Water and South Alabama Bancorporation, Inc. ("South Alabama"),
pursuant to which, among other matters (a) Sweet Water would be merged with
and into South Alabama and (b) each share of Sweet Water common stock will be
converted into the right to receive 14.17 shares of South Alabama common
stock, subject to adjustment for fluctuations in South Alabama's stock price,
as more fully described in the accompanying Prospectus (the "Prospectus"),
which also serves as a Proxy Statement. A copy of the Merger Agreement is set
forth in Appendix A to the Prospectus and is hereby incorporated by reference
herein.

     2.   To transact such other business as may properly come before the
Special Meeting or any adjournment thereof.

     Only shareholders of record at the close of business on _______, 1999
are entitled to receive notice of and to vote at the Special Meeting or any
adjournments thereof.  Approval of the Merger Agreement  requires the
affirmative vote of the holders of at least two-thirds of the shares of Sweet
Water Common Stock entitled to vote at the Special Meeting.

     THE BOARD OF DIRECTORS OF SWEET WATER UNANIMOUSLY RECOMMENDS THAT
SHAREHOLDERS VOTE FOR APPROVAL OF THE MERGER AGREEMENT.

     Each shareholder has the right to dissent from the Merger Agreement and
demand payment of the fair value of his or her shares if the Merger is
consummated.  The right of any shareholder to receive such payment is
contingent upon strict compliance with requirements of Article 13 of the
Alabama Business Corporation Act.  The full text of Article 13 is set forth
in Appendix D to the Prospectus and is incorporated herein by reference.  For
a summary of the requirements of Article 13, see "GENERAL INFORMATION
Dissenters' Rights" in the Prospectus.

                                        By order of the Board of Directors



                                        Stratton F. Lewis, Jr., Chairman


WE URGE YOU TO SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON.  IF YOU DO ATTEND
THE MEETING, YOU MAY THEN WITHDRAW YOUR PROXY IF YOU WISH.  THE PROXY MAY BE
REVOKED AT ANY TIME PRIOR TO ITS EXERCISE.


                        Proxy Statement of
                SWEET WATER STATE BANCSHARES, INC.
            For a Special Meeting of its Shareholders
                   to be Held ___________, 1999

         This Proxy Statement Includes the Prospectus of
                SOUTH ALABAMA BANCORPORATION, INC.
          Relating to up to _____ Shares of Common Stock
                    (par value $.01 per share)

     To Be Issued In Connection With The Proposed Merger of
               Sweet Water State Bancshares, Inc.
                          with and into
               South Alabama Bancorporation, Inc.

South Alabama Bancorporation, Inc. Common Stock is Quoted on the
Nasdaq Stock Market  Under the Symbol SABC.

     You should rely on the information contained in this document or
information that we have referred you to.  We have not authorized anyone to
provide you with information that is different.

     This document offers only the Common Stock identified on this page and
offers it only where it is legal to do so.

     The information in this document that we have referred you to is correct
as of the date of this document, as shown at the bottom of this page, but it
may not continue to be correct after that date.

     Sweet Water has provided all of the information about itself and its
subsidiary contained in this document.  South Alabama and its subsidiaries
are relying on the correctness of that information.

     South Alabama and its subsidiaries have provided all of the information
about South Alabama and its subsidiaries that is contained in this document
or that we have referred you to.  Sweet Water is relying on the correctness of
that information.

     The securities offered by this document (1) are not savings accounts or
bank deposits, (2) are not obligations of a bank or saving association, and
(3) are not insured by the Federal Deposit Insurance Corporation or any other
governmental agency.

     Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus.  Any representation to the contrary
is a criminal offense.


This Proxy Statement/Prospectus and the accompanying form of proxy are dated,
and are first being mailed to shareholders on or about,  ____________, 1999.
<TABLE>
<CAPTION>
                        TABLE OF CONTENTS
                                                                    Page


     <S>                                                              <C>
     INFORMATION REQUESTS  . . . . . . . . . . . . . . . . . . . . . .5

     A WARNING ABOUT FORWARD-LOOKING STATEMENTS  . . . . . . . . . . .5

     SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
           The Companies . . . . . . . . . . . . . . . . . . . . . . .6
           What Happens in The Merger. . . . . . . . . . . . . . . . .6
           What Sweet Water Shareholders will Receive in the Merger  .7
           Information about South Alabama and Sweet Water Common
            Stock                                                     7
           Why Your Approval is Requested; Special Meeting . . . . . .8
           Interests of Certain Persons in the Merger That May Be
            Different from Yours
           Recommendation of Sweet Water Board of Directors  . . . . .8
           Ownership of South Alabama After the Merger . . . . . . . .9
           Things That May Prevent the Merger from Happening . . . . .9
           Federal Income Tax Consequences . . . . . . . . . . . . . .9
           Accounting Treatment. . . . . . . . . . . . . . . . . . . 10
           Dissenter's Appraisal Rights  . . . . . . . . . . . . . . 10
           Differences in Rights of Sweet Water Shareholders . . . . 10
           Selected Consolidated Financial Data. . . . . . . . . . . 10
           Comparative Per Share Data. . . . . . . . . . . . . . . . 13
           Summary Capital Ratios. . . . . . . . . . . . . . . . . . 14

      GENERAL INFORMATION. . . . . . . . . . . . . . . . . . . . . . 15
           Special Meeting, Record Date and Vote Required. . . . . . 15
           Proxies . . . . . . . . . . . . . . . . . . . . . . . . . 15
           Dissenters' Rights. . . . . . . . . . . . . . . . . . . . 16
           Recommendation of Sweet Water Board of Directors. . . . . 17

      THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . 18
           Terms of the Merger; Exchange Ratio . . . . . . . . . . . 18
           Waiver and Amendment; Termination . . . . . . . . . . . . 18
           Opinion of Sweet Water's Financial Advisor. . . . . . . . 19
           Effective Date and Effective Time . . . . . . . . . . . . 22
           Background of and Reasons for the Merger. . . . . . . . . 22
           Surrender of Certificates . . . . . . . . . . . . . . . . 24
           Conditions to Consummation of the Merger. . . . . . . . . 25
           Regulatory Approvals. . . . . . . . . . . . . . . . . . . 25
           Conduct of Business Pending the Merger. . . . . . . . . . 26
           Commitments with Respect to Other Offers. . . . . . . . . 26
           Management and Operations After the Merger. . . . . . . . 27
           Interests of Certain Persons in the Merger. . . . . . . . 27
           Certain Federal Income Tax Consequences . . . . . . . . . 27
           Accounting Treatment. . . . . . . . . . . . . . . . . . . 28
           Expenses and Fees . . . . . . . . . . . . . . . . . . . . 28
           Resales of South Alabama Common Stock . . . . . . . . . . 28

      PRO FORMA FINANCIAL INFORMATION. . . . . . . . . . . . . . . . 28
      Pro Forma Combined Condensed Consolidated Statement of Condition 28
      Pro Forma Combined Condensed Consolidated Statements of Income 29

      COMPARATIVE MARKET PRICES AND DIVIDENDS. . . . . . . . . . . . 30
           Market Prices . . . . . . . . . . . . . . . . . . . . . . 30
           Dividends . . . . . . . . . . . . . . . . . . . . . . . . 31

      DESCRIPTION OF SOUTH ALABAMA CAPITAL STOCK . . . . . . . . . . 31

      EFFECT OF MERGER ON RIGHTS OF SHAREHOLDERS . . . . . . . . . . 32
           Required Shareholder Votes  . . . . . . . . . . . . . . . 32
           Action by Written Consent . . . . . . . . . . . . . . . . 33
           Amendment of Articles of Incorporation. . . . . . . . . . 33
           Amendment of Bylaws . . . . . . . . . . . . . . . . . . . 33
           Directors . . . . . . . . . . . . . . . . . . . . . . . . 33
           Director Liability. . . . . . . . . . . . . . . . . . . . 33
           Effect of the Merger on Sweet Water Shareholders. . . . . 34

      SWEET WATER MANAGEMENT'S DISCUSSION AND ANALYSIS . . . . . . . 34
           FINANCIAL CONDITION . . . . . . . . . . . . . . . . . . . 35
                Average Assets and Liabilities . . . . . . . . . . . 35
                Loans. . . . . . . . . . . . . . . . . . . . . . . . 36
                Investment Securities. . . . . . . . . . . . . . . . 37
                Deposits and Short-Term Borrowings . . . . . . . . . 38
                Asset/Liability Management . . . . . . . . . . . . . 39
                Liquidity. . . . . . . . . . . . . . . . . . . . . . 39
                Interest Rate Sensitivity. . . . . . . . . . . . . . 39
                Capital Resources. . . . . . . . . . . . . . . . . . 40
           RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . 41
                Net Interest Revenue . . . . . . . . . . . . . . . . 41
              Provision for Loan Losses and Allowance for Loan Losses43
           NON-PERFORMING ASSETS . . . . . . . . . . . . . . . . . . 44
                Non-Interest Revenue and Non-Interest Expense. . . . 45
                Income Taxes and Other Issues. . . . . . . . . . . . 46
                Year 2000 Compliance . . . . . . . . . . . . . . . . 46
           FIRST THREE MONTHS OF 1999. . . . . . . . . . . . . . . . 47
                Financial Condition. . . . . . . . . . . . . . . . . 47
                Results of Operation . . . . . . . . . . . . . . . . 47
                Loan Loss Experience and Non-Performing Assets . . . 47

      BUSINESS OF SWEET WATER. . . . . . . . . . . . . . . . . . . . 48
           General . . . . . . . . . . . . . . . . . . . . . . . . . 48
           Deposit Activities. . . . . . . . . . . . . . . . . . . . 48
           Lending Activities. . . . . . . . . . . . . . . . . . . . 49
           Investments . . . . . . . . . . . . . . . . . . . . . . . 49
           Employees . . . . . . . . . . . . . . . . . . . . . . . . 50
           Properties. . . . . . . . . . . . . . . . . . . . . . . . 50
           Legal Proceedings . . . . . . . . . . . . . . . . . . . . 50
           Management. . . . . . . . . . . . . . . . . . . . . . . . 50
           Executive Compensation. . . . . . . . . . . . . . . . . . 50
           Employee Benefit Plans. . . . . . . . . . . . . . . . . . 51
           Certain Transactions. . . . . . . . . . . . . . . . . . . 51
           Voting Securities and Principal Shareholders. . . . . . . 51
           Security Ownership of Management. . . . . . . . . . . . . 52

      SUPERVISION, REGULATION, AND EFFECTS OF GOVERNMENTAL POLICY. . 53
           Bank Holding Company Regulation . . . . . . . . . . . . . 53
           Bank Regulation . . . . . . . . . . . . . . . . . . . . . 55
           Capital Adequacy. . . . . . . . . . . . . . . . . . . . . 57
           Effects of Governmental Policies. . . . . . . . . . . . . 58

      LEGAL MATTERS  . . . . . . . . . . . . . . . . . . . . . . . . 59

      EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

      SHAREHOLDER PROPOSALS. . . . . . . . . . . . . . . . . . . . . 59

      TO OBTAIN MORE INFORMATION . . . . . . . . . . . . . . . . . . 59

      INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE. . . . . . . . 60

Appendix A    Agreement and Plan of Merger
Appendix B    Opinion of Alex Sheshunoff & Co. Investment Banking
Appendix C    Sweet Water State Bancshares, Inc. Financial Statements
Appendix D    Provisions of Alabama Business Corporation Act Relating to
              Dissenters' Rights
</TABLE>
                       INFORMATION REQUESTS

     This Prospectus incorporates important business and financial information
about South Alabama that is not included in or delivered with this document.
On the written or oral request of any person to whom this Prospectus is
delivered, South Alabama will provide, without charge, a copy of any or all
of such excluded information. You may request this information from:

                              F. Michael Johnson
                              Chief Financial Officer and Secretary
                              South Alabama Bancorporation, Inc.
                              Post Office Box 3067
                              Mobile, Alabama 36652
                              (334) 431-7800.

In order to insure timely delivery of such documents any requests should be
made by                        ,1999.

            A WARNING ABOUT FORWARD-LOOKING STATEMENTS

     This Prospectus contains forward looking statements about South Alabama
and Sweet Water and about South Alabama following the Merger.  These
statements can be identified by our use of words like "expect," "may," "could,"
"intend," "project," "estimate" or "anticipate."  These forward-looking
statements reflect our current views, but they are based on assumptions and
are subject to risks, uncertainties and other variables, which you should
consider in voting on the merger, including the following:

               1.   Expected cost savings from the merger (and other
          acquisitions) cannot be fully realized;

               2.   Deposit attrition, customer loss, or revenue loss
          following the merger is greater than expected;

               3.   Competitive pressure in the banking industry increases
          significantly;

               4.   Costs or difficulties related to the integration of the
          businesses of South Alabama and Sweet Water are greater than
          expected;

               5.   Changes in the interest rate environment reduce margins;

               6.   General economic conditions, either locally or regionally,
          are less favorable than expected, resulting in,  among other things,
          a deterioration in credit quality;

               7.   Changes occur in the regulatory environment;

               8.   Changes occur in business conditions and inflation;

               9.   Changes occur in the securities markets; and

               10.  Disruptions of the operations of South Alabama, Sweet
          Water, or any of their subsidiaries, or any other private or
          governmental entity as a result of the "Year 2000 problem."

                               SUMMARY


This summary highlights selected information from this Prospectus and may
not contain all of the information that is important to you.  You should
carefully read this entire Prospectus and the other documents we refer to
in this document.  These will give you a more complete description of the
proposed merger.  For more information about South Alabama, see "Where You
Can Find More Information" on page.  We have included page references in
this Summary to direct you to other sections of the Prospectus
containing a more complete description of the topics covered in this Summary.
By "you," we mean owners of Sweet Water Common Stock on          , 1999, the
record date.

The Companies (See page ___ for South Alabama, page ___ for Sweet Water)


South Alabama Bancorporation, Inc.
100 St. Joseph Street
Mobile, Alabama 36602
(334) 431-7800

     South Alabama is a registered bank holding company subject to supervision
and regulation by the Federal Reserve and is incorporated in Alabama.
South Alabama currently owns all of the stock of, and conducts its business
through, South Alabama Bank, formerly known as The Bank of Mobile ("SAB"),
First National Bank, Brewton ("FNBB"), The Monroe County Bank, ("MCB"),
The Commercial Bank of Demopolis ("CBD"), and South Alabama Trust Company,
Inc. ("SATC").  The deposits of South Alabama's banking subsidiaries are
all insured by the Bank Insurance Fund ("BIF") of the Federal Deposit
Insurance Corporation ("FDIC").

     At December 31, 1998, South Alabama had total assets of approximately
$504 million, total deposits of approximately $428 million, total loans of
approximately $278 million and total shareholders' equity of approximately
$59 million.


Sweet Water State Bancshares, Inc.
101 Main Street
Sweet Water, Alabama  36782-0128
(334) 994-4113

     Sweet Water is a registered bank holding company subject to supervision and
regulation by the Federal Reserve and is incorporated in Alabama.  Sweet Water
owns all of the stock of Sweet Water State Bank, an Alabama state banking
corporation ("SWSB").  SWSB  provides a diversified range of banking and
financial services to customers in the commercial and retail banking fields and
has offices located in Sweet Water, Linden, and Thomasville, Alabama.  Deposits
of SWSB are insured by the BIF of the FDIC.

     At December 31, 1998, Sweet Water had total assets of approximately $54
million, total deposits of approximately $47.4 million, total net loans of
approximately $35.0 million and total shareholders' equity of approximately
$5.9 million.

What Happens in The Merger (Page ___)

     Sweet Water proposes to merge with and into South Alabama.  South Alabama
will be the surviving corporation in the proposed merger, and, as such, will
be the owner of all the stock of SWSB.  When the proposed merger is completed,
South Alabama will also succeed to all liabilities and obligations of Sweet
Water, and Sweet Water will essentially disappear.  SWSB will continue to
operate but as a subsidiary of South Alabama instead of Sweet Water.

What Sweet Water Shareholders will Receive in the Merger (Page ___)

     Assuming the merger occurs, South Alabama will issue South Alabama Common
Stock to you in exchange for your Sweet Water Common Stock.  The number of
shares of South Alabama Common Stock you will receive is dependant upon the
price at which South Alabama Common Stock is trading immediately prior
to the time the merger takes place.  The following table shows the number of
shares of South Alabama Common Stock you would receive for each share of Sweet
Water Common Stock, under various scenarios, assuming the merger occurs:

<TABLE>
<CAPTION>
Market Price (Average
South Alabama Per         Number of Shares of
Share Stock Price         South Alabama Stock You
Immediately Prior         Would Receive for Each        Market Value of Per
to Merger)                Share of Sweet Water Stock    Share Consideration

<S>                        <C>                           <C>
$11.00                     16.75                         $184.21
 11.50                     16.02                          184.21
 12.00                     15.35                          184.21
 12.50                     14.74                          184.21
 12.99                     14.18                          184.21
 13.00                     14.17                          184.21
 13.50                     14.17                          191.30
 14.00                     14.17                          198.38
 14.50                     14.17                          205.47
 15.00                     14.17                          212.55
 15.50                     14.17                          219.64
 16.00                     14.17                          226.72
 16.50                     14.17                          233.81
 17.00                     14.17                          240.89
 17.01                     14.16                          240.89
 17.50                     13.77                          240.89
 18.00                     13.38                          240.89
 18.50                     13.02                          240.89
 19.00                     12.68                          240.89
</TABLE>








     You should note that South Alabama will not issue fractional shares and
will pay cash in the merger for any fractional shares to which you would
otherwise be entitled.

Information about South Alabama and Sweet Water Common Stock (Page ___)

     South Alabama Common Stock is publicly traded on the NASDAQ Stock Market
under the symbol SABC.  The South Alabama Common Stock to be issued in the
merger will be registered stock and generally freely tradable; however,
securities laws and the rules governing the proposed accounting treatment for
the merger impose certain restrictions on affiliates (generally directors,
executive officers and 10% shareholders of Sweet Water and South Alabama)
regarding how and when they made trade both Sweet Water and South
Alabama Common Stock.

      Shares of Sweet Water are not quoted on any established market.  On
October 26, 1998, the last full trading day prior to the public announcement
of the proposed merger, South Alabama Common Stock closed at $14.50 per share.
On April 1, 1999, the last full trading day prior to the execution of the
definitive merger agreement, South Alabama Common Stock closed at $13.875 per
share.  The last known sale of Sweet Water Common Stock took place on April 15,
1997, at the price of $100.00 per share.  We can give no assurance that
this transaction was on an arm's length basis.  Transactions in Sweet Water
Common Stock are infrequent and are negotiated privately by the parties to such
transactions.

     Based on the exchange ratio in the proposed merger, which is 14.17, subject
to adjustment, the market value of the consideration that Sweet Water
shareholders will receive in the proposed merger for each share of Sweet Water
Common Stock will be $205.47 based on South Alabama's October 26, 1998 closing
price and $196.61 , based on South Alabama's April 1, 1999 closing price.  Of
course, the market price of South Alabama Common Stock will fluctuate prior to
and after completion of the proposed merger, while the exchange ratio is
essentially fixed, although subject to certain adjustments.  Therefore, you
should obtain current stock price quotations for South Alabama Common Stock.

Why Your Approval is Requested; Special Meeting (Page ___)

     We cannot complete the merger without the approval of at least two-thirds
of the Sweet Water Common Stock.  You are entitled to vote on the merger if you
own shares of Sweet Water Common Stock at the close of business on          ,
1999, the record date.  If you own Sweet Water Common Stock on the record
date, you will be able to cast your vote at the special meeting of the
shareholders of Sweet Water to be held at 101 Main Street, Sweet Water, Alabama,
36782-0128 at                     , local time,  on             , 1999.  At
the special meeting, we will ask you:

               (1)  To approve the merger; and

               (2)  To act on any other matters that may come before the
               special meeting, although we know of no such other matters at
               this time.

     On the record date there were 60,000 shares of Sweet Water Common Stock
outstanding.  You will be entitled to one vote for each share of Sweet Water
Common Stock you own on the record date.  You may vote either by attending the
special meeting and voting your shares, or by completing the enclosed proxy card
and mailing it to us in the enclosed envelope.

     Assuming all of the Directors and Executive Officers of  Sweet Water, who
collectively own, directly or beneficially, 16,081 shares , or approximately
26.8%, of the Sweet Water Common Stock, vote in favor of the proposed merger,
the approval of  an additional 23,939 shares, or 39.9% of the outstanding
shares, of Sweet Water Common Stock would be needed to approve the proposed
merger.

Interests of Certain Persons in the Merger That May Be Different from Yours
(Page ___)

     Sweet Water's Board of Directors and certain officers may have interests
in the merger that differ from the interests of Sweet Water shareholders
generally. Those interests include, among others, provisions in the
merger agreement regarding indemnification, insurance and continued service as
a director or officer of SWSB or service as a director or officer of South
Alabama.  The Board of Directors of Sweet Water was aware of these interests
and considered them in approving and recommending the merger.

Recommendation of Sweet Water Board of Directors (Page ___)

     Your Board of Directors believes that the proposed merger is fair to you
and in your best interest.  The Board unanimously recommends that you vote
"FOR" the proposal to approve the merger.


     Before deciding to approve and recommend the proposed merger, your Board of
Directors considered the financial condition and prospects of Sweet Water,
information about South Alabama, the financial terms of the proposed merger,
the likelihood that bank regulators will approve the proposed merger, the
federal income tax consequences of the proposed merger, the advice of your
Board's legal and financial advisors, and other factors the Board believes to
be relevant.  Your Board of Directors, based on the information it
considered, decided that the proposed merger is advisable and is in your best
interests as shareholders.

     In deciding to approve the proposed merger, your Board considered the
opinion of  its financial advisor, Alex Sheshunoff & Co. Investment Banking,
that as of the date of the opinion the consideration you are to receive in
the merger is fair from a financial point of view to you as Sweet Water
shareholders.  We have attached this opinion as Appendix B to this prospectus.
You should read it and the description of the methods used to arrive at that
opinion (found on page ___) carefully.

Ownership of South Alabama After the Merger (Page ___)

     South Alabama will issue approximately 850,200 shares of South Alabama
Common Stock to Sweet Water shareholders in the merger.  Based on that number,
after the merger, Sweet Water shareholders will own approximately 9.9% of
the outstanding shares of South Alabama Common Stock. This information is based
on the number of shares of  Sweet Water and South Alabama Common Stock
outstanding on          , 1999. It does not reflect shares that South Alabama
may issue due to the exercise of South Alabama stock options or for other
purposes, and it assumes no dissenters.

Things That May Prevent the Merger from Happening (Page ___)

     The merger agreement contains numerous conditions to consummation of the
merger, including, among others, approval of the shareholders of Sweet Water,
certain regulatory approvals, receipt of a letter regarding pooling of
interest accounting treatment from South Alabama's outside auditors and the
non-occurrence of certain events which would have a material adverse impact on
South Alabama or Sweet Water.  Furthermore, in certain circumstances, South
Alabama and Sweet Water, or one or either of them, have the right to terminate
the merger agreement and abandon the proposed merger.  In the event that all of
the conditions to consummation of the merger are not either fulfilled or waived,
or in the event that one or both of the parties decide to terminate the merger
agreement, then the proposed merger would not occur.

Federal Income Tax Consequences

     We have structured the proposed merger with the intent that you will not
recognize any gain or loss for  U. S. Federal income tax purposes on the
exchange of all of your shares of Sweet Water Common Stock for shares of South
Alabama Common Stock in the proposed merger, except in connection with cash
received instead of fractional shares.  We have conditioned the proposed merger
on our receipt of a legal opinion from South Alabama's counsel that this will be
the case, but this opinion will not bind the Internal Revenue Service,
which may take a different view.

     This tax treatment may not apply to certain Sweet Water shareholders
including the types of Sweet Water shareholders discussed on page          ,
and will not apply to any Sweet Water shareholder who dissents from the
proposed merger under Alabama law.  Determining the actual tax consequences
of the proposed merger to you can be complicated.  These consequences will
depend on your specific situation and many variables not within our control.
You should consult your own tax advisor for a full understanding of the proposed
merger's tax consequences.


Accounting Treatment (Page ___)

     We expect the merger to qualify for pooling of interests accounting
treatment.


Dissenter's Appraisal Rights (Page ___)

          Alabama law permits you to dissent from the proposed merger and to
require that the fair value of your Sweet Water Common Stock be paid
to you in cash.  To do this, you must follow certain procedures,
including the filing of certain notices in a timely fashion and refraining from
voting your shares in favor of the proposed merger.  If you dissent from the
proposed merger, your shares of Sweet Water Common Stock will not be exchanged
for shares of South Alabama Common Stock in the proposed merger, and your only
right will be to receive the appraised value your shares in cash.  Please note
that the procedures for exercising dissenter's rights are complicated and
technical, and if you wish to dissent from the merger you must strictly observe
these requirements to avoid waiving your dissenter's rights of appraisal.

Differences in Rights of Sweet Water Shareholders (Page ___)

     Once the proposed merger occurs, Sweet Water shareholders who do not
dissent from the merger  will become South Alabama shareholders.  Although
your rights as a shareholder will continue to be governed by Alabama corporate
law, they will be governed by South Alabama's Articles of Incorporation and
Bylaws instead of Sweet Water's Articles of Incorporation and Bylaws.  Because
of certain differences between Sweet Water's Articles of Incorporation and
Bylaws and South Alabama's Articles of Incorporation and Bylaws, your
current rights will change after the merger.

Selected Consolidated Financial Data

     The following tables present for South Alabama and Sweet Water, on a
historical basis, selected consolidated financial data and ratios.  This
information is based on the consolidated financial statements of South
Alabama, incorporated herein by reference, and Sweet Water, appearing
elsewhere in this Prospectus, and should be read in conjunction therewith and
with the notes thereto.  See "Available Information," "Incorporation of
Certain Documents by Reference," "Pro Forma Financial Information" and Appendix
C hereto.   The financial data as of March 31, 1999 and 1998, and the three
month periods then ended are derived from unaudited financial statements;
however, in the opinion of management of South Alabama and Sweet Water, all
adjustments necessary to arrive at a fair statement of results of interim
period operation of the respective companies have been included and are
solely of a normal recurring nature.  Results for the three months ended
March 31, 1999, are not necessarily indicative of results to be expected for
the entire year or for any future period.

<TABLE>
South Alabama Selected Financial Data (Historical)
(Dollars In Thousands Except Per Share Amounts)


<CAPTION>
                             Three Months Ended
                                   March 31,                 Year Ended December 31,
                             -------------------     --------------------------------------------------------
                                1999        1998        1998(2)     1997(2)     1996(2)     1995        1994

<S>                          <C>         <C>         <C>         <C>         <C>         <C>         <C>
RESULTS OF OPERATIONS
Interest revenue             $  8,718    $  7,936    $ 33,826    $ 30,897    $ 24,734    $ 22,778    $ 19,605
Interest expense                3,929       3,650      15,577      13,433       9,702       7,112      10,561
Net interest revenue            4,789       4,286      18,249      17,464      14,173      13,076      12,493
Provision for loan losses         142          95         301         308          78          84         396
Non-interest revenue              956         832       4,113       3,675       3,034       2,693       2,664
Non-interest expense            3,659       3,294      14,332      13,242      11,040      10,279      10,130
Income before income taxes      1,944       1,729       7,729       7,501       5,859       5,412       4,943
Income taxes                      544         476       2,154       1,996       1,733       1,646       1,439
Net income                   $  1,400    $  1,253    $  5,575    $  5,505    $  4,126    $  3,766    $  3,504
Basic net income per share   $   0.18    $   0.17    $   0.73    $    .73    $    .69    $    .66    $    .62
Diluted net income per share $   0.18    $   0.16    $   0.72    $    .73    $    .69    $    .66    $    .62

PERIOD-END STATEMENT OF
CONDITION
Total assets                 $503,982    $448,346    $503,847    $437,592    $413,863    $306,740    $275,579
Loans, Net Unearned Income    302,323     237,759     278,011     244,628     232,153     182,850     169,808
Deposits                      428,684     383,105     428,076     371,991     349,660     264,748     234,983
Shareholders' equity           59,193      53,686      58,946      52,664      53,586      34,921      31,190

AVERAGE BALANCES
Total assets                 $497,141    $436,862    $464,728    $412,087    $323,673    $288,320    $274,459
Average earning assets        462,131     405,255     431,737     381,218     298,687     266,819     253,633
Loans                         291,306     241,714     257,241     239,044     197,518     177,932     157,867
Deposits                      420,810     371,282     393,427     349,810     276,702     246,868     235,846
Shareholders' equity           59,332      52,507      55,539      51,963      38,901      33,128      30,822


PERFORMANCE RATIOS(3)
Net income to:
 Average total assets            1.14%       1.16%       1.20%       1.34%       1.27%       1.31%       1.28%
 Average shareholders' equity    9.57%       9.68%      10.04%      10.59%      10.61%      11.37%      11.37%
Average shareholders' equity to
 average total assets           11.93%      12.02%      11.95%      12.61%      12.02%      11.49%      11.23%

Dividend payout ratio           47.22%      36.47%      43.56%     132.60%(1)   35.80%      39.72%      27.49%

__________________
     (1)  Includes special dividend of $0.833 per share.
     (2)  The results of operations of South Alabama include MCB from
          October 31, 1996, the date it was acquired in a purchase
          business combination.

</TABLE>
<TABLE>
Sweet Water Selected Financial Data (Historical)
(Dollars in Thousands Except Per Share Amounts)


<CAPTION>
                              Three Months Ended
                                 March 31,                     Year Ended December 31,
                            ------------------    ---------------------------------------------------
                             1999       1998       1998       1997       1996       1995       1994


<S>                         <C>        <C>        <C>        <C>        <C>        <C>        <C>
RESULTS OF OPERATIONS
Interest revenue            $ 1,094    $ 1,005    $ 4,244    $ 3,565    $ 3,505    $ 3,354    $ 2,902
Interest expense                551        443      1,975      1,608      1,654      1,470      1,229
Net interest revenue            543        562      2,269      1,957      1,851      1,884      1,673
Provision for loan losses         9         30        270         23         30         60         33
Non-interest revenue            115         98        402        369        301        289        355
Non-interest expense            446        424      1,774      1,516      1,234      1,237      1,155
Income before income taxes      203        206        627        787        888        876        840
Income taxes                     52         52        113        178        188        190        225
Net income                  $   151    $   154    $   514    $   609    $   700    $   686    $   615
Earnings per share:
Basic net income per share  $  2.52    $  2.57    $  8.57    $ 10.15    $ 11.67    $ 11.43    $ 10.25
Diluted net income per
 share                      $  2.52    $  2.57    $  8.57    $ 10.15    $ 11.67    $ 11.43    $ 10.25

PERIOD-END STATEMENT
OF CONDITION:
Total assets                $56,231    $48,193    $53,502    $47,070    $42,420    $41,318    $39,932
Loans,net of unearned income 33,769     31,231     35,020     28,702     24,714     23,345     24,418
Deposits                     49,926     42,210     47,369     41,352     36,590     36,328     35,516
Shareholders' equity          5,821      5,695      5,784      5,539      5,105      4,755      4,220

AVERAGE BALANCES
Total assets                $55,860    $46,749    $49,810    $43,795    $42,851    $40,086    $39,052
Average earning assets       51,041     43,456     46,653     41,348     40,221     37,605     36,413
Loans, net of unearned income34,153     29,571     32,111     25,733     23,692     22,962     23,619
Deposits                     49,482     40,911     43,629     37,997     37,424     35,189     34,653
Shareholders' equity          5,785      5,607      5,846      5,423      5,040      4,611      4,131

PERFORMANCE RATIOS (1)
Net income to:
 Average total assets          1.10%      1.34%      1.03%      1.39%      1.63%      1.71%      1.57%
 Average shareholders' equity 10.59%     11.14%      8.79%     11.23%     13.89%     14.88%     14.89%
Average shareholders' equity
   to average total assets    10.36%     11.99%     11.74%     12.38%     11.76%     11.50%     10.58%

Dividend payout ratio         47.68%      0.00%     52.53%     41.87%     34.29%     32.80%     31.71%

     (1)  Annualized for three month periods.
</TABLE>

     The following table sets forth pro forma combined selected consolidated
financial data and ratios giving effect to the Merger on a pooling-of-interests
accounting basis.  The data is not necessarily indicative of the results of
the future operations of either entity or the actual results that would have
occurred during the period indicated below and should be read in conjunction
with the Unaudited Pro Forma Combined Condensed Consolidated Financial
Statements appearing elsewhere in this Prospectus and the consolidated
financial statements of South Alabama, incorporated herein by reference, and
Sweet Water, appearing elsewhere in this Prospectus. See "Incorporation of
Certain Documents by Reference," "Pro Forma Financial Information" and
Appendix C.

<TABLE>
Combined Pro Forma Selected Consolidated Financial Data
(Dollars In Thousands Except Per Share Amounts)



                              Three Months Ended
                                      March 31,                      Year Ended December 31,
                              --------------------    --------------------------------------------------------
                                 1999        1998        1998(2)     1997(2)     1996(2)     1995        1994

<S>                           <C>         <C>         <C>         <C>         <C>         <C>         <C>
RESULTS OF OPERATIONS
Interest revenue              $  9,812    $  8,941    $ 38,070    $ 34,462    $ 28,239    $ 26,132    $ 22,507
Interest expense                 4,480       4,093      17,552      15,041      12,215      11,172       8,341
Net interest revenue             5,332       4,848      20,518      19,421      16,024      14,960      14,166
Provision for loan losses          151         125         571         419         338         138         117
Non-interest revenue             1,071         930       4,515       4,044       3,335       2,982       3,019
Non-interest expense             4,105       3,718      16,106      14,758      12,274      11,516      11,285
Income before income taxes       2,147       1,935       8,356       8,288       6,747       6,288       5,783
Income taxes                       596         528       2,267       2,174       1,921       1,836       1,664
Net income                    $  1,551    $  1,407    $  6,089    $  6,114    $  4,826    $  4,452    $  4,119
Net Income per share          $   0.18    $   0.17    $   0.72    $   0.73    $   0.71    $   0.68    $   0.63
Diluted net income per share  $   0.18    $   0.17    $   0.71    $   0.72    $   0.70    $   0.68    $   0.63

PERIOD-END
STATEMENT OF CONDITION:
Total assets                  $560,213    $496,539    $557,349    $484,662    $456,283    $348,058    $315,511
Loans, Net Unearned Income     336,092     268,990     313,031     273,330     256,867     206,195     194,226
Deposits                       478,610     425,315     475,445     413,343     386,250     301,076     270,499
Shareholders' equity            65,014      59,381      64,730      58,203      58,691      39,676     35,410

AVERAGE BALANCES
Total assets                  $553,001    $483,611    $514,538    $455,882    $366,524    $328,406    $313,511
Average earning assets         513,172     448,711     478,390     422,566     338,908     304,424     290,046
Loans                          325,459     271,285     289,352     264,777     221,210     200,894     181,486
Deposits                       470,292     412,193     437,056     387,807     314,126     282,057     270,499
Shareholders' equity            65,117      58,114      61,385      57,386      43,941      37,739      34,953


PERFORMANCE RATIOS(3)
Net income to:
 Average total assets             1.14%       1.18%       1.18%       1.34%       1.32%       1.36%       1.31%
 Average shareholders' equity     9.66%       9.82%       9.92%      10.65%      10.98%      11.80%      11.78%
Average shareholders' equity to
 average total assets            11.78%      12.02%      11.93%      12.59%      11.99%      11.49%      11.15%
Dividend payout ratio            46.98%      33.30%      44.70%     123.49%(1)   36.74%      31.04%      28.12%

     (1)   Includes special dividend of $.833 per share
     (2)   The results of operations of South Alabama include MCB from
           October 31, 1996, the date it was acquired in a purchase business
           combination.
     (3)   Annualized for three month periods.
</TABLE>

Comparative Per Share Data

     The following table presents selected comparative per share data for
South Alabama Common Stock and Sweet Water Common Stock on a historical basis,
for South Alabama Common Stock on a pro forma basis reflecting consummation of
the Merger and for Sweet Water Common Stock on an equivalent pro forma basis
reflecting consummation of the Merger.  Such information has been prepared
giving effect to the Merger on a pooling-of-interests accounting basis.  See
"The Merger Accounting Treatment."  The data is not necessarily indicative of
the results of the future operations of either entity or the actual results
that would have occurred had the Merger been consummated as of the first date
of each income statement presented.  The information is derived from and
should be read in conjunction with the consolidated historical consolidated
financial statements of South Alabama, including related notes thereto, which
are incorporated by reference, and the historical financial statements of
Sweet Water, including the notes thereto, and the unaudited pro forma
financial information appearing elsewhere in this Prospectus.  See "Available
Information," "Incorporation of Certain Documents by Reference," "Pro Forma
Financial Information" and Appendix C hereto.


<TABLE>
<CAPTION>
                                     Three Months Ended      Year Ended December 31,
                                     March 31, 1999          1998      1997     1996

<S>                                  <C>                     <C>       <C>      <C>
South Alabama Common Stock
 Net income per common share:
  Historical:
   Basic                             $0.18                   0.73      0.73     0.69
   Diluted                            0.18                   0.72      0.73     0.69
  Pro forma combined:
   Basic                              0.18                   0.72      0.73     0.71
   Diluted                            0.18                   0.71      0.72     0.70
  Dividends paid per common share:
   Historical                         0.085                  0.32      0.97     0.25
   Pro forma combined                 0.085                  0.32      0.90     0.25
 Book value per common share
  (at end of period):
  Historical                          7.66                   7.64      6.97     7.12
  Pro forma combined                  7.58                   7.56      6.92     7.01

SWSB Common Stock
 Net income per common share:
  Historical:
   Basic and Diluted                  2.52                   8.57     10.15    11.67
  Pro forma equivalent (1)
   Basic                              2.56                  10.14     10.33     9.99
   Diluted                            2.54                  10.00     10.26     9.95
  Dividends paid per common share:
   Historical                         1.20                   4.50      4.25     4.00
   Pro forma equivalent (1)           1.202                  4.51     12.76     3.56
 Book value per common share
  (at end of period):
  Historical                         97.02                  96.40     92.31     86.68
  Pro forma equivalent (1)          107.38                 107.10     98.09     99.40

   (1)  SWSB pro forma equivalent amounts are computed by applying an assumed
Exchange Ratio of 14.17 shares of South Alabama Common Stock for each share
of SWSB Common Stock.  See "The Merger Terms of the Merger; Exchange Ratio."
</TABLE>

Summary Capital Ratios

     The following table sets forth the historical risk-based capital ratios
for South Alabama and Sweet Water and pro forma ratios for the combined
company, together with the minimum ratios required by regulatory agencies, as
of March 31, 1999.  See "Supervision, Regulation, and Effects of Governmental
Policy Capital Adequacy."




<TABLE>
<CAPTION>
                                   South         Sweet         Pro Forma
                                   Alabama       Water         Combined


  <S>                              <C>           <C>           <C>
Risk-based capital ratios
  Tier I capital                   15.66%        15.92%        15.69%
  Total capital (Tier I and II)    16.62%        17.08%        16.67%
Minimum risk-based capital ratios
  TierI capital                     4.00%         4.00%         4.00%
  Total capital (Tier I and II)     8.00%         8.00%         8.00%

Tier I leverage ratio              10.90%        10.11%        10.82%


Minimum Tier I leverage ratio   4.00%-5.00%     4.00%-5.00%    4.00%-5.00%
</TABLE>

                        GENERAL INFORMATION

Special Meeting, Record Date and Vote Required

     Sweet Water Special Meeting.  The Special Meeting of Shareholders of Sweet
Water (the "Sweet Water Meeting") will be held at 101 Main Street, Sweet
Water, Alabama, at  _________ ., local time, on _________, 1999.  The
purpose of the meeting is to consider and vote upon a proposal to approve
the Agreement and Plan of Merger attached hereto as Appendix A (the "Merger
Agreement"), which provides for, among other things, the merger of Sweet
Water with and into South Alabama (the "Merger").  Only holders of record
of Sweet Water Common Stock at the close of business on the Sweet Water
Record Date,        , 1999, will be entitled to notice of and to vote at
the Sweet Water Meeting.  As of the Sweet Water Record Date, there were
60,000 shares of Sweet Water Common Stock issued, outstanding and entitled
to be voted.  There were 168 Sweet Water shareholders of record on the
Sweet Water Record Date.  Each share of Sweet Water Common Stock will be
entitled to one vote at the Sweet Water Meeting.

     The presence, in person or by proxy, of holders of a majority of the issued
and outstanding shares of Sweet Water Common Stock entitled to vote at the
Sweet Water Meeting is necessary to constitute a quorum at such meeting.

     Approval of the Merger Agreement on behalf of Sweet Water, pursuant to the
Alabama Business Corporation Act (the "ABCA"), will require the affirmative
vote of the holders of at least two-thirds of the outstanding shares of
Sweet Water Common Stock entitled to be voted thereon. For this purpose,
a failure to return the enclosed proxy, a vote to abstain and a broker non-vote
will have the same effect as a vote against approval of the Merger Agreement.
As of the Sweet Water Record Date, 16,081 shares of Sweet Water Common Stock,
or 26.8% of the total shares of Sweet Water Common Stock outstanding, were
held, either of record or beneficially, by directors and executive officers of
Sweet Water and certain family members and related entities.  Assuming all
such shares are voted in favor of the Merger, 23,939 additional affirmative
votes of shares of Sweet Water Common Stock will be required for approval.

     Dissenters' rights may be demanded by Sweet Water shareholders who do not
vote in favor of the Merger and who follow the specified procedures of the ABCA.
See "Dissenters' Rights" below.

Proxies

     Sweet Water.  The enclosed proxies are solicited on behalf of the Board of
Directors of  Sweet Water for use in connection with the Sweet Water Meeting and
any adjournment or adjournments thereof.  Holders of Sweet Water Common
Stock are requested to complete, date and sign the accompanying proxy and return
it promptly to Sweet Water in the enclosed envelope.  Failure to return  a
properly executed proxy or to vote at the Sweet Water Meeting will have the
same effect as a vote against approval of the Merger Agreement.

     A Sweet Water shareholder who has executed and delivered a proxy may revoke
it at any time before such proxy is voted by giving a later written proxy, by
giving written revocation to Sweet Water, provided such later proxy or
revocation is actually received by Sweet Water before the vote of the
shareholders, or by voting in person at the Sweet Water Meeting.  Any
shareholder attending the Sweet Water Meeting may vote in person whether or
not a proxy has been previously filed.  The shares represented by all properly
executed proxies received in time for the Sweet Water Meeting, unless said
proxies are revoked, will be voted in accordance with the instructions therein.
If instructions are not given, properly executed proxies received will be voted
FOR approval of the Merger Agreement.

     Other Matters.  Sweet Water will bear the costs of any solicitation of
proxies for the Sweet Water Meeting, except that South Alabama will pay the
costs of preparing (exclusive of Sweet Water's legal fees), printing and
distributing this Prospectus.  Such solicitation  will be made by mail but
also may be made by telephone, facsimile  or in person by the directors,
officers and employees of Sweet Water, but no written materials other
than those included herewith will be used to solicit proxies.

     The management of Sweet Water is not aware of any business to be acted
upon at the Sweet Water Meeting other than approval of a proposal to approve
the Merger Agreement.  If other matters are properly brought before the Sweet
Water Meeting or any adjournment thereof, any proxy, if properly signed,
dated and returned, will be voted in accordance with the recommendation of
Sweet Water's management or, if there is no such recommendation, in the
discretion of the individuals named as proxies therein.

Dissenters' Rights

     South Alabama Dissenters' Rights.  Shareholders of South Alabama do not
have any right to dissent in connection with the Merger.

     Sweet Water Dissenters' Rights.  If the Merger is consummated, holders of
record of Sweet Water Common Stock who follow the procedures specified by
Article 13 of the ABCA ("Article 13") will be entitled to determination and
payment in cash of the "fair value" of their stock immediately before the
Effective Time, excluding value resulting from the anticipation of the Merger
but including "a fair and equitable" rate of interest thereon.  Sweet Water
shareholders who elect to follow such procedures are referred to herein as
"Dissenting Sweet Water Shareholders".


     A VOTE IN FAVOR OF THE MERGER AGREEMENT BY A HOLDER OF SWEET WATER COMMON
STOCK WILL RESULT IN THE WAIVER OF THE SHAREHOLDER'S RIGHT TO DEMAND PAYMENT
FOR HIS OR HER SHARES.

     The following summary of the provisions of Article 13 is not intended to
be a complete statement of such provisions, the full text of which is attached
as Appendix D to this Prospectus, and is qualified in its entirety by reference
thereto.

     A holder of Sweet Water Common Stock electing to exercise dissenters'
rights (1) must deliver to Sweet Water, before the vote at the Sweet Water
Meeting, written notice of his or her intent to demand payment for his or
her shares if the Merger is effectuated, and (2) must not vote in favor of
the Merger Agreement.   The requirement of such written notice is in
addition to and separate from the requirement that such shares not be voted
in favor of the Merger Agreement, and the requirement of such written
notice is not satisfied by voting against the Merger Agreement either in
person or by proxy. The requirement that such shares not be voted in favor
of the Merger Agreement will be satisfied if no proxy is returned and such
shares are not voted in person.  Because a properly executed and delivered
proxy which is left blank will, unless revoked, be voted FOR approval of the
Merger Agreement, in order to be assured that such shareholder's shares are not
voted in favor of the Merger Agreement, a Dissenting Sweet Water Shareholder who
votes by proxy must not leave the proxy blank but must (i) vote AGAINST the
approval of the Merger Agreement or (ii) affirmatively ABSTAIN from voting.
Neither a vote against approval of the Merger Agreement nor an abstention will
satisfy the requirement that a written notice of intent to demand payment be
delivered to Sweet Water before the vote on the Merger Agreement.

     Both holders of record and beneficial owners of Sweet Water Common Stock
are entitled to assert dissenters' rights for the shares registered in the
name of or held for the benefit of that holder or owner.  Dissenters' rights
may be asserted with respect to less than all shares of Sweet Water Common Stock
held of record by such holder only if such holder dissents with respect to
all shares beneficially owned by any one person and notifies Sweet Water in
writing of the name and address of each person on whose behalf such record
holder is asserting dissenters' rights.  A beneficial shareholder, in order
to assert his or her dissenters' rights, must submit to Sweet Water  the record
shareholder's written consent to the dissent prior to or contemporaneously
with such assertion and must dissent with respect to all shares of which he or
she is the beneficial shareholder or over which he or she has the power to vote.
Where no number of shares is expressly mentioned, the notice of intent to
demand payment will be presumed to cover all shares held in the name of the
record holder.

     No later than 10 days after the Effective Time, South Alabama will send a
written dissenters' notice to each Dissenting Sweet Water Shareholder who did
not vote in favor of the Merger and who duly filed a written notice of intent
to demand payment in accordance with the foregoing.  The dissenters' notice
will specify the deadline by which time South Alabama must receive a payment
demand from such Dissenting Sweet Water Shareholder and will include a form for
demanding payment.  The deadline will be no fewer than 30 days or more than 60
days after the date the dissenters' notice is delivered.  It is the obligation
of any Dissenting Sweet Water Shareholder to initiate all necessary action to
perfect his or her dissenters' rights within the time periods prescribed in
Article 13 and the dissenters' notice.  If no payment demand is timely received
from a Dissenting Sweet Water Shareholder, all dissenters' rights will be lost,
notwithstanding any previously submitted written notice of intent to demand
payment.  Each Dissenting Sweet Water Shareholder who demands payment retains
all other rights of a shareholder until those rights are cancelled or modified
by the Merger.  A Dissenting Sweet Water Shareholder who demands payment in
accordance with the foregoing may not thereafter withdraw that demand and
accept the terms offered under the Merger Agreement unless South Alabama
consents thereto.

     Within 20 days of the formal payment demand, a Dissenting Sweet Water
Shareholder who has made a demand must submit his or her share certificate
or certificates to Sweet Water or South Alabama, as applicable, so that a
notation to that effect may be placed on such certificate or certificates
and the shares returned to the Dissenting Sweet Water Shareholder with the
notation thereon.  A shareholder's failure to submit shares for notation
will, at South Alabama's option, terminate the holder's rights as a
dissenter, unless a court of competent jurisdiction determines otherwise.

     Promptly after the Effective Time, or upon receipt of a payment demand,
South Alabama shall offer to pay each Dissenting Sweet Water Shareholder who
complied with Article 13 the amount South Alabama estimates to be the fair value
of such Dissenting Sweet Water Shareholder's shares, plus accrued interest.
Each Dissenting Sweet Water Shareholder who agrees to accept the above
referenced offer of payment in full satisfaction of his or her demand must
surrender to South Alabama the certificate or certificates representing his or
her shares in accordance with the terms of the dissenters' notice. Upon
receiving the certificate or certificates, South Alabama shall pay each
Dissenting Sweet Water Shareholder the fair value of his or her shares, plus
accrued interest.  Upon receiving payment, a Dissenting Sweet Water Shareholder
ceases to have any interest in the shares.

     A Dissenting Sweet Water Shareholder who has made a payment demand may
notify South Alabama in writing of his or her own estimate of the fair value of
his or her shares and the amount of interest due, and demand payment of his
or her estimate, or reject the offer made to such shareholder and demand payment
of the fair value of his or her shares and interest due, if: (i) the
Dissenting Sweet Water Shareholder believes that the amount offered him or her
is less than the fair value of his or her shares or that the interest due is
incorrectly calculated; (ii) South Alabama fails to make an offer as
required by Article 13 within sixty (60) days after the date set for demanding
payment; or (iii) Sweet Water having failed to consummate the Merger does not
release the transfer restrictions imposed on shares within sixty (60) days
after the date set for demanding payment; provided, however, that a Dissenting
Sweet Water Shareholder  waives his or her right to demand payment different
from that offered unless he or she notifies South Alabama of his or her demand
in writing within thirty (30) days after South Alabama offered payment for his
or her shares.

     If a demand for payment remains unsettled, South Alabama shall commence a
proceeding within sixty (60) days after receiving the second payment demand
and petition the court to determine the fair value of the shares and accrued
interest.  If the proceeding is not commenced within the sixty (60) day period,
each Dissenting Sweet Water Shareholder whose demand remains unsettled shall
be entitled to receive the amount demanded.  Such a proceeding will be filed in
the Circuit Court of Mobile County, Alabama. Each Dissenting Sweet Water
Shareholder made a party to the proceeding is entitled to judgment for the
amount the court finds to be the fair value of his or her shares, plus accrued
interest.  Upon payment of the judgment and surrender to South Alabama of the
certificate or certificates representing the judicially appraised shares, a
Dissenting Sweet Water Shareholder will cease to have any interest in the
shares.  The court may assess costs incurred in such a proceeding against all
or some of the Dissenting Sweet Water Shareholders, in amounts the court finds
equitable, to the extent the court finds that such Dissenting Sweet Water
Shareholders acted arbitrarily, vexatiously, or not in good faith in demanding
payment different from that initially offered by South Alabama.  The Court may
also assess the reasonable fees and expenses of counsel and experts against all
or some of the Dissenting Sweet Water Shareholders if the court finds that such
Dissenting Sweet Water Shareholders acted arbitrarily, vexatiously or not in
good faith with respect to the rights provided in Article 13.


Recommendation of Sweet Water Board of Directors

     The Board of Directors of Sweet Water has recommended that the shareholders
of Sweet Water vote FOR the proposal to approve the Merger Agreement.  See
"The Merger Background of and Reasons for the Merger."


                             THE MERGER

     The following information concerning the Merger, insofar as it relates to
matters contained in the Merger Agreement, is qualified in its entirety by
reference to the Merger Agreement, which is attached hereto as Appendix A, and
incorporated herein by reference.

Terms of the Merger; Exchange Ratio

     At the Effective Time, Sweet Water will merge with and into South Alabama
with South Alabama as the surviving corporation.  In the Merger, each share of
Sweet Water Common Stock outstanding immediately prior to the Effective Time,
other than certain shares held by Sweet Water or by South Alabama or their
subsidiaries, if any, in each case other than in a fiduciary capacity or as a
result of debts previously contracted, will be converted into and exchanged for
the right to receive 14.17 shares  (rounded to the nearest hundredth) of South
Alabama Common Stock (the "Exchange Ratio"), if the Market Price (defined
below) of South Alabama Common Stock is between $13.00 and $17.00 per share,
inclusive.  If the Market Price of South Alabama Common Stock is greater than
$17.00, then the Exchange Ratio shall be the number of shares of South Alabama
Common Stock having an aggregate Market Price of $240.89.  If the Market Price
of South Alabama Common Stock is less than $13.00, then the Exchange Ratio
shall be the number of shares of South Alabama Common Stock having an aggregate
Market Price of $184.21.

     The "Market Price" of a share of South Alabama Common Stock is the average
of the closing bid and closing ask price, as reported on NASDAQ, during the
period of 20 consecutive NASDAQ trading days ending on the trading day
preceding by two trading days the Effective Time.  The Merger Agreement provides
for adjustment of the Exchange Ratio in the event either party issues additional
shares as a result of a stock split, stock dividend or similar
recapitalization.  The Exchange Ratio was determined through negotiations
between South Alabama and Sweet Water.


     As an example, if the Market Price is $______ (which, as of _____________,
1999, was the average Market Value of South Alabama Common Stock during the
preceding 20 trading days), then each share of Sweet Water Common Stock
will be converted into 14.17 shares of South Alabama Common Stock.  As a result,
a shareholder of Sweet Water who owns 100 shares of Sweet Water Common Stock
would receive 1,417 shares of South Alabama Common Stock  (14.17 multiplied
by 100).  If the Market Price of South Alabama Common Stock is $12.50, then each
share of Sweet Water Common Stock will be converted into the right to receive
14.74 shares of South Alabama Common Stock ($184.21 divided by $12.50). If
the Market Price of South Alabama Common Stock is $17.50, then each share of
Sweet Water Common Stock will be converted into the right to receive 13.77
shares of South Alabama Common Stock ($240.89 divided by $17.50).

     Shareholders are advised to obtain current market quotations for South
Alabama Common Stock.  The Market Price of South Alabama Common Stock at the
Effective Time or on the date on which certificates representing such shares
are received by Sweet Water shareholders may be higher or lower than the
Market Price of South Alabama Common Stock as of the date of this Prospectus or
at the time of the Sweet Water Meeting.

     No fractional shares of South Alabama Common Stock will be issued in
exchange for Sweet Water Common Stock, and cash will be paid by South Alabama in
lieu of issuance of such fractional shares.  The amount paid in lieu of
fractional shares will be calculated by multiplying each such fraction by the
Market Price of South Alabama Common Stock.

Waiver and Amendment; Termination

     Prior to the Effective Time, either South Alabama or Sweet Water may waive
or extend the time for the compliance or fulfillment by the other of any and all
of its obligations under the Merger Agreement,  and South Alabama and Sweet
Water may, to the extent permitted by law, amend the Merger Agreement in
writing with the approval of the Board of Directors of each of Sweet Water and
South Alabama.

     The Merger Agreement may be terminated at any time prior to the Effective
Time, as follows:  (i) by mutual consent of the parties; (ii) by either party
in the event of a breach by the other party of any representation or warranty
which cannot be cured or is not cured within 30 days after written notice to the
breaching party, to the extent such breach is likely to result in a Material
Adverse Effect on the breaching party; (iii) by either party in the event of a
material breach by the other party of any covenant or agreement which cannot be
cured or is not cured within 30 days after written notice; (iv) by either party
in the event any required regulatory approval is denied or not obtained or the
shareholders of Sweet Water fail to approve the Merger as required; (v) by
South Alabama if the Market Price of a share of South Alabama Common Stock
is less than $10.00; (vi) by Sweet Water if South Alabama enters into a letter
of intent or agreement concerning its acquisition by a third party; (vii) by
either party in the event the Merger shall not have been consummated by October
31, 1999, unless such failure is caused by a breach on the part of the party
electing to terminate; or (viii) by either party in the event that any of the
conditions precedent to the obligations of such party to consummate the Merger
cannot be satisfied or fulfilled by October  31, 1999.

     In determining whether to elect to terminate the Merger Agreement in these
circumstances, the Sweet Water Board of Directors or the South Alabama
Board of Directors, as the case may be, will take into account, consistent
with its fiduciary duties, all relevant facts and circumstances existing at
the time, including, without limitation, the market for bank holding
company stock in general, the relative value of the South Alabama Common
Stock in the market, and the advice of its financial advisors and legal
counsel.  By approving the Merger Agreement, the holders of Sweet Water
Common Stock will permit the Sweet Water Board of Directors to determine,
in the exercise of its fiduciary duties, to proceed with the Merger even
though the Merger is not consummated, or any conditions precedent thereto
cannot be satisfied or fulfilled, by October  31, 1999.

     In the event of the termination of the Merger Agreement, it shall become
void and have no effect, except that the confidentiality requirements shall
survive such termination and such termination will not relieve a breaching party
from liability for an uncured willful breach of the representation, warranty,
covenant or agreement giving rise to the termination.

Opinion of Sweet Water's Financial Advisor

     Sweet Water retained Alex Sheshunoff & Co. Investment Banking (the
"Advisor") to provide its opinion of the fairness from a financial viewpoint,
of the Merger consideration to be received by the shareholders of Sweet Water in
connection with the Merger.  As part of its investment banking business, the
Advisor is regularly engaged in the valuation of securities in connection with
mergers and acquisitions and valuations for estate, corporate and other
purposes.  The Board of Directors of Sweet Water retained the Advisor based
upon its experience as a financial advisor in mergers and acquisitions of
financial institutions and its knowledge of financial institutions. Sweet Water
did not retain the Advisor to negotiate the proposed merger, and the terms and
conditions of the merger were negotiated directly by and between Sweet
Water and South Alabama.

     On March 30, 1999, the Advisor rendered its oral opinion that, as of such
date, the Merger consideration was fair, from a financial point of view, to the
shareholders of Sweet Water. The Advisor rendered its written Fairness Opinion
as of June 24, 1999.The full text of the Fairness Opinion which sets forth,
among other things, assumptions made, procedures followed, matters considered,
and limitations on the review undertaken, is attached as Appendix B to this
Prospectus.  The shareholders of Sweet Water are urged to read the Advisor's
Fairness Opinion carefully and in its entirety.  The Fairness Opinion is
addressed to the Board of Directors of Sweet Water and does not constitute a
recommendation to any shareholders of Sweet Water as to how such shareholders
should vote at the Sweet Water Meeting.


     In connection with the Fairness Opinion, the Advisor:

     1.   reviewed the Merger Agreement;

     2.   reviewed certain publicly available financial statements and
regulatory information concerning South Alabama and Sweet Water, respectively;

     3.   reviewed certain internal financial statements and other financial and
operating data of Sweet Water provided to the Advisor by the management of Sweet
Water;

     4.   reviewed the reported market prices and trading activity for South
Alabama's Common Stock;

     5.   discussed the past and current operations, financial condition, and
future prospects of Sweet Water with executive management;

     6.   compared Sweet Water and South Alabama from a financial point of view
with certain other banking companies that the Advisor deemed to be relevant;

     7.   compared the financial performance of South Alabama and the market
prices and trading activity of South Alabama's Common Stock with that of
certain other indices of publicly traded equity securities;

     8.   reviewed the financial terms, to the extent publicly available, of
certain comparable merger transactions in the Southeastern United States and
in Alabama; and

     9.   performed such other analyses and reviews as the Advisor deemed
appropriate.

     In connection with its review, the Advisor relied upon and assumed the
accuracy and completeness of all of the foregoing information provided to it or
made publicly available, and the Advisor did not assume any responsibility for
independent verification of such information.  The Advisor assumed that
internal confidential financial projections provided by Sweet Water were
reasonably prepared reflecting the best currently available estimates and
judgments of the future financial performance of Sweet Water and did not
independently verify the validity of such assumptions.  The Advisor did
not make any independent evaluation or appraisal of the assets or liabilities
of Sweet Water nor was the Advisor furnished with any such appraisals.  The
Advisor did not examine any individual loan files of Sweet Water.  The Advisor
is not an expert in the evaluation of loan portfolios for the purposes of
assessing the adequacy of the allowance for losses with respect thereto and
has assumed that such allowance is, in the aggregate, adequate to cover such
losses.

     With respect to South Alabama, the Advisor did not conduct any independent
evaluation or appraisal of the assets, liabilities or business prospects of
South Alabama, was not furnished with any evaluations or appraisals, and
did not review any individual loan files of South Alabama.

     The Fairness Opinion is necessarily based on economic, market and other
conditions as in effect on, and the information made available to the
Advisor as of June 23, 1999.

     In rendering the Fairness Opinion, the Advisor performed a variety of
financial analyses.  The preparation of an opinion involves various
determinations as to the most appropriate and relevant methods of financial
analysis and the application of those methods to the particular circumstances.
Consequently, the Fairness Opinion is not readily susceptible to partial
analysis of summary description.  Moreover, the evaluation of fairness, from a
financial point of view, of the Merger consideration is to some extent
subjective, based on the experience and judgment of the Advisor, and not merely
the result of mathematical analysis of financial data.  Accordingly,
notwithstanding the separate factors summarized below,the Advisor believes
that its analyses must be considered as a whole and that selecting portions of
its analyses and of the factors considered by it, without considering all
analyses and factors, could create an incomplete view of the evaluation
process underlying its opinion.  The ranges of valuations resulting from any
particular analysis described below should not be taken to be the Advisor's
view of the actual value of Sweet Water.

     In performing its analyses, the Advisor made numerous assumptions with
respect to industry performance, business and economic conditions and other
matters, many of which are beyond the control of Sweet Water.  The analyses
performed by the Advisor are not necessarily indicative of actual values or
future results, which may be significantly more or less favorable than suggested
by such analyses, nor are they appraisals.  In addition, the Advisor's analyses
should not be viewed as determinative of the opinion of the Board of Directors
or the management of Sweet Water with respect to the value of Sweet Water.

     The following is a summary of the analyses performed by the Advisor in
connection with the Fairness Opinion updated as of June 24, 1999.  The following
discussion contains financial information concerning Sweet Water and South
Alabama as of December 30, 1998 and market information as of June 23, 1999.
Analysis of Selected Transactions  .  The Advisor performed an analysis of
premiums paid in selected pending or recently completed acquisitions of banking
organizations in Alabama and in the Southeastern United States with comparable
characteristics to the Merger.  Two sets of comparable transactions were
analyzed to ensure a thorough comparison.

     The first set of comparable transactions consisted of a group of comparable
transactions based upon the geographic market area of Alabama for which pricing
data were available.  These comparable transactions consisted of three mergers
and acquisitions of banks located in Alabama with assets of less than $100
million which were announced or completed between January 1, 1998 and June 23,
1999.  The analysis yielded multiples of the purchase price in these
transactions relative to:

     1.   Book value ranging from 1.64 times to 2.95 times with an average of
2.36 times and a median of 2.50 times (compared with the multiples implied in
the Merger of 1.85 times December 30, 1998 book value for Sweet Water);

     2.   Last twelve months earnings ranging from 14.2 times to 40.6 times with
an average of 26.1 times and a median of 23.4 times (compared with the multiples
implied in the Merger of 16.4 times last twelve months earnings as
of December 30, 1998 for Sweet Water);

     3.   Total assets ranging between 17.7% and 26.8% with an average of 22.3%
and a median of 22.4% (compared with the multiples implied in the Merger of
20.0% of December 30, 1998 total assets for Sweet Water); and

     4.   Total deposits ranging from 20.0% to 31.6% with an average of 25.4%
and a median of 24.6% (compared with the multiples implied in the Merger of
22.5% of deposits as of December 30, 1998 for Sweet Water).

     The second set of comparable transactions consisted of a group of
comparable transactions based upon the profitability, asset size and
geographic market area of Sweet Water for which pricing data were available.
These comparable transactions specifically consisted of forty-five mergers and
acquisitions of banks in the Southeast with total assets of less than $100
million and which were announced or completed between June 1, 1998 and June
23, 1999.  The analysis yielded multiples of the purchase price in these
transactions relative to:

     1.   Book value ranging from 1.27 times to 3.49 times with an average of
2.36 times and a median of 2.27 times (compared with the multiples implied in
the Merger of 1.85 times December 30, 1998 book value for Sweet Water);

     2.   Last twelve months earnings ranging from 12.9 times to 58.1 times with
an average of 26.2 times and a median of 21.5 times (compared with the multiples
implied in the Merger of 16.4 times last twelve months earnings as
of December 30, 1998 for Sweet Water);

     3.   Total assets ranging between 7.5% and 51.1% with an average of 24.2%
and a median of 22.9% (compared with the multiples implied in the Merger of
20.0% of December 30, 1998 total assets for Sweet Water); and

     4.   Total deposits ranging from 7.9% to 88.1% with an average of 28.6%
and a median of 25.5% (compared with the multiples implied in the Merger of
22.5% of deposits as of December 30, 1998 for Sweet Water).

     Discounted Cash Flow Analysis.  Using discounted cash flow analysis, the
Advisor estimated the present value of the future after-tax cash flow streams
that Sweet Water could produce through the year 2003, under various
circumstances, assuming that it performed in accordance with the earnings/return
projections provided by management.


     The Advisor estimated the terminal value for Sweet Water  at the end of
2003 by capitalizing the final period projected earnings by the quotient of
(i) the assumed annual growth rate of the earnings of Sweet Water plus one and
(ii) the difference between a range of required rates of return and the assumed
annual growth rate of earnings in (i) above.  This produced a range of terminal
values per share of $147.00 to $184.00.  The Advisor then discounted the annual
cash flow streams (defined as all earnings in excess of that required to
maintain a tangible equity to asset ratio of 6.0%) and the terminal values
using discount rates ranging from 12% to 14%.  The discount range was chosen to
reflect different assumptions regarding the required rates of return of Sweet
Water and the inherent risk surrounding the underlying projections.  This
discounted cash flow analysis indicated a range of values per share of $128.00
to $159.00, compared to the value per share of the Merger consideration to Sweet
Water stockholders of $178.02 as of June 23, 1999.

     Comparable Company Analysis.  The Advisor compared selected stock market
results of South Alabama to the publicly available corresponding data of other
composites which the Advisor deemed to be relevant, including SNL
Securities, L.P.'s (i) index of all publicly traded banks and (ii) the SNL index
of banks with assets of less than $500 million and (iii) the S&P 500.  Although
South Alabama's Common Stock price has exhibited some recent weakness relative
to the selected indices, this weakness in itself is not material to the fairness
from a financial point of view of the Merger consideration to be received by
stockholders of Sweet Water as of the date of the Fairness Opinion.

     No company or transaction used in the comparable company and comparable
transaction analyses is identical to Sweet Water, South Alabama or the Merger.
Accordingly, an analysis of the results of the foregoing necessarily involves
complex considerations and judgments concerning differences in financial and
operating characteristics of Sweet Water and South Alabama and other factors
that could affect the public trading value of the companies to which they are
being compared.  Mathematical analysis (such as determining the average or
median) is not in itself a meaningful method of using comparable transaction
data or comparable company data.

     Pursuant to an engagement letter dated January 22, 1999, between Sweet
Water and the Advisor, Sweet Water agreed to pay the Advisor a fee of $10,000.


     Sweet Water also agreed to indemnify and hold harmless the Advisor and its
officers and employees against certain liabilities in connection with its
services under the engagement letter, except for liabilities resulting from the
negligence, violation of law or regulation or bad faith of the Advisor or any
matter for which the Advisor may have strict liability.

     The Fairness Opinion is directed only to the question of whether the Merger
consideration  is fair from a financial perspective and does not constitute a
recommendation to any Sweet Water shareholder to vote in favor of the Merger.
No limitations were imposed on the Advisor regarding the scope of its
investigation or otherwise by Sweet Water.

     Based on the results of the various analyses described above, the Advisor
concluded that the Merger consideration to be received by Sweet Water
shareholders pursuant to the Merger is fair from a financial point of view.


Effective Date and Effective Time

     Articles of Merger will be filed with the Secretary of State of the State
of Alabama (the "Secretary of State") as soon as practicable after all
conditions contained in the Merger Agreement have been satisfied or lawfully
waived, including receipt of all regulatory approvals and expiration of all
statutory waiting periods, and the approval of the Merger Agreement
by the shareholders of Sweet Water.  The Effective Time of the Merger will be
the later of the time stated in the Articles of Merger or the time  the Articles
of Merger are filed with the Secretary of State.  The Effective Date of the
Merger will be the day on which the Effective Time occurs.

Background of and Reasons for the Merger

     Since 1991, management of South Alabama has considered various
possibilities for increased asset and earnings growth, including possible new
branches, acquisition of existing branches of other area banks and the
chartering of new banks within southern Alabama.  Since 1993, South Alabama has
acquired through mergers four banks in southern Alabama.

     Background of the Merger.  In the past several years, Sweet Water has been
approached by several institutions who expressed an interest in merging with
Sweet Water.  About two years ago, Sweet Water received an unsolicited and
very informal call to discuss a possible merger with a much larger bank in a
city about one hour from Sweet Water. Representatives of each of the banks held
several meetings by phone and in person to discuss a possible merger.  After
careful consideration, the Board of Directors of Sweet Water determined that
the proposed merger consideration was not of sufficient value to the
shareholders of Sweet Water, and those merger negotiations were discontinued.

     Sweet Water was next approached by a holding company in West Central
Alabama in June of 1996.  Again, the Board of Directors determined the offered
consideration was insufficient, and the merger negotiations were terminated.

     In July of 1996, Sweet Water was approached by a holding company of a large
bank in the  middle of the state to discuss the possibility of a merger.
Executives of Sweet Water met with the holding company chairman and his
attorney on several occasions, and talks progressed to the point that the
chairman and the attorney made a formal presentation to the Sweet Water
Board of Directors.   After several weeks of further discussions and
negotiations, the Sweet Water Board declined to sign a letter of intent.
The Board of Directors of Sweet Water determined that the consideration being
offered was inadequate and that the two companies were not compatible in
their philosophies of management.


     In June of 1998, The Commercial National Bank of Demopolis announced that
it intended to merge with South Alabama Bancorporation.  Several Executives
and Board Members of Sweet Water had contacts with The Commercial National
Bank.  These contacts spoke well of South Alabama and its philosophies of
business and bank management.

     In July of 1998, representatives from Sweet Water were approached by
representatives of South Alabama Bancorporation to entertain the
possibility of a merger.  After several meetings, a team of executive
officers from South Alabama came to Sweet Water and made a presentation to
its Board on the history of South Alabama and their plans for the future.
The Board of Directors of Sweet Water was impressed with this presentation
and South Alabama's system of bank management.  After a period of
negotiation on per share price, a plan for the tax-free exchange of Sweet
Water Common Stock for South Alabama Common Stock was agreed on, and a
letter of intent was signed.

     Sweet Water held several more meetings and negotiated with South Alabama
in December of 1998 and the first quarter of 1999.  The Board engaged Alex
Sheshunoff & Co. to examine the fairness of the merger consideration to the
Sweet Water shareholders.  At a meeting of the Board of Directors of Sweet Water
on March 30, 1999, Alex Sheshunoff & Co. rendered a preliminary opinion that
the merger consideration was fair to the shareholders of Sweet Water from a
financial point of view.  The Board of Directors approved the Merger
Agreement and authorized its executive offers to execute and fulfill the
agreement.

     Reasons for the Merger.  Numerous  factors were considered by the two
Boards in approving the Merger and, in the case of Sweet Water, in recommending
the terms of the Merger to its shareholders.  They included an analysis of the
financial structure, results of operations and prospects of South Alabama and
Sweet Water, the composition of the businesses of the two organizations, the
overall compatibility of the management of the organizations, the tax free
nature of the transaction,  and the outlook for both organizations in the
banking and financial services industry.

     In the last several years South Alabama has focused on expanding its
franchise into new markets in the southern half of Alabama, especially in the
southwest quadrant of the state.  South Alabama's management believes that it
must grow to remain competitive in the rapidly changing banking environment.
The addition of Sweet Water  is expected to increase the resources available
to South Alabama, add stability to its deposit base, allow for a wider
distribution of risk and enhance its ability to keep pace with the technological
and competitive changes in banking.

     Sweet Water's Board of Directors believes that the Merger is in the best
interests of Sweet Water and its shareholders. The Board of Directors of Sweet
Water considered a number of factors in deciding to approve and recommend
the terms of the Agreement to Sweet Water shareholders. These factors included,
among other things: (i) the terms of the proposed transaction; (ii) the
financial condition, results of operations, and future prospects of Sweet Water;
(iii)the likelihood that Sweet Water would continue to face significant
additional competitive pressures in its market area from larger banking and
other financial institutions capable of offering a broad array of financial
services, especially considering the general trend in the banking industry
favoring mergers:(iv)the economies of scale to be afforded by combining the
strengths of SWSB and South Alabama;(v)as a part of a larger and more
diverse financial institution, it is anticipated that the Merger will help
SWSB reach more customers, add additional products for its customers,
diversify its risks, enchance its ability to make larger loans, and, in
general, compete more effectively with larger banking institutions
(vi) the market value of the consideration to be received by Sweet Water
shareholders relative to the book value and earnings per share of Sweet Water
Common Stock; (vii) the competitive and regulatory environment for financial
institutions generally; (viii) the fact that the Merger will enable Sweet Water
shareholders to exchange their shares of Sweet Water Common Stock (for which
there is no established public trading market) for shares of common stock of a
larger and more diversified entity, the stock of which is more widely held and
more actively traded; (ix) that the Merger will continue to enable Sweet Water
shareholders to hold stock in a financial institution that has historically
paid cash dividends to its shareholders; (x) the likelihood of receiving
the requisite regulatory approvals; (xi) that it is expected that the Merger
will be a tax-free transaction (except in respect of cash received for Sweet
Water Common Stock) for federal income tax purposes; (xii) the appeal of South
Alabama's current philosophy of maintaining local management and allowing local
management a high level of autonomy, particularly as to loan decisions;
(x) the fact that South Alabama presently contemplates continuing to
use SWSB's long established name in the community; (xiv) the expectation that
the Merger will decrease Sweet Water's dependency on the local timber industry;
and  (xv) the prospect of minimal job displacement among the two companies.
The Board of Directors also took into account an opinion received from Alex
Sheshunoff & Co. Investment Banking that the consideration to be received by the
shareholders of Sweet Water in the Merger, as determined in the Agreement, is
fair, from a financial point of view, to them.  See "-Opinion of Financial
Advisor."  The foregoing discussion of the information and factors considered
by the Sweet Water Board of Directors is not intended to be exhaustive of the
factors considered by the Board of Directors. The Sweet Water Board of Directors
did not assign any relative or specific weights to the foregoing factors,
and individual directors may have given different weights to different factors.
In addition, management of South Alabama made it clear to Sweet Water's Board of
Directors that there could be no assurance that factors (xii) and (xiii) listed
above would continue indefinitely.  See "Available Information,"  "Incorporation
of Certain Documents by Reference," "Comparative Market Prices and Dividends"
and "Business of Sweet Water."

Surrender of Certificates

     As promptly as practicable after the Effective Time, SATC, acting in the
capacity of exchange agent for South Alabama (the "Exchange Agent"), will mail
to each former holder of record at the record date of Sweet Water Common
Stock a form letter of transmittal, together with instructions and a return
mailing envelope (collectively, the "Exchange Materials"), for the exchange of
such holders' Sweet Water Common Stock certificates for cash and certificates
representing shares of South Alabama Common Stock.  HOLDERS OF SWEET WATER
COMMON STOCK SHOULD NOT SEND IN THEIR CERTIFICATES UNTIL THEY RECEIVE THE
EXCHANGE MATERIALS FROM THE EXCHANGE AGENT.

     Upon receipt of the Exchange Materials, former holders of Sweet Water
Common Stock should complete the letter of transmittal in accordance with
the instructions and mail the letter of transmittal together with all their
stock certificates representing shares of Sweet Water Common Stock to the
Exchange Agent in the return envelope provided.  Upon receipt of the
certificates and related documentation, South Alabama will issue, and the
Exchange Agent will mail, to such holder of Sweet Water Common Stock a
check in the amount of any payment in respect of fractional shares of South
Alabama Common Stock payable to the surrendering shareholder and a
certificate representing the number of shares of South Alabama Common
Stock to which such holder is entitled pursuant to the Merger Agreement.
 No certificates of South Alabama Common Stock and no payment in respect of
fractional shares will be delivered to a holder of Sweet Water Common Stock
unless and until such holder shall have delivered to the Exchange Agent
certificates representing the shares of Sweet Water Common Stock owned by such
holder and in respect of which such holder claims payment is due, or such
documentation and security in respect of lost or stolen certificates as may
be required by the Exchange Agent.

     Former shareholders of record of Sweet Water on the Record Date will be
entitled to vote after the Effective Time at any meeting of South Alabama
shareholders the number of whole shares of South Alabama Common Stock into
which such holders' respective shares of Sweet Water Common Stock are
converted, regardless of whether such holders have exchanged their
certificates representing Sweet Water Common Stock for certificates
representing South Alabama Common Stock.

     Beginning six months after the Effective Time, no dividend or other
distribution payable after the Effective Time with respect to South Alabama
Common Stock issued to replace Sweet Water Common Stock will be paid to the
holder of an unsurrendered Sweet Water Common Stock certificate until the
holder surrenders such certificate, at which time such holder will be entitled
to receive all previously withheld dividends and distributions, without
interest.

     After the Effective Time, there will be no transfers on Sweet Water's stock
transfer books of shares of Sweet Water Common Stock issued and outstanding at
the Effective Time.  If certificates representing shares of Sweet Water Common
Stock are presented for transfer after the Effective Time, they will be returned
to the presenter together with a form of letter of transmittal and exchange
instructions.

     Neither South Alabama nor the Exchange Agent shall be liable to a holder of
Sweet Water Common Stock for any amounts paid or properly delivered in good
faith to a public official pursuant to any applicable abandoned property
law.

Conditions to Consummation of the Merger

     The respective obligations of South Alabama and Sweet Water to effect the
Merger are subject to the satisfaction of the following conditions prior to the
Effective Time:  (i) approval of the Merger Agreement and the transactions
contemplated thereby by the holders of at least two-thirds (2/3) of the Sweet
Water Common Stock;  (ii) approval of the Merger Agreement and the transactions
contemplated thereby by the Federal Reserve and the expiration of any applicable
statutory waiting period; (iii) receipt of all other regulatory and contractual
consents necessary to consummate the transactions contemplated by the Merger
Agreement; (iv) absence of any law, regulation, rule, judgment, ruling or order
which prohibits or restricts consummation of the transactions contemplated by
the Merger Agreement; (v) the Registration Statement of which this Prospectus
forms a part will have become effective and no stop order suspending the
effectiveness of the Registration Statement will have been issued and no
proceeding or investigation by the Commission to suspend the effectiveness
thereof shall have been initiated and be continuing, and all necessary approvals
under state securities laws relating to the issuance or trading of the shares
of South Alabama Common Stock issuable pursuant to the Merger shall have been
received;  (vi) South Alabama shall have received a satisfactory letter from
Arthur Andersen LLP to the effect that the merger will qualify for
pooling-of-interests accounting treatment; and (vii) South Alabama and Sweet
Water shall have received an opinion from counsel to South Alabama to the effect
that, for federal income tax purposes, the exchange of Sweet Water Common
Stock for South Alabama Common Stock will not give rise to recognition of gain
or loss to shareholders of Sweet Water (other than to the extent any cash is
received) and neither South Alabama nor Sweet Water will recognize gain or loss
as a consequence of the Merger.

     The obligations of South Alabama to effect the Merger are further subject
to the satisfaction or waiver of the following conditions: (i) each of the
representations and warranties of Sweet Water set forth in the Merger Agreement
shall be true and correct as of the Effective Time, each of the agreements and
covenants of Sweet Water to be performed pursuant to the Merger Agreement prior
to the Effective Time shall have been duly performed, and South Alabama shall
have received a certificate of Sweet Water to the effect that such obligations
have been complied with;  (ii) South Alabama shall have received an opinion of
counsel to Sweet Water in the form attached to the Merger Agreement; and (iii)
Sweet Water's Book Value (as defined in the Merger Agreement) shall be at least
$96.40 per share.

     The obligations of Sweet Water to effect the Merger are further subject to
the satisfaction or waiver by Sweet Water of the following conditions:
i) each of the representations and warranties of South Alabama set forth in the
Merger Agreement shall be true and correct as of the Effective Time, each of the
agreements and covenants of South Alabama to be performed pursuant to the
Merger Agreement prior to the Effective Time shall have been duly performed, and
Sweet Water shall have received a certificate of South Alabama to the effect
that such obligations have been complied with;  (ii) Sweet Water shall have
received an opinion of counsel to South Alabama in the form attached to the
Merger Agreement; (iii) the approval for listing on NASDAQ of the shares of
South Alabama Common Stock to be issued in the Merger; and (iv) Sweet Water
shall have received the Fairness Opinion from Alex Sheshunoff & Co.
Investment Banking.

Regulatory Approvals

    The Merger will not proceed in the absence of receipt of the requisite
regulatory approvals.  There can be no assurance that such regulatory approvals
will be obtained or as to the timing of such approvals.  There also can be no
assurance that such approvals will not be accompanied by a  conditional
requirement which causes such approvals to fail to satisfy the conditions set
forth in the Merger Agreement.  Applications for approvals described below have
been submitted to the appropriate regulatory agencies.

     South Alabama and Sweet Water are not aware of any material government
approvals or actions that are required for consummation of the Merger, except
as described below.  Should any other approval or action be required, it
presently is contemplated that such approval or action would be sought.

     The Merger requires the prior approval of the Federal Reserve, pursuant to
Section 3 of the Bank Holding Company Act (the "BHC Act").    In granting its
approval under Section 3 of the BHC Act, the Federal Reserve must take
into consideration, among other factors, the financial and managerial resources
and future prospects of the institutions and the convenience and needs of the
communities  to be served.  The relevant statutes prohibit the Federal Reserve
from approving the Merger (i) if it would result in a monopoly or be in
furtherance of  any combination or conspiracy to monopolize or attempt to
monopolize the business of banking in any part of the United States, or (ii) if
its effect in any section of the country may be to lessen substantially
competition or to tend to create a monopoly, or (iii) if it would be a
restraint of trade in any manner, unless the Federal Reserve finds that any
anti-competitive effects are outweighed clearly by the public interest and the
probable effect of the transaction in meeting the convenience and needs of the
communities to be served.  Under the BHC Act, the Merger generally may not be
consummated until the 15th day following the date of Federal Reserve approval,
during which time the United States Department of Justice may challenge the
transaction on antitrust grounds.  The commencement of any antitrust action
would stay the effectiveness of the Federal Reserve's approval, unless a court
specifically orders otherwise.

     The Federal Reserve approved the Merger on June 3, 1999, and the 15-day
waiting period expired on June 18, 1999.

Conduct of Business Pending the Merger

     The Merger Agreement requires that each of Sweet Water and South Alabama
preserve intact its business relationships and goodwill, and take no action that
would adversely affect the ability of either party to obtain any necessary
consents or its ability to perform under the Merger Agreement.  In addition,
Sweet Water has agreed that, without the consent of South Alabama, it will not:
(i) amend its charter or bylaws; (ii) incur any additional debt except in the
ordinary course of business or permit any lien on its assets to exist; (iii)
repurchase, redeem or otherwise acquire any of its Common Stock or declare or
pay any dividend, except that it may alter its dividend patterns as required or
permitted for pooling-of-interests accounting treatment; (iv) issue or sell any
of its Common Stock or any right to acquire such stock; (v) take any
action with respect to any adjustment or reclassification of its Common Stock or
dispose of or encumber any stock of a subsidiary or any other of its assets
other than in the ordinary course of business; (vi) acquire any equity interest
in any third party other than in connection with foreclosures or by a subsidiary
acting in a fiduciary capacity; (vii) grant any increase in compensation to
employees or directors or pay any bonus or severance payments, all except in
accordance with past practice; (viii) enter into any employment contracts
without an unconditional right of termination; (ix) adopt any new
employee benefit plan or make any material change to an existing employee
benefit plan unless necessary to maintain the tax qualified status of such plan;
(x) make any significant change in accounting method except as required to meet
regulatory or other requirements;  (xi) commence any litigation other than in
accordance with past practice, settle any litigation involving any material
liability, or modify, amend or terminate, except in the ordinary course of
business, any material contract; (xii) operate other than in the ordinary
course of business; or (xiii) fail to file timely any report required
to be filed by it with any Regulatory Authority.

     Each party has also agreed to give written notice to the other promptly
upon becoming aware of the occurrence of any event which is likely to constitute
a Material Adverse Effect within the meaning given to such term in the Merger
Agreement or constitute a breach of any of its representations, warranties or
covenants contained in the Merger Agreement and to use its reasonable efforts to
remedy any such condition or breach.

Commitments with Respect to Other Offers

     Until the termination of the Merger Agreement, and except for the Merger,
neither Sweet Water nor any of its directors or officers (or any person
representing any of the foregoing) shall solicit inquiries or proposals with
respect to, furnish any non-public information it is not legally obligated to
furnish, or enter into any contract concerning any acquisition or purchase of
all or of a substantial portion of the assets of, or of a substantial equity
interest in, Sweet Water or any business combination involving Sweet Water
(collectively, an "Acquisition Proposal") other than as contemplated
by the Merger Agreement.  Sweet Water will notify South Alabama immediately
if any such inquiries or proposals are received by Sweet Water.  SwSeet Water
shall instruct its officers, directors, agents or affiliates or their
subsidiaries to refrain from doing any of the above.  Sweet Water may
communicate information about an Acquisition Proposal to its shareholders
to the extent that it is required to do so in order to comply with its legal
obligations.

     South Alabama shall promptly notify Sweet Water orally and in writing if it
receives any inquiry or proposal relating to an Acquisition Proposal. Sweet
Water shall keep any such information confidential.

Management and Operations After the Merger

     The Merger Agreement provides for the appointment of the Chairman of Sweet
Water's Board of Directors, Stratton F. Lewis, Jr., and Jack O. Kerby, Sr.,
to the Board of Directors of South Alabama and the election of Stratton F.
Lewis, Jr., as an executive officer of South Alabama.

Interests of Certain Persons in the Merger

     Certain of the directors and executive officers of Sweet Water, members of
their families and certain of their associates own, or have interests in, 2,700
shares of South Alabama Common Stock in the aggregate.

     South Alabama has agreed in the Merger Agreement to indemnify present and
former directors and officers of Sweet Water against liabilities arising out of
actions or omissions occurring at or prior to the Effective Time to the extent
South Alabama would have been authorized under the ABCA and Sweet Water's
Articles and Bylaws.

     In the normal course of business, SAB, MCB, FNBB and CBD make loans to
heir directors and officers  and to directors and officers of South
Alabama, and SWSB makes loans to its directors and officers and to directors
and officers of Sweet Water, including loans to certain related persons and
entities.  Such loans are made on substantially the same terms, including
interest rates and collateral, as those prevailing at the time for comparable
transactions with other customers, and, in the opinion of management of both
South Alabama and Sweet Water, do not involve more than the normal risk of
collectibility.  The amount of these loans by SAB, MCB, FNBB and CBD to their
and South Alabama's directors and officers was 40.0% of shareholders' equity
for South Alabama, and the amount of loans by SWSB to its and Sweet Water's
directors and officers was 47.1% of shareholders' equity for Sweet Water, both
as of March 31, 1999.

Certain Federal Income Tax Consequences

     Neither South Alabama nor Sweet Water has requested or will receive an
advance ruling from the Internal Revenue Service as to the tax consequences
of the Merger.  Hand Arendall, L.L.C., counsel for South Alabama, has delivered
an opinion that, for federal income tax purposes, under current law, assuming
that the Merger will take place as described in the Merger Agreement and that
certain factual matters represented by South Alabama and Sweet Water (including
the representation that Sweet Water shareholders will maintain sufficient
equity ownership interests in South Alabama after the Merger) are true and
correct at the time of consummation of the Merger, the Merger will constitute a
reorganization within the meaning of Section 368(a) of the Code, and South
Alabama and Sweet Water will each be a party to the reorganization within the
meaning of Section 368(b) of the Code.

     Assuming that the Merger will take place as described in the Merger
Agreement and that certain factual matters represented by South Alabama and
Sweet Water (including the representation that Sweet Water shareholders will
maintain sufficient equity ownership interests in South Alabama after the
Merger) are true and correct at the time of consummation of the Merger, then,
in the opinion of Hand Arendall, L.L.C., the following will be certain of the
federal income tax consequences of the Merger:  (i) no gain or loss will be
recognized by South Alabama and Sweet Water in the Merger; (ii) the shareholders
of Sweet Water will recognize no gain or loss upon the exchange of their Sweet
Water Common Stock solely for shares of South Alabama Common Stock; (iii) the
basis of the South Alabama Common Stock received by the Sweet Water shareholders
in the proposed transaction will, in each instance, be the same as the basis of
the Sweet Water Common Stock surrendered in exchange therefor; (iv) the holding
period of the South Alabama Common Stock received by the Sweet Water
shareholders will, in each instance, include the period during which the Sweet
Water Common Stock surrendered in exchange therefor was held, provided that the
Sweet Water Common Stock was held as a capital asset on the date of the
exchange; (v) the payment of cash to Sweet Water shareholders in lieu of
fractional share interests of South Alabama Common Stock will be treated for
federal income tax purposes as if the fractional shares were distributed as part
of the exchange and then were redeemed by South Alabama; these cash payments
will be treated as having been received as distributions in full payment in
exchange for the stock redeemed as provided in Code Section 302(a); and
(vi) where solely cash is received by a Sweet Water shareholder in exchange
for his Sweet Water Common Stock pursuant to the exercise of dissenters' rights,
such cash will be treated as having been received in redemption of his or her
Sweet Water Common Stock, subject to the provisions and limitations of Code
Section 302.

     The discussion set forth above is included for general information only
and is based upon the opinion of Hand Arendall, L.L.C., and applies only to
Sweet Water Shareholders who hold Sweet Water Common Stock as a capital
asset, and may not apply to special situations, such as Sweet Water
Shareholders, if any, who received their Sweet Water Common Stock upon exercise
of employee stock options or otherwise as compensation and Sweet Water
Shareholders that are insurance companies, securities dealers, financial
institutions or foreign persons.  It does not address the state, local or
foreign tax aspects of the Merger or any tax consequences of a subsequent
transaction involving South Alabama Common Stock, including any redemption or
transfer of South Alabama Common Stock. This discussion is based on currently
existing provisions of the Code, existing and proposed treasury regulations
thereunder, and current administrative rulings and court decisions.  All of the
foregoing are subject to change and any such change could affect the continuing
validity of this discussion.  Each Sweet Water Shareholder should consult
his or her own tax advisor with respect to the specific tax consequences of the
Merger to him or her, including the application and effect of state, local
and foreign tax laws.

Accounting Treatment

     The Merger is expected  to be accounted for as a pooling-of-interests.
The pooling-of-interests method accounts for a business combination as the
uniting of ownership interests of two or  more companies by exchange of equity
securities. The recorded assets and liabilities of South Alabama and Sweet Water
will be carried forward to the combined corporation at their recorded amounts.
Income of the combined corporation will include income of South Alabama and
Sweet Water for the entire fiscal period in which the combination occurs.  The
reported income of South Alabama and Sweet Water for prior periods will be
combined and restated as income for the combined corporation.  The unaudited
pro forma financial information contained in this Prospectus has been prepared
using the pooling-of-interests method of accounting.  The Merger Agreement
provides that a condition to consummation of the Merger is receipt of a letter
from Arthur Andersen LLP, the independent auditor for South Alabama, confirming
that the Merger qualifies for pooling-of-interests accounting treatment.

Expenses and Fees

     The Merger Agreement provides that each of the parties will bear and pay
all costs and expenses incurred by it in connection with the transactions
contemplated by the Agreement.  It is expected that the total expenses and fees
for South Alabama and Sweet Water will be approximately $42 thousand and
$60 thousand, respectively.

Resales of South Alabama Common Stock

     The shares of South Alabama Common Stock issued pursuant to the Merger
Agreement will be freely transferrable under the Securities Act, except for
shares issued to any shareholder who may be deemed to be an "affiliate"
(generally including, without limitation, directors, certain executive
officers and  certain principal shareholders of Sweet Water) for purposes of
Rule 145 under the Securities Act as of the date Sweet Water shareholders voted
on the Merger Agreement. Affiliates may not sell their shares of South Alabama
Common Stock acquired in connection with the Merger except pursuant to an
effective registration statement under the Securities Act covering such shares
or in compliance with Rule 145 promulgated under the Securities Act or another
applicable exemption from the registration requirements of the Securities Act
and until such time as financial results covering at least 30 days of combined
operations of South Alabama and Sweet Water after the Merger have been
published.  South Alabama may place restrictive legends on certificates
representing South Alabama Common Stock issued to all persons who are deemed
"affiliates" under Rule 145.  In addition, Sweet Water has agreed to use its
reasonable efforts to cause each person or entity that is an "affiliate" to
enter into a written agreement in substantially the form attached to the Merger
Agreement relating to such restrictions on sale or other transfer. This
Prospectus does not cover resales of South Alabama Common Stock received by any
person who may be deemed to be an affiliate of Sweet Water.


                  PRO FORMA FINANCIAL INFORMATION

Pro Forma Combined Condensed Consolidated Statement of Condition

     The following unaudited Pro Forma Combined Condensed Consolidated
Statement of Condition combines the historical consolidated statements of
condition of South Alabama and Sweet Water giving effect to the Merger, which
will be accounted for as a pooling-of-interests, as if it had been completed,
and the issuance of 850,200 shares of South Alabama Common Stock occurred, on
March 31, 1999, after giving effect to the pro forma adjustments described in
the accompanying footnotes.  No provision has been reflected for expenses
related to the Merger, which are not expected to have a material impact on
financial condition. This financial data should be read in conjunction with
the historical consolidated financial statements, including the respective
notes thereto, of South Alabama, which are incorporated by reference in this
Prospectus, and the historical consolidated financial statements of Sweet
Water, which appear elsewhere in this Prospectus, and with the condensed
consolidated historical and other pro forma financial information, including
the notes thereto, appearing elsewhere in this Prospectus.  See "Available
Information," "Incorporation of Certain Documents by Reference," and Appendix
C hereto.  This pro forma financial information is not necessarily indicative
of the actual financial position that would have occurred had the Merger been
consummated on March 31, 1999, nor is it necessarily indicative of future
financial position.

<TABLE>
Pro Forma Condensed Consolidated Statement of Condition
As of March 31, 1999 (Unaudited)
(In Thousands)



<CAPTION>
                                  HISTORICAL
                               South      Sweet       PRO FORMA      PRO FORMA
                               Alabama    Water       ADJUSTMENTS    COMBINED

<S>                            <C>        <C>         <C>            <C>
ASSETS
  Cash and cash equivalents    $ 28,322   $ 6,196                    $ 34,518
  Investment securities         154,556    14,288                     168,844
  Loans, net                    298,998    33,344                     332,342
  Premises and equipment, net    11,196     1,279                      12,475
  Intangible assets               4,527         0                       4,527
  Other assets                    6,383     1,124                       7,507
   Total assets                $503,982   $56,231                    $560,213


LIABILITIES
  Deposits                     $428,684   $49,926                    $478,610
  Short-term borrowings           6,386         0                       6,386
  Federal Home Loan Bank
   borrowings                     6,000         0                       6,000
  Other liabilities               3,719       484                       4,203
   Total liabilities            444,789    50,410                     495,199

SHAREHOLDERS' EQUITY
  Common stock                       77        60     $(51)a               86
  Capital surplus                37,126       648       51             37,825
  Accumulated other
   comprehensive income             854       (30)                        824
  Retained earnings              21,136     5,143                      26,279
  Total shareholders' equity     59,193     5,821        0             65,014
Total liabilities and
 shareholders' equity          $503,982   $56,231     $  0           $560,213

   (a)  Reflects issuance of 850,200 shares of South Alabama Common Stock in
exchange for the 60,000 shares outstanding of Sweet Water.
</TABLE>

Pro Forma Combined Condensed Consolidated Statements of Income

     The following unaudited Pro Forma Combined Condensed Consolidated
Statements of Income have been prepared giving effect to the Merger as if it
had been completed, and the issuance of 850,200 shares of South Alabama
Common Stock occurred, on March 31, 1999, presented on a pooling-of-interest
accounting basis.  No provision has been reflected for expenses related to
the Merger, which are not expected to have a material impact on results of
operations.  This financial data should be read in conjunction with the
historical consolidated financial statements, including the respective notes
thereto, of South Alabama, which are incorporated by reference in this
Prospectus, and of Sweet Water, which appear elsewhere in the Prospectus, and
with the condensed consolidated historical and other pro forma financial
information, including the notes thereto, appearing elsewhere in this
Prospectus.  See "Available Information," "Incorporation of Certain Documents
by Reference," and Appendix C hereto.  This pro forma financial information
is not necessarily indicative of the actual operating results that would have
occurred had the Merger been consummated on March 31, 1999, nor is it
necessarily indicative of future operating results.

<TABLE>
Pro Forma Combined Condensed Consolidated Statement of Income (Unaudited)
(In Thousands Except Per Share Data)



<CAPTION>
                         Three Months Ended
                           March 31, 1999         Year Ended December 31,
                                              1998        1997        1996


<S>                      <C>                  <C>         <C>         <C>
Interest revenue         $ 9,812              $ 38,070    $ 34,462    $ 28,239
Interest expense           4,480                17,552      15,041      12,215

Net interest revenue       5,332                20,518      19,421      16,024
Provision for loan losses    151                   571         419         338
Non-interest revenue       1,071                 4,515       4,044       3,335
Non-interest expense       4,105                16,106      14,758      12,274

Income before income
 taxes                     2,147                 8,356       8,288       6,747
Income taxes                 596                 2,267       2,174       1,921
Net income               $ 1,551              $  6,089    $  6,114    $  4,826

Basic net earnings
 per share:              $  0.18              $   0.72    $   0.73    $   0.71
Diluted earnings
 per share:              $  0.18              $   0.71    $   0.72    $   0.70
</TABLE>


              COMPARATIVE MARKET PRICES AND DIVIDENDS
Market Prices

     South Alabama.  The South Alabama Common Stock is traded on the NASDAQ
Stock Market under the symbol "SABC."  The following table sets forth the high
and low closing sale prices for the South Alabama Common Stock, adjusted for
a three-for-two stock split that occurred in mid-1998 (the "Stock Split").
The stock prices do not include retail mark-up, mark-down or commissions.
Trades have generally occurred in small lots, and the prices quoted are not
necessarily indicative of the market value of a substantial block.




<TABLE>
<CAPTION>
                         Closing Sales Prices Per Share
                               High              Low


<S>                            <C>                <C>
1999
First Quarter                  $16.50             $13.63


1998
First Quarter                  $18.83             $14.00
Second Quarter                  20.67              15.33
Third Quarter                   24.75              15.00
Fourth Quarter                  16.25              13.50

1997
First Quarter                  $10.50             $ 8.33
Second Quarter                  12.00               8.67
Third Quarter                   14.30               8.83
Fourth Quarter                  16.37              13.17
</TABLE>

          On October 26, 1998,  the last business day prior to public
announcement that South Alabama and Sweet Water had agreed in principle to
combine, and on April 1, 1999, the last business day prior to the execution of
the Merger Agreement, the closing sales prices per share of South Alabama Common
Stock, as reported on NASDAQ, were $14.50 and $13.875, respectively.

     Sweet Water shareholders should obtain current market quotations for South
Alabama Common Stock.

     Sweet Water.   There has been no active or established public trading
market for the Common Stock of Sweet Water, and, accordingly, there is no
published information with respect to market prices of Sweet Water Common Stock.
Management is aware that shares of Sweet Water's Common Stock were sold in one
private transaction during the past three years, although sales may have taken
place of which, and at prices at which, management is unaware.  The most
recent sale of which management is aware occurred in April, 1997, when 100
shares were sold at a price of $100 per share. Such price may or may not
reflect the market price of Sweet Water Common Stock, and the Board of Directors
of Sweet Water makes no representation to that effect.

Dividends

     South Alabama declared regular quarterly cash dividends per share, as
adjusted for the Stock Split, totaling $.247 in 1996, $.266 in 1997, and $.318
in 1998.  In 1997, a special cash dividend of $.833, as adjusted for the Stock
Split, was declared. During the past two years, Sweet Water has declared cash
dividends of $4.25 per share for 1997 and $4.50 per share for 1998. Future
dividends on shares of South Alabama (assuming the Merger is consummated) or of
both South Alabama and Sweet Water (assuming the Merger is not consummated) will
depend on their respective earnings, financial condition and other relevant
factors, including governmental policies and regulations.  See "Supervision,
Regulation and Effects of Governmental Policy Bank Regulation."


            DESCRIPTION OF SOUTH ALABAMA CAPITAL STOCK

     South Alabama's Articles of Incorporation currently authorize the issuance
of 20,000,000 shares of Common Stock, $0.01 par value, and up to 500,000 shares
of preferred stock.  As of the date of this Prospectus, 7,735,425 shares
of South Alabama Common Stock are issued and outstanding, and no preferred
stock has been issued.  In addition, approximately 151,587 shares of South
Alabama Common Stock are subject to acquisition through the exercise of options
under South Alabama's Incentive Stock Option Plan.  The capital stock of South
Alabama does not represent or constitute a deposit account and is not insured by
the FDIC, the BIF, the Savings Association Insurance Fund or any governmental
agency.

     All of the South Alabama Common Stock outstanding is, and all South
Alabama Common Stock to be issued in connection with the Merger will be, fully
paid and non-assessable.  No South Alabama Common Stock is subject to call.

     South Alabama Common Stock may be issued at such time or times and for
such consideration (not less than the par value thereof) as the South Alabama
Board of Directors may deem advisable, subject to such limitations as may be
set forth in the law of the State of Alabama or in regulations or orders
applicable to South Alabama and its subsidiaries.  SATC is the Registrar and
Transfer Agent for shares of South Alabama Common Stock.

     Holders of South Alabama Common Stock are entitled to receive, to the
extent permitted by law, such dividends as may be declared from time to time
by South Alabama's Board of Directors.  South Alabama has the right to, and
may, from time to time, enter into borrowing arrangements or issue debt
instruments the provisions of which may contain restrictions on payment of
dividends or other distributions on South Alabama Common Stock.  As of the date
of this Prospectus, no such restrictions are in effect.

     In the event of the voluntary or involuntary liquidation, dissolution,
distribution of assets or winding up of South Alabama, after distribution in
full of the preferential amounts, if any, to be distributed to holders of South
Alabama's preferred stock, should any be issued, holders of South Alabama Common
Stock will be entitled to receive all of the remaining assets of South Alabama
of whatever kind available for distribution to shareholders ratably in
proportion to the number of shares of South Alabama Common Stock held.
The South Alabama Board of Directors may distribute in kind to the holders of
South Alabama Common Stock such remaining assets of South Alabama or may sell,
transfer or otherwise dispose of all or any part of such remaining assets to
any other person or entity and receive payment therefor in cash, stock
or obligations of such other person or entity, and may sell all or any part
of the consideration so  received and distribute any balance thereof in kind
to holders of South Alabama Common Stock.  Neither the merger or consolidation
of South Alabama into or with any other corporation, nor the merger of any other
corporation into it, nor any purchase or redemption of shares of stock of
South Alabama of any class, shall be deemed to be a dissolution, liquidation
or a winding-up of South Alabama for purposes of this paragraph.

     Because South Alabama is a holding company, its rights and the rights of
its creditors and shareholders, including the holders of South Alabama Common
Stock, to participate in the distribution of assets of a subsidiary on its
liquidation or recapitalization may be subject to prior claims of such
subsidiary's creditors except to the extent that South Alabama itself may be a
creditor having recognized claims against such subsidiary.

     Except as provided by law, each holder of South Alabama Common Stock shall
have one vote on all matters voted upon by shareholders with respect to each
share of South Alabama Common Stock held.  Holders of South Alabama
Common Stock do not have cumulative voting rights in the election of directors.

     Holders of South Alabama Common Stock are not entitled to preemptive rights
with respect to any shares or other securities of South Alabama which may
be issued.

     South Alabama's Articles of Incorporation permit the issuance of preferred
stock in one or more series having such voting powers and other terms and
conditions, as may be determined in the discretion of the South Alabama Board
of Directors.

             EFFECT OF MERGER ON RIGHTS OF SHAREHOLDERS

     South Alabama and Sweet Water are both Alabama corporations subject to the
provisions of the ABCA. Shareholders of Sweet Water, whose rights are
governed by Sweet Water's Articles of Incorporation and Bylaws will, upon
consummation of the Merger, become shareholders of South Alabama.  The rights
of such shareholders as shareholders of South Alabama will then be governed by
South Alabama's Articles of Incorporation and Bylaws and will continue to
be governed by the ABCA.

     The following summary sets forth certain material differences between the
rights of a Sweet Water shareholder under Sweet Water's Articles of
Incorporation and Bylaws, and the rights of a South Alabama shareholder under
South Alabama's Articles of Incorporation and Bylaws, but does not purport to be
a complete discussion of, and is qualified in its entirety by reference to, the
ABCA and the Articles of Incorporation and Bylaws of Sweet Water and South
Alabama.

Authorized Capital Stock

     South Alabama's Articles of Incorporation authorize the issuance of up to
20,000,000 shares of South Alabama Common Stock ($0.01 par value each), and
500,000 shares of preferred stock (no par value), of which 7,735,425 shares
of South Alabama Common Stock were issued and outstanding as of         , 1999.

     Sweet Water's Articles of Incorporation authorize the issuance of up to
60,000 shares of Sweet Water Common Stock ($1.00[???] par value each), of which
60,000 shares were issued and outstanding as of          , 1999.

Required Shareholder Votes

     South Alabama's Articles of Incorporation provide that the vote of 75% or
more of the shares entitled to vote will be required to approve any merger
or consolidation of South Alabama with or into any other "related" corporation
or the sale, lease, exchange or other disposition of a substantial part (20%)
of South Alabama's assets to such a related corporation, if the related
corporation or its affiliates are the beneficial owners of 5% or more of the
outstanding capital stock of South Alabama.  The above 75% vote requirement
does not apply if (i) a 75% vote of the directors is obtained or (ii) South
Alabama owns 50% or more of the voting stock of such related corporation.

     Sweet Water's Articles of Incorporation and Bylaws contain no similar
provision.

Action by Written Consent

     The ABCA provides that shareholders may take action without a meeting if
consent in writing to such action is signed by all of the shareholders entitled
to vote on the action, unless otherwise provided in the Articles of
Incorporation. South Alabama's Articles of Incorporation prohibit shareholder
action by unanimous written consent.

     Sweet Water's Bylaws specifically authorize shareholder action by unanimous
written consent.

Amendment of Articles of Incorporation

     South Alabama's Articles of Incorporation may be amended as permitted by
the ABCA, but require a vote of the shareholders holding at least 75% of the
stock to change any of those sections of its Articles of Incorporation relating
to (i) mergers with related corporations, (ii) action by shareholders by
written consent, (iii) calling of special meeting of the shareholders or
(iv) nomination of a director for election at an annual meeting of the
shareholders, provided, however, that this 75% vote requirement does not
apply if the amendment in question receives the affirmative vote of not less
than 75% of the directors.

     Sweet Water's Articles of Incorporation may be amended as permitted by the
ABCA.

Amendment of Bylaws

     South Alabama's Bylaws provide that they may be amended by majority vote at
any regular or special meeting of the Board of Directors or the shareholders if
notice of such amendment is included in notice of the meeting.

     Sweet Water's Bylaws may be amended by either its shareholders or
directors, except that its directors may not amend the Bylaws to change the
number of shares necessary to constitute a quorum at a shareholder meeting.

Directors

     South Alabama's Articles of Incorporation provide that in order for a
shareholder to nominate a director for election at an annual shareholders'
meeting, such shareholder must give South Alabama's Secretary notice of such
nomination no less than 30 and no more than 60 days prior to such meeting,
unless such requirement is waived in advance of the meeting by the Board of
Directors.   South Alabama's Bylaws provide that the number of directors shall
be between three and twenty-five, inclusive, and shall be set by the directors
within that range.  South Alabama's Bylaws permit the Board of Directors to
fill vacancies and newly created board seats.

     Sweet Water's Bylaws require at least 60 but not more than 90 days notice
to nominate a director.  The number of directors for Sweet Water is set by
its Board of Directors.  Sweet Water's Bylaws require the shareholders to elect
directors to fill newly created board seat.

Director Liability

     South Alabama's Articles of Incorporation contain a provision which limits,
to the extent permitted by the ABCA, the liability of South Alabama directors
for action or inaction as a director.

     Sweet Water's Articles of Incorporation do not contain any provision
limiting the liability of directors.

Effect of the Merger on Sweet Water Shareholders

     As of _______________, 1999 , Sweet Water had 168 shareholders of record
and 60,000 outstanding shares of Common Stock.  As of _______________, 1999
South Alabama had  7,735,425 shares of South Alabama Common Stock
outstanding with _____  stockholders of record.

     Assuming that no dissenters' rights of appraisal are exercised in the
Merger, and assuming a Market Price of South Alabama Common Stock of
$_______________ at the Effective Time (which was the average market value
during the preceding 20 trading days calculated as of _______________ 1999), an
aggregate amount of _______________ shares of South Alabama Common Stock would
be issued to the shareholders of Sweet Water pursuant to the Merger.  These
shares would represent approximately _______________% of the total shares of
South Alabama Common Stock outstanding after the Merger.

     The issuance of South Alabama Common Stock pursuant to the Merger will
reduce the percentage interest of South Alabama Common Stock currently held
by each principal shareholder and each director and officer of South
Alabama.  Based upon the foregoing assumptions, as a group, the current
directors and officers of South Alabama, who own approximately 25.98% of
South Alabama's outstanding shares, would own approximately 23.41% after
the Merger.

     As noted above, the foregoing statements are based on assumptions, and the
Market Price of South Alabama Common Stock may differ from those assumptions,
causing actual results in the Merger to vary from the assumed results set
forth above.


          SWEET WATER MANAGEMENT'S DISCUSSION AND ANALYSIS

     The following discussion and financial information are presented to aid
in an understanding of the current financial position and results of
operations of Sweet Water and its subsidiary on a consolidated basis and
should be read in conjunction with the Financial Statements and Notes thereto
included herein.  The emphasis of this discussion will be on the years 1998,
1997, 1996, 1995 and 1994.  All yields presented and discussed herein are
based on the cash basis and not on the tax-equivalent basis.

     This discussion contains certain forward looking statements with respect
to the financial condition, results of operation and business of Sweet Water
and its subsidiary on a consolidated basis related to, among other things:

     (a)  trends or uncertainties which will impact future operating results,
liquidity and capital resources, and the relationship between those trends or
uncertainties and non-performing loans and other loans;

     (b)  the effect of the market's perception of future economic conditions,
future inflation, real returns and the monetary policies of the Federal
Reserve Board on short and long term interest rates;

     (c)  the effect of interest rate changes on liquidity and interest rate
sensitivity management; and

     (d)  possible disruptions relating to the "Year 2000 problem."

     These forward looking statements involve certain risks and uncertainties.
Factors that may cause actual results to differ materially from those
contemplated by such forward looking statements include, among others, the
following possibilities:

     (a)  Sweet Water encounters difficulty in integrating with the operations
of South Alabama; and

     (b)  general economic conditions, either nationally or in Alabama, are
less favorable than expected.

     At December 31, 1998, Sweet Water had total assets of approximately $53.5
million and operated two banking locations in Marengo County and one banking
location in Clarke County.  Sweet Water's sole business is banking; therefore,
loans and investments are the principal sources of income.

FINANCIAL CONDITION

     From 1994 to 1997 Sweet Water experienced slow but steady growth in
average assets.  Average net loans grew from $23.4 million in 1994 to $25.4
million in 1997, and average deposits grew from $34.7 million to $38.0 million
during the same period.  The loan to deposit ratio remained fairly constant
during this period, ranging from 62% to 68%.  In 1998, average assets began to
grow at a faster pace, increasing 13.7% from 1997 to 1998.   Deposits increased
14.8% from 1997 to 1998 and this increase was used to partially fund an
increase of 25.2% in net loans during the same period. The remaining increase
in loans was funded by a decrease in the investment portfolio.  Average
shareholders' equity grew from $4.1 million in 1994 to $5.8 million in 1998.

<TABLE>
Average Assets and Liabilities
Distribution of Average Assets, Liabilities and Shareholders' Equity
(In Thousands)



<CAPTION>
                                              1998       1997       1996       1995       1994
<S>                                         <C>        <C>        <C>        <C>        <C>
Average Assets:
  Cash and non-interest bearing deposits    $ 1,625    $ 1,193    $ 1,370    $ 1,396    $ 1,361
  Interest bearing deposits                      43        100        100         78        873
  Federal funds sold                          2,027      1,455      1,202      1,129      1,430
  Investment securities - taxable             5,506      7,875      8,245      6,668      5,325
  Investment securities - nontaxable          6,966      6,185      6,982      6,768      5,166
  Loans, net                                 31,866     25,446     23,397     22,700     23,392
  Premises and equipment, net                   749        579        520        548        568
  Other real estate owned, net                    5         85        153         11          0
  Deferred tax asset                             53         87         81         63         48
  Intangible assets                               0          0          0          0          0
  Other assets                                  970        790        801        725        889
    Average Total Assets                    $49,810    $43,795    $42,851    $40,086    $39,052

Average Liabilities:
  Non-interest bearing demand deposits      $ 5,666    $ 4,945    $ 5,150    $ 5,012    $ 4,780
  Interest bearing demand deposits            4,802      5,704      5,242      4,042      4,060
  Savings deposits                            3,793      3,834      3,776      3,407      3,153
  Time deposits                              29,368     23,514     23,256     22,728     22,660
   Total Deposits                           $43,629    $37,997    $37,424    $35,189    $34,653

Short-term borrowings                             0          0          0          1          1
Long term debt                                    0          0          0          0          0
Deferred tax liability                            9         11         19         14          8
Other liabilities                               326        364        368        271        259
Shareholders' equity                          5,846      5,423      5,040      4,611      4,131
Average Total Liabilities and
      Shareholders' Equity                  $49,810    $43,795    $42,851    $40,086    $39,052
</TABLE>

Loans

Loan growth was slow at Sweet Water from 1994 to 1996.   In September, 1997,
a branch of Sweet Water was opened in Thomasville in Clarke County.   The
branch has experienced rapid growth in loans and contributed most of the
21.5% increase from year-end 1997 to year-end 1998.  At December 31, 1998,
commercial, financial and agricultural loans represented 18.3%, real estate
represented 47.7%, and consumer loans represented 34.0% of total loans,
respectively.

     Of the commercial, financial and agricultural loans and real estate loans
outstanding at year-end 1998, $19.4 million or 80.9% were available for
repricing within one year either because of maturities or because they contained
variable rate terms.

     The table below shows the classification of loans by major category at
December 31, 1998 and 1997.  The second table depicts maturities of selected
loan categories and the interest rate structure for such loans maturing after
one year.

<TABLE>
Distribution of Loans by Category
(In Thousands)

<CAPTION>
                                                            December 31,
                                          ---------------------------------------------------
                                            1998       1997       1996       1995       1994
<S>                                       <C>        <C>        <C>        <C>        <C>
Commercial, financial and agricultural    $ 6,661    $ 7,113    $ 4,778    $ 4,611    $ 5,799
Real estate - construction                      0          0         91          0         61
Real estate - mortgage                     17,323     12,583     11,355     11,355     11,629
Installment                                12,346     10,171      8,973      7,898      7,444
Total Loans                               $36,330    $29,867    $25,197    $23,864    $24,933
Less unearned loan income                  (1,310)    (1,165)      (483)      (519)      (515)
Allowance for loan losses                    (416)      (227)      (307)      (287)      (237)
     Net Loans                            $34,604    $28,475    $24,407    $23,058    $24,181
</TABLE>
<TABLE>
Selected Loans by Type and Maturity
(In Thousands)


<CAPTION>
                                         December 31, 1998
                                           Maturing
                              ----------------------------------------------
                              After One
                              Within       But Within    After
                              One  Year    Five Years    Five Years    Total
<S>                           <C>          <C>  <C>      <C>           <C>
Commercial, financial
 and agricultural             $ 6,661      $    0        $0            $ 6,661
Real estate - Construction          0           0         0                  0
Real Estate - Mortgage         12,746       4,577         0             17,323
     Total                    $19,407      $4,577        $0            $23,984

Loans maturing after
 one year with:
  Fixed interest rates                     $4,577        $0
  Floating interest rates                       0         0
Total                                      $4,577        $0
</TABLE>


     Sweet Water's rollover/renewal policy consists of a reevaluation of
maturing loans to determine whether such loans will be renewed (or rolled
over) and, if so, at what amount, rate and maturity.

Investment Securities

     Statement of Financial Accounting Standards ("SFAS") No. 115, Accounting
for Certain Investments in Debt and Equity Securities requires that only debt
securities as to which Sweet Water has the positive intent and ability to hold
to maturity be classified as to be held-to-maturity and reported at amortized
cost; all other debt securities are reported at fair value.  SFAS No. 115
further requires that unrealized gains and losses on securities classified as
trading account assets be recognized in current operations.  Securities not
classified as to be held-to-maturity or trading are classified as
available-for-sale, and the related unrealized gains and losses are excluded
from earnings and reported net of tax as a separate component of shareholders'
equity until realized.

     Investment securities not classified as available-for-sale or trading are
carried at cost, adjusted for amortization of premiums and accretion of
discounts.  Premiums and discounts are amortized and accreted to operations
using the straight line method, adjusted to prepayments as applicable.
Management has the intent and Sweet Water has the ability to hold these assets
as long-term investments until their estimated maturities.

     Securities within the "available for sale" portfolio may be used as part
of Sweet Water's asset/liability strategy and may be sold in response to
changes in interest rate risk, prepayment risk or similar economic factors.
The specific identification method is used to compute gains or losses on the
sale of these assets.

     The maturities and weighted average yields of investment securities and
securities held for sale at December 31, 1998, are presented in the following
table using the average stated contractual maturities.  The average stated
contractual maturities may differ from the average expected life, because
borrowers may have the right to call or prepay obligations. Taxable equivalent
adjustments, using a 37% tax rate, have been made when calculating yields on
tax-exempt obligations.  For purposes of the following table, securities
available for sale are shown at amortized cost.
<TABLE>
Maturity Distribution of Investment Securities
(Dollars in Thousands)



<CAPTION>
                                               December 31, 1998 Maturity
                                  ----------------------------------------------------------------------------------
                                                    After one        After five
                                    Within one      but within       but within       After ten
                                       year         five years       ten years        years            Total
                                  -------------     ------------     ------------     ------------     -------------
                                  Amount  Yield     Amount Yield     Amount Yield     Amount Yield     Amount  Yield


<S>                               <C>     <C>       <C>    <C>       <C>    <C>       <C>    <C>       <C>     <C>
Securities Held to Maturity
 US Treasury securities           $   14  7.92%     $  752 6.28%                                       $   752 6.28%
 US Government Agencies              705  8.36          79 7.28      $  380 7.81%     $  564 7.82%       1,037 7.78
 State and political subdivisions    144  8.01       2,399 8.42       3,272 8.27         343 9.55        6,719 8.40
 Other Investments                                     200 7.68                                            344 7.82
Total Securities Held to Maturity    863  8.29       3,430 7.88       3,652 8.22         907 8.47        8,852 8.12


Securities Available for Sale
US Treasury securities               250  5.85         751 6.28                                          1,001 6.17
U.S. Government Agencies                                              1,000 6.46       1,402 6.12        2,402 6.26
State and Political Subdivisions                        80 9.24                                             80 9.24
Other investments                                                                        151 7.25          151 7.25
Total Securities Available
 for sale                            250  5.85         831 6.56       1,000 6.46       1,553 6.23        3,634 6.34
Total Investments                 $1,113  7.75%     $4,261 7.62%     $4,652 7.84%     $2,460 7.06%     $12,486 7.61%
</TABLE>

<TABLE>

Book Value of Available for Sale Securities
(In Thousands)
<CAPTION>
                                            December 31,
                                         1998          1997


<S>                                      <C>           <C>
Securities available for sale
   U.S. Treasury Securities              $1,001        $1,000
   U.S. Government Agencies               2,402           599
   State and Political Subdivisions          80             0
   Other Investments                        151           100
Total                                    $3,634        $1,699
</TABLE>


Deposits and Short-Term Borrowings

     The deposit base at Sweet Water remained relatively stable during the
years 1993 through 1997, with an average growth of 3.1 percent per year
experienced.  The mix of deposits remained fairly constant during this period.
Increased growth was realized in 1998 compared to 1997, and this growth was
aided by the addition of the Thomasville branch. The largest increase occurred
in time deposits, a result of special promotional efforts in the Thomasville
area.

<TABLE>
Average Deposits
(Dollars in Millions)




<CAPTION>
                                                 Average for the Year
                        --------------------------------------------------------------------
                                1998                    1997                    1996
                        --------------------    --------------------    --------------------
                        Average      Average    Average      Average    Average      Average
                        Amount       Rate       Amount       Rate       Amount       Rate
                        Outstanding  Paid       Outstanding  Paid       Outstanding  Paid

<S>                     <C>          <S>        <C>          <S>        <C>          <S>
Non-interest bearing
 demand deposits        $ 5,666      N/A        $ 4,945      N/A        $ 5,150      N/A
Interest bearing
 demand deposits          4,802      3.35%        5,704      3.35%        5,242      3.53%
Savings deposits          3,793      3.72         3,834      3.73         3,776      3.73
Time deposits            29,368      5.70        23,514      5.42        23,256      5.71
Total average deposits  $43,629                 $37,997                 $37,424
</TABLE>




     The following table reflects maturities of time deposits of $100,000 or
more at December 31, 1998.  These time deposits include both certificates of
deposit and time deposit open accounts.  Deposits of $11.9 million in this
category represented 25.1% of total deposits at year-end 1998.  Management
does not actively pursue these deposits as a means to fund interest earning
assets, and, as a result, rates paid on these deposits do not differ from
rates paid on smaller denomination certificates of deposit.

<TABLE>
Maturities of Time Deposits of $100,000 or More
(In Millions)
<CAPTION>
     At December 31, 1998

Under                      Over
3               3-12       12
Months          Months     Months      Total
<C>             <C>        <C>         <C>
$4.4            $5.2       $2.3        $11.9
</TABLE>


Asset/Liability Management

     Effective asset/liability management requires an analysis of liquidity
and interest rate risk factors.  Decisions relating to the structure of the
balance sheet are made after management considers the impact on current and
future liquidity needs as well as the effect on the interest rate sensitivity
gap.

     Sweet Water's primary market risk is its exposure to interest rate
changes. Interest rate risk management strategies are designed to optimize
net interest income while minimizing fluctuations caused by changes in the
interest rate environment.  It is through these strategies that Sweet Water
seeks to manage the maturity and repricing characteristics of its balance
sheet.

     The modeling techniques used by Sweet Water simulate net interest income
and impact on fair values under various rate scenarios.  Important elements
of these techniques include the mix of floating versus fixed rate assets and
liabilities, and the scheduled, as well as expected, repricing and maturing
volumes and rates of the existing balance sheet. Under a scenario simulating
a hypothetical 100 basis point increase applied to all interest earning assets
and interest-bearing liabilities, Sweet Water would expect a net loss in fair
value of the underlying instruments of  $3.9 million. This hypothetical loss
is not a precise indicator of future events.  Instead, it is a reasonable
estimate of the results anticipated if the assumptions used in the modeling
techniques were to occur.

Liquidity

     Liquidity represents the ability of a bank to meet loan commitments as
well as deposit withdrawals.  Liquidity is derived from both the asset side
and liability side of the balance sheet.  On the asset side, liquidity is
provided by marketable investment securities, maturing loans, federal funds
sold and cash and cash equivalents.  On the liability side, liquidity is
provided by a stable base of core deposits.  Additionally, Sweet Water has
federal funds lines of credit available if needed.

Interest Rate Sensitivity

     By monitoring Sweet Water's interest rate sensitivity, management
attempts to maintain a desired balance between the growth of net interest
revenue and the risks that might result from significant changes in interest
rates in the market. One tool for measurement of this risk is gap analysis,
whereby the repricing of assets and liabilities are matched across certain
time frames. The interest sensitivity analysis presented in the table below
is based on this type of gap analysis, which assumes that rates earned on
interest earning assets and rates paid on interest bearing liabilities will
move simultaneously in the same direction and to the same extent.  However,
the rates associated with these assets and liabilities actually change at
different times and in varying amounts.  Management must consider various
interest rate scenarios in order to make the decisions which will maximize
net interest revenue and maintain the desired range of interest rate risk.

     The Interest Sensitivity Analysis table below shows a cumulative one
year net asset sensitive position of $10.9 million at December 31, 1998. This
positive gap position indicates that in a rising rate environment Sweet Water
might experience an increase of its net interest revenue as interest rates
earned on interest earning assets would increase faster than rates paid on
interest bearing liabilities.  Conversely, the table would indicate that in a
falling rate environment, Sweet Water might experience a narrowing of the net
interest margin.
<TABLE>
Interest Sensitivity Analysis
(Dollars in Thousands)


<CAPTION>
                                        December 31, 1998
                                  --------------------------------------
                                  Interest Sensitive Within (Cumulative)  Non-Interest
                                  --------------------------------------  Sensitive
                                  3 months    3-12 months    1-5 years    Within 5 years    Total

<S>                               <C>         <C>            <C>          <C>               <C>
EARNING ASSETS
Loans(1)                          $10,332     $28,946        $36,239      $    91           $36,330
Unearned Income                         0           0              0       (1,310)           (1,310)
Less allowance for loan losses          0           0              0         (416)             (416)
Net loans                          10,332      28,946         36,239       (1,635)           34,604
Investment securities                 670       1,560          5,953        6,557            12,510
Federal funds sold and resale
 agreements                         2,360       2,360          2,360            0             2,360
Interest bearing deposits in
 other financial institutions           0           0              0            0                 0
Total earning assets              $13,362     $32,866        $44,552      $ 4,922           $49,474

LIABILITIES
Non-Interest bearing demand
 deposits                               0           0              0      $ 4,985           $ 4,985
Interest bearing demand
 deposits (2)                     $ 1,030     $ 1,030        $ 1,030        4,764             5,794
Savings deposits (2)                    0           0              0        3,979             3,979
Large denomination time
 deposits                           4,383       9,607         11,899            0            11,899
Other time deposits                 5,506      15,857         20,712            0            20,712
Short-term borrowing                    0           0              0            0                 0
Long-term debt                          0           0              0            0                 0
Total interest bearing
 liabilities                      $10,919     $26,494        $33,641      $13,728           $47,369

Interest sensitivity gap          $ 2,443     $ 6,372        $10,911
Earning assets
 /Interest bearing liabilities       1.22        1.24           1.32
Interest sensitivity gap
 /Earning assets                     0.18        0.19           0.24

  (1)  Non-accrual loans are included in the "Non-Interest Sensitive Within
5 Years" category.
  (2)  Certain types of savings and NOW accounts are included in the "Non-
Interest Sensitive Within 5 Years" category.  In Management's opinion these
liabilities do not reprice in the same proportions as rate sensitive assets,
as they are not responsive to general interest rate changes in the economy.
</TABLE>
Capital Resources

     The Federal Reserve and the FDIC require that bank holding companies and
banks have a minimum of Tier I capital equal to not less than 4% of risk
adjusted assets and total capital equal to not less than 8% of risk adjusted
assets. Tier I capital consists of common shareholders' equity.  Tier II
capital includes reserves for loan losses up to 1.25% of risk adjusted assets.
Sweet Water's Tier I capital was $5.7 million at December 31, 1998, and total
(Tier I plus Tier II) capital was $6.1 million at December 31, 1998.  Tier I
and total capital ratios were 13.42% and 14.40%, respectively at December 31,
1998. Both ratios were well above the regulatory minimums.
<TABLE>
Risk-Based Capital
(Dollars in Thousands)

<CAPTION>
                                                          December 31,
                                                       1998         1997


<S>                                                    <C>          <C>
Tier I capital
  Tangible common shareholders' equity                 $ 5,729      $ 5,528
Tier II capital
  Allowable portion of the allowance for
     loan losses                                           416          227
          Total capital (Tier I and Tier II)           $ 6,145      $ 5,755

Risk-adjusted assets                                   $42,675      $31,282
Quarterly average assets                                53,862       46,695
Risk-adjusted capital ratios:
  Tier I capital                                         13.42%       17.67%
  Total capital (Tier I and Tier II)                     14.40%       18.40%

Minimum risk-based capital guidelines
   Tier I capital                                         4.00%        4.00%
   Total capital (Tier I and Tier II)                     8.00%        8.00%

Tier I leverage ratio                                    10.72%       11.84%
</TABLE>

RESULTS OF OPERATIONS

Net Interest Revenue

     Net interest revenue increased 5.73% in 1997 compared to 1996 and 15.9%
in 1998 compared to 1997.  The net yield on interest earning assets increased
to 5.36% in 1997 from 5.28% in 1996 and remained relatively unchanged in 1998.
In 1997 increased loan volume combined with lower cost time deposit portfolio
contributed to the increased margin.

     Presented below is an analysis of net interest income, weighted average
yields on earning assets and weighted average rates paid on interest bearing
liabilities for the past three years.  In order to facilitate comparisons,
federally tax-exempt interest on obligations of state and local governments
and on industrial revenue bonds has been reflected on a fully taxable
equivalent basis, assuming a tax rate of 37%.

<TABLE>
Net Interest Revenue
(Dollars in Thousands)



<CAPTION>
                                        1998                              1997                              1996
                           ------------------------------    ------------------------------    ------------------------------
                           Average      Average  Interest    Average      Average  Interest    Average      Average  Interest
                           Amount       Rate/    Earned/     Amount       Rate/    Earned/     Amount       Rate/    Earned/
                           Outstanding  Yield      Paid      Outstanding  Yield    Paid        Outstanding  Yield    Paid

<S>                        <C>          <C>      <C>         <C>          <C>      <C>         <C>          <C>      <C>
Interest earning assets
  Taxable securities       $ 5,506      6.90%    $  380      $ 7,875      5.52%    $  435      $ 8,245      5.92%    $  488
  Non-taxable securities     6,966      5.57%       388        6,185      7.21%       446        6,982      6.72%       469
  Total securities          12,472      6.16%       768       14,060      6.27%       881       15,227      6.28%       957
  Loans(1)                  32,111     10.45%     3,357       25,733     10.15%     2,611       23,692     10.46%     2,477
  Federal funds sold         2,027      5.72%       116        1,455      4.54%        66        1,202      5.32%        64
  Deposits                      43      6.98%         3          100      7.00%         7          100      7.00%         7
Total interest
 earning assets             46,653      9.10%     4,244       41,348      8.62%     3,565       40,221      8.71%     3,505

Non-interest earning assets:
 Cash and due from banks     1,625                             1,193                             1,370
 Premises and
  equipment, net               749                               579                               520
 Other real estate               5                                85                               153
 Deferred tax asset             53                                87                                81
 Other assets                  970                               790                               801
 Intangible assets               0                                 0                                 0
 Allowance for loan losses    (245)                             (287)                             (295)
  Total                    $49,810                           $43,795                           $42,851

Interest bearing liabilities
 Interest bearing demand
  and savings deposits     $ 8,595      3.51%    $  302      $ 9,538      3.50%    $  334      $ 9,018      3.61%    $  326
 Time deposits              29,368      5.70%     1,673       23,514      5.42%     1,274       23,256      5.71%     1,328
 Short-term borrowing            0      0.00%         0            0      0.00%         0            0      0.00%         0
 Long-term debt                  0      0.00%         0            0      0.00%         0            0      0.00%         0
  Total interest
   bearing liabilities      37,963      5.20%     1,975       33,052      4.87%     1,608       32,274      5.12%     1,654

Non-interest bearing liabilities
 Demand deposits             5,666                             4,945                             5,150
 Deferred Tax Liability          9                                11                                19
 Other                         326                               364                               368
                             6,001                             5,320                             5,537
Shareholders' equity         5,846                             5,423                             5,040
Total                      $49,810                           $43,795                           $42,851

 Net Interest Revenue                   3.90%    $2,269                   3.75%    $1,957                   3.59%    $1,851

Net yield on interest
 earning assets                         4.86%                             4.73%                             4.60%
Tax equivalent adjustment               0.49%                             0.63%                             0.68%
Net yield on interest
 earning assets (tax equivalent)        5.35%                             5.36%                             5.28%

        (1)  Loans classified as non-accruing are included in the average
volume classification.  Loan Fees for all years shown are included in the
interest amounts for loans.
</TABLE>

     The following table reflects the sources of interest income and expense
between 1998 and 1997 and between 1997 and 1996.  The variances resulting from
changes in interest rates and the variances resulting from changes in volume
are shown.

<TABLE>
Analysis of Taxable -Equivalent Interest Increases (Decreases)
(Dollars In Thousands)



<CAPTION>
                          1998 Change From 1997     1997 Change From 1996
                          ---------------------     ---------------------
                                  Due to(1)                Due to (1)
                                  -------------            ------------
                          Amount  Volume  Rate      Amount Volume Rate
<S>                       <C>     <C>     <C>       <C>    <C>    <C>
Interest Revenue
Taxable securities        $ (55)  $(141)  $  86     $(53)  $ (21) $(32)
Non-taxable securities      (92)     75    (167)     (36)    (87)   51
Total securities           (147)    (66)    (81)     (89)   (108)   19
Total loans                 746     650      96      134     212   (78)
Federal funds sold           50      29      21        2      12   (10)
Deposits                     (4)     (4)      0        0       0     0
  Total                     645     609      36       47     116   (69)

Interest Expense
Interest bearing demand
 deposits and savings
 deposits                   (32)    (33)      1        8      19   (11)
Other time deposits         399     320      79      (54)     14   (68)
Short-term borrowing          0       0       0        0       0     0
Long term debt                0       0       0        0       0     0
 Total                      367     287      80      (46)     33   (79)
Net interest revenue       $278    $322    $(44)    $ 93   $  83  $ 10

        (1)  The change in interest due to both rate and volume has been
allocated to volume and rate changes in proportion to the relationship of the
absolute dollar amount of the change in each.
</TABLE>

Provision for Loan Losses and Allowance for Loan Losses

     Throughout the year management estimates the level of losses inherent in
the portfolio to determine whether the allowance for loan losses is adequate
to absorb losses in the existing portfolio.  The allowance for loan losses is
a valuation allowance which quantifies this estimate.  Management's judgment
as to the amount of anticipated losses on existing loans involves the
consideration of current and anticipated economic conditions and their
potential effects on specific borrowers; results of examinations of the loan
portfolio by regulatory agencies; and management's internal review of the loan
portfolio. In determining the collectibility of certain loans, management also
considers the fair value of any underlying collateral. The amounts ultimately
realized may differ from the carrying value of these assets due to economic,
operating or other conditions beyond Sweet Water's control.

     While it is possible that in particular periods Sweet Water may sustain
losses which are substantial relative to the allowance for loan losses, it is
the judgment of management that the allowance for loan losses reflected in
the consolidated statements of condition is adequate to absorb estimated
losses which may exist in the current loan portfolio.

     Management reviews the loan portfolio and determines the adequacy of the
allowance at each quarter end. Appropriate adjustments to the allowance are
made through the provision for loan losses.

     The table below sets forth certain information with respect to Sweet
Water's average loans, allowance for loan losses, charge-offs and recoveries
for the three years ended December 31, 1998.

<TABLE>
Summary of Loan Loss Experience
(Dollars in Thousands)





<CAPTION>
                                                    Year Ended December 31,
                                       ---------------------------------------------------
                                          1998       1997       1996       1995      1994
<S>                                    <C>        <C>        <C>        <C>        <C>
Allowance for loan losses-
  balance at beginning of period       $   227    $   307    $   287    $   237    $   228

Charge-offs:
 Commercial, financial and
  agricultural                               5         13          0          3          0
 Real estate - construction                  0          0          0          0          0
 Real estate - mortgage                     17         23          0          0         23
 Installment                                81         77         20         15         16
Total charge-offs                          103        113         20         18         39

Recoveries:
 Commercial, financial and
  agricultural                               5          1          3          1          1
 Real estate - construction
 Real estate - mortgage                      0          0          0          1          6
 Installment                                17          9          7          6          8
Total recoveries                            22         10         10          8         15

Net charge-offs                             81        103         10         10         24

Addition to allowance charged to
  operating expense                        270         23         30         60         33

Allowance for loan losses-
  balance at end of period             $   416    $   227    $   307    $   287    $   237

Loans at end of year, net of
 unearned income                       $35,020    $28,702    $24,714    $23,345    $24,418
Ratio of ending allowance to
 ending loans                             1.19%      0.79%      1.24%      1.23%      0.97%
Average loans, net of unearned income  $32,111    $25,733    $23,692    $22,962    $23,619
Non-performing loans                   $   156    $   170    $   224    $    58    $   123
Ratio of net charge-offs to average
 loans                                    0.25%      0.40%      0.04%      0.04%      0.10%
Ratio of ending allowance to
 total non-performing loans             266.67%    133.53%    137.05%    494.83%    192.68%
</TABLE>

     Net charge offs in the years 1994, 1995 and 1996 were $24 thousand, $10
thousand and $10 thousand, respectively.  In 1997 net charge-offs increased to
$103 thousand, primarily a result of one $42 thousand loss.  In 1998 net
charge-offs decreased to $81 thousand.  The ratio of loan loss reserve allowance
compared to outstanding loans for the years ended 1998, 1997, 1996, 1995 and
1994 were 1.19%, 0.79%, 1.24%, 1.23% and 0.97%, respectively.  Abnormally
high charge-offs, an increase in the installment loan portfolio, which
traditionally has a higher charge-off percentage, and identification
of problem loans required an increase of $270 thousand to loan loss reserves.


NON-PERFORMING ASSETS

     Non-performing assets are loans on a non-accrual basis, accruing loans
90 days or more past due, renegotiated loans and other real estate owned.
Total non-performing assets as a percentage  of loans and other real estate
owned at year-end 1998 was .45% compared to .90 %  at year-end 1997. Total
non-performing assets decreased from $412 thousand at year-end 1996 to $260
thousand at year-end 1997 and then were further reduced to $156 thousand at
year-end 1998.

     In accordance with regulatory standards, loans are classified as
non-accrual when the collection of principal or interest is 90 days or more
past due or when, in management's judgment, such principal or interest will
not be collectible in the ordinary course of business, unless in the opinion
of management the loan is both adequately secured and in the process of
collection.

     Not included as non-performing assets are loans totaling $957 thousand at
December 31, 1998 as to which management has concerns about the ability of the
borrowers to comply with present repayment terms.  These credits were
considered in determining the adequacy of the allowance for possible loan
losses and, while current, are regularly monitored for changes within a
particular industry or general economic trends which could cause the borrowers
severe financial difficulties. Management does not expect a loss in any of
these loans.

     The table below sets forth certain information with respect to accruing
loans 90 days or more past due, loans on non-accrual, renegotiated loans and
other real estate owned.

<TABLE>
Summary of Non-Performing Assets
(In Thousands)

<CAPTION>
                                    Year Ended December 31,
                                    1998     1997     1996
 <S>                                <C>      <C>      <C>
Accruing loans 90 days or
 more past due                      $ 65     $ 80     $108
Loans on non-accrual                  91       90      116
Renegotiated loans
Total non-performing loans           156      170      224
Other real estate owned                        90      188
Total Non-performing assets         $156     $260     $412

Loans 90 days or more past due
 as a percent of loans              0.19%    0.28%    0.44%
Total non-performing loans
 as a percent of loans              0.45%    0.59%    0.91%
Total non-performing assets as
 a percent of loans and other
 real estate owned                  0.45%    0.90%    1.65%
</TABLE>

Non-Interest Revenue and Non-Interest Expense

     Service charges on deposit accounts grew 8.0% in 1997 from 1996 and
increased 17.8% in 1998 from 1997.  The increases were generated by growth in
the number of accounts as well as an increase in certain service charges in
1998. Security gains/losses over the three year period reflect slight
repositioning of the investment portfolio.  Other revenue increased 52.5% in
1997 compared to 1996 and then decreased 17.8% in 1998 compared to 1997. The
increase in 1997 resulted from increases in NSF charges.

     Total non-interest expense increased 22.9% in 1997 and then 17.0% in 1998.
The increases were allocated among all categories and primarily resulted from
the opening on Sweet Water's third office in Thomasville in September, 1998.
Additional increases resulted from general salary increases and increased
building maintenance, office supplies and equipment.


<TABLE>
Non-Interest Revenue
(In Thousands)

                                       Year Ended December 31,
<CAPTION>
                                        1998    1997    1996
<S>                                     <C>     <C>     <C>
Service charges on deposit accounts     $317    $269    $249
Security gains (losses)                   11      10      (7)
Other revenue                             74      90      59
Total                                   $402    $369    $301
</TABLE>

<TABLE>
Non-Interest Expense
(In Thousands)



                                        Year Ended December 31,
<CAPTION>
                                         1998      1997      1996
<S>                                    <C>       <C>       <C>
Salaries                               $  939    $  808    $  687
Pension and other employee benefits       174       158       133
Net occupancy expenses                     88        78        49
Furniture and equipment expenses           98        85        72
Other expenses                            475       387       293
Total                                  $1,774    $1,516    $1,234
</TABLE>

Income Taxes and Other Issues

     Income tax expense was $113 thousand in 1998 compared to $178 thousand
in 1997.

     Because Sweet Water's assets and liabilities are essentially monetary in
nature, the effect of inflation on Sweet Water's assets differs greatly from
that of most commercial and industrial companies.  Inflation can have an
impact on the growth of total assets in the banking industry and the resulting
need to increase capital at higher than normal rates in order to maintain an
appropriate equity to assets ratio.  Inflation also can have a significant
effect on other expenses, which tend to rise during periods of general
inflation. Management believes, however, that Sweet Water's financial results
are influenced more by its ability to react to changes in interest rates than
by inflation.

Year 2000 Compliance

     Sweet Water has conducted its own internal work regarding Year 2000 and
is in the process of testing for compliance. It is also upgrading its
mainframe computer and expects to be Year 2000 compliant by the end of 1999.
To date, Sweet Water has spent approximately $22 thousand and expects to
incur approximately $5 thousand in additional expense for this purpose.

     Sweet Water is in the process of identifying its current loan customers
for the potential risk presented by these customers and their strategies for
addressing the Year 2000 issue.  For this purpose, commercial loan customers
with loan amounts of $50 thousand and higher are being reviewed and contacted
by Sweet Water for purposes of evaluating the risks presented by Year 2000.

     Sweet Water believes it has an adequate plan in place to address the Year
2000 issue, and the final outcome is not anticipated to have a material
adverse effect on the results of operations of the financial condition of
Sweet Water.

     Except as discussed in this Management's Discussion and Analysis,
management is not aware of trends, events or uncertainties that will have or
that are reasonably likely to have a material effect on the liquidity,
capital resources or operations of Sweet Water.  Management is not aware of
any current recommendations by regulatory  authorities which, if they were
implemented, would have such an effect.

FIRST THREE MONTHS OF 1999

Financial Condition

     Total assets at March 31, 1999, were $56.2 million compared to $48.2
million at March 31, 1998.  Total deposits grew $7.7 million  from $42.2
million to $49.9 million.  The increase in deposits was used to partially
fund an increase of $2.5 million in loans, an increase in federal funds sold
of $4.5 million and the increase in the investment portfolio.

Results of Operation

     Net income for the first three months of 1999 was $151 thousand compared
to $154 thousand during the same period in 1998.  Net interest income decreased
3.5%, primarily due to increased volume in time deposits.  Non-interest income
increased $17 thousand in the first three months in 1999 compared to the same
period in 1998, a result of increased service charges on deposit accounts.
Non-interest expense increased 5.0%, or $21 thousand, with most of the
increase resulting from an increase in salaries and insurance premiums.

Loan Loss Experience and Non-Performing Assets

     The allowance for loan losses at March 31, 1999, and at March 31, 1998,
was, in management's opinion, adequate. Additions to the allowance through
the  provision are made after an analysis of the portfolio considering past
experience, size of the portfolio and current  economic conditions.  A summary
of the activity in the allowance for loan losses for the three month period
ending March 31, 1999, and March 31, 1998, are presented below.

<TABLE>
Summary of Non-Performing Assets
(Dollars in Thousand)
<CAPTION>
                                              March 31, 1999
<S>                                           <C>
Accruing loans 90 days or
 more past due                                $282
Loans on non-accrual                           140
Renegotiated loans                               0
 Total non-performing loans                    422
Other real estate owned                          0
Total non-performing assets                   $422

Loans 90 days or more past due
 as a percent of loans                         .84%
Total non-performing loans as
 a percent of loans                           1.25%
Total non-performing assets as
 a percent of loans and
 other real estate owned                      1.25%
</TABLE>

     Total non-performing assets increased to $422 thousand on March 31,1999,
from $156 thousand at year-end 1998. Most of the increase occurred in loans
90 days or more past due.  Consequently, total non-performing loans as a
percent of loans increased to 1.25% at March 31, 1999, compared to 0.42% at
December 31, 1998.

<TABLE>
Summary of Loan Loss Experience
(In Thousands)


<CAPTION>
                                         Three Months Ended
                                    March 31, 1999    March 31, 1998


<S>                                 <C>               <C>
Allowance for loan losses -
 balance at beginning of period     $416              $227
Charge-Offs                          (13)              (22)
Recoveries                            13                 4
Addition to allowance charged to
 operating expense                     9                30
Balance at end of period            $425              $239
</TABLE>




                        BUSINESS OF SWEET WATER

General

     Sweet Water was incorporated under the laws of the State of Alabama on
November 8, 1988.  Sweet Water is a registered bank holding company under
the Bank Holding Company Act of 1956, as amended (the "BHC Act"), and owns
all of the voting shares of SWSB.

     SWSB commenced operations in 1913.  SWSB is a state banking corporation
subject to regulation by the Federal Deposit Insurance Corporation ("FDIC")
and the Alabama Department of Banking (the "Alabama Department"). SWSB's
operations are conducted from its main office located in Sweet Water, Alabama,
and branch offices located in Linden and Thomasville, Alabama.

     SWSB provides a range of consumer and commercial banking services to
individuals, businesses and industries. The basic services offered by SWSB
include: demand interest bearing and noninterest bearing accounts, money
market deposit accounts, NOW accounts, time deposits, safe deposit services,
credit cards, cash management, direct deposits, notary services, money orders,
night depository, travelers' checks, cashier's checks, domestic collections,
savings bonds, bank drafts, drive-in tellers, and banking by mail. In
addition, SWSB makes secured and unsecured commercial and real estate loans
and issues stand-by letters of credit.  SWSB does not have trust powers and,
accordingly, no trust services are provided.

     The revenues of SWSB are primarily derived from interest on, and fees
received in connection with, real estate loans and other loans, and from
interest and dividends from investment and mortgage-backed securities, and
short-term investments. The principal sources of funds for SWSB's lending
activities are its deposits, repayment of loans, and the sale and maturity
of investment securities. The principal expenses of SWSB are the interest
paid on deposits, and operating and general administrative expenses.

     As is the case with banking institutions generally, SWSB's operations
are materially and significantly influenced by general economic conditions and
by related monetary and fiscal policies of financial institution regulatory
agencies, including the Federal Reserve, the FDIC, and the Alabama Department.
Deposit flows and costs of funds are influenced by interest rates on
competing investments and general market rates of interest. Lending activities
are affected by the demand for financing of real estate and other types of
loans, which in turn is affected by the interest rates at which such financing
may be offered and other factors affecting local demand and availability of
funds. SWSB faces strong competition in the attraction of deposits (its
primary source of lendable funds) and in the origination of loans.

Deposit Activities

     Deposits are the major source of SWSB's funds for lending and other
investment activities. SWSB considers the majority of its regular savings,
demand, NOW and money market deposit accounts to be core deposits. These
accounts comprised 29% of SWSB's total deposits at March 31, 1999.   At March
31, 1999, 68% of SWSB's deposits were certificates of deposit. Generally,
SWSB attempts to maintain the rates paid on its deposits at a competitive
level. Time deposits of $100,000 and over made up 25% of SWSB's total deposits
at March 31, 1999.  The majority of the deposits of SWSB are generated from
Clarke, Marengo and Choctaw Counties. SWSB does not accept brokered deposits.
For additional information on SWSB's deposit activities, see "Sweet Water
Management's Discussion and Analysis of Financial Condition and Results of
Operations   Financial Condition   Deposits and Short-Term Borrowings".

Lending Activities

     SWSB offers a range of lending services, including real estate, consumer
and commercial loans, to individuals and small businesses and other
organizations that are located in or conduct a substantial portion of their
business in SWSB's market area. SWSB's loans receivable, net at March 31, 1999
were $31.9 million, or 59% of total assets. The interest rates charged on
loans vary with the degree of risk, maturity, and amount of the loan, and are
further subject to competitive pressures, money market rates, availability of
funds, and government regulations. SWSB has no foreign loans or loans for
highly leveraged transactions.

     SWSB's loans are concentrated in three major areas: real estate loans,
commercial loans, and consumer loans. As of March 31, 1999, 30% of SWSB's
loan portfolio consisted of loans secured by mortgages on real estate and 9%
of the loan portfolio consisted of commercial loans. At the same date, 41% of
SWSB's loan portfolio consisted of consumer loans.

     SWSB's real estate loans are secured by mortgages and consist primarily
of loans to individuals and businesses for the purchase, improvement of or
investment in real estate and for the construction of single-family
residential units or the development of single-family residential building
lots. These real estate loans may be made at fixed- or variable-interest
rates.  SWSB generally does not make fixed-interest rate commercial real
estate loans for terms exceeding five years. Loans in excess of three years
generally have adjustable-interest rates. SWSB's residential real estate
loans generally are repayable in monthly installments based on up to a
15-year amortization schedule with variable-interest rates.

     SWSB's commercial loans include loans to individuals and small-to-medium
sized businesses located primarily in Clarke County for working capital,
equipment purchases, and various other business purposes. A majority of SWSB's
commercial loans are secured by equipment or similar assets, but these loans
may also be made on an unsecured basis. Commercial loans may be made at
variable- or fixed-interest rates. Commercial lines of credit are typically
granted on a one-year basis, with loan covenants and monetary thresholds.
Other commercial loans with terms or amortization schedules of longer than
one year will normally carry interest rates which vary with the prime lending
rate and will become payable in full and are generally refinanced in three to
five years.

     SWSB's consumer loan portfolio consists primarily of loans to individuals
for various consumer purposes, but includes some business purpose loans which
are payable on an installment basis. The majority of these loans are for terms
of less than five years and are secured by liens on various personal assets of
the borrowers, but consumer loans may also be made on an unsecured basis.
Consumer loans are made at fixed-and variable-interest rates, and are often
based on up to a five-year amortization schedule.

     Loan originations are derived from a number of sources, including direct
solicitation by SWSB's loan officers, existing customers and borrowers,
advertising, walk-in customers and, in some instances, referrals from brokers.

     For additional information on SWSB's lending activities, see "Sweet Water
Management's Discussion and Analysis of Financial Condition and Results of
Operations   Financial Condition   Loans," and "Non-Performing Assets."

Investments

     SWSB invests a portion of its assets in U.S. Treasury and U.S. Government
agency obligations, FHLMC and FNMA mortgage-backed securities, state, county
and municipal obligations, certificates of deposit, collateralized mortgage
obligations ("CMO's"), and federal funds sold. SWSB's investments are managed
in relation to loan demand and deposit growth, and are generally used to
provide for the investment of excess funds at reduced yields and risks
relative to yields and risks of the loan portfolio, while providing liquidity
to fund increases in loan demand or to offset fluctuations in deposits. For
additional information relating to Sweet Water's investments, see "Sweet
Water Management's Discussion and Analysis of Financial Condition and Results
of Operations   Financial Condition   Investment Securities" and Note 3 to
the Notes to Sweet Water's Consolidated Financial Statements.

Employees

     As of March 31, 1999, Sweet Water employed 34 full-time employees and 5
part-time employees. The employees are not represented by a collective
bargaining unit. Sweet Water and SWSB consider relations with employees to be
good.

Properties

     The main office of Sweet Water and SWSB is located at 101 Main Street,
Sweet Water, Alabama  36782, in a two story building of approximately 9,500
square feet, which is owned by SWSB.

     SWSB also has a 3,000 square foot banking office in Linden, at 206 South
Main, Linden, Alabama 36748, and a 3,960 square foot banking office in
Thomasville, at 1531 Highway 43 North, Thomasville, Alabama 36784.  All of
the foregoing offices are owned by SWSB.

Legal Proceedings

     Sweet Water and SWSB are periodically parties to or otherwise involved
in legal proceedings arising in the normal course of business, such as claims
to enforce liens, claims involving the making and servicing of real property
loans, and other issues incident to their respective businesses. Management
does not believe that there is any pending or threatened proceeding against
Sweet Water or SWSB which, if determined adversely, would have a material
adverse effect on Sweet Water's consolidated financial position.

Certain Management Information

        Under the rules established by the Commission, Sweet Water is required
to provide certain information in regard to each director and officer who is
or will be a director or officer of South Alabama after consummation of the
Merger. It is presently anticipated that Jack O. Kerby, Sr. will be a director
and that Stratton F. Lewis, Jr. will be a director and executive office of
South Alabama following the consummation of the Merger.

        Mr. Lewis, age 49, is President, Chief Executive Officer and
Chairman of the Board of Sweet Water.  Mr. Lewis was employed by SWSB in
1985 and has served as President and CEO of SWSB since 1987 and as President
and CEO of Sweet Water since its incorporation in 1988.  Mr. Lewis has
served as Chairman of Sweet Water since 1994.

        Mr. Kerby, age 71, has served as a director and secretary of Sweet
Water since its incorporation in 19988 and as a director of SWSB since 1973.
Mr. Kerby retired in 1993 from Alabama Southern Community College where he
served as the Dean of Instruction from 1965 to 1993.



Executive Compensation


                      SUMMARY COMPENSATION TABLE

     Because it is presently anticipated that Stratton F. Lewis, Jr. will serve
as an executive officer of South Alabama after the Merger, the following table
presents the compensation paid to Mr. Lewis for the last three fiscal years
of Sweet Water.

<TABLE>
<CAPTION>
                                        Annual Compensation
Name and Principal Position   Year   Salary     Bonus   All Other Compensation (1)
<S>                           <C>    <C>        <C>     <C>
Stratton F. Lewis             1998   $105,500   $8,791  $7,600
Cairman, President            1997    102,500    8,541   7,000
and CEO of Sweet Water        1996     97,500    8,125   6,700
</TABLE>


Voting Securities and Principal Shareholders

     As of March 31, 1999, Sweet Water had issued and outstanding 60,000
shares of Sweet Water Common Stock with 168 shareholders of record.
Each such share is entitled to one vote. As of March 31, 1999, no shares of
Sweet Water Common Stock were subject to issue upon exercise of any options
or warrants. There are currently 60,000 shares of Sweet Water Common Stock
authorized.

     The following table shows those persons who are known to Sweet Water to
be beneficial owners as of March 31, 1999 of more than five percent of
outstanding Sweet Water Common Stock.


<TABLE>
<CAPTION>

Name and Address              Number of Shares         Percentage of Class
                              of Common Stock          Outstanding
<S>                           <C>                      <C>
Stratton F. Lewis, Jr.        4,692(1)                 7.82%
P. O. Box 37
Sweet Water, Alabama 36782

Mary Jane Lewis Loftin        3,337(2)                 5.56
P. O. Box 36
Sweet Water, Alabama 36782

Helen Lewis Johnston          3,359(3)                 5.60
1706 Pineneedle Road
Montgomery, Alabama 36106

Jack O. Kerby, Sr.            4,021                    6.70
1507 Elmwood Drive
Demopolis, Alabama 36732

Grace Whitley                 3,060                    5.10
345 5th Avenue
Thomaston, Alabama 36783

Betty Young Owensby           3,315                    5.52
339 Plantation Drive
Linden, Alabama 36748

    (1) Includes 2,021 shares of Sweet Water Common Stock jointly owned by
    Stratton F. Lewis, Jr. and his son, Stratton Ford Lewis, III.  Stratton
    Ford Lewis, III disclaims any beneficial ownership interest in these
    shares.  Stratton F. Lewis, Jr. is the brother of Mary Jane Lewis Loftin
    and Helen Lewis Johnston.  Mr. Lewis disclaims any beneficial ownership
    interest in their stock.
    (2) Includes 2,021 shares of Sweet Water Common Stock jointly owned by
    Mary Jane Lewis Loftin and her nephew, Stratton Ford Lewis, III.
    Stratton Ford Lewis, III disclaims any beneficial ownership interest in
    these shares.  Mary Jane Lewis Loftin is the sister of Stratton F. Lewis,
    Jr. and Helen Lewis Johnston.  Mrs. Loftin disclaims any beneficial
    ownership interest in their stock.
    (3) Helen Lewis Johnston is the sister of Stratton F. Lewis, Jr. and Mary
    Jane Lewis Loftin.  Mrs. Johnston disclaims any beneficial ownership
    interest in their stock.
</TABLE>

Security Ownership of Management

  The following table indicates for each director, executive officer, and all
executive officers and directors of Sweet Water as a group, the number of
shares of outstanding Sweet Water Common Stock of beneficially owned as of
March 31, 1999.


<TABLE>
               SHARES OF SWEET WATER BENEFICIALLY OWNED

<CAPTION>
                           Number of Shares
Directors Name             of Common Stock       Percentage of Class Outstanding


<S>                         <C>                   <C>
Stratton F. Lewis, Jr.      4,692(1)              7.82%
Mary Jane Lewis Loftin      3,337(2)              5.56
Jack O. Kerby, Sr.          4,021                 6.70
James Lewis                   252                 *
Rentz S. Lewis, Sr.         2,760                 4.60
A. W. Compton, Jr.            672                 1.12
T. Patrick Young              275                 *
William B. Booker              70                 *


         CERTAIN EXECUTIVE OFFICERS WHO ARE NOT ALSO DIRECTORS

                          Number of Shares
Officers Name             of Common Stock       Percentage of Class Outstanding

Betty Callahan            2                     *

*Represents less than 1%.


       (1)    Includes 2,021 shares of Sweet Water Common Stock jointly owned
       by Stratton F. Lewis, Jr. and his son, Stratton Ford Lewis, III.
       Stratton Ford Lewis, III disclaims any beneficial ownership interest in
       these shares.  Stratton F. Lewis, Jr. is the brother of Mary Jane
       Lewis Loftin and Helen Lewis Johnston.  Mr. Lewis disclaims any
       beneficial ownership interest in their stock.
       (2)    Includes 2,021 shares of Sweet Water Common Stock jointly owned
       by Mary Jane Lewis Loftin and her nephew, Stratton Ford Lewis, III.
       Stratton Ford Lewis, III disclaims any beneficial ownership interest
       in these shares.  Mary Jane Lewis Loftin is the sister of Stratton F.
       Lewis, Jr. and Helen Lewis Johnston.  Mrs. Loftin disclaims any
       beneficial ownership interest in their stock.
</TABLE>

      SUPERVISION, REGULATION, AND EFFECTS OF GOVERNMENTAL POLICY

  Bank holding companies and banks are extensively regulated under both
federal and state law.  The following is a brief summary of certain statutes,
rules, and regulations affecting South Alabama, Sweet Water and their
subsidiaries.  This summary is qualified in its entirety by reference to the
particular statutory and regulatory provisions referred to below and is not
intended to be an exhaustive description of the statutes or regulations
applicable to the business of South Alabama, Sweet Water or their subsidiaries
Supervision, regulation and examination of banking institutions by the
regulatory agencies are intended primarily for the protection of depositors,
rather than shareholders.

Bank Holding Company Regulation

  South Alabama and Sweet Water are both bank holding companies under the
BHCA and are registered with, and subject to supervision by, the Federal
Reserve.  As a bank holding company, South Alabama and Sweet Water are
required to file periodic reports and such additional information as the
Federal Reserve may require pursuant to the BHCA.  The Federal Reserve may
also examine South Alabama and Sweet Water and their subsidiaries.

  The BHCA requires prior Federal Reserve approval for, among other things,
the acquisition by a bank holding company of direct or indirect ownership or
control of more than five percent of the voting shares or of substantially
all of the assets of any bank, and for a merger or consolidation of a bank
holding company with another bank holding company.  With certain exceptions,
the BHCA prohibits a bank holding company from acquiring direct or indirect
ownership or control of any voting shares of any company which is not a bank
or bank holding company and from engaging directly or indirectly in any
activity other than banking or managing or controlling banks or performing
services for authorized subsidiaries.  A bank holding company may, however,
engage in or acquire an interest in a company that engages in activities
which the Federal Reserve has determined by order or regulation to be so
closely related to banking or managing or controlling banks as to be properly
incident thereto.  Such permitted activities include acting as fiduciary or
investment or financial advisor, selling or underwriting insurance coverage
directly related to extensions of credit, and the leasing of real and personal
property.


  The Federal Reserve has adopted capital adequacy guidelines applicable to
bank holding companies (see "Capital Adequacy" below).  Federal Reserve policy
requires a bank holding company to act as a source of financial strength to
each of its bank subsidiaries and to commit resources to support each of its
subsidiaries.  Such policy also requires a bank holding company to take
measures to preserve and protect bank subsidiaries in situations where
additional investments in a troubled bank may not otherwise be warranted.  As
a result, a bank holding company may be required to lend money to its
subsidiaries in the form of capital notes or other instruments which qualify
as capital for regulatory purposes.  In addition, where a bank holding
company has more than one subsidiary depository institution, the holding
company's other subsidiary depository institutions are responsible under a
cross-guarantee for any losses to the FDIC as a result of the failure of a
subsidiary depository institution.  Often, bank holding companies will obtain
the funds to provide such companies' subsidiary banks. However, any loans from
the holding company to such subsidiary banks will likely be unsecured and will
be subordinated to such banks' depositors and perhaps to other creditors.

  With the enactment of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 ("FIRREA") and the Federal Deposit Insurance
Corporation Improvement Act of 1991 ("FDICIA"), Congress enacted comprehensive
legislation affecting the commercial banking and thrift industries.  FIRREA,
among other things, abolished the Federal Savings and Loan Insurance
Corporation and established two new insurance funds under the jurisdiction of
the FDIC:  BIF, which insures most commercial banks, and the Savings
Association Insurance Fund, which insures most thrift institutions.  In
addition to effecting far-reaching restructuring of the thrift industry,
FIRREA provided for a phased-in increase in the rate of annual insurance
assessments paid by insured depository institutions.   FDICIA provided
increased funding for the BIF and expanded regulation of depository
institutions and their affiliates, including parent holding companies.  A
significant portion of the additional BIF funding has been in the form of
borrowings to be repaid by insurance premiums assessed on BIF members.  These
premium increases were in addition to the increase in deposit premiums made
during 1991.  FDICIA provides for an increase in the BIF's ratio of reserves
to insured deposits to 1.25% within the next 15 years, which was attained in
1995, resulting in a reduction in current premiums.  FDICIA provides authority
for special assessments against insured deposits and for the development of a
system of assessing deposit insurance premiums based upon the institution's
risk.

  In September 1992, the FDIC adopted a new transitional risk-based premium
schedule which increases the assessment rates for depository institutions.
Each financial institution is assigned to one of three capital groups--well
capitalized, adequately capitalized or undercapitalized, as defined in the
regulations implementing the prompt corrective action provisions of FDICIA
described below--and further assigned to one of three subgroups within a
capital group on the basis of supervisory evaluation by the institution's
primary federal and, if applicable, state supervisors and other information
relevant to the institution's financial condition and the risk posed to the
applicable insurance fund.  The actual assessment rate applicable to a
particular institution depends upon the risk assessment classification so
assigned to the institution by the FDIC.

  Among other things, FDICIA requires the federal banking agencies to take
"prompt corrective action" in respect of banks that do not meet minimum
capital requirements.  The five capital tiers established by the FDICIA and
the banking regulators' minimum requirements for each are summarized as
follows:


<TABLE>
<CAPTION>
                                Total Risk-Based    Tier I Risk Based    Leverage
                                Capital Ratio       Capital Ratio        Ratio
<S>                             <C>                 <C>                  <C>
Well capitalized                10% or above        6% or above          Less than 3%
Adequately capitalized          8% or above         4% or above          4% or above
Undercapitalized                Less than 8%        Less than 4%         Less than 4%
Significantly undercapitalized  Less than 6%        Less than 3%         Less than 3%
Critically undercapitalized                                              2% or less
</TABLE>


  An institution may be deemed to be in a capitalization category that is
lower than is indicated by its actual capital position if it receives an
unsatisfactory examination rating.

  If a depository institution should fail to meet regulatory capital
requirements, regulatory agencies can require submission and funding of a
capital restoration plan by the institution, place limits on its activities,
require the raising of additional capital and, ultimately, require the
appointment of a conservator or receiver for the institution.  The Federal
Reserve and the other federal depository institution regulatory agencies have
recently adopted regulations to implement the FDICIA "prompt corrective
action" requirements.  Under FDICIA, a bank holding company must guarantee
that a subsidiary bank will meet its capital restoration plan, subject to
certain limitations.  The obligation of a controlling bank holding company
under FDICIA to fund a capital restoration plan is limited to the lesser of
5% of an undercapitalized subsidiary's assets or the amount required to meet
regulatory capital requirements.  If the controlling bank holding company
should fail to fulfill its obligations under FDICIA and files (or has filed
against it) a petition under the federal Bankruptcy Code, the FDIC's claim
may be entitled to a priority in such bankruptcy proceeding over third-party
creditors of the bank holding company.

  Undercapitalized depository institutions may be subject to growth limitations
and are required to submit a capital restoration plan.  The federal banking
agencies may not accept a capital plan without determining, among other things,
that the plan is based on realistic assumptions, is likely to succeed in
restoring the depository institution's capital and is guaranteed by the parent
holding company.  If a depository institution should fail to submit an
acceptable plan, it will be treated as if it were significantly undercapitalized

  Significantly undercapitalized depository institutions may be subject to a
number of requirements and restrictions, including orders to sell sufficient
voting stock to become adequately capitalized and requirements to reduce
total assets and to cease receiving deposits from correspondent banks.
Critically undercapitalized institutions are subject to appointment of a
receiver or conservator.  An institution that is not well capitalized is
generally prohibited from accepting brokered deposits and offering interest
rates on deposits higher than the prevailing rate in its market.  In addition,
"pass-through" insurance coverage  may not be available for certain employee
benefit accounts.

  An insured depository institution may not pay management fees to any person
having control of the institution nor may an institution, except under certain
circumstances and with prior regulatory approval, make any capital
distribution if, after making such payment or distribution, the institution
would be undercapitalized.  FDICIA imposes new restrictions upon the
acceptance of brokered deposits by insured depository institutions and
contains a number of consumer banking provisions, including disclosure
requirements and substantive contractual limitations with respect to deposit
accounts.

  FDICIA contains numerous other provisions, including new reporting
requirements, termination of the "too big to fail" doctrine except in special
clearly-defined cases, limitations on the FDIC's payment of deposits at
foreign branches and revised regulatory standards for, among other things,
real estate lending and capital adequacy.

  FDICIA provides that, in the event of the "liquidation or other resolution"
of an insured depository institution, the claims of depositors of such
institution (including claims by the FDIC as receiver) would be afforded a
priority over other general unsecured claims against the institution.  If an
insured depository institution fails, insured and uninsured depositors, along
with the FDIC, will be placed ahead of unsecured, nondeposit creditors,
including a parent holding company such as South Alabama or Sweet Water, in
order of priority of payment.

  The FDIC is authorized to raise insurance premiums in certain circumstances.
Any increase in premiums would have an adverse effect on South Alabama's and
Sweet Water's earnings.

  Under the FDIA, insurance of deposits may be terminated by the FDIC upon a
finding that an institution has engaged in unsafe and unsound practices, is
in an unsafe or unsound condition to continue operations or has violated any
applicable law, regulation, rule, order or condition imposed by a federal
bank's regulatory agency.

  The Federal Reserve has the right to prevent the continuance or development
of unsafe or unsound banking practices or other violations of law and to take
certain remedial action.  In particular, the Federal Reserve has the power to
order a holding company or its subsidiaries to terminate any activity or
terminate its ownership or control of any subsidiary, despite prior approval
of such activity or such ownership or control, when it has reasonable cause
to believe that continuation of such activity or such ownership or control
constitutes a serious risk to the financial safety, soundness or stability of
any bank subsidiary of that bank holding company.

  In addition to the impact of regulation, commercial banks generally are
affected significantly by the actions of the Federal Reserve in its attempt
to control the money supply and credit availability in order to influence the
economy.

Bank Regulation

  SAB, MCB, and CBD, Alabama banking corporations, and SATC, an Alabama trust
corporation, are wholly owned subsidiaries of South Alabama, operating under
the Alabama Banking Code.  SAB, MCB, CBD and SATC are subject to regulation,
supervision and examination by the Superintendent of Banks, as is SWSB.  In
addition, deposits of SAB, MCB, CBD and SWSB are insured by the FDIC up to the
maximum amount permitted by law, and SAB, MCB, CBD and SWSB are therefore
subject to regulation, supervision and examination by the FDIC.  FNBB, a
national banking association, is a wholly owned subsidiary of South Alabama
and is subject to regulation, supervision and examination by the Comptroller.
Its deposits are insured by the FDIC up to the maximum amount permitted by
law.

  South Alabama and Sweet Water are legal entities  separate and distinct from
their respective subsidiary banks and trust company.  Various legal
limitations restrict the subsidiary banks from lending or otherwise supplying
funds to South Alabama, Sweet Water or any nonbank subsidiaries of South
Alabama  and Sweet Water (each an "affiliate"), generally limiting such
transactions with the affiliate to 10% of the bank's capital and surplus and
limiting all such transactions to 20% of the bank's capital and surplus.  Such
transactions, including extensions of credit, sales of securities or assets and
provision of services, also must be on terms and conditions consistent with
safe and sound banking practices, including credit standards, that are
substantially the same or at least as favorable to the bank as those
prevailing at the time for transactions with unaffiliated companies.

  Federal and state banking laws and regulations govern all areas of the
operation of South Alabama's and Sweet Water's subsidiary banks and trust
company, including reserves, loans, mortgages, capital, issuance of securities,
payment of dividends and establishment of branches.  Federal and state bank
regulatory agencies also have the general authority to limit the dividends
paid by insured banks and bank holding companies if such payments should be
deemed to constitute an unsafe and unsound practice.  The primary federal
regulators of South Alabama's and Sweet Water's subsidiary banks have
authority to impose penalties, initiate civil and administrative actions and
take other steps intended to prevent the banks from engaging in unsafe or
unsound practices.

  Federally insured banks are subject, with certain exceptions, to certain
restrictions on extensions of credit to their parent holding companies or
other affiliates, on investments in the stock or other securities of
affiliates and on the taking of such stock or securities as collateral from
any borrower.  In addition, such banks are prohibited from engaging in certain
tie-in arrangements in connection with any extension of credit or the
providing of any property or service.

  Banks are also subject to the provisions of the Community Reinvestment Act
of 1977, which requires the appropriate federal bank regulatory agency, in
connection with its regular examination of a bank, to assess the bank's
record in meeting the credit needs of the community serviced by the bank,
including low and moderate income neighborhoods.  The regulatory agency's
assessment of the bank's record is made available to the public.  Further,
such assessment is required of any bank which has applied, among other things,
to establish a new branch office that will accept deposits, relocate an
existing office or merge or consolidate with, or acquire the assets or assume
the liabilities of, a federally regulated financial institution.

  Dividends from its subsidiary banks constitute the major source of funds
for dividends to be paid by South Alabama and Sweet Water.  The amount of
dividends payable by the subsidiary banks to South Alabama and Sweet Water
depends upon the banks' earnings and capital position and is limited by
federal and state laws, regulations and policies.  National bank subsidiaries
(such as FNBB) are subject to dividend regulations of the Comptroller.  State
non-member bank subsidiaries (such as SAB, MCB and CBD) are subject to the
dividend laws of the states under which such banks are chartered.  Subject to
restrictions as described below, at March 31, 1999, the subsidiary banks of
South Alabama had $3.8 million of undivided profits legally available for the
payment of dividends, and Sweet Water's subsidiary bank had $682 thousand of
undivided profits available for payment of dividends. The amount of dividends
actually paid during any one period is strongly influenced by South Alabama's
and Sweet Water's management policy of maintaining strong capital positions
in South Alabama's and Sweet Water's subsidiary banks.  Federal law further
provides that no insured depository institution may make any capital
distribution (which would include a cash dividend) if, after making the
distribution, the institution would not satisfy one or more of its minimum
capital requirements.  Moreover, the federal bank regulatory agencies also
have the general authority to limit the dividends paid by insured banks if
such payments should be deemed to constitute an unsafe and unsound practice.

  Under Alabama law, a bank may not pay a dividend in excess of 90% of its
net earnings until the bank's surplus is equal to at least 25% of capital.
SAB's, MCB's and CBD's and SWSB's surplus exceeded that percentage as of
March 31, 1999.   SAB, MCB , CBD and SWSB are also required by Alabama law to
obtain the proper approval of the superintendent of the Alabama Banking
Department for the payment of dividends if the total of all dividends declared
by the bank in any calendar year will exceed the total of the bank's net
earnings (as defined by statute) for that year combined with its retained
net earnings for the preceding two years, less any required transfers to
surplus.  Also, no dividends may be paid from surplus without the prior
written approval of the superintendent.

  Furthermore, if, in the opinion of the appropriate federal bank regulatory
authority, a bank under its jurisdiction is engaged in or is about to engage
in an unsafe or unsound practice (which, depending on the financial condition
of the bank, could include the payment of dividends), such authority may
require, after notice and hearing, that such bank cease and desist from such
practice.  The Federal Reserve has indicated that paying dividends that
deplete a bank's capital base to an inadequate level would be an unsafe and
unsound banking practice.  In addition, under the FDIA, an insured bank may
not pay any dividend if it is undercapitalized or if payment would cause it
to become undercapitalized.  Moreover, the Federal Reserve has issued a policy
statement that provides that bank holding companies and state member banks
should generally only pay dividends out of current operating earnings.

Capital Adequacy

  South Alabama and its subsidiary banks are required to comply with the
applicable capital adequacy standards established by the Federal Reserve,
the Comptroller and the FDIC.  Sweet Water and SWSB are required to comply
with the applicable capital adequacy guidelines of the Federal Reserve and
the FDIC.  Currently, there are two basic measures of capital adequacy:  a
"risk-based" measure and a "leverage" measure.  All applicable capital
standards must be satisfied for an institution to be considered in compliance.

  The capital-based prompt corrective action provisions of the FDIA and the
implementing regulations apply to FDIC-insured depository institutions and
are not directly applicable to holding companies that control such institutions.
However, the Federal Reserve has indicated that, in regulating bank holding
companies, it will take appropriate action at the holding company level based
on an assessment of the effectiveness of supervisory actions imposed upon
subsidiary depository institutions pursuant to such provisions and regulations
Although the capital categories defined under the prompt corrective
action regulations are not directly applicable to South Alabama and Sweet
Water under existing law and regulations, if South Alabama or Sweet Water was
placed in a capital category, then South Alabama and Sweet Water would
qualify as well-capitalized as of March 31, 1999.

  The risk-based capital standards are designed to make regulatory capital
requirements more sensitive to differences in risk profile among banks and
bank holding companies, to account for off-balance sheet exposure and to
minimize disincentives for holding liquid assets.  Assets and off-balance
sheet items are assigned to broad risk categories, each with appropriate
weights.  The resulting capital ratios represent capital as a percentage of
total risk-weighted assets and off-balance sheet items.

  The minimum standards for the ratio of capital to risk-weighted assets
(including certain off-balance sheet obligations, such as standby letters of
credit) is 8%.  At least 50% of that capital level must consist of common
equity, retained earnings and, within limitations, perpetual preferred stock,
less goodwill and certain other intangibles ("Tier I capital").  The remainder
("Tier II capital") may consist of a limited amount of other preferred stock,
mandatory convertible securities, subordinated debt and a limited amount of
loan loss reserves.  The sum of Tier I capital and Tier II capital is "total
risk-based capital."  The Federal Reserve, the Comptroller and the FDIC have
proposed to add an interest rate risk component to their existing risk-
based capital requirements.

  In 1992, the Federal Reserve issued an interpretive release with respect to
the classification by bank holding companies of certain subordinated debt as
Tier II capital.  Previously issued subordinated debt that does not meet all
of the requirements set forth in the release will be considered on a
case-by-case basis to determine whether such debt qualifies as Tier II capital.
The release states that as a general rule, previously issued debt may qualify
as Tier II capital as long as the non-qualifying provisions of such debt:
(i) have been commonly used by banking organizations; (ii) do not provide an
unreasonably high degree of protection to the holder in cases not involving
bankruptcy or receivership; and (iii) do not effectively allow the holder
to stand ahead of the general creditors of the financial institution in cases
of bankruptcy or receivership.

  The Federal Reserve, the Comptroller and the FDIC also have adopted
regulations which supplement the risk-based guidelines to include a minimum
leverage ratio of 3% Tier I capital to total assets less goodwill (the
"leverage ratio").  Such agencies have emphasized that the 3% leverage ratio
constitutes a minimum requirement for well-run banking organizations
having diversified risk including no undue interest rate risk exposure,
excellent asset quality, high liquidity, good earnings and a composite
regulatory rating of 1 under the regulatory rating system for banks.  Banking
organizations experiencing or anticipating significant growth, as well as
those organizations which do not satisfy the criteria described above, will be
required to maintain a minimum leverage ratio ranging generally from 4% to 5%.

  Bank regulators continue to indicate their desire to raise capital
requirements applicable to the banking industry beyond current levels.
However, neither South Alabama nor Sweet Water is able to predict whether or
when higher capital requirements might be imposed.

  Any institution which fails to maintain minimum capital requirements may be
subject to a capital directive which is enforceable in the same manner and to
the same extent as a final cease and desist order, and must submit a capital
plan within 60 days to the FDIC.  If the leverage ratio should fall to 2% or
less, the institution may be deemed to be operating in an unsafe or unsound
condition, allowing the FDIC to take various enforcement actions, including
possible termination of insurance or placing the institution into receivership.

  The following tables present the regulatory capital position at March 31,
1999, for each of South Alabama, SAB, FNBB, MCB, CBD, Sweet Water and SWSB.

<TABLE>

<CAPTION>
                             South                                                 Sweet
                             Alabama    SAB        FNBB       MCB        CBD       Water     SWSB
<S>                          <C>        <C>        <C>        <C>        <C>       <C>       <C>
Tier I Capital
 Tangible Common
  shareholders' equity       $ 53,812   $ 17,035   $ 14,012   $ 12,675   $ 7,793   $ 5,851   $ 5,808
Tier II Capital
 Allowable portion of the
  allowance for loan losses     3,324      1,508        775        493       548       425       425
  Total Capital (Tier I and
   Tier II)                  $ 57,136   $ 18,543   $ 14,787   $ 13,168   $ 8,341   $ 6,276   $ 6,233

Risk-weighted assets         $343,685   $154,625   $ 79,725   $ 71,308   $45,704   $ 36,486  $ 36,486
Quarterly average assets     $493,868   $192,081   $113,295   $112,816   $74,361   $ 57,472  $ 57,472

Tier I capital                  15.66%     11.02%     17.58%     17.78%    17.05%     16.04%    15.92%
Total capital (Tier I and
 Tier II)                       16.62%     11.99%     18.55%     18.47%    18.25%     17.20%    17.08%
Leverage Ratio                  10.90%      8.87%     12.37%     11.24%    10.48%     10.18%    10.11%
</TABLE>

  The FDIC has adopted regulations under the FDIA governing the receipt of
brokered deposits.  Under the regulations, an FDIC-insured depository
institution cannot accept, roll over or renew brokered deposits unless (i) it
is well capitalized or (ii) it is adequately capitalized and received a
waiver from the FDIC.  A depository institution that cannot receive brokered
deposits also cannot offer "pass-through" insurance on certain employee
benefit accounts.  Whether or not it has obtained such a waiver, a depository
institution that is not well-capitalized may not pay an interest rate on any
deposits in excess of 75 basis points over certain prevailing market rates
specified by regulation.  There are no such restrictions on a depository
institution that is well capitalized.  Because SAB, MCB, CBD and SWSB were
well capitalized as of March 31, 1999, South Alabama believes that brokered
deposits regulation will have no material effect on the funding liquidity of
SAB, MCB, CBD and SWSB.

Effects of Governmental Policies

  Many FDICIA provisions will be implemented through adoption of regulations
that have been or will be proposed by the various federal banking agencies.
Accordingly, the full effect on South Alabama and Sweet Water and their
subsidiaries cannot be assessed this time.

  Because of concerns relating to the competitiveness and the safety and
soundness of the industry, the Congress is considering, even after the
enactment of FIRREA and FDICIA, a number of wide-ranging proposals for
altering the structure, regulation and competitive relationships of the
nation's financial institutions.  Among such bills are proposals to prohibit
banks and bank holding companies from conducting certain types of activities,
to subject banks to increased disclosure and reporting requirements, to alter
the statutory separation of commercial and investment banking and to further
expand the powers of banks, bank holding companies and competitors of banks.
It cannot be predicted whether or in what form any of these proposals will be
adopted or the extent to which the business of South Alabama or Sweet Water
or their respective subsidiaries may be affected thereby.

  The Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (the
"IBBEA") authorized interstate acquisitions of banks and bank holding
companies without geographic limitations beginning September 29, 1995.  In
addition, beginning June 1, 1997, the IBBEA authorizes a bank to merge with a
bank in another state as long as neither of the states has opted out of
interstate branching by May 31, 1997.  A bank may establish and operate a de
novo branch in a state in which the bank does not maintain a branch if that
state expressly permits de novo branching.  Once a bank has established
branches in a state through an interstate merger transaction, the bank may
establish and acquire additional branches at any location in the state where
any bank involved in the interstate merger transaction could have established
or acquired branches under applicable Federal or state law.  A bank that has
established a branch in a state through de novo branching may establish and
acquire additional branches in such state in the same manner and to the same
extent as a bank having a branch in such state as a result of an interstate
merger.  If a state opts out of interstate branching within the specific time
period, no bank in any other state may establish a branch in the opting out
state, whether through an acquisition or de novo.  The State of Alabama has
opted in with respect to interstate branching effective on or before June 1,
1997.

                             LEGAL MATTERS

  The legality of the South Alabama Common Stock to be issued in the Merger
will be passed upon by Hand Arendall, L.L.C., Mobile, Alabama  ("Hand
Arendall").  Hand Arendall attorneys own beneficially approximately
192,998  shares of the outstanding South Alabama Common Stock, and
Stephen G. Crawford, a member, is a director of South Alabama. During 1998,
South Alabama and its subsidiaries paid fees aggregating approximately
$166,000 to Hand Arendall for legal services.

  Certain legal matters in connection with the Merger will be passed upon for
Sweet Water by Miller, Hamilton, Snider & Odom, L.L.C., Montgomery, Alabama.

  Hand Arendall has rendered an opinion with respect to the federal tax
consequences of the Merger.  See "The Merger Certain Federal Income Tax
Consequences."


                                EXPERTS

  The Consolidated Financial Statements of South Alabama Bancorporation, Inc.,
incorporated by reference in this Prospectus and elsewhere in the
Registration Statement, have been audited by Arthur Andersen LLP, independent
public accountants, as indicated in their report with respect thereto and
are included herein in reliance upon the authority of said firm as experts in
giving said reports.

  The Consolidated Financial Statements of Sweet Water State Bancshares, Inc.
as of December 31, 1998 and 1997, and for each of the two years then
ended, included in this Prospectus have been audited by McKean & Associates,
P.A., independent public accountants, as indicated in their report with
respect thereto and are so included herein in reliance upon the authority of
said firm as experts in giving said  reports.

                         SHAREHOLDER PROPOSALS

  Shareholder proposals intended to be submitted for consideration at the
2000 annual meeting of the shareholders of South Alabama must be submitted in
writing to and received by the Secretary of South Alabama not later than
December 15, 1999, to be included in South Alabama's proxy statement and form
of proxy relating to that meeting.  The named proxies for the 2000 annual
meeting will have discretionary voting authority with respect to any
shareholder proposal not received in writing by South Alabama by February 28,
2000, and they will exercise their authority in accordance with the
recommendations of South Alabama's Board of Directors.

                       TO OBTAIN MORE INFORMATION

  The Securities Exchange Act of 1934, as amended (the "Exchange Act"),
requires South Alabama to file  reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission").
These documents may be inspected and copied at the public reference
facilities maintained by the Commission at:

Room 1024, Judiciary Plaza,
450 Fifth Street, N.W.
Washington D.C. 20549

and at the Commission's Regional Offices in New York at:

7 World Trade Center, Suite 1300
New York, New York 10048

and Chicago  at:

Northwestern Atrium Center
500 West Madison Street, Suite 1400
Chicago, Illinois 60661).

Copies of such materials can be obtained from the Securities and Exchange
Commission at:

450 Fifth Street, N.W.
Washington, D.C. 20549.

The Commission also maintains a Web Site that contains reports, proxy and
information statements and other information regarding registrants, including
South Alabama, that file electronically with the Commission at
http://www.sec.gov.

  You may obtain further information about the Public Reference Section by
calling 1-800-SEC-0330.

  South Alabama has filed with the Commission a Registration Statement
(No. 333-  ) on Form S-4 (together with any amendments thereto, the
"Registration Statement") under the Securities Act of 1933, as amended (the
"Securities Act"), with respect to the shares of South Alabama Common Stock
to be issued pursuant to the Merger Agreement.  This Prospectus does not
contain all of the information set forth in the Registration Statement and
the exhibits thereto, portions of which were omitted in accordance with the
rules and regulations of the Commission.  For further information regarding
South Alabama and the South Alabama Common Stock offered hereby, reference is
made to the complete Registration Statement, including all amendments thereto
and the schedules and exhibits filed as a part thereof.  Statements contained
herein or in any document incorporated by reference herein as to the contents
of documents are necessarily summaries of the documents, and each statement is
qualified in its entirety by reference to the copy of the applicable document
filed with the Commission.


            INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

  The following documents previously filed by South Alabama with the
Commission (Commission File No. 0-15423) pursuant to the Exchange Act are
hereby incorporated by reference in this Prospectus:

         1.   South Alabama's Annual Report on Form 10-K for the year ended
         December 31, 1998;

         2.   South Alabama's Quarterly Reports on Form 10-Q for the
         quarters ended 1999; and

         3.   South Alabama's Proxy Statement for its 1999 Annual Meeting of
         Shareholders.

  South Alabama's Annual Report on Form 10-K for the year ended December 31,
1998, incorporates by reference specific portions of South Alabama's Annual
Report to Shareholders for that year (the "Annual Report to Shareholders")
but does not incorporate other portions of the Annual Report to Shareholders.
Those portions of the Annual Report to Shareholders captioned "Consolidated
Financial Highlights," "Letter to Shareholders," "Return on Average Assets"
and "Directors and Officers," as well as the Introduction and the text on
page 2, are NOT incorporated herein.  Other portions of the Annual Report
to Shareholders are incorporated herein and are a part of the Registration
Statement.

  Any statement contained herein or in a document incorporated by reference
herein shall be deemed to be modified or superseded for purposes of the
Registration Statement and this Prospectus to the extent that another
statement contained herein, in any supplement hereto or in any other
subsequently filed document which also is incorporated by reference herein,
modifies or supersedes such statement.  Any such statement so modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of the Registration Statement, this Prospectus or any
supplement hereto.





                                            APPENDIX A










                     AGREEMENT AND PLAN OF MERGER

                            BY AND BETWEEN

                  SWEET WATER STATE BANCSHARES, INC.

                                 AND

                  SOUTH ALABAMA BANCORPORATION, INC.


                             DATED AS OF
                            APRIL 5, 1999





                          TABLE OF CONTENTS
                                                                  PAGE


AGREEMENT AND PLAN OF MERGER . . . . . . . . . . . . . . . . . . . . 1

Preamble . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ARTICLE ONE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
     TRANSACTIONS AND TERMS OF MERGER. . . . . . . . . . . . . . . . 9
          1.1  Merger. . . . . . . . . . . . . . . . . . . . . . . . 9
          1.2  Time and Place of Closing . . . . . . . . . . . . . . 9
          1.3  Effective Time. . . . . . . . . . . . . . . . . . . .10

ARTICLE TWO. . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
     TERMS OF MERGER . . . . . . . . . . . . . . . . . . . . . . . .10
          2.1  Articles of Incorporation . . . . . . . . . . . . . .10
          2.2  Bylaws. . . . . . . . . . . . . . . . . . . . . . . .10
          2.3  Directors and Officers. . . . . . . . . . . . . . . .10

ARTICLE THREE. . . . . . . . . . . . . . . . . . . . . . . . . . . .10
     MANNER OF CONVERTING SHARES . . . . . . . . . . . . . . . . . .10
          3.1  Conversion of Shares. . . . . . . . . . . . . . . . .11
          3.2  Anti-Dilution Provisions. . . . . . . . . . . . . . .11
          3.3  Shares Held by Sweet Water or South Alabama . . . . .11
          3.4  Dissenting Shareholders . . . . . . . . . . . . . . .11
          3.5  Fractional Shares . . . . . . . . . . . . . . . . . .12

ARTICLE FOUR . . . . . . . . . . . . . . . . . . . . . . . . . . . .12
     EXCHANGE OF SHARES. . . . . . . . . . . . . . . . . . . . . . .12
          4.1  Exchange Procedures . . . . . . . . . . . . . . . . .12
          4.2  Rights of Former Sweet Water Shareholders . . . . . .13

ARTICLE FIVE . . . . . . . . . . . . . . . . . . . . . . . . . . . .13
     REPRESENTATIONS AND WARRANTIES OF SWEET WATER . . . . . . . . .13
          5.1  Organization, Standing, and Power . . . . . . . . . .13
          5.2  Authority; No Breach By Agreement . . . . . . . . . .14
          5.3  Capital Stock . . . . . . . . . . . . . . . . . . . .15
          5.4  Sweet Water Subsidiaries. . . . . . . . . . . . . . .15
          5.5  Financial Statements. . . . . . . . . . . . . . . . .16
          5.6  Absence of Undisclosed Liabilities. . . . . . . . . .16
          5.7  Absence of Certain Changes or Events. . . . . . . . .16
          5.8  Tax Matters . . . . . . . . . . . . . . . . . . . . .16
          5.9  Allowance for Possible Loan Losses. . . . . . . . . .17
          5.10 Assets. . . . . . . . . . . . . . . . . . . . . . . .17
          5.11 Environmental Matters . . . . . . . . . . . . . . . .18
          5.12 Compliance with Laws. . . . . . . . . . . . . . . . .19
          5.13 Labor Relations . . . . . . . . . . . . . . . . . . .19
          5.14 Employee Benefit Plans. . . . . . . . . . . . . . . .20
          5.15 Material Contracts. . . . . . . . . . . . . . . . . .21
          5.16 Legal Proceedings . . . . . . . . . . . . . . . . . .22
          5.17 Statements True and Correct . . . . . . . . . . . . .22
          5.18 Accounting, Tax and Regulatory Matters. . . . . . . .23
          5.19 Charter Provisions. . . . . . . . . . . . . . . . . .23
          5.20 Year 2000 Compliance. . . . . . . . . . . . . . . . .23

ARTICLE SIX. . . . . . . . . . . . . . . . . . . . . . . . . . . . .23
     REPRESENTATIONS AND WARRANTIES OF SOUTH ALABAMA . . . . . . . .23
          6.1  Organization, Standing, and Power . . . . . . . . . .23
          6.2  Authority; No Breach By Agreement . . . . . . . . . .23
          6.3  Reports . . . . . . . . . . . . . . . . . . . . . . .24
          6.4  Capital Stock . . . . . . . . . . . . . . . . . . . .25
          6.5  Financial Statements. . . . . . . . . . . . . . . . .25
          6.6  Absence of Material Adverse Change. . . . . . . . . .26
          6.7  Subsidiaries. . . . . . . . . . . . . . . . . . . . .26
          6.8  Legal Proceedings.. . . . . . . . . . . . . . . . . .26
          6.9  Statements True and Correct.. . . . . . . . . . . . .26
          6.10      Year 2000 Compliance.. . . . . . . . . . . . . .27
          6.11      Environmental Matters. . . . . . . . . . . . . .27

ARTICLE SEVEN. . . . . . . . . . . . . . . . . . . . . . . . . . . .28
     CONDUCT OF BUSINESS PENDING CONSUMMATION. . . . . . . . . . . .28
          7.1  Covenants of Both Parties . . . . . . . . . . . . . .28
          7.2  Covenants of Sweet Water. . . . . . . . . . . . . . .28
          7.3  Covenants of South Alabama. . . . . . . . . . . . . .30
          7.4  Adverse Changes in Condition. . . . . . . . . . . . .31
          7.5  Reports . . . . . . . . . . . . . . . . . . . . . . .31

ARTICLE EIGHT. . . . . . . . . . . . . . . . . . . . . . . . . . . .32
     ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . .32
          8.1  Registration Statement; Proxy Statement;
               Shareholder Approval. . . . . . . . . . . . . . . . .32
          8.2  Applications. . . . . . . . . . . . . . . . . . . . .33
          8.3  Filings with State Offices. . . . . . . . . . . . . .33
          8.4  Agreement as to Efforts to Consummate . . . . . . . .33
          8.5  Investigation and Confidentiality . . . . . . . . . .34
          8.6  Press Releases. . . . . . . . . . . . . . . . . . . .34
          8.7  Certain Actions . . . . . . . . . . . . . . . . . . .34
          8.8  Accounting and Tax Treatment. . . . . . . . . . . . .35
          8.9  Charter Provisions. . . . . . . . . . . . . . . . . .35
          8.10 Agreement of Affiliates . . . . . . . . . . . . . . .36

ARTICLE NINE . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
     CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE . . . . . . .38
          9.1  Conditions to Obligations of Each Party . . . . . . .38
          9.2  Conditions to Obligations of South Alabama. . . . . .39
          9.3  Conditions to Obligations of Sweet Water. . . . . . .40

ARTICLE TEN. . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
     TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . .41
          10.1 Termination . . . . . . . . . . . . . . . . . . . . .41
          10.2      Effect of Termination. . . . . . . . . . . . . .42
          10.3 Termination of Representations and Covenants. . . . .43

ARTICLE ELEVEN . . . . . . . . . . . . . . . . . . . . . . . . . . .43
     MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . .43
          11.1 Expenses. . . . . . . . . . . . . . . . . . . . . . .43
          11.2      Brokers and Finders. . . . . . . . . . . . . . .43
          11.3      Entire Agreement . . . . . . . . . . . . . . . .43
          11.4      Amendments . . . . . . . . . . . . . . . . . . .44
          11.5      Waivers. . . . . . . . . . . . . . . . . . . . .44
          11.6      Assignment . . . . . . . . . . . . . . . . . . .44
          11.7      Notices. . . . . . . . . . . . . . . . . . . . .45
          11.8 Governing Law . . . . . . . . . . . . . . . . . . . .46
          11.9 Counterparts. . . . . . . . . . . . . . . . . . . . .46
          11.10     Captions . . . . . . . . . . . . . . . . . . . .46
          11.11     Enforcement of Agreement . . . . . . . . . . . .46
          11.12     Severability . . . . . . . . . . . . . . . . . .46



                     AGREEMENT AND PLAN OF MERGER

          THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is
made and entered into as of April 5, 1999 by and between SWEET WATER STATE
BANCSHARES, INC. ("Sweet Water"), a corporation organized and existing under the
laws of the State of Alabama, with its principal office located in Sweet
Water, Alabama, and SOUTH ALABAMA BANCORPORATION, INC.  ("South Alabama"), a
corporation organized and existing under the laws of the State of Alabama,
with its principal office located in Mobile, Alabama.


                               PREAMBLE

          The Boards of Directors of Sweet Water and South Alabama are of the
opinion that the transactions described herein are in the best interests of
the parties and their respective shareholders.   This Agreement provides for the
merger of Sweet Water with and into South Alabama.  At the effective time of
such merger, the outstanding shares of the capital stock of Sweet Water shall
be converted into the right to receive shares of the common stock of South
Alabama (except as provided herein).

As a result, shareholders of Sweet Water shall become shareholders of South
Alabama and South Alabama shall continue to conduct the business and
operations of SweetWater.  The transactions described in this Agreement are
subject to the approvals of the shareholders of Sweet Water, the Board of
Governors of the Federal Reserve System, and the satisfaction of certain other
conditions described in this Agreement.

It is the intention of the parties to this Agreement that the Merger (i) for
federal income tax purposes shall qualify as a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code, and (ii) for
accounting purposes shall qualify for treatment as a "pooling of interests."

          NOW, THEREFORE, in consideration of the above and the mutual
warranties, representations, covenants and agreements set forth herein, the
parties agree as follows:


                             DEFINITIONS

          Except as otherwise provided herein, the capitalized terms set forth
          below (in their singular and plural forms as applicable) shall have
          the following meanings:

               "ABCA" shall mean the Alabama Business Corporation Act.

               "ACQUISITION PROPOSAL" with respect to a Party shall mean any
tender offer or exchange offer or any proposal for a merger, acquisition
of all of the stock or assets of, or other business combination involving such
Party or any of its Subsidiaries or the acquisition of a substantial equity
interest in, or a substantial portion of the assets of, such Party or any of its
Subsidiaries.

               "AFFILIATE" of a Person shall mean: (i) any other Person
directly, or indirectly through one or more intermediaries, controlling,
controlled by or under common control with such Person; (ii) any officer,
director, partner, employer, or direct or indirect beneficial owner of any 10%
or greater equity or voting interest of such Person; or (iii) any other Person
for which a Person described in clause (ii) acts in any such capacity.

               "AGREEMENT" shall mean this Agreement and Plan of Merger,
including the Exhibits delivered pursuant hereto and incorporated herein by
reference.  References to "the date of this Agreement," "the date hereof"
and words of similar import shall refer to the date this Agreement was
first executed, April 5, 1999.

               "ALLOWANCE" shall have the meaning provided in Section 5.9 of
this Agreement.

              "ARTICLES OF MERGER" shall mean the Articles of Merger to be
executed by South Alabama and filed with the Secretary of State of the
Stateof Alabama relating to the Merger as contemplated by Section 1.1 of this
Agreement.

               "ASSETS" of a Person shall mean all of the assets, properties,
businesses and rights of such Person of every kind, nature, character and
description, whether real, personal or mixed, tangible or intangible,
accrued or contingent, or otherwise relating to or utilized in such Person's
business, directly or indirectly, in whole or in part, whether or not carried
on the books and records of such Person, and whether or not owned in the name
of such Person or any Affiliate of such Person and wherever located.

               "BHC ACT" shall mean the federal Bank Holding Company Act of
1956, as amended.

               "BROKER FEES" shall have the meaning provided in Section 11.2 of
this Agreement.

               "BOOK VALUE," with respect to Sweet Water Common Stock, shall
mean the book value of one share of Sweet Water Common Stock on the last day
of the last fiscal quarter ending prior to or contemporaneously with the
day of the Effective Time, according to the Sweet Water Financial Statements
computed in accordance with GAAP, plus the after-tax impact of (a) the
booked or accrued amount of any one-time special assessment by the Federal
Deposit Insurance Fund after the date of this Agreement; (b) fees, except
for those already reserved for as of December 31, 1998, paid to Miller,
Hamilton, Snider & Odom, L.L.C. in connection with this Agreement and the
transactions contemplated herein; (c) fees paid to Alex Sheshunoff & Co.
Investment Banking pursuant to Section 11.2 of this Agreement; and (d) any
other fees or payments required to be paid or accrued to be paid or accrued
bySweet Water in connection with this Agreement or the proposed transaction.
"CLOSING" shall mean the closing of the transactions contemplated hereby, as
described in Section 1.2 of this Agreement.

               "CONSENT" shall mean any consent, approval, authorization,
clearance, exemption, waiver, or similar affirmation by any Person pursuant
to any Contract, Law, Order, or Permit.

               "CONTRACT" shall mean any written or oral agreement, arrange-
ment, authorization, commitment, contract, indenture, instrument, lease,
obligation, plan, practice, restriction, understanding or undertaking of
any kind or character, or other document to which any Person is a party or that
is binding on any Person or its capital stock, Assets or business.

               "CREDITOR'S LAWS" shall have the meaning provided in Section
5.2(a) of this Agreement.

               "DEFAULT" shall mean (i) any breach or violation of or default
under any Contract, Order or Permit, (ii) any occurrence of any event that with
the passage of time or the giving of notice or both would constitute a
breach or violation of or default under any Contract, Order or Permit, or (iii)
any occurrence of any event that with or without the passage of time or the
giving of notice would give rise to a right to terminate or revoke, change the
current terms of, or renegotiate, or to accelerate, increase, or impose any
Liability under, any Contract, Order or Permit, where, in any such event, such
Default is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on a Party.

               "EFFECTIVE TIME" shall mean the date and time at which the
Merger becomes effective as defined in Section 1.3 of this Agreement.

               "ENVIRONMENTAL LAWS" shall mean all Laws which are administered,
interpreted or enforced by the United States Environmental Protection
Agency and state and local agencies with jurisdiction over pollution or
protection of the environment.

               "EQUITABLE DISCRETION" shall have the meaning provided in
Section 5.2(a) of this Agreement.

               "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.

               "ERISA AFFILIATE" shall have the meaning provided in Section 5.14
of this Agreement.

               "ERISA PLAN" shall have the meaning provided in Section 5.14 of
this Agreement.

               "EXCHANGE AGENT" shall have the meaning provided in Section 4.1
of this Agreement.

               "EXCHANGE RATIO" shall have the meaning given such term in
Section 3.1 hereof.

               "EXHIBITS" 1 through 4, inclusive, shall mean the Exhibits so
marked, copies of which are attached to this Agreement.  Such Exhibits are
hereby incorporated by reference herein and made a part hereof, and may be
referred to in this Agreement and any other related instrument or document
without being attached hereto.

               "GAAP" shall mean generally accepted accounting principles,
consistently applied during the periods involved.

               "HAZARDOUS MATERIAL" shall mean any pollutant, contaminant, or
hazardous substance within the meaning of the Comprehensive Environment
Response, Compensation, and Liability Act, 42 U.S.C. section 9601 et
seq., or any similar federal, state or local Law.

               "INTERNAL REVENUE CODE" shall mean the Internal Revenue Code
of 1986, as amended, and the rules and regulations promulgated thereunder.

               "KNOWLEDGE" as used with respect to a Person shall mean the
actual Knowledge after due inquiry of the Chairman, President, Chief
Financial Officer, Chief Accounting Officer, Chief Credit Officer, General
Counsel, any Assistant or Deputy General Counsel, or any Senior or Executive
Vice President of such Person.

               "LAW" shall mean any code, law, ordinance, regulation, reporting
or licensing requirement, rule, or statute applicable to a Person or its Assets,
Liabilities or business, including, without limitation, those promulgated,
interpreted or enforced by any of the Regulatory Authorities.

               "LIABILITY" shall mean any direct or indirect, primary or
secondary, liability, indebtedness, obligation, penalty, cost or expense
(including, without limitation, costs of investigation, collection and defense),
claim, deficiency, guaranty or endorsement of or by any Person (other than
endorsements of notes, bills, checks, and drafts presented for collection or
depositin the ordinary course of business) of any type, whether accrued,
absolute or contingent, liquidated or unliquidated, matured or unmatured,
or otherwise.

               "LIEN" shall mean any conditional sale agreement, default of
title, easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title
retention or other security arrangement, or any adverse right or interest,
charge, or claim of any nature whatsoever of, on, or with respect to any
property or property interest, other than (i) Liens for current property Taxes
not yet due and payable,(ii) for depository institution Subsidiaries of a Party,
pledges to secure deposits and other Liens incurred in the ordinary course of
the banking business, and (iii) Liens which are not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on a Party.

               "LITIGATION" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, demand letter, governmental or other
examination or investigation, hearing, inquiry, administrative or other
proceeding, or notice (written or oral) by any Person alleging potential
Liability or requesting information relating to or affecting a Party, its busi-
ness, its Assets(including, without limitation, Contracts related to it), or
the transactions contemplated by this Agreement, but shall not include regular,
periodic examinations of depository institutions and their Affiliates by
Regulatory Authorities.

               "LOAN PROPERTY" shall mean any property owned by the Party in
question or by any of its Subsidiaries or in which such Party or Subsidiary
holds a security interest, and, where required by the context, includes
the owner or operator of such property, but only with respect to such property.

               "MARKET PRICE,"  when used with reference to South Alabama
Common Stock, shall mean the per share average Market Value during the
Valuation Period.

               "MARKET VALUE," when used with reference to South Alabama
Common Stock, shall mean the per share average of the closing bid and closing
ask price as reported by NASDAQ, adjusted for the effect of any stock
split, stock dividend or other similar recapitalization between the date hereof
and the Effective Time.

               "MATERIAL" and derivations thereof for purposes of this
Agreement shall be determined in light of the facts and circumstances of the
matter in question; provided that any specific monetary amount stated in this
Agreement shall determine Materiality in that instance.

               "MATERIAL ADVERSE EFFECT" on a Party shall mean an event, change
or occurrence which has a material adverse impact on (i) the financial position
or business of such Party and its Subsidiaries, taken as a whole, or (ii) the
ability of such Party to perform its obligations under this Agreement or
to consummate the Merger or the other transactions contemplated by this
Agreement, provided that "material adverse impact" shall not be deemed to
include the impact of (x) changes in banking and similar Laws of general
applicability or interpretations thereof by courts or governmental authorities,
(y)changes in generally accepted accounting principles or regulatory accounting
principles generally applicable to banks and their holding companies, and
(z) the Merger on the operating performance of the Parties.

               "MERGER" shall mean the merger of Sweet Water with and into
South Alabama referred to in Section 1.1 of this Agreement.

               "NASD" shall mean the National Association of Securities Dealers,
Inc.

               "NASDAQ" shall mean the National Association of Securities
Dealers Automated Quotations System.

               "1933 ACT" shall mean the Securities Act of 1933, as amended.

               "1934 ACT" shall mean the Securities Exchange Act of 1934, as
amended.

               "ORDER" shall mean any administrative decision or award, decree,
injunction, judgment, order, quasi-judicial decision or award, ruling, or
writ of any federal, state, local or foreign or other court, arbitrator,
mediator, tribunal, administrative agency or Regulatory Authority.

               "PARTICIPATION FACILITY" shall means any facility in which the
Party in question or any of its Subsidiaries participates in the management
and, where required by the context, includes the owner or operator or such
property, but only with respect to such property.

               "PARTY" shall mean either Sweet Water or South Alabama, and
"PARTIES" shall mean both Sweet Water and South Alabama.

               "PERMIT" shall mean any federal, state, local, and foreign
governmental approval, authorization, certificate, easement, filing, franchise,
license, notice, permit, or right to which any Person is a party or that
is or may be binding upon or inure to the benefit of any Person or its
securities,Assets or business.

               "PERSON" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability
company, trust, business association, group acting in concert, or any person
acting in a representative capacity.

               "PREVIOUSLY DISCLOSED" shall mean information delivered in
writing prior to the date of this Agreement in the manner and to the
Party and counsel described in Section 11.7 of this Agreement and describing
in reasonable detail the matters contained therein.

               "PROXY STATEMENT" shall mean the proxy statement/prospectus
used by Sweet Water to solicit the approval of its shareholders of the
transactions contemplated by this Agreement and used by South Alabama in
connection with the issuance of South Alabama Common Stock to holders of Sweet
Water Common Stock and which shall be filed with the SEC as part of the
Registration Statement.

               "REGISTRATION STATEMENT" shall mean the Registration Statement
on Form S-4, or other appropriate form, filed with the SEC by South Alabama
under the 1933 Act in connection with the transactions contemplated by this
Agreement.

               "REGULATORY AUTHORITIES" shall mean, collectively, the Federal
Trade Commission, the United States Department of Justice, the Board of the
Governors of the Federal Reserve System, the Office of the Comptroller of the
Currency, the Federal Deposit Insurance Corporation, all state regulatory
agencies having jurisdiction over the Parties and their respective Subsidiaries,
the NASD, and the SEC.

               "SEC" shall mean the United States Securities and Exchange
Commission.

               "SEC DOCUMENTS" shall mean all reports and registration
statements filed, or required to be filed, by a Party or any of its Subsidiaries
with any Regulatory Authority pursuant to the Securities Laws.


               "SECURITIES LAWS" shall mean the 1933 Act, the 1934 Act, the
Investment Company Act of 1940, as amended, the Investment Advisors Act of
1940, as amended, the Trust Indenture Act of 1939, as amended, and the
rules and regulations of any Regulatory Authority promulgated thereunder.

               "SHAREHOLDERS' MEETING" shall mean the Meeting of the
shareholders of Sweet Water to be held pursuant to Section 8.1 of this Agree-
ment, including any adjournment or adjournments thereof.

               "SOUTH ALABAMA COMMON STOCK" shall mean the $.01 par value
common stock of South Alabama.

               "SOUTH ALABAMA COMPANIES" shall mean, collectively, South
Alabama and all South Alabama Subsidiaries.

               "SOUTH ALABAMA SUBSIDIARIES" shall mean the Subsidiaries of
South Alabama, which have been Previously Disclosed to Sweet Water, and any
corporation, bank, savings association, or other organization acquired as a
Subsidiary of South Alabama in the future and owned by South Alabama at the
Effective Time.

               "SUBSIDIARIES" shall mean all those corporations, banks,
associations, or other entities of which the entity in question owns or controls
50% or more of the outstanding  equity securities either directly or
through an unbroken chain of entities as to each of which 50% or more of the
outstanding equity securities is owned directly or indirectly by its parent;
provided, however, there shall not be included any such entity acquired through
foreclosure or any such entity the equity securities of which are owned or
controlled in a fiduciary capacity.

               "SURVIVING CORPORATION" shall mean South Alabama as the
surviving corporation resulting from the Merger.

               "SWEET WATER BENEFIT PLANS" shall have the meaning set forth in
Section 5.14 of this Agreement.

               "SWEET WATER COMMON STOCK" shall mean the $1.00 par value
common stock of Sweet Water.

               "SWEET WATER COMPANIES" shall mean, collectively, Sweet Water
and all Sweet Water Subsidiaries.

               "SWEET WATER FINANCIAL STATEMENTS" shall mean (i) the
consolidated balance sheets (including related notes and schedules, if
any) of Sweet Water as of December 31, 1998 and 1997, and the related statements
of income, changes in shareholders' equity, and cash flows (including
related notes and schedules, if any) for each of the three fiscal years ended
December 31, 1998, 1997, and 1996, as delivered by Sweet Water to South Alabama,
and (ii) the consolidated balance sheets of Sweet Water (including related
notes and schedules, if any) and related statements of income, changes in share-
holders' equity, and cash flows (including related notes and schedules, if any)
delivered by Sweet Water to South Alabama with respect to periods ended
subsequent to December 31, 1998.

               "SWEET WATER REPRESENTATIVES" shall mean the meaning set forth
in Section 8.7(a) of this Agreement.

               "SWEET WATER SUBSIDIARIES" shall mean the Subsidiaries of Sweet
Water, which shall include the Sweet Water Subsidiaries described in Section
5.4 of this Agreement and any corporation, bank, savings association, or other
organization acquired as a Subsidiary of Sweet Water in the future and owned
by Sweet Water at the Effective Time.

               "TAXES" shall mean any federal, state, county, local, foreign and
other taxes, assessments, charges, fares, and impositions, including
interest and penalties thereon or with respect thereto.

               "TRADING DAY" shall mean a day on which NASDAQ is open for
trading activities.

               "VALUATION PERIOD" shall mean the period of twenty (20)
consecutive Trading Days ending on the Trading Day preceding by two Trading
Days the Effective Time.


                             ARTICLE ONE
                   TRANSACTIONS AND TERMS OF MERGER

          1.1  MERGER.  Subject to the terms and conditions of this Agreement,
at the Effective Time, Sweet Water shall be merged with and into South
Alabama in accordance with the provisions of Article 11 of the ABCA and
with the effect provided in Section 11.06 of the ABCA (the "Merger").
South Alabama shall be the Surviving Corporation resulting from the Merger
and shall continue to be governed by the Laws of the  State of Alabama.
The Merger shall be consummated pursuant to the terms of this Agreement,
which has been approved and adopted by the respective Boards of Directors
of Sweet Water and South Alabama.

          1.2  TIME AND PLACE OF CLOSING.  The Closing will take place at 9:00
A.M. on the date that the Effective Time occurs (or the immediately preceding
day if the Effective Time is earlier than 9:00 A.M.), or at such other time as
the Parties, acting through their chief executive officers or chief financial
officers, may mutually agree.

The place of Closing shall be at the offices of Hand Arendall, L.L.C., Mobile,
Alabama, or such other place as may be mutually agreed upon by the Parties.

          1.3  EFFECTIVE TIME.  The Merger and other transactions contemplated
by this Agreement shall become effective on the date and at the time specified
in the Articles of Merger or at the time the Articles of Merger are duly filed
with the Secretary of State or the State of Alabama, whichever is later (the
"Effective Time"). Subject to the terms and conditions hereof, unless otherwise
mutually agreed upon in writing by the chief executive officers or chief
financial officers of each Party, the Parties shall use their reasonable efforts
to cause the Effective Time to occur as soon as practicable after the last to
occur of (i) the effective date (including expiration of any applicable waiting
period) of the last required Consent of any Regulatory Authority having
authority over and approving or exempting the Merger, and (ii) the date on
which the shareholders of Sweet Water approve this Agreement to the extent such
approval is required by applicable Law, or such later date within ninety (90)
days thereof as may be specified by South Alabama.


                             ARTICLE TWO
                           TERMS OF MERGER

          2.1  ARTICLES OF INCORPORATION.  The Articles of Incorporation of
South Alabama in effect immediately prior to the Effective Time shall be the
Articles of Incorporation of the Surviving Corporation immediately following the
Effective Time, with the amendments set forth in Exhibit 1 hereto, until
otherwise amended or repealed.

          2.2  BYLAWS.  The Bylaws of South Alabama in effect immediately prior
to the Effective Time shall be the Bylaws of the Surviving Corporation
immediately following the Effective Time, with the amendments set forth in
Exhibit 2 hereto, until otherwise amended or repealed.

          2.3  DIRECTORS AND OFFICERS.

               (a)  The directors of the Surviving Corporation from and after
the Effective Time shall consist of the seventeen (17) incumbent directors of
South Alabama.  All such  persons shall serve in accordance with the Bylaws of
the Surviving Corporation.  The members of the standing committees of the Board
of Directors of the Surviving Corporation shall be determined by such Board of
Directors.

               (b)  The principal officers of the Surviving Corporation upon the
Effective Time shall be the incumbent officers of South Alabama, who shall
serve as officers of the Surviving Corporation from and after the Effective
Time in accordance with the Bylaws of the Surviving Corporation.



                            ARTICLE THREE
                     MANNER OF CONVERTING SHARES

          3.1  CONVERSION OF SHARES.  Subject to the provisions of this Article
Three, at the Effective Time, by virtue of the Merger and without any action
on the part of the holders thereof, the shares of the constituent corporations
shall be converted as follows:

          (a)  Each share of South Alabama Common Stock issued and outstanding
     immediately prior to the Effective Time shall remain issued and outstand-
     ing from and after the Effective Time.

          (b)  Each share of Sweet Water Common Stock (excluding shares to be
     canceled pursuant to Section 3.3 of this Agreement and shares held by
     shareholders who perfect their dissenters' rights of appraisal as
     provided in Section 3.4 of this Agreement) issued and outstanding at the
     Effective Time shall cease to be outstanding and shall be converted into
     and exchanged for the right to receive 14.17  shares (rounded to the
     nearest hundredth of a share) of South Alabama Common Stock(the "Exchange
     Ratio"); provided, that (subject to the provisions of Section 10.1):
     (i) in the event the Market Price of South Alabama Common Stock is greater
     than $17.00, then the Exchange Ratio shall be the number of shares of South
     Alabama Common Stock having an aggregate Market Price equal to $240.89  for
     each share of Sweet Water Common Stock; and (ii) in the event the Market
     Price of South Alabama Common Stock is less than $13.00, then the Exchange
     Ratio shall be the number of shares of South Alabama Common Stock having an
     aggregate Market Price equal to $184.21 for each share of Sweet Water
     Common Stock.

          3.2  ANTI-DILUTION PROVISIONS.  In the event Sweet Water changes the
number of shares of Sweet Water Common Stock issued and outstanding prior to the
Effective Time as a result of a stock split, stock dividend or similar
recapitalization with respect to such stock and the record date therefor shall
be prior to the Effective Time, the Exchange Ratio shall be proportionately
adjusted.

          3.3  SHARES HELD BY SWEET WATER OR SOUTH ALABAMA.  Each of the
shares of Sweet Water Common Stock held by any Sweet Water Company or by any
South Alabama Company, in each case other than in a fiduciary capacity or as a
result of debts previously contracted, shall be canceled and retired at the
Effective Time, and no consideration shall be issued in exchange therefor.

          3.4  DISSENTING SHAREHOLDERS.  Any holder of shares of Sweet Water
Common Stock who perfects his dissenters' rights of appraisal in accordance
with and as contemplated by Article 13 of the ABCA shall be entitled to receive
the value of such shares in cash as determined pursuant to such provision of
Law; provided, however, that no such payment shall be made to any dissenting
shareholder unless and until such dissenting shareholder has complied with the
applicable provisions of the ABCA and surrendered to the Surviving Corporation
the certificate or certificates representing the shares for which payment is
being made.  In the event that after the Effective Time a dissenting shareholder
of Sweet Water fails to perfect, or effectively withdraws or loses, his right
to appraisal and of payment for his shares, the Surviving Corporation shall
issue and deliver the consideration to which such holder of shares of Sweet
Water Common Stock is entitled under this Article Three (without interest)
upon surrender by such holder of the certificate or certificates representing
shares of Sweet Water Common Stock held by him.

          3.5  FRACTIONAL SHARES.  Notwithstanding any other provision of this
Agreement, each holder of shares of Sweet Water Common Stock exchanged pursuant
to the Merger, who would otherwise have been entitled to receive a fraction of
a share of South Alabama Common Stock (after taking into account all
certificates delivered by such holder) shall receive, in lieu thereof, cash
(without interest) in an amount equal to such fractional part of a share of
South Alabama Common Stock multiplied by the Market Price of one share of South
Alabama Common Stock.  No such holder will be entitled to dividends, voting
rights, or any other rights as a shareholder in respect of any fractional
shares.


                             ARTICLE FOUR
                          EXCHANGE OF SHARES

          4.1  EXCHANGE PROCEDURES.  Promptly after the Effective Time, the
Surviving Corporation shall cause the exchange agent selected by it (the
"Exchange Agent") to mail to the former shareholders of Sweet Water appropriate
transmittal Materials (which shall specify that delivery shall be effected, and
risk of loss and title to the certificates theretofore representing shares of
Sweet Water Common Stock shall pass, only upon proper delivery of such certifi-
cates to the Exchange Agent). After the Effective Time, each holder of shares
of Sweet Water Common Stock (other than shares to be canceled pursuant to
Section 3.3 of this Agreement or as to which dissenters' rights of appraisal
have been perfected as provided in Section 3.4 of this Agreement)issued and
outstanding at the Effective Time shall surrender the certificate or
certificates representing such shares to the Exchange Agent and shall promptly
upon surrender thereof receive in exchange therefor the consideration provided
in Section 3.1 of this Agreement, together with all undelivered dividends or
distributions in respect of such shares (without interest thereon) pursuant to
Section 4.2 of this Agreement. To the extent required by Section 3.5 of this
Agreement, each holder of shares of Sweet Water Common Stock issued and
outstanding at the Effective Time also shall receive, upon surrender of the
certificate or certificates representing such shares, cash in lieu of any
fractional share of South Alabama Common Stock to which such holder may be
otherwise entitled (without interest).  The Surviving Corporation shall not be
obligated to deliver the consideration to which any former holder of Sweet
Water Common Stock is entitled as a result of the Merger until such holder
surrenders his certificate or certificates representing the shares of Sweet
Water Common Stock for exchange as provided in this Section 4.1.  The certi-
ficate or certificates of Sweet Water Common Stock so surrendered shall be duly
endorsed as the Exchange Agent may require.  Any other provision of this
Agreement notwithstanding, neither the Surviving Corporation nor the Exchange
Agent shall be liable to a holder of Sweet Water Common Stock for any amounts
paid or property delivered in good faith to a public official pursuant to any
applicable abandoned property Law.

          4.2  RIGHTS OF FORMER SWEET WATER SHAREHOLDERS.  At the Effective
Time, the stock transfer books of Sweet Water shall be closed as to holders of
Sweet Water Common Stock immediately prior to the Effective Time and no transfer
of Sweet Water Common Stock by any such holder shall thereafter be made or
recognized.  Until surrendered for exchange in accordance with the provisions
of Section 4.1 of this Agreement, each certificate theretofore representing
shares of Sweet Water Common Stock ("Sweet Water Certificate"), other than
shares to be canceled pursuant to Sections 3.3 and 3.4 of this Agreement, shall
from and after the Effective Time represent for all purposes only the right to
receive the  consideration provided in Sections 3.1 and 3.5 of this Agreement in
exchange therefor.  To the extent permitted by Law, former shareholders of
record of Sweet Water shall be entitled to vote after the Effective Time at any
meeting of Surviving Corporation shareholders the number of whole shares of
South Alabama Common Stock into which their respective shares of Sweet Water
Common Stock are converted, regardless of whether such holders have exchanged
their Sweet Water Certificates for certificates representing South Alabama
Common Stock in accordance with the provisions of this Agreement.  Whenever a
dividend or other distribution is declared by the Surviving Corporation on the
South Alabama Common Stock, the record date for which is at or after the
Effective Time, the declaration shall include dividends or other distributions
on all shares issuable pursuant to this Agreement.  Notwithstanding the
preceding sentence, any person holding any Sweet Water Certificate at or after
six (6) months after the Effective Time (the "Cutoff") shall not be entitled to
receive any dividend or other distribution payable after the Cutoff to holders
of South Alabama Common Stock, which dividend or other distribution is
attributable to such person's South Alabama Common Stock represented by said
Sweet Water Certificate held after the Cutoff, until such person surrenders said
Sweet Water Certificate for exchange as provided in Section 4.1 of this
Agreement.  However, upon surrender of such Sweet Water Certificate, both the
South Alabama Common Stock certificate (together with all such undelivered
dividends or other distributions, without interest) and any undelivered cash
payments to be paid for fractional share interests (without interest) shall be
delivered and paid with respect to each share represented by such Sweet Water
Certificate.


                             ARTICLE FIVE
            REPRESENTATIONS AND WARRANTIES OF SWEET WATER

          Sweet Water hereby represents and warrants to South Alabama as
follows:

          5.1  ORGANIZATION, STANDING, AND POWER.  Sweet Water is a
corporation duly organized, validly existing and in good standing under the
Laws of the State of Alabama, and has the corporate power and authority to
carry on its business as now conducted and to own, lease and operate its Assets.
Sweet Water is duly qualified or licensed to transact business as a foreign
corporation in good standing in the States of the United States and foreign
jurisdictions where the character of its Assets or the nature or conduct of its
business requires it to be so qualified or licensed and in which the failure to
be so qualified or licensed would be reasonably expected to, individually or in
the aggregate, have a Material Adverse Effect on Sweet Water.  Sweet Water has
delivered to South Alabama complete and correct copies of its Articles of
Incorporation and Bylaws and the articles of incorporation, bylaws and other,
similar governing instruments of each of its Subsidiaries, in each case as
amended through the date hereof.

          5.2  AUTHORITY; NO BREACH BY AGREEMENT.

               (a)  Sweet Water has the corporate power and authority
necessary to execute, deliver and, subject to Article Nine hereof, perform its
obligations under this Agreement and to consummate the transactions contemplated
hereby.  The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein, including the Merger,
have been duly and validly authorized by all necessary corporate action in
respect thereof on the part of Sweet Water, subject to the approval of this
Agreement by the holders of Sweet Water Common Stock in accordance with the
ABCA.  Subject to such requisite shareholder approval, this Agreement
represents a legal, valid, and binding obligation of Sweet Water, enforceable
against Sweet Water in accordance with its terms (except in all cases as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar Laws affecting the enforcement of
creditors' rights generally ("Creditor's Laws") and except that the
availability of the equitable remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any proceeding
may be brought ("Equitable Discretion")).

               (b)  Neither the execution and delivery of this Agreement by
Sweet Water, nor the consummation by Sweet Water of the transactions
contemplated hereby, nor compliance by Sweet Water with any of the provisions
hereof, will (i) conflict with or result in a breach of any provision of Sweet
Water's Articles of Incorporation or Bylaws, or (ii) constitute or result in a
Default under, or require any Consent pursuant to, or result in the creation of
any Lien on any Asset of any Sweet Water Company under, any Contract or Permit
of any Sweet Water Company, where any failure to obtain such Consent is
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect on Sweet Water, or, (iii) subject to receipt of the requisite approvals
referred to in Section 9.1(b) of this Agreement, violate any Law or Order
applicable to any Sweet Water Company or any of their respective Assets.

               (c)  Other than in connection or compliance with the provisions
of the Securities Laws, applicable state corporate and securities Laws, and
other than Consents required from Regulatory Authorities, and other than notices
to or filings with the Internal Revenue Service or the Pension Benefit Guaranty
Corporation with respect to any employee benefit plans, no notice to, filing
with, or Consent of, any public body or authority is necessary for the
consummation by Sweet Water of the Merger and the other transactions
contemplated in this Agreement.

          5.3  CAPITAL STOCK.

               (a)  The authorized capital stock of Sweet Water consists only of
60,000 shares of Sweet Water Common Stock, of which 60,000 shares are issued and
outstanding.  All of the issued and outstanding shares of capital stock of
Sweet Water are duly and validly issued and outstanding and are fully paid and
nonassessable under the ABCA.  None of the outstanding shares of capital stock
of Sweet Water has been issued in  violation of any preemptive rights of the
current or past shareholders of Sweet Water.

               (b)  There are no shares of capital stock or other equity
securities of Sweet Water outstanding and no outstanding options, warrants,
scrip, rights to subscribe to, calls, or commitments of any character whatsoever
relating to, or securities or rights convertible into or exchangeable for,
shares of the capital stock of Sweet Water or contracts, commitments,
understandings, or arrangements by which Sweet Water is or may be bound to
issue additional shares of its capital stock or options, warrants, or rights to
purchase or acquire any additional shares of its capital stock.

          5.4  SWEET WATER SUBSIDIARIES.  Sweet Water has Previously Disclosed
all of the Sweet Water Subsidiaries as of the date of this Agreement.  Except as
Previously Disclosed, Sweet Water or one of its Subsidiaries owns all of the
issued and outstanding shares of capital stock of each Sweet Water Subsidiary.
No equity securities of any Sweet Water Subsidiary are or may become required
to be issued by reason of any options, warrants, scrip, rights to subscribe to,
calls, or commitments of any character whatsoever relating to, or securities or
rights convertible into or exchangeable for, shares of the capital stock of any
such Subsidiary, and there are no Contracts by which any Sweet Water Subsidiary
is bound to issue additional shares of its capital stock or options, warrants,
or rights to purchase or acquire any additional shares of its capital stock or
by which any Sweet Water Company is or may be bound to transfer any shares of
the capital stock of any Sweet Water Subsidiary.  There are no Contracts
relating to the rights of any Sweet Water Company to vote or to dispose of any
shares of the capital stock of any Sweet Water Subsidiary.  All of the shares of
capital stock of each Sweet Water Subsidiary held by a Sweet Water Company are
fully paid nonassessable under the applicable corporation Law of the
jurisdiction in which such Subsidiary is incorporated or organized and are owned
by the Sweet Water Company free and clear of any Lien.  Each Sweet Water
Subsidiary is either a bank or a corporation, and is duly organized, validly
existing, and in good standing under the Laws of the jurisdiction in which it
is incorporated or organized, and has the corporate power and authority
necessary for it to own, lease and operate its Assets and to carry on its
business as now conducted.  Each Sweet Water Subsidiary is duly qualified or
licensed to transact business as a foreign corporation in good standing in the
States of the United States and foreign jurisdictions where the character of its
Assets or the nature or conduct of its business requires it to be so qualified
or licensed.  Each Sweet Water Subsidiary that is a  depository institution is
an "insured institution" as defined in the Federal Deposit Insurance Act and
applicable regulations thereunder; and the businesses of any non-bank
subsidiaries of Sweet Water are permitted to subsidiaries of registered bank
holding companies.

          5.5  FINANCIAL STATEMENTS.  Sweet Water has delivered to South
Alabama prior to the execution of this Agreement copies of all Sweet Water
Financial Statements for periods ended December 31,1998, 1997 and 1996 and will
deliver to South Alabama copies of all Sweet Water Financial Statements prepared
subsequent to the date hereof.  The Sweet Water Financial Statements (as of the
dates thereof and for the periods covered thereby) (i) are or, if dated after
the date of this Agreement, will be in accordance with the books and records of
the Sweet Water Companies, which are or will be, as the case may be, complete
and correct and which have been or will have been, as the case may be,
maintained in accordance with good business practices, and (ii) present or will
present, as the case may be, fairly the consolidated financial position of the
Sweet Water Companies as of the dates indicated and the consolidated
results of operations, changes in shareholders' equity, and cash flows of the
Sweet Water Companies for the periods indicated, all in accordance with GAAP.
The Financial Statements for December 31, 1998, have not yet been audited and
are subject to normal year-end adjustments.

          5.6  ABSENCE OF UNDISCLOSED LIABILITIES.  No Sweet Water Company
has any Liabilities that are reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Sweet Water, except Liabilities which
have been Previously Disclosed or are accrued or reserved against in the
consolidated balance sheets of Sweet Water as of December 31, 1998, included in
the Sweet Water Financial Statements or reflected in the notes thereto.  No
Sweet Water Company has incurred or paid any Liability since December 31, 1998,
except for such Liabilities incurred or paid in the ordinary course of business
consistent with past business practice and which are not reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on Sweet
Water.

          5.7  ABSENCE OF CERTAIN CHANGES OR EVENTS.  Since December 31, 1998,
except as disclosed in the Sweet Water Financial Statements or as Previously
Disclosed, (i) there have been no events, changes or occurrences which have
had, or are reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect on Sweet Water, and (ii) the Sweet Water Companies have
not taken any action, or failed to take any action, prior to the date of this
Agreement, which action or failure, if taken after the date of this Agreement,
would represent or result in a Material breach or violation of any of the
covenants and agreements of Sweet Water provided in Article Seven of this
Agreement.

          5.8  TAX MATTERS.

               (a)  All Tax returns required to be filed by or on behalf of
any of the Sweet Water Companies have been timely filed or requests for
extensions have been timely filed, granted, and have not expired for periods
ended on or before September 30, 1998, and on or before the date of the most
recent fiscal year end immediately preceding the Effective Time, and all returns
filed are complete and accurate.  All Taxes shown on filed returns have been
paid.  There is no audit examination, deficiency, or refund Litigation with
respect to any Taxes, except as reserved against in the Sweet Water Financial
Statements delivered prior to the date of this Agreement or as Previously
Disclosed.  All Taxes and other Liabilities due with respect to completed and
settled examinations or concluded Litigation have been paid.

               (b)  None of the Sweet Water Companies has executed an
extension or waiver of any statute of limitations on the assessment or
collection of any Tax due (excluding such statutes that relate to years
currently under examination by the Internal Revenue Service or other applicable
taxing authorities) that is currently in effect.

               (c)  To Sweet Water's Knowledge, adequate provision for any
Taxes due or to become due for any of the Sweet Water Companies for the period
or periods through and including the date of the respective Sweet Water
Financial Statements has been made and is reflected on such Sweet Water
Financial Statements.

               (d)  Deferred Taxes of the Sweet Water Companies have been
provided for in accordance with GAAP.

               (e)  Sweet Water is in compliance with, and its records contain
the information and documents (including properly completed IRS Forms W-9)
necessary to comply with applicable information reporting and Tax Withholding
Requirements under federal, state and local Tax Laws, and such records
identify the accounts subject to backup withholding under section 3406 of the
Internal Revenue Code.

          5.9  ALLOWANCE FOR POSSIBLE LOAN LOSSES.  The allowance for possible
loan or credit losses (the "Allowance") shown on the consolidated balance
sheets of Sweet Water included in the most recent Sweet Water Financial
Statements dated prior to the date of this Agreement was, and the Allowance
shown on the consolidated balance sheets of Sweet Water included in the Sweet
Water Financial Statements as of dates subsequent to the execution of this
Agreement will be, as of the dates thereof, adequate (within the meaning of GAAP
and applicable regulatory requirements or guidelines) to provide for losses
relating to or inherent in the loan and lease portfolios (including accrued
interest receivables) of the Sweet Water Companies and other extensions of
credit (including letters of credit and commitments to make loans or
extend credit) by the Sweet Water Companies as of the dates thereof.

          5.10 ASSETS.  Except as Previously Disclosed or as disclosed or
reserved against in the Sweet Water Financial Statements, the Sweet Water
Companies have good and marketable title, free and clear of all Liens, to
all of their respective Assets. All tangible properties used in the businesses
of the Sweet Water Companies are in good condition, reasonable wear and tear
excepted, and are usable in the ordinary course of business consistent with
Sweet Water's past practices.  All Assets which are Material to Sweet Water's
business on a consolidated basis, held under leases or subleases by any of the
Sweet Water Companies, are held under valid Contracts enforceable in accordance
with their respective terms (except as enforceability may be limited by
Creditor's Laws and Equitable Discretion), and each such Contract is in full
force and effect.  The policies of fire, theft, liability, and other insurance
maintained with respect to the Assets or businesses of the Sweet Water
Companies provide adequate coverage under current industry practices against
loss or Liability, and the fidelity and blanket bonds in effect as to which any
of the Sweet Water Companies is a named insured are reasonably sufficient.  The
Assets of the Sweet Water Companies include all assets required to operate the
business of the Sweet Water Companies as presently conducted.

          5.11 ENVIRONMENTAL MATTERS.

               (a)  Each Sweet Water Company, its Participation Facilities, and
to its Knowledge its Loan Properties are, and have been, in compliance with all
Environmental Laws, except where instances of noncompliance, individually or
in the aggregate, would not be reasonably likely to result in a Material Adverse
Effect on Sweet Water.

               (b)  There is no Litigation pending or, to Sweet Water's
Knowledge, threatened before any court, governmental agency or authority or
other forum in which any Sweet Water Company or any of its Participation
Facilities has been or, to its Knowledge with respect to threatened Litigation,
may be named as a defendant (i) for alleged noncompliance (including by any
predecessor) with any Environmental Law or (ii) relating to the release into
the environment of any Hazardous Material (as defined below) or oil, whether or
not occurring at, on, under or involving a site owned, leased or operated by any
Sweet Water Company or any of its Participation Facilities.

               (c)  There is, to Sweet Water's Knowledge, no Litigation pending
or threatened before any court, governmental agency or board or other forum in
which any of its Loan Properties (or Sweet Water in respect of such Loan
Property) has been or may be named as a defendant or potentially responsible
party (i) for alleged noncompliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of any
Hazardous Material or oil, whether or not occurring at, on, under or involving
a Loan Property.

               (d)  To the Knowledge of Sweet Water, there is no reasonable
basis for any Litigation of a type described in subsections (b) or (c).

               (e)  During the period of (i) any Sweet Water Company's
ownership or operation of any of their respective current properties, (ii) any
Sweet Water Company's participation in the management of any Participation
Facility, or (iii) any Sweet Water Company's holding of a security interest in a
Loan Property, there have, to Sweet Water's Knowledge with respect to (ii) and
iii), been no releases of Hazardous Material or oil in, on, under or affecting
such properties.  Prior to the period of (i) any Sweet Water Company's ownership
or operation of any of their respective current properties, (ii) any Sweet Water
Company's participation in the management of any Participation Facility, or
(iii) any Sweet Water Company's holding of a security interest in a Loan
Property, to the Knowledge of Sweet Water, there were no releases of Hazardous
Material or oil in, on, under or affecting any such property, Participation
Facility or Loan Property.  It is acknowledged by the Parties that Sweet Water
has made no additional inquiry in regard to the matters reflected in
this Section 5.11 as to its Loan Properties for the purpose of making the
representations and warranties contained herein.

          5.12 COMPLIANCE WITH LAWS.  Sweet Water is duly registered as a bank
holding company under the BHC Act.  Each Sweet Water Company has in effect all
Permits necessary for it to own, lease or operate its Assets and to carry on
its business
as now conducted and there has occurred no Default under any such Permit.
None of the Sweet Water Companies:

               (a)  Is in material violation of any Laws, Orders or Permits
applicable to its business or employees conducting its business; and

               (b)  Has received any notification or communication from any
agency or department of federal, state, or local government or any
Regulatory Authority or the staff thereof (i) asserting that any Sweet Water
Company is not in compliance with any of the Laws or Orders which such
governmental authority or Regulatory Authority enforces (ii) threatening to
revoke any Permits or (iii) requiring any Sweet Water Company to enter into
or consent to the issuance of a cease and desist order, formal agreement,
directive, commitment or memorandum of understanding, or to adopt any Board
resolution or similar undertaking, which restricts Materially the conduct of
its business, or in any manner relates to its capital adequacy, its credit or
reserve policies, its management, or the payment of dividends.

          5.13 LABOR RELATIONS.  No Sweet Water Company is the subject of any
Litigation asserting that it or any other Sweet Water Company has committed an
unfair labor practice (within the meaning of the National Labor Relations Act or
comparable state law) or seeking to compel it or any other Sweet Water Company
to bargain with any labor organization as to wages or conditions of employment,
nor is there any strike or other labor dispute involving any Sweet Water
Company, pending or threatened, or to its Knowledge, is there any activity
involving any Sweet Water Company's employees seeking to certify a collective
bargaining unit or engaging in any other organization activity.

          5.14 EMPLOYEE BENEFIT PLANS.

               (a)  Sweet Water has delivered or made available to South
Alabama prior to the execution of this Agreement copies of all pension,
retirement, profit-sharing, deferred compensation, stock option, employee stock
ownership, severance pay, vacation, bonus, or other incentive plan, all other
written employee programs, arrangements, or agreements, all medical, vision,
dental, or other health plans, all life insurance plans, and all other employee
benefit plans or fringe benefit plans, including, without limitation,
"employee benefit plans" as that term is defined in Section 3(3) of ERISA,
currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by any Sweet Water Company or Affiliate thereof for the
benefit of employees, retirees, dependents, spouses, directors, independent
contractors, or other beneficiaries and under which employees, retirees,
dependents, spouses, directors, independent contractors, or other beneficiaries
are eligible to participate (collectively, the "Sweet Water Benefit Plans").
Any of the Sweet Water Benefit Plans which is an "employee pension benefit
plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as a "Sweet Water ERISA Plan."  Each Sweet Water ERISA
Plan which is also a "defined benefit plan" (as defined in Section 414(j) of
the Internal Revenue Code) is referred to herein as a "Sweet Water Pension
Plan."  No Sweet Water Pension Plan is or has been a multiemployer plan
within the meaning of Section 3(37) of ERISA.

               (b)  All Sweet Water Benefit Plans are in compliance with the
applicable terms of ERISA, the Internal Revenue Code, and any other applicable
Laws, the breach or violation of which are reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Sweet Water.
Each Sweet Water ERISA Plan which is intended to  be qualified under Section
401(a) of the Internal Revenue Code has received a favorable determination
letter from the Internal Revenue Service, and Sweet Water is not aware of any
circumstances likely to result in revocation of any such favorable determination
letter.  No Sweet Water Company has engaged in a transaction with respect to
any Sweet Water Benefit Plan that, assuming the taxable period of such
transaction expired as of the date hereof, would subject any Sweet Water
Company to a tax or penalty imposed by either Section 4975 of the Internal
Revenue Code or Section 502(i) of ERISA.

               (c)  No Sweet Water Pension Plan has any "unfunded current
liability," as that term is defined in Section 302(d)(8)(A) of ERISA, and the
fair market value of the assets of any such plan exceeds the plan's "benefit
liabilities," as that term is defined in Section 4001(a)(16) of ERISA, when
determined under actuarial factors that would apply if the plan terminated in
accordance with all applicable legal requirements.  Since the date of the most
recent actuarial valuation, there has been (i) no Material change in the
financial position of any Sweet Water Pension Plan, (ii) no
change in the actuarial assumptions with respect to any Sweet Water Pension
Plan, and (iii) no increase in benefits under any Sweet Water Pension Plan as
a result of plan amendments or changes in applicable Law.  Neither any Sweet
Water Pension Plan nor any "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by any Sweet
Water Company, or the single-employer plan of any entity which is considered
one employer with Sweet Water under Section 4001 of ERISA or Section 414
of the Internal Revenue Code or Section 302 of ERISA (whether or not waived)
(an "ERISA Affiliate") has an "accumulated funding deficiency" within the
meaning of Section 412 of the Internal Revenue Code or Section 302 of ERISA,
which is reasonably likely to have a Material Adverse Effect on Sweet
Water.  No Sweet Water Company has provided, or is required to provide,
security to a Sweet Water Pension Plan or to any single-employer plan of an
ERISA Affiliate pursuant to Section 401(a)(29) of the Code.

               (d)  No Liability under Subtitle C or D of Title IV or ERISA has
been or is expected to be incurred by any Sweet Water Company with respect to
any ongoing, frozen or terminated single-employer plan or the single-employer
plan of any ERISA Affiliate.  No Sweet Water Company has incurred any
withdrawal Liability with respect to a multiemployer plan under Subtitle B of
Title IV or ERISA (regardless of whether based on contributions of an ERISA
Affiliate).  No notice of a "reportable event," within the meaning of Section
4043 of ERISA for which the 30-day reporting requirement has not been waived,
has been  required to be filed for any Sweet Water Pension Plan or by any
ERISA Affiliate within the 12-month period ending on the date hereof.

               (e)  Except as Previously Disclosed, (i) no Sweet Water Company
has any obligations for retiree health and life benefits under any of the
Sweet Water Benefit Plans and (ii) there are no restrictions on the rights of
such Sweet Water Company to amend or terminate any such Plan without
incurring any Liability thereunder.

               (f)  Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in
any payment (including, without limitation, severance, unemployment
compensation, golden parachute or otherwise) becoming due to any director or
any employee of any Sweet Water Company from any Sweet Water Company under
any Sweet Water Benefit Plan or otherwise, (ii) increase any benefits
otherwise payable under any Sweet Water Benefit Plan, or (iii) result in any
acceleration of the time of payment or vesting of any such benefit, where
such payment, increase or acceleration is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on Sweet Water.

          5.15 MATERIAL CONTRACTS.  Except as Previously Disclosed or otherwise
reflected in the Sweet Water Financial Statements, none of the Sweet Water
Companies, nor any of their respective Assets, businesses or operations, is a
party to, or is bound or affected by, or receives benefits under, (i) any
employment, severance, termination, consulting or retirement Contract with
any Person, (ii) any Contract relating to the borrowing of money by any Sweet
Water Company or the guarantee by any Sweet Water Company of any such
obligation (other than Contracts evidencing deposit liabilities, purchases of
federal funds, fully-secured repurchase agreements, and Federal Home Loan Bank
advances of depository institution Subsidiaries, trade payables, and Contracts
relating to borrowings or guarantees made in the ordinary course of business),
(iii) any Contracts between or among Sweet Water Companies; and
(iv) any other Contract or amendment thereto that requires any Sweet Water
Company to make payments aggregating $10,000 or more in any 12-month period
(together with all Contracts referred to in Sections 5.10 and 5.14(a) of this
Agreement, the "Sweet Water Contracts").  None of the Sweet Water Companies is
in Default under any Sweet Water Contract.  All of the indebtedness of any
Sweet Water Company for money borrowed is prepayable at any time by such
Sweet Water Company without penalty or premium.

          5.16 LEGAL PROCEEDINGS.  Except as Previously Disclosed, there is
no Litigation instituted or pending, or, to the Knowledge of Sweet Water,
threatened (or unasserted but considered probable of assertion and which if
asserted would have at least a reasonable probability of an unfavorable outcome)
against any Sweet Water Company, or against any Asset, interest, or right of
any of them, that is reasonably likely to have, individually or in the
aggregate, a Material Adverse Effect on Sweet Water, nor are there any Orders
of any Regulatory Authorities, other governmental authorities, or arbitrators
outstanding against any Sweet Water Company that are reasonably likely to have,
individually or in the aggregate, a material Adverse Effect on Sweet Water.

          5.17 STATEMENTS TRUE AND CORRECT.  No statement, certificate,
instrument or other writing furnished or to be furnished for inclusion in the
Proxy Statement by any Sweet Water Company or any Affiliate thereof to South
Alabama pursuant to this Agreement or any other document, agreement or
instrument referred to herein contains or will contain any untrue statement
of Material fact or will omit to state a Material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.  None of the information supplied or to be supplied by any
Sweet Water Company or any Affiliate thereof for inclusion in the
Registration Statement to be filed by South Alabama with the SEC
will, when the Registration Statement becomes effective, be false or
misleading with respect to any Material fact, or omit to state any Material
fact necessary to make the statements therein not misleading.  None of the
information supplied or to be supplied by any Sweet Water Company or any
Affiliate thereof for inclusion in the Proxy Statement to be mailed to Sweet
Water's shareholders in connection with the Shareholders' Meeting, and any
other documents to be filed by a Sweet Water Company or any Affiliate thereof
with the SEC or any other Regulatory Authority in connection with the
transactions contemplated hereby, will, at the respective time
such documents are filed, and with respect to the Proxy Statement, when first
mailed to the shareholders of Sweet Water, be false or misleading with
respect to any Material fact, or omit to state any Material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading, or, in the case of the Proxy Statement or any
amendment or supplement thereto, at the time of the Shareholders' Meeting,
be false or misleading with respect to any Material fact, or omit to
state any Material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the
Shareholders' Meeting.  All documents that any Sweet Water Company or any
Affiliate thereof is responsible for filing with any Regulatory Authority in
connection with the transactions contemplated hereby will comply as to form
in all Material respects with the provisions of applicable Law.

          5.18 ACCOUNTING, TAX AND REGULATORY MATTERS.  Sweet Water has not,
and to Sweet Water's Knowledge, no Sweet Water Company or any Affiliate
thereof has taken any action, and Sweet Water has no Knowledge of any fact or
circumstance, that is reasonably likely to (i) prevent the transactions
contemplated hereby, including the Merger, from qualifying for pooling-of-
interests accounting treatment or as a reorganization within the meaning of
Section 368(a) of the Internal Revenue Code, or
(ii) Materially impede or delay receipt of any Consents of Regulatory
Authorities referred to in Section 9.1(b) of this Agreement or result in the
imposition of a condition or restriction of the type referred to in the last
sentence of such Section.

          5.19 CHARTER PROVISIONS.  Each Sweet Water Company has taken all
action so that the entering into of this Agreement and the consummation of
the Merger and the other transactions contemplated by this Agreement do not
and will not result in the grant of any rights to any Person under the Articles
or Certificate of Incorporation, Bylaws or other governing instruments of any
Sweet Water Company or restrict or impair the ability of the Surviving
Corporation to vote, or otherwise to exercise the rights of a shareholder
with respect to, shares of any Sweet Water Company that may be acquired or
controlled by it.

          5.20 YEAR 2000 COMPLIANCE.  Each Sweet Water Company has taken
and is taking commercially reasonable steps to cause all of its computer
systems, phone systems and other affected systems or equipment, including
without limitation hardware and software, to be Year 2000 compliant and
suffer no failure as a result of the arrival of January 1, 2000.


                             ARTICLE SIX
           REPRESENTATIONS AND WARRANTIES OF SOUTH ALABAMA

          South Alabama hereby represents and warrants to Sweet Water as
follows:

          6.1  ORGANIZATION, STANDING, AND POWER.  South Alabama is a
corporation duly organized, validly existing, and in good standing under the
Laws of the State of Alabama, and has the corporate power and authority to
carry on its businesses as now conducted and to own, lease and operate its
Material Assets.

          6.2  AUTHORITY; NO BREACH BY AGREEMENT.

          (a)  South Alabama has the corporate power and authority necessary
     to execute, deliver and, subject to Article Nine hereof, perform its
     obligations under this Agreement and to consummate the transactions
     contemplated hereby.  The execution, delivery and performance of this
     Agreement and the consummation of the transactions contemplated herein,
     including the Merger, have been duly and validly authorized by all
     necessary corporate action in respect thereof on the part of South
     Alabama.  This Agreement represents a legal, valid, and binding
     obligation of South Alabama, enforceable against South Alabama in
     accordance with its terms (except in all cases as such enforceability
     may be limited by Creditors' Laws and Equitable Discretion).

          (b)  Neither the execution and delivery of this Agreement by South
     Alabama, nor the consummation by South Alabama of the transactions
     contemplated hereby, nor compliance by South Alabama with any of the
     provisions hereof, will (i) conflict with or result in a breach of any
     provision of its Articles of Incorporation or Bylaws, or (ii) constitute
     or result in a Default under, or require any Consent pursuant to, or
     result in the creation of any Lien on any Asset of any South Alabama
     Company under, any Contract or Permit of any South Alabama Company,
     where any failure to obtain such Consent is reasonably likely to have,
     individually or in the aggregate, a Material Adverse Effect on South
     Alabama, or, (iii) subject to receipt of the requisite approvals
     referred to in Section 9.1(b) of this Agreement, violate any Law or Order
     applicable to any South Alabama Company or any of their respective Assets.

          (c)  Other than in connection or compliance with the provisions of the
     Securities Laws, applicable state corporate and securities Laws, and
     rules of the NASD, and other than Consents required from Regulatory
     Authorities, and other than notices to or filings with the Internal
     Revenue Service or the Pension Benefit Guaranty Corporation with respect
     to any employee benefit plans and other than Consents, filings or
     notifications which, if not obtained or made, are not reasonably likely
     to have, individually or in the aggregate, a Material Adverse Effect on
     South Alabama, no notice to, filing with, or Consent of, any public body
     or authority is necessary for the consummation by South Alabama
     of the Merger and the other transactions contemplated in this Agreement.

          6.3  REPORTS.  Since January 1, 1995, or the date of organization
if later, each South Alabama Company has timely filed all reports and
statements, together with any amendments required to be made with respect
thereto, that it was required to file with (i) the SEC, including, but not
limited to, Forms 10-K, Forms 10-Q, Forms 8-K, and proxy statements,
(ii) other Regulatory Authorities, and (iii) any applicable state securities
or banking authorities (except, in the case of state securities authorities,
failures to file which are not reasonably likely to have, individually or in
the aggregate, a Material Adverse Effect on South Alabama).  As of their
respective dates, each of such reports and documents, including the financial
statements, exhibits, and schedules thereto, complied in all Material respects
with all applicable Laws.  As of its respective date, each such report and
document did not, in all Material respects, contain any untrue statement of a
Material fact or omit to state a Material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading.

          6.4  CAPITAL STOCK.

          (a)  The authorized capital stock of South Alabama consists of (A)
     10,000,000 shares of Common Stock, $.01 par value per share, of which as
     of March 5, 1999, 7,729,425 shares (not counting additional shares subject
     to issue pursuant to stock option and other plans) were validly issued and
     outstanding, fully paid and nonassessable, and (B) 500,000 shares of
     Preferred stock, no par value per share, none of which are issued and
     outstanding.  Shares of South Alabama Common Stock are not subject to
     preemptive rights.  The shares of South Alabama Common Stock to be issued
     in the Merger are duly authorized and, when so issued, will be validly
     issued and outstanding, fully paid and nonassessable.

          (b)  The authorized capital stock of each Subsidiary of South Alabama
     is validly issued and outstanding, fully paid and nonassessable, and each
     Subsidiary is wholly owned, directly or indirectly, by South Alabama.

          6.5  FINANCIAL STATEMENTS.  South Alabama has Previously Disclosed
to Sweet Water copies of the following financial statements of South Alabama:

          (a)  Consolidated balance sheets as of December 31, 1996, December 31,
     1997, and December 31, 1998;

          (b)  Consolidated statements of operations for each of the three years
     ended December 31,1996, 1997, and 1998;

          (c)  Consolidated statements of cash flows for each of the three years
     ended December 31,1995, 1996, and 1997, and for the nine months ended
     September 30, 1998;

          (d)  Consolidated statements of changes in shareholders' equity for
     the three years ended December 31,1996 and 1997, and for the nine months
     ended September 30, 1998.

All such financial statements are in all Material respects in accordance with
the books and records of South Alabama and have been prepared in accordance
with GAAP applied on a consistent basis throughout the periods indicated,
all as more particularly set forth in the notes to such statements.  Each of
the consolidated balance sheets presents fairly as of its date the
consolidated financial condition of South Alabama and its Subsidiaries.
Except as and to the extent reflected or reserved against in such balance
sheets (including the notes thereto), South Alabama did not have, as of the
dates of such balance sheets, any Material Liabilities or obligations
(absolute or contingent) of a nature customarily reflected in a balance sheet or
the notes thereto. The statements of consolidated income, shareholders'
equity and changes in consolidated financial position present fairly the
results of operations and changes in financial position of South Alabama and
its Subsidiaries for the periods indicated.  The foregoing representations,
insofar as they relate to the unaudited financial statements of South Alabama
for periods ending December 31, 1998, and the unaudited interim financial
statements of South Alabama for the nine months ended September 30, 1998,
are subject in all cases to normal recurring year-end adjustments and the
omission of footnote disclosure.

          6.6  ABSENCE OF MATERIAL ADVERSE CHANGE.  Since the date of the most
recent balance sheet provided under Section 6.5 above, there have been no
events, changes or occurrences which have had or are reasonably likely to
have, individually or in the aggregate, a Material Adverse Effect on South
Alabama.

          6.7  SUBSIDIARIES.    Each Subsidiary of South Alabama has been duly
incorporated and is validly existing as a corporation or association in good
standing under the Laws of the jurisdiction of its incorporation, and each
Subsidiary has been duly qualified as a foreign corporation to transact
business and is in good standing under the Laws of each other jurisdiction
in which it owns or leases properties, or conducts any business so as to
require such qualification and in which the failure to be duly qualified
could have a Material Adverse Effect upon South Alabama and its Subsidiaries
considered as one enterprise; each of the banking Subsidiaries of South
Alabama has its deposits fully insured by the Federal Deposit Insurance
Corporation to the extent provided by the Federal Deposit Insurance Act;
and the businesses of the non-bank Subsidiaries of South Alabama are
permitted to subsidiaries of registered bank holding companies.

          6.8  LEGAL PROCEEDINGS.  Except as Previously Disclosed, there is
no litigation instituted or pending, or to South Alabama's Knowledge,
threatened (or unasserted but considered probable of assertion and which if
asserted would have at least a reasonable probability of an unfavorable
outcome) against South Alabama, or against any Material Asset, interest,
or right of South Alabama, that is reasonably likely to have, individually
or in the aggregate, a Material Adverse Effect on South Alabama, nor are
there any orders of any Regulatory Authorities, other governmental agencies,
or arbitrators outstanding against South Alabama that are reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect on
South Alabama.

          6.9  STATEMENTS TRUE AND CORRECT.  No statement of South Alabama
or certificate of South Alabama to Sweet Water pursuant to this Agreement
contains or will contain any untrue statement of Material fact or will omit
to state a Material fact necessary to make statements therein, in light of
the circumstances under which they were made, not misleading.  None of the
information supplied or to be supplied by South Alabama for inclusion in the
'Registration Statement to be filed by South Alabama with the SEC will, when
the Registration Statement becomes effective, be false or misleading with
respect to any Material fact, or omit to state any Material fact necessary
to make the statements therein not misleading. None of the information
supplied or to be mailed to Sweet Water's shareholders in connection with the
Shareholders' Meeting, and any other documents to be filed by South Alabama
with the SEC, or any other Regulatory Authority in connection with the
transactions contemplated hereby will, at the respective time such documents
are filed and with respect to the Proxy Statement, when first mailed to the
Shareholders of Sweet Water, be false or misleading with respect to any
Material fact, or omit to state any Material fact necessary to make the
statements therein, in light of the of the circumstances under which they
were made, not misleading, or, in the case of the Proxy Statement or any
amendment thereof or supplement thereto, at the time of the Shareholders'
Meeting, be false or misleading with respect to any Material fact, or omit
to state any Material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of any proxy for the
Shareholders' Meeting.  All documents that South Alabama is responsible for
filing with any Regulatory Authority in connection with the transactions
contemplated hereby will comply as to form in all Material respects with the
provisions of applicable Law.

          6.10   YEAR 2000 COMPLIANCE.  South Alabama has taken and is taking
commercially reasonable steps to cause all of South Alabama's computer systems,
phone systems and other affected systems or equipment, including without
limitation, hardware and software, to be year 2000 compliant and suffer no
failure as a result of the arrival of January 1, 2000.

          6.11      ENVIRONMENTAL MATTERS.  Except as Previously Disclosed:

     (a)  South Alabama, its Participation Facilities, and, to its Knowledge,
its Loan Properties, are, and have at all times been, in Material compliance
with all Environmental Laws, except where instances of noncompliance,
individually or in the aggregate, would not be reasonably likely to result
in a Material Adverse Effect on South Alabama.

     (b)  There is, to South Alabama's Knowledge, no Litigation pending or
threatened before any court, governmental agency or authority or other forum
in which South Alabama or any of its Participation Facilities have been or,
to its Knowledge, with respect to threatened Litigation, may be named as a
defendant (i) for alleged non-compliance (including by any predecessor) with
any Environmental Law or (ii) relating to the release into the environment of
any Hazardous Material, whether or not occurring at, on, under or involving
a site owned, leased or operated by South Alabama or any of its Participation
Facilities.

     (c)  There is, to South Alabama's Knowledge, no Litigation pending or
threatened before any court, governmental agency or board or other forum in
which any of its Loan Properties (or South Alabama in respect to such Loan
Property) have been or may be named as a defendant or potentially responsible
party (i) for alleged non-compliance (including by any predecessor) with any
Environmental Law or (ii) relating to the release into the environment of
any Hazardous Material, whether or not occurring at, on, under or involving
a Loan Property.

     (d)  To South Alabama's Knowledge, there is no reasonable basis for any
Litigation of a type described in subsections (b) or (c).

     (e)  During the period of (i) South Alabama s ownership or operation of
any of its current properties, (ii) South Alabama's participation in the
management of any Participation Facility, or (iii) South Alabama s holding
of a security interest in a Loan Property, there have been, to South
Alabama's Knowledge with respect to (ii)and (iii), no releases of
Hazardous Material in, on, under or affecting such properties.  Prior to
the period of (i) South Alabama's ownership or operation of any of its
current properties, (ii) South Alabama s participation in the management of
any Participation Facility, or (iii) South Alabama's holding of a security
interest in a Loan Property, there were, to South Alabama s Knowledge, no
releases of Hazardous Material in, on, under or affecting any such property,
Participation Facility or Loan Property.  It is acknowledged by the Parties
that South Alabama has made no additional inquiry in regard to the matters
reflected in this Section 6.11 as to its Loan Properties for the
purpose of making the representations and warranties contained herein.


                            ARTICLE SEVEN
               CONDUCT OF BUSINESS PENDING CONSUMMATION

          7.1  COVENANTS OF BOTH PARTIES.  Unless the prior written consent of
 the other Party shall have been obtained, and except as otherwise expressly
contemplated herein, each Party shall and shall cause each of its Subsidiaries
to (a) preserve intact its business organizations, goodwill, relationships
with depositors, customers and employees, and Assets and maintain its rights
and franchises, and (b) take no action which would (i) adversely affect the
ability of any Party to obtain any Consents required for the transactions
contemplated hereby without imposition of a condition or restriction of the
type referred to in the last sentences of Section 9.1(b) or 9.1(c) of this
Agreement, or (ii) adversely affect the ability of any Party to perform its
covenants and agreements under this Agreement.

          7.2  COVENANTS OF SWEET WATER.  From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
Sweet Water covenants and agrees that it will not do or agree or commit to do,
or permit any of its Subsidiaries to do or agree or commit to do, any of the
following without the prior written consent of the chief executive officer,
president or chief financial officer of South Alabama, which consent shall
not be unreasonably withheld:

               (a)  Amend the Articles of Incorporation, Bylaws or other
     governing instruments of any Sweet Water Company; or

               (b)  incur any additional debt obligation or other obligation
     for borrowed money (other than indebtedness of a Sweet Water Company
     to another Sweet Water Company) except in the ordinary course of the
     business of Sweet Water Subsidiaries consistent with past practices
     (which shall include, for Sweet Water Subsidiaries that are depository
     institutions, creation of deposit liabilities, purchases of federal funds,
     advances from the Federal Reserve Bank or the Federal Home Loan Bank,
     and entry into repurchase agreements fully secured by U.S. government or
     agency securities), or impose, or suffer the imposition, on any share of
     stock held by any Sweet Water Company of any Lien or permit any such Lien
     to exist; or

               (c)  repurchase, redeem, or otherwise acquire or exchange (other
     than exchanges in the ordinary course under employee benefit plans),
     directly or indirectly, any shares, or any securities convertible into any
     shares, of the capital stock of any Sweet Water Company, or declare or pay
     any dividend or make any other distribution in respect of Sweet Water's
     capital stock, except that Sweet Water will pay quarterly one-fourth of its
     normal annual cash dividend, in accordance with past practice Previously
     Disclosed, (or a dividend equivalent to that which would be paid by South
     Alabama if the Merger had been consummated) as and to the extent permitted
     or required for the Merger to qualify for pooling-of-interests accounting
     treatment; or

               (d)  except for this Agreement, issue, sell, pledge, encumber,
     enter into any Contract to issue, sell, pledge, or encumber, authorize the
     issuance of, or otherwise permit to become outstanding, any additional
     shares of Sweet Water Common Stock or any other capital stock of any Sweet
     Water Company, or any stock appreciation rights, or any option, warrant,
     conversion, or other right to acquire any such stock, or any security
     convertible into any such stock; or

               (e)  adjust, split, combine or reclassify any capital stock of
     any Sweet Water Company or issue or authorize the issuance of any other
     securities in respect of or in substitution for shares of its capital
     stock or sell, lease, mortgage or otherwise dispose of or otherwise
     encumber any shares of capital stock of any Sweet Water Subsidiary
     (unless any such shares of stock are sold or otherwise transferred to
     another Sweet Water Company) or any Asset other than in the ordinary
     course of business for full and adequate consideration; or

               (f)  acquire any direct or indirect equity interest in any
     Person, other than in connection with (i) foreclosures in the ordinary
     course of business, and (ii) acquisitions of control by a depository
     institution Subsidiary in its fiduciary capacity; or

               (g)  grant any increase in compensation or benefits to the
     employees or officers of any Sweet Water Company, except in accordance
     with past practice Previously Disclosed or as required by Law; pay any
     bonus except in accordance with past practice Previously Disclosed or
     the provisions of any applicable program or plan adopted by its Board of
     Directors prior to the date of this Agreement; enter into or amend any
     severance agreements with officers of any Sweet Water Company; grant any
     Material increase in fees or other increases in compensation or other
     benefits to directors of any Sweet Water Company except in accordance
     with past practice Previously Disclosed; or

               (h)  enter into or amend any employment Contract between any
     Sweet Water Company and any Person (unless such amendment is required by
     Law) that the Sweet Water Company does not have the unconditional right
     to terminate without Liability (other than Liability for services already
     rendered), at any time on or after the Effective Time;

               (i)  adopt any new employee benefit plan of any Sweet Water
     Company or make any Material change in or to any existing employee benefit
     plans of any Sweet Water Company other than any such change that is
     required by Law or that, in the opinion of counsel, is necessary or
     advisable to maintain the tax qualified status of any such plan; or

               (j)  make any change in any accounting methods or systems of
     internal accounting controls, except as may be appropriate to conform to
     changes in regulatory accounting requirements or GAAP;

               (k)  commence any Litigation other than in accordance with past
     practice, settle any Litigation involving any Liability of any Sweet
     Water Company for Material money damages or restrictions upon the
     operations of any Sweet Water Company, or modify, amend or terminate any
     Material Contract or waive, release, compromise or assign any Material
     rights or claims;

               (l)  operate its business otherwise than in the ordinary course
     of business; or

               (m)  fail to file timely any report required to be filed by it
               with any Regulatory Authority.

          7.3  COVENANTS OF SOUTH ALABAMA.  From the date of this Agreement
until the earlier of the Effective Time or the termination of this Agreement,
South Alabama covenants and agrees that it shall and shall cause each of its
Subsidiaries to continue to conduct its business and the business of its
Subsidiaries in a manner designed in its reasonable judgment to enhance the
long-term value of the South Alabama Common Stock and the business prospects
of the South Alabama Companies and to the extent consistent therewith use all
reasonable efforts to preserve intact the South Alabama Companies' core
businesses and goodwill with their respective employees and the communities
they serve, and will not do or agree or commit to do,or permit any of its
Subsidiaries to do or agree or commit to do, any of the following without the
prior written consent of the chief executive officer, president or chief
financial officer of Sweet Water, which consent shall not be unreasonably
withheld:

               (a)  fail to file timely any report required to be filed by it
     with Regulatory Authorities, including the SEC;

               (b)  take any action which would cause the South Alabama
     Common Stock to cease to be traded on the NASDAQ;

               (c)  take no action which would materially adversely affect
     the ability of any Party to obtain any Consents required for the
     transactions contemplated hereby;

               (d)  take no action which would materially adversely affect the
     ability of any Party to perform its covenants and agreements under this
     Agreement; or

               (e)  amend the Articles of Incorporation or Bylaws of South
     Alabama, in each case, in any manner which is adverse to, and
     discriminates against, the holders of Sweet Water Common Stock.

          7.4  ADVERSE CHANGES IN CONDITION.  Each Party agrees to give
written notice promptly to the other Party upon becoming aware of the
occurrence or impending occurrence of any event or circumstance relating to
it or any of its Subsidiaries which (i) is reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect on it or
(ii) would cause or constitute a Material breach of any of it's
representations, warranties, or covenants contained herein, and to use its
reasonable efforts to prevent or promptly to remedy the same.

          7.5  REPORTS.  Each Party and its Subsidiaries shall deliver to the
other Party copies of all reports with Regulatory Authorities promptly after
the same are filed.


                            ARTICLE EIGHT
                        ADDITIONAL AGREEMENTS

          8.1  REGISTRATION STATEMENT; PROXY STATEMENT; SHAREHOLDER
               APPROVAL.

               (a)  As soon as practicable after execution of this Agreement,
     South Alabama shall file the Registration Statement with the SEC, and
     shall use its reasonable efforts to cause the  Registration Statement to
     become effective under the 1933 Act and take any action required to be
     taken under the applicable state Blue Sky or Securities Laws in connection
     with the issuance of the shares of South Alabama Common Stock upon
     consummation of the Merger.  Sweet Water shall furnish all information
     concerning it and the holders of its capital stock as South Alabama may
     reasonably request in connection with such action. Sweet Water shall call
     the Shareholders' Meeting, to be held as soon as reasonably practicable
     after the Registration Statement is declared effective by the SEC, for the
     purpose of voting upon adoption of this Agreement and such other related
     matters as it deems appropriate.  In connection with the Shareholders'
     Meeting, (i) Sweet Water and South Alabama shall prepare and file a Proxy
     Statement with the SEC and mail it to Sweet Water's shareholders, (ii) the
     Parties shall furnish to each other all information concerning them that
     they may reasonably request in connection with such Proxy Statement,
     (iii) the Board of Directors of Sweet Water shall recommend (subject to
     compliance with its fiduciary duties as advised by counsel) to its
     shareholders the approval of this Agreement, and (iv) the Board of
     Directors and officers of Sweet Water shall use their reasonable efforts to
     obtain such shareholders' approval (subject to compliance with their
     fiduciary duties as advised by counsel).

               (b)  From and after the Effective Time South Alabama shall
     indemnify and hold harmless Sweet Water, each of its directors and
     officers, and each Person, if any, who controls Sweet Water within the
     meaning of the 1933 Act against any losses, claims, damages, or
     Liabilities, joint, several, or solitary, to which they or any of them may
     become subject, under the 1933 Act or otherwise, insofar as such losses,
     claims, damages, or Liabilities (or actions in respect thereof) arise out
     of or are based upon an untrue statement or alleged untrue statement of
     Material fact contained in the Registration Statement or the Proxy
     Statement, or arising out of or based upon the omission or alleged
     omission to state therein a Material fact required to be stated therein or
     necessary to make the statements therein not misleading, and will reimburse
     each such Person for any legal or other expenses reasonably incurred by
     such person in connection with investigating or defending any such action
     or claim; provided, however, that South Alabama shall not be liable in any
     such case to the extent that any such loss, claim, damage, or Liability
     (or action in respect thereof) arises out of or is based upon any untrue
     statement or alleged untrue statement or omission or alleged omission made
     in the Registration Statement or the Proxy Statement in reliance upon and
     in conformity with information furnished to South Alabama by Sweet Water
     or an indemnified Person or information concerning Sweet Water or any
     indemnified Person.  Promptly after receipt by an indemnified Person of
     notice of the commencement of any action, such indemnified Person shall, if
     a claim in respect thereof is to be made against South Alabama under this
     Section 8.1(b), notify South Alabama in writing of the commencement
     thereof, but failure to give prompt notice shall deprive the indemnified
     Person of his or her right to be indemnified only to the extent that South
     Alabama is thereby prejudiced.  In case any such action shall be brought
     against any indemnified Person and it shall notify South Alabama of the
     commencement thereof, South Alabama shall be entitled to participate
     therein, and to the extent that it shall wish, to assume the defense
     thereof, with counsel satisfactory to such indemnified Person, and, after
     notice from South Alabama to such indemnified Person of its election to so
     assume the defense thereof, South Alabama shall not be liable to such
     indemnified party under this Section 8.1(b) for any legal expenses of other
     counsel or any other expenses subsequently incurred by such indemnified
     Person, except that if South Alabama elects not to assume such defense or
     counsel for an indemnified Person or Persons advises in writing that there
     are material substantive issues which raise conflicts of interests between
     South Alabama and one or more indemnified Persons, such indemnified Person
     or Persons may retain counsel satisfactory to them, and South Alabama shall
     pay all reasonable fees and expenses of such counsel for the indemnified
     Persons, promptly as statements therefor are received; provided that
     (i) South Alabama shall be obligated pursuant to this Section 8.1(b) to pay
     for only one firm of counsel for all indemnified Persons in any
     jurisdiction and (ii) South Alabama shall not be liable for any settlement
     effected without its prior written consent.

          8.2  APPLICATIONS.  South Alabama shall promptly prepare and file,
and Sweet Water shall cooperate in the preparation and, where appropriate,
filing of, applications with all Regulatory Authorities having jurisdiction
over the transactions contemplated by this Agreement seeking the requisite
Consents necessary to consummate the transactions contemplated by this
Agreement.

          8.3  FILINGS WITH STATE OFFICES.  Upon the terms and subject to the
conditions of this Agreement, South Alabama shall execute and file the
Articles of Merger with the Secretary of State of the State of Alabama in
connection with the Closing.

          8.4  AGREEMENT AS TO EFFORTS TO CONSUMMATE.  Subject to the terms
and conditions of this Agreement, each Party agrees to use, and to cause its
Subsidiaries to use, its reasonable efforts to take, or cause to be taken,
all actions, and to do, or cause to be done, all things necessary, proper, or
advisable under applicable Laws to consummate and make effective, as soon as
practicable after the date of this Agreement, the transactions contemplated by
this Agreement, including, without limitation, using its reasonable efforts to
lift or rescind any Order adversely affecting its ability to consummate the
transactions contemplated herein and to cause to be satisfied the conditions
referred to in Article Nine of this Agreement.  Each Party shall use, and shall
cause each of its Subsidiaries to use, its reasonable efforts to obtain all
Consents necessary or desirable for the consummation of the transactions
contemplated by this Agreement.

          8.5  INVESTIGATION AND CONFIDENTIALITY.

              (a)  Prior to the Effective Time, Sweet Water will keep South
     Alabama advised of all Material developments relevant to its business and
     to consummation of the Merger and shall permit South Alabama to make or
     cause to be made such investigation of the business and properties of it
     and its Subsidiaries and of its financial and legal conditions as South
     Alabama reasonably requests, provided that such investigation shall be
     reasonably related to the transactions contemplated hereby and shall not
     interfere unnecessarily with normal operations.  No such investigation
     shall affect the representations and warranties of Sweet Water.

               (b)  Each Party shall, and shall cause its advisers and agents
     to, maintain the confidentiality of all confidential information furnished
     to it by the other Party concerning its and its Subsidiaries' businesses,
     operations, and financial positions and shall not use such information for
     any purpose except in furtherance of the transactions contemplated by this
     Agreement.  If this Agreement is terminated prior to the Effective Time,
     each Party shall promptly return all documents and copies thereof, and all
     work papers containing confidential information received from the other
     Party.

               (c)  Each Party agrees to give the other Party notice as soon as
     practicable after any determination by it of any fact or occurrence
     relating to the other Party which it has discovered through the course
     of its investigation or otherwise and which represents, or is reasonably
     likely to represent, either a Material breach of any representation,
     warranty, covenant or agreement of the other Party or which has had
     or is reasonably likely to have a Material Adverse Effect on the other
     Party.

          8.6  PRESS RELEASES.  Prior to the Effective Time, Sweet Water and
South Alabama shall consult with each other as to the form and substance of
any press release or other public disclosure Materially related to this
Agreement or any other transaction contemplated hereby; provided, however, that
nothing in this Section 8.6 shall be deemed to prohibit any Party from making
any disclosure which its counsel deems necessary or advisable in order to
satisfy such Party's disclosure obligations imposed by Law.


          8.7  CERTAIN ACTIONS.

               (a)  Except with respect to this Agreement and the transactions
       contemplated hereby, no Sweet Water Company or any Affiliate thereof or
       any investment banker, attorney, accountant or other representative
       retained by any Sweet Water Company (collectively, "Sweet Water
       Representatives") shall directly or indirectly solicit any Acquisition
       Proposal by any Person.  No Sweet Water Company or any Affiliate or
       Representative thereof shall furnish any non-public information that it
       is not legally obligated to furnish, negotiate with respect to, or enter
       into any Contract with  respect to, any Acquisition Proposal, but Sweet
       Water or its directors may communicate information about such an
       Acquisition Proposal to its shareholders if and to the extent that it is
       required to do so in order to comply with its or their fiduciary or legal
       obligations.  Sweet Water shall promptly notify South Alabama orally and
       in writing in the event that it receives any inquiry or proposal relating
       to any such transaction.  Sweet Water shall (i) immediately cease and
       cause to be terminated any existing activities, discussions or
       negotiations with any Persons conducted heretofore with respect to any
       of the foregoing, and (ii) direct and use its reasonable efforts to cause
       all Sweet Water Representatives not to engage in any of the foregoing.

               (b)  South Alabama shall promptly notify Sweet Water orally and
      in writing in the event that it receives any inquiry or proposal relating
      to an Acquisition Proposal with respect to the acquisition of South
      Alabama; provided, that if requested by South Alabama Sweet Water shall
      keep the information provided pursuant to this Section 8.7(b) confidential
      until such Acquisition Proposal is made public by South Alabama or another
      party thereto.

          8.8  ACCOUNTING AND TAX TREATMENT.  Each of the Parties undertakes
and agrees to use its reasonable efforts to cause the Merger, and to take no
action which would cause the Merger not, to qualify for pooling-of-interests
accounting treatment and treatment as a "reorganization" within the meaning of
Section 368(a) of the Internal Revenue Code for federal income tax purposes.

          8.9  CHARTER PROVISIONS.

               (a)  Each Sweet Water Company shall take all necessary action
     to ensure that the entering into of this Agreement and the consummation of
     the Merger and the other transactions contemplated hereby do not and will
     not result in the grant of any rights to any Person under the Articles of
     Incorporation, Bylaws or other governing instruments of any Sweet Water
     Company or restrict or impair the ability of South Alabama to vote, or
     otherwise to exercise the rights of a shareholder with respect to, shares
     of any Sweet Water Company that may be acquired or controlled by
     it.

               (b)  Each South Alabama Company shall take all necessary
     action to ensure that the entering into of this Agreement and
     the consummation of the Merger and the other transactions
     contemplated hereby do not and will not result in the grant of
     any rights to any Person under the Articles of Incorporation,
     Bylaws or other governing instruments of any South Alabama
     Company or restrict or impair the ability of any Sweet Water
     shareholder to vote, or otherwise exercise the rights of a
     shareholder with respect to, shares of South Alabama Common Stock
     that may be acquired or controlled by it.

          8.10 AGREEMENT OF AFFILIATES.  Sweet Water shall use its reasonable
best efforts to cause each Person who is an "affiliate" within the meaning of
SEC Rule 145 to deliver to South Alabama not later than thirty (30) days prior
to the Effective Time, a written agreement, substantially in the form of Exhibit
3, providing that such Person will not sell, pledge, transfer, or otherwise
dispose of the shares of Sweet Water Common Stock held by such Person except
as contemplated by such agreement or by this Agreement and will not sell,
pledge, transfer, or otherwise dispose of the shares of South Alabama Common
Stock to be received by such Person upon consummation of the Merger except
in compliance with applicable provisions of the 1933 Act and the
rules and regulations thereunder and until such time as financial results
covering at least thirty (30) days of combined operations of South Alabama and
Sweet Water have been published within the meaning of Section 201.01 of the
SEC's Codification of Financial Reporting Policies.  If the Merger will
qualify for pooling-of-interests accounting treatment, shares of South
Alabama Common Stock issued to such affiliates of Sweet Water in exchange for
shares of Sweet Water Common Stock (and shares of South Alabama Common Stock
held by persons who are "affiliates" of South Alabama) shall not be transferable
until such time as financial results covering at least thirty (30)
days of combined operations of South Alabama and Sweet Water have been published
within the meaning of Section 201.01 of the SEC's Codification of Financial
Reporting Policies, regardless of whether each such affiliate has provided the
written agreement referred to in this Section 8.10 (and South Alabama shall be
entitled to place restrictive legends upon certificates for shares of South
Alabama Common Stock issued to affiliates of Sweet Water pursuant to this
Agreement to enforce the provisions of this Section 8.10).  South Alabama shall
not be required to maintain the effectiveness of the Registration Statement
under the 1933 Act for the purposes of resale of South Alabama Common Stock
by such affiliates.

          8.11 COMPENSATION AND EMPLOYEE BENEFITS.  The Parties contemplate
that at the Effective Time the compensation and employee benefit plans of
neither the Sweet Water Companies nor the South Alabama Companies shall be
affected by the Merger and that such plans shall continue in effect as though
the Merger had not occurred.  The Parties further contemplate, however, that it
is desirable that the Surviving Corporation and its Subsidiaries offer more
uniform employee compensation and benefits and that at some point after the
Effective Time the Surviving Corporation and its Subsidiaries will adopt uniform
policies and plans, giving due regard to the benefits offered to current
employees.

          8.12 DIRECTOR AND EXECUTIVE OFFICER.  Promptly after the Effective
Time, South Alabama shall appoint the current Chairman of Sweet Water,
Stratton F. Lewis, Jr., and Jack O. Kerby as directors of South Alabama.
Promptly after the Effective Time, South Alabama shall elect the Chief Executive
Officer of Sweet Water, Stratton F. Lewis, Jr., as an Executive Officer of South
Alabama.  The persons named by the Parties as members of the Board of Directors
of the Surviving Corporation shall be named in the Proxy Statement and the
Registration Statement, subject to receipt of the consent of such individuals to
be so named.

          8.13 INDEMNIFICATION.

          (a)  From and after the Effective Time, South Alabama shall indemnify
     and advance costs and expenses (including reasonable attorneys fees,
     disbursements and expenses) and hold harmless each present and former
     director and/or officer of Sweet Water determined as of the Effective Time
     (the "Indemnified Parties"), against any costs or expenses (including
     reasonable attorney's fees), judgments, fines, losses, claims, damages,
     settlements or liabilities (collectively, "Costs") incurred in connection
     with any claim, action, suit, proceeding or investigation, whether civil,
     criminal, administrative or investigative (each a "Claim"), arising out of
     or pertaining to matters existing or occurring at or prior to the Effective
     Time, whether asserted or claimed prior to, at or after the Effective Time
     to the fullest extent that Sweet Water would have been permitted to
     indemnify such person under Alabama Law, Sweet Water's Articles of
     Incorporation or Bylaws in effect on the date hereof.

          (b)  Any Indemnified Party wishing to claim indemnification under
     this Section 8.13 shall notify South Alabama within forty-five (45) days
     after the Indemnified Party's receipt of a notice of any Claim, but the
     failure to so notify shall not relieve South Alabama of any Liability it
     may have to such Indemnified Party, unless such failure Materially
     prejudices South Alabama.  In the event of any claim (whether arising
     before or after the Effective Time), (i) South Alabama shall have the right
     to assume the defense thereof, and South Alabama shall not be liable to
     such Indemnified Parties for any legal expenses of other counsel or any
     other expenses subsequently incurred by such Indemnified Parties in
     connection with the defense thereof, except that if South Alabama elects
     not to assume such defense, or counsel for the Indemnified Parties advises
     that there are issues which raise conflicts of interest between South
     Alabama and the Indemnified Parties, the Indemnified Parties may retain
     counsel satisfactory to them, and South Alabama shall pay the reasonable
     fees and expense of such counsel for the Indemnified Parties promptly after
     statements therefor are received; provided, however, that South Alabama
     shall be obligated pursuant to this paragraph (ii) to pay for only one firm
     of counsel for all Indemnified Parties in any jurisdiction unless the use
     of one counsel for such Indemnified Parties will present such counsel with
     a conflict of interest, (iii) the Indemnified Parties will cooperate in the
     defense of any such matter, and (iv) South Alabama shall not be liable for
     any settlement effected without its prior written consent which shall not
     be unreasonably withheld.  If such indemnity with respect to any
     Indemnified Party is unenforceable against South Alabama, then South
     Alabama and the Indemnified Party shall contribute to the amount payable in
     such proportion as is appropriate to reflect relative faults and benefits.

          (c)  South Alabama shall purchase such "tail" or extended reporting
     period insurance coverage as it deems advisable to insure the obligations
     for which it is providing indemnification hereunder, which coverage shall
     be in an amount and for a term deemed appropriate by South Alabama.

          (d)  If South Alabama or any of its successors and assigns (i) shall
     consolidate with or merge into any other corporation or entity and shall
     not be the continuing or surviving corporation or entity of such
     consolidation or merger, or (ii) shall transfer all or substantially all of
     its property and assets to any individual, corporation or other entity,
     then, in each such case, proper provision shall be made so that the
     successors and assigns of South Alabama and its Subsidiaries shall assume
     the obligations set forth in this section.

          (e)  The provisions of this Section 8.13 are intended to be for the
     benefit of, and shall be enforceable by each Indemnified Party, and each
     Indemnified Party's heirs and representatives.


                             ARTICLE NINE
          CONDITIONS PRECEDENT TO OBLIGATIONS TO CONSUMMATE

          9.1  CONDITIONS TO OBLIGATIONS OF EACH PARTY.  The respective
obligations of each Party to perform this Agreement and consummate the Merger
and the other transactions contemplated hereby are subject to the satisfaction
of the following conditions, unless waived by both Parties pursuant to Section
11.5 of this Agreement:

               (A)  SHAREHOLDER APPROVAL.  The shareholders of Sweet Water
     shall have adopted this Agreement, and the consummation of the transactions
     contemplated hereby, including the Merger, as and to the extent required by
     Law, by the provisions of any governing instruments, or by the rules of
     the NASD.

               (B)  REGULATORY APPROVALS.  All Consents of, filings and
     registrations with, and notifications to, all Regulatory Authorities
     required for consummation of the Merger shall have been obtained or made
     and shall be in full force and effect and all waiting periods required by
     Law shall have expired.  No Consent obtained from any Regulatory Authority
     which is necessary to consummate the transactions contemplated hereby shall
     be conditioned or restricted in a manner (including, without limitation,
     requirements relating to the raising of additional capital or the
     disposition of assets) which in the reasonable judgment of the Board of
     Directors of either Party would so Materially adversely impact the economic
     or business benefits of the transactions contemplated by this Agreement
     so as to render inadvisable the consummation of the Merger.

               (C)  CONSENTS AND APPROVALS.  Each Party shall have obtained
     any and all Consents required for consummation of the Merger (other than
     those referred to in Section 9.1(b) of this Agreement) or for the
     preventing of any Default under any Contract or Permit of such Party which,
     if not obtained or made, is reasonably likely to have, individually or in
     the aggregate, a Material Adverse Effect on such Party.  No Consent so
     obtained which is necessary to consummate the transactions contemplated
     hereby shall be conditioned or restricted in a manner which in the
     reasonable judgment of the Board of Directors of either Party would so
     Materially adversely impact the economic or business benefits of the
     transactions contemplated by this Agreement so as to render inadvisable the
     consummation of the Merger.

               (D)  LEGAL PROCEEDINGS.  No court or governmental or
     regulatory authority of competent jurisdiction shall have enacted, issued,
     promulgated, enforced or entered any Law or  Order (whether temporary,
     preliminary or permanent) or taken any other action which prohibits,
     restricts or makes illegal consummation of the transactions contemplated
     by this Agreement.

               (E)  REGISTRATION STATEMENT.  The Registration Statement shall
     be effective under the 1933 Act, no stop orders suspending the
     effectiveness of the Registration Statement shall have been issued, no
     action, suit, proceeding or investigation by the SEC to suspend the
     effectiveness thereof shall have been initiated and be continuing, and all
     necessary approvals under state securities Laws or the 1933 Act or 1934
     Act relating to the issuance or trading of the shares of South Alabama
     Common Stock issuable pursuant to the Merger shall have been received.

               (F)  POOLING LETTER.  South Alabama shall have received a letter,
     dated as of the Effective Time, in form and substance reasonably
     acceptable to it, from Arthur Andersen LLP to the effect that the Merger
     will qualify for pooling-of-interests accounting treatment.

               (G)  TAX MATTERS.  Sweet Water and South Alabama shall have
     received a written opinion of counsel from Hand Arendall, L.L.C., in form
     reasonably satisfactory to them (the "Tax Opinion"), to the effect that
     (i) the Merger will constitute a reorganization within the meaning of
     Section 368(a) of the Internal Revenue Code, (ii) the exchange in the
     Merger of Sweet Water Common Stock for South Alabama Common Stock will not
     give rise to gain or loss to the shareholders of Sweet Water with respect
     to such exchange (except to the extent of any cash received),and (iii)
     neither Sweet Water nor South Alabama will recognize gain or loss as a
     consequence of the Merger (except for income and deferred gain recognized
     pursuant to Treasury regulations issued under Section 1502 of the Internal
     Revenue Code).  In rendering such Tax Opinion, Hand Arendall, L.L.C. shall
     be entitled to rely upon representations of officers of Sweet Water and
     South Alabama reasonably satisfactory in form and substance to such
     counsel.

          9.2  CONDITIONS TO OBLIGATIONS OF SOUTH ALABAMA.  The obligations
of South Alabama to perform this Agreement and consummate the Merger and the
other transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by South Alabama pursuant to Section 11.5(a)
of this Agreement:

               (A)  REPRESENTATIONS AND WARRANTIES.  The representations
     and warranties of Sweet Water set forth or referred to in this Agreement
     shall be true and correct as of the date of this Agreement and as of the
     Effective Time with the same effect as though all such representations
     and warranties had been made on and as of the Effective Time.

               (B)  PERFORMANCE OF AGREEMENTS AND COVENANTS.  Each and
     all of the agreements and covenants of Sweet Water to be performed and
     complied with pursuant to this Agreement and the other agreements contem-
     plated hereby prior to the Effective Time shall have been duly performed
     and complied with in all respects.

               (C)  CERTIFICATES.  Sweet Water shall have delivered to South
     Alabama (i) a certificate, dated as of the Effective Time and signed on
     its behalf by its chief executive officer and its chief financial officer,
     to the effect that the conditions of its obligations set forth in Section
     9.2(a) and 9.2(b) of this Agreement have been satisfied, and (ii) certified
     copies of resolutions duly adopted by Sweet Water's Board of Directors and
     shareholders evidencing the taking of all corporate action necessary to
     authorize the execution, delivery and performance of this Agreement, and
     the consummation of the transactions contemplated hereby, all in such
     reasonable detail as South Alabama and its counsel shall request.

               (D)  OPINION OF COUNSEL.  Sweet Water shall have delivered to
     South Alabama an opinion of Miller, Hamilton, Snider & Odom, L.L.C.,
     counsel to Sweet Water, dated as of the Closing, in substantially the form
     of Exhibit 4 hereto.

               (E)  BOOK VALUE THRESHOLD.   Sweet Water's Book Value shall
     not be less than $96.40 per share.

          9.3  CONDITIONS TO OBLIGATIONS OF SWEET WATER.  The obligations of
Sweet Water to perform this Agreement and consummate the Merger and the other
transactions contemplated hereby are subject to the satisfaction of the
following conditions, unless waived by Sweet Water pursuant to Section 11.5(b)
of this Agreement:

               (A)  REPRESENTATIONS AND WARRANTIES.  The representations
     and warranties of South Alabama set forth or referred to in this Agreement
     shall be true and correct as of the date of this Agreement and as of the
     Effective Time with the same effect as though all such representations and
     warranties had been made on and as of the Effective Time.

               (B)  PERFORMANCE OF AGREEMENTS AND COVENANTS.  Each and
     all of the agreements and covenants of South Alabama to be performed and
     complied with pursuant to this Agreement and the other agreements contem
     plated hereby prior to the Effective Time shall have been duly performed
     and complied with in all Material respects.

               (C)  CERTIFICATES.  South Alabama shall have delivered to Sweet
     Water (i) a certificate, dated as of the Effective Time and signed on its
     behalf by its chief executive officer and its chief financial officer, to
     the effect that the conditions of its obligations set forth in Section
     9.3(a) and 9.3(b) of this Agreement have been satisfied, and (ii) certified
     copies of resolutions duly adopted by South Alabama's Board of Directors
     and shareholders evidencing the taking of all corporate action necessary
     to authorize the execution, delivery and performance of this Agreement, and
     the consummation of the transactions contemplated hereby, all in such
     reasonable detail as Sweet Water and its counsel shall request.

               (D)  OPINION OF COUNSEL.  South Alabama shall have delivered
     to Sweet Water an opinion of Hand Arendall, L.L.C., counsel to South
     Alabama, dated as of the Effective Time, in substantially the form of
     Exhibit 5 hereto.

               (E)  EXCHANGE LISTING.  The shares of South Alabama Common
     Stock issuable pursuant to the Merger shall have been approved, subject to
     official notice of issuance, for listing on the NASDAQ Stock Market.

               (F)  FAIRNESS OPINION.  Sweet Water shall have received from
     Alex Sheshunoff & Co. investment Banking prior to the mailing of the Proxy
     Statement a letter setting forth its opinion that the Exchange Ratio is
     fair to the shareholders of Sweet Water from a financial point of view,
     and such opinion shall not have been withdrawn as of the Effective Time.


                             ARTICLE TEN
                             TERMINATION

          10.1 TERMINATION.  Notwithstanding any other provision of this
Agreement, and notwithstanding the approval of this Agreement by the
shareholders of Sweet Water, this Agreement may be terminated and the Merger
abandoned at any time prior to the Effective Time:

               (a)  By mutual consent of the Board of Directors of South
     Alabama and the Board of Directors of Sweet Water; or

               (b)  By the Board of Directors of either Party in the event of a
     breach by the other Party of any representation or warranty contained in
     this Agreement which cannot be or has not been cured within thirty (30)
     days after the giving of written notice to the breaching Party of such
     breach and which breach is reasonably likely, in the opinion of the
     non-breaching Party, to have, individually or in the aggregate, a Material
     Adverse Effect on the breaching Party; or

               (c)  By the Board of Directors of either Party in the event of a
     Material breach by the other Party of any covenant or agreement contained
     in this Agreement which cannot be or has not been cured within thirty (30)
     days after the giving of written notice to the breaching Party of such
     breach; or

               (d)  By the Board of Directors of either Party (provided that the
     terminating Party is not then in Material breach of any representation,
     warranty, covenant, or other agreement contained in this Agreement) in the
     event (i) any Consent of any Regulatory Authority required for consummation
     of the Merger and the other transactions contemplated hereby shall have
     been denied by final nonappealable action of such authority or if any
     action taken by such authority is not appealed within the time limit for
     appeal, or (ii)if the shareholders of Sweet Water fail to vote their
     approval of this Agreement and the transactions contemplated hereby as
     required by the ABCA and the rules of the NASD at the Shareholders' Meeting
     where the transactions were presented to such shareholders for approval and
     voted upon; or

               (e)  By the Board of Directors of South Alabama in the event the
     Market Price is less than $10.00 per share;

               (f)  By the Board of Directors of Sweet Water if South Alabama
     enters into a letter of intent, acquisition agreement, merger agreement or
     similar agreement with another entity for the purpose of South Alabama
     being subject to an Acquisition Proposal; or

               (g)  By the Board of Directors of either Party in the event that
     the Merger shall not have been consummated by October 31, 1999, if the
     failure to consummate the transactions contemplated hereby on or before
     such date is not caused by any breach of this Agreement by the Party
     electing to terminate pursuant to this Section 10.1(g);

               (h)  By the Board of Directors of either Party in the event that
     any of the conditions precedent to the obligations of such Party to
     consummate the Merger cannot be satisfied or fulfilled by the date
     specified in Section 10.1(h) of this Agreement.

          10.2      EFFECT OF TERMINATION.  In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1 of this Agreement, this
Agreement shall become void and have no effect, except that (i) the provisions
of this Section 10.2 and Article Eleven and Section 8.5(b) of this Agreement
shall survive any such termination and abandonment, and (ii) a termination
pursuant to Sections 10.1(b), 10.1(c) or 10.1(f) of this Agreement shall not
relieve the breaching Party from Liability for an uncured  willful breach of a
representation, warranty, covenant, or agreement giving rise to such
termination.

          10.3 TERMINATION OF REPRESENTATIONS AND COVENANTS.  All
representations and warranties provided in Articles 5 and 6 of this Agreement
or in any closing certificate pursuant to Articles 8 and 9 shall terminate and
be extinguished at and shall not survive the Effective Time.  All covenants,
agreements and undertakings required by this Agreement to be performed by any
Party hereto following the Effective Time shall survive such Effective Time and
be binding upon such Party. Items disclosed in the Exhibits and items and
matters Previously Disclosed are incorporated into this Agreement and form a
part of the representations, warranties, covenants or agreements to which they
relate.


                            ARTICLE ELEVEN
                            MISCELLANEOUS

          11.1 EXPENSES.  Each of the parties shall bear and pay all costs and
expenses incurred by it or on its behalf in connection with the transactions
contemplated hereunder.  It is agreed and understood that work done by South
Alabama and/or its attorneys and advisors to prepare and file the Registration
Statement and print the Prospectus shall not be deemed to be done on behalf of
Sweet Water, and the costs and expenses therefor shall not be the responsibility
of Sweet Water.

          11.2      BROKERS AND FINDERS.  Except for fees incurred for the
services of Alex Sheshunoff & Co. Investment Banking, each of the Parties
represents and warrants that neither it nor any of its officers, directors,
employees, or Affiliates has employed any broker or finder or incurred any
Liability for any financial advisory fees, investment bankers' fees, brokerage
fees, commissions, or finders' fees in connection with this Agreement or the
transactions contemplated hereby.  In the event of a claim by any broker or
finder based upon his or its representing or being retained by or allegedly
representing or being retained by Sweet Water or South Alabama, each
of Sweet Water and South Alabama, as the case may be, agrees to indemnify and
hold the other Party harmless of and from any Liability in respect of any such
claim.

          11.3      ENTIRE AGREEMENT.  Except as otherwise expressly provided
herein, this Agreement (including the documents and instruments referred to
herein) constitutes the entire agreement between the Parties with respect to the
transactions contemplated hereunder and supersedes all prior arrangements or
understandings with respect thereto, written or oral.  Nothing in this Agreement
expressed or implied is intended to confer upon any Person, other than the
Parties or their respective successors, any rights, remedies, obligations, or
liabilities under or by reason of this Agreement.


          11.4      AMENDMENTS.  To the extent permitted by Law, this Agreement
may be amended by a subsequent writing signed by each of the Parties upon the
approval of the Boards of Directors of each of the Parties; provided, however,
that after approval of this Agreement by the holders of Sweet Water Common
Stock, there shall be made no amendment that pursuant to the ABCA requires
further approval by the Sweet Water shareholders without the further approval of
the Sweet Water shareholders.


          11.5      WAIVERS.

               (a)  Prior to or at the Effective Time, South Alabama, acting
through its Board of Directors, chief executive officer or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by Sweet Water, to waive or extend the time for the
compliance or fulfillment by Sweet Water of any and all of its obligations under
this Agreement, and to waive any or all of the conditions precedent to the
obligations of South Alabama under this Agreement, except any condition which,
if not satisfied, would result in the violation of any Law. No such waiver shall
be effective unless in writing signed by the chief executive officer of South
Alabama.

               (b)  Prior to or at the Effective Time, Sweet Water, acting
through its Board of Directors, chief executive officer or other authorized
officer, shall have the right to waive any Default in the performance of any
term of this Agreement by South Alabama, to waive or extend the time for the
compliance or fulfillment by South Alabama of any and all of its obligations
under this Agreement, and to waive any or all of the conditions precedent to the
obligations of Sweet Water under this Agreement, except any condition which, if
not satisfied, would result in the violation of any Law.  No such waiver shall
be effective unless in writing signed by the chief executive officer of Sweet
Water.

               (c)  The failure of any Party at any time or times to require
performance of any provision hereof shall in no manner affect the right of
such Party at a later time to enforce the same or any other provision of this
Agreement.  No waiver of any condition or  of the breach of any term contained
in this Agreement in one or more instances shall be deemed to be construed as a
further or continuing waiver of such condition or breach or a waiver of any
other condition or of the breach or any other term of this Agreement.

          11.6      ASSIGNMENT.  Except as expressly contemplated hereby,
neither this Agreement nor any of the rights, interests or obligations
hereunder shall be assigned by any Party hereto (whether by operation of Law or
otherwise) without the prior written consent of the other Party.  Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit of
and be enforceable by the Parties and their respective successors and assigns.

          11.7      NOTICES.  All notices or other communications which are
required or permitted hereunder shall be in writing and sufficient if delivered
by hand, by facsimile transmission, by registered or certified mail, postage
pre-paid, or by courier or overnight carrier, to the persons at the addresses
set forth below (or at such other address as may be provided hereunder), and
shall be deemed to have been delivered as of the date so delivered:


     Sweet Water:   Sweet Water State Bancshares, Inc.
                    P. O. Box 128 (36782-0128)
                    101 Main Street
                    Sweet Water, Alabama 36782-0128
                    Telephone Number: 334-994-4113
                    Facsimile Number:  334-994-4716

                    Attention: Stratton F. Lewis, Jr., President

Copy to Counsel:    Miller, Hamilton, Snider & Odom, L.L.C.
                    P. O. Box 19 (36101)
                    One Commerce Street, Suite 305
                    Montgomery, Alabama 36104
                    Telephone Number: (334) 834-5550
                    Facsimile Number:  (334) 265-4533

                    Attention: Willard H. Henson

     South Alabama: South Alabama Bancorporation, Inc.
                    P. O. Box 3067 (36652)
                    100 St. Joseph Street
                    Mobile, Alabama 36602
                    Telephone Number: (334) 431-7800
                    Facsimile Number:  (334) 431-7851

                    Attention: W. Bibb Lamar, Jr., President

Copy to Counsel:    Hand Arendall, L.L.C.
                    P. O. Box 123 (36601)
                    3000 AmSouth Bank Building
                    107 St. Francis Street
                    Mobile, Alabama  36602
                    Telephone Number: (334) 432-5511
                    Facsimile Number:  (334) 694-6375

                    Attention: Brooks P. Milling

     11.8 GOVERNING LAW.  This Agreement shall be governed by and construed in
accordance with the Laws of the State of Alabama, without regard to any
applicable conflicts of Laws.


     11.9 COUNTERPARTS.  This Agreement may be executed in one or more counter-
parts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

     11.10     CAPTIONS.  The captions contained in this Agreement are for
reference purposes only and are not part of this Agreement.

     11.11     ENFORCEMENT OF AGREEMENT.  The Parties hereto agree that
irreparable damage would occur in the event that any of the provisions of
this Agreement was not performed in accordance with its specific terms or was
otherwise breached.  It is accordingly agreed that the Parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof in any court of the United
States or any state having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.

     11.12     SEVERABILITY.  Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms and provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.  If any provision of
this Agreement is so broad as to be unenforceable, the provision shall be
interpreted to be only so broad as is enforceable.


     IN WITNESS WHEREOF, each of the Parties has caused this Agreement to be
executed on its behalf and its corporate seal to be hereunto affixed and
attested by its respectively authorized officers as of the day and year first
above written.


                              ATTEST: SWEET WATER STATE BANCSHARES,
                              INC.


/s/Jack O. Kerby                 By:/s/Stratton F. Lewis, Jr.
Secretary                           Stratton F. Lewis, Jr., President


[CORPORATE SEAL]



ATTEST:                       SOUTH ALABAMA BANCORPORATION,
                              INC.


/s/F. Michael Johnson           By: /s/W. Bibb Lamar, Jr.,
Secretary                           W. Bibb Lamar, Jr., President

[CORPORATE SEAL]
                           LIST OF EXHIBITS


     EXHIBIT NUMBER                     DESCRIPTION


     1.   Amendment to the Articles of Incorporation of South Alabama
          Bancorporation, Inc.  (section 2.1).

     2.   Amendment to the Bylaws of South Alabama Bancorporation, Inc.
          (section 2.2)

     3.   Form of agreement of affiliates of Sweet Water.  (section 8.10).

     4.   Form of opinion of counsel for Sweet Water.  (section 9.2(d)).

     5.   Form of opinion of counsel for South Alabama.  (section 9.3(d)).


                                                             EXHIBIT 1


            AMENDMENT TO THE ARTICLES OF INCORPORATION OF
                  SOUTH ALABAMA BANCORPORATION, INC.



     None.
                                                             EXHIBIT 2


                      AMENDMENT TO THE BYLAWS OF
                  SOUTH ALABAMA BANCORPORATION, INC.



     None.
                                                             EXHIBIT 3

                         AFFILIATE AGREEMENT



South Alabama Bancorporation, Inc.
Mobile, Alabama

Attention:     W. Bibb Lamar, Jr.
          President

Gentlemen:

     The undersigned is a shareholder of Sweet Water Bancshares, Inc. ("Sweet
Water"), an Alabama corporation located in Sweet Water, Alabama, and will become
a shareholder of the South Alabama Bancorporation, Inc. ("South Alabama")
pursuant to the transactions described in the Agreement and Plan of Merger,
dated as of_____________, 1999, (the "Agreement"), by and between South Alabama
and Sweet Water.  Under the terms of the Agreement, Sweet Water will be merged
with and into South Alabama (the "Merger"), and the shares of the common stock
of Sweet Water ("Sweet Water Common Stock") will be converted into and exchanged
for shares of the common stock of South Alabama ("South Alabama Common Stock").
This Affiliate Agreement represents an agreement between the undersigned and
South Alabama regarding certain rights and obligations of the undersigned in
connection with the shares of South Alabama to be received by the undersigned
as a result of the Merger.

     In consideration of the Merger and the mutual covenants contained herein,
     the undersigned and South Alabama hereby agree as follows:

     1.   Affiliate Status.  The undersigned understands and agrees that as to
Sweet Water he or she is an "affiliate" under Rule 145(c) as defined in
Rule 405 of the Rules and Regulations of the Securities and Exchange
Commission ("SEC") under the Securities Act of 1933, as amended ("1933
Act"), and the undersigned anticipates that he or she will be such an
"affiliate" at the time of the Merger.

     2.   Initial Restriction on Disposition.  The undersigned agrees that he
or she will not sell, transfer or otherwise dispose of his or her interests in,
or reduce his or her risk relative to, any of the shares of South Alabama Common
Stock into which his or her shares of Sweet Water Common Sock are converted upon
consummation of the Merger until such time as South Alabama notifies the
undersigned that the requirements of SEC Accounting Series Release Nos. 130 and
135 ("ASR 130 and 135") have been met.  The undersigned understands that ASR 130
and 135 relate to publication of financial results of post-Merger combined
operations of South Alabama and Sweet Water.  South Alabama agrees that it will
publish such results within forty-five (45) days after the end of the first
fiscal quarter of South Alabama containing the required period of post-Merger
combined operations and that it will notify the undersigned promptly following
such publication.

     3.   Covenants and Warranties of Undersigned.  The undersigned represents,
warrants and agrees that:

          (a)  The South Alabama Common Stock received by the undersigned
     as a result of the Merger will be taken for his or her own account and
     not for others, directly or indirectly, in whole or in part.

          (b)  South Alabama has informed the undersigned that any distribution
     by the undersigned of South Alabama Common Stock has not been registered
     under the 1933 act and that shares of South Alabama Common Stock received
     pursuant to the Merger can only be sold by the undersigned (1) following
     registration under the 1933 Act, or (2) in conformity with the volume and
     other requirements of Rule 145(d) promulgated by the SEC as the same now
     exist or may hereafter be amended, or (3) to the extent some other
     exemption from registration under the 1933 Act might be available.  The
     undersigned under stands that South Alabama is under no obligation to file
     a registration statement with the SEC covering the disposition of the
     undersigned's shares of South Alabama Common Stock.

     (c)  The undersigned is aware that South Alabama intends to treat the
     Merger as a tax-free reorganization under Section 368 of the Internal
     Revenue Code ("Code") for federal income tax purposes.  The undersigned
     agrees to treat the transaction in the same manner as South Alabama for
     federal income tax purposes.  The undersigned acknowledges that the Income
     Tax Regulations require "continuity of interest" in order for the Merger to
     be treated as tax-free under Section 368 of the Code.  The undersigned
     has no prearrangement, plan or intention to sell or otherwise dispose of an
     amount of his or her South Alabama Common Stock to be received in the
     Merger which would cause the foregoing requirement not to be satisfied.

     4.   Restrictions on Transfer.  The undersigned understands and agrees that
stop transfer instructions with respect to the shares of South Alabama Common
Stock received by the undersigned pursuant to the Merger will be given to South
Alabama's Transfer Agent and that there will be placed on the certificates of
such shares, or shares issued in substitution thereof, a legend stating in
substance:

     The shares represented by this certificate were issued pursuant to a
     business combination which is accounted for as a "pooling of interests"
     and may not be sold, nor may the owner thereof reduce his or her risks
     relative thereto in any way, until such time as South Alabama
     Bancorporation, Inc. (the "Corporation") has published the financial
     results covering at least thirty (30) days of combined operations after the
     effective date of the merger through which the business combination was
     effected.  In addition, the shares represented by this certificate may not
     be sold, transferred or otherwise disposed of except or unless (1) covered
     by an effective registration statement under the Securities Act of 1933, as
     amended, (2) in accordance with (i) Rule 145(d) (in the case of shares
     issued to an individual who is not an affiliate of the Corporation) or (ii)
     Rule 144 (in the case of shares issued to an individual who is an affiliate
     of the Corporation) of the Rules and Regulations of such Act, or (3) in
     accordance with a legal opinion satisfactory to counsel for the
     Corporation that such sale or transfer is otherwise exempt from the
     registration requirements of such Act.

Such legend will also be placed on any certificate representing South Alabama
securities issued subsequent to the original issuance of the South Alabama
Common Stock pursuant to the Merger as a result of any stock dividend, stock
split, or other recapitalization as long as the South Alabama Common Stock
issued to the undersigned pursuant to the Merger has not been transferred in
such manner to justify the removal of the legend therefrom.  Upon the request of
the undersigned, South Alabama shall cause the certificates representing the
shares of South Alabama Common Stock issued to the undersigned in connection
with the Merger to be reissued free of any legend relating to restrictions on
transfer by virtue of  ASR 130 and 135 as soon as practicable after the
requirements of ASR 130 and 135 have been met.  In addition, if the provisions
of Rules 144 and 145 are amended to eliminate restrictions applicable of the
South Alabama Common Stock received by the undersigned pursuant to the Merger,
or at the expiration of the restrictive period set forth in Rule 145(d),
South Alabama, upon the request of the undersigned, will cause the certificates
representing the shares of South Alabama Common Stock issued to the undersigned
in connection with the Merger to be reissued free of any legend relating to the
restrictions set forth in Rules 144 and 145(d) upon receipt by South Alabama
of an opinion of its counsel to the effect that such legend may be removed.

     5.   Understanding of Restrictions on Dispositions.  The undersigned has
carefully read the Agreement and this Affiliate Agreement and discussed their
requirements and impact upon his or her ability to sell, transfer, or
otherwise dispose of the shares of South Alabama Common Stock received by the
undersigned, to the extent he or she believes necessary, with his or her counsel
or counsel for Sweet Water.

     6.   Filing of Reports by South Alabama.  South Alabama agrees, for a
period of three years after the effective date of the Merger, to file on a
timely basis all reports required to be filed by it pursuant to Section 13 of
the Securities Exchange Act of 1934, as amended, so that the public information
provisions of Rule 145(d) promulgated by the SEC as the same are presently in
effect will be available to the undersigned in the event the undersigned desires
to transfer any shares of South Alabama Common Stock issued to the undersigned
pursuant to the Merger.

     7.   Transfer Under Rule 145(d).  If the undersigned desires to sell or
otherwise transfer the shares of South Alabama Common Stock received by him
or her in connection with the Merger at any time during the restrictive
period set forth in Rule 145(d), the undersigned will provide the necessary
representation letter to the transfer agent for South Alabama Common Stock
together with such additional information as the transfer agent may reasonably
request.  If South Alabama's counsel concludes that such proposed sale or
transfer complies with the requirements of Rule 145(d), South Alabama shall
cause such counsel to provide such opinions as may be necessary to
South Alabama's Transfer Agent so that the undersigned may complete the proposed
sale or transfer.

     8.   Acknowledgments.  The undersigned recognizes and agrees that the
foregoing provisions also apply to (i) the undersigned's spouse, (ii) any
relative of the undersigned or of the undersigned's spouse who has the same home
as the undersigned, (iii) any trust or estate in which the undersigned, the
undersigned's spouse, and any such relative collectively own at least a 10%
beneficial interest or of which any of the foregoing serves as trustee,
executor, or in any similar capacity, and (iv) any corporation or other
organization in which the undersigned, the undersigned's spouse and any such
relative collectively own at least 10% of any class of equity securities or of
the equity interest.  The undersigned further recognizes that, in the
event that the undersigned is a director or officer of South Alabama or
becomes a director or officer of South Alabama upon consummation of the Merger,
among other things, any sale of South Alabama common Stock by the undersigned
within a period of less than six months following the effective time of the
Merger may subject the undersigned to liability pursuant to Section 16(b) of the
Securities Exchange Act of 1934, as amended.

     9.   Miscellaneous.  This Affiliate Agreement is the complete agreement
between South Alabama and the undersigned concerning the subject matter
hereof. Any notice required to be sent to any party hereunder shall be sent by
registered or certified mail, return receipt requested, using the addresses set
forth herein or such other address as shall be furnished in writing by the
parties.  This Affiliate Agreement shall be governed by the laws of the State
of Alabama.


     This Affiliate Agreement is executed as of the            day of
_______________, 1999.


                                   Very truly yours,




                                   Signature



                                   Print Name






                                   Address



AGREED TO AND ACCEPTED as of
                                            , 1999

SOUTH ALABAMA BANCORPORATION, INC.


By:

South Alabama Bancorporation, Inc.
________________, 199___                                     EXHIBIT 4


           [LETTERHEAD OF MILLER, HAMILTON, SNIDER & ODOM]


                                                      , 199__

South Alabama Bancorporation, Inc.
Mobile, Alabama


     Re:  Merger of Sweet Water State Bancshares, Inc. with and into South
          Alabama Bancorporation, Inc.

Gentlemen:

     We are counsel to Sweet Water State Bancshares, Inc. ("Sweet Water"), a
corporation organized and existing under the laws of the State of Alabama, and
have represented Sweet Water in connection with the execution and delivery of
the Agreement and Plan of Merger, dated as of __________, 1999 (the "Agree-
ment"), by and between South Alabama Bancorporation, Inc. ("South Alabama") and
Sweet Water.

     This opinion is delivered pursuant to Section 9.2(d) of the Agreement.
Capitalized terms used in this opinion shall have the meaning set forth in the
Agreement.

     In rendering this opinion, we have examined the corporate books and records
of Sweet Water and made such other investigations as we have deemed necessary.
We have relied upon certificates of public officials and officers of Sweet Water
as to certain questions of fact.

     Based upon and subject to the foregoing, we are of the opinion that:

1.   Sweet Water is a corporation duly organized, validly existing and in good
     standing under the laws of the State of Alabama with full corporate power
     and authority to carry on the business in which it is engaged and to own
     the properties owned by it.

2.   The execution and delivery of the Agreement and compliance with its terms
     do not and will not violate or contravene any provision of the Articles of
     Incorporation or Bylaws of Sweet Water or, to the best of our knowledge,
     result in any conflict with, breach of, or default or acceleration under
     any mortgage, agreement, lease, indenture, or other instrument, order,
     judgment or decree to which Sweet Water is a party or by which Sweet Water
     is bound.

3.   In accordance with the Bylaws of Sweet Water and pursuant to resolutions
     duly adopted by its Board of Directors and shareholders, the Agreement has
     been duly adopted and approved by the Board of Directors of Sweet Water and
     by the shareholders of Sweet Water at the Shareholders' Meeting.

4.   The Agreement has been duly and validly executed and delivered by Sweet
     Water.

5.   The authorized capital stock of Sweet Water consists of __________ shares
     of Sweet Water Common Stock, of which _____________ shares were issued and
     outstanding as of ________________, 1999.  The shares of Sweet Water Common
     Stock that are issued and outstanding were not issued in violation of any
     statutory preemptive rights of shareholders, were duly issued and are
     fully paid and nonassessable.  To our knowledge, there are no options,
     subscriptions, warrants, calls, rights or commitments obligating Sweet
     Water to issue any equity securities or acquire any of its equity
     securities.

     This opinion is delivered solely for reliance by South Alabama.

                              Sincerely,



Sweet Water State Bancshares, Inc.
_________________, 199___                                    EXHIBIT 5


                [LETTERHEAD OF HAND ARENDALL, L.L.C.]



Sweet Water State Bancshares, Inc.
_________________________________
_________________________________


     Re:  Merger of Sweet Water State Bancshares, Inc. with and into South
          Alabama Bancorporation, Inc.

Gentlemen:

     We are counsel to South Alabama Bancorporation, Inc. ("South Alabama"), a
corporation organized and existing under the laws of the State of Alabama, and
have represented South Alabama in connection with the execution and delivery of
the Agreement and Plan of Merger, dated as of _______________, 1999, (the
"Agreement"), by and between Sweet Water State Bancshares, Inc. ("Sweet Water")
and South Alabama.

     This opinion is delivered pursuant to Section 9.3(d) of the Agreement.
Capitalized terms used in this opinion shall have the meaning set forth in the
Agreement.

     In rendering this opinion, we have examined the corporate books and records
of South Alabama, and made such other investigations as we have deemed
necessary. We have relied upon certificates of public officials and officers of
South Alabama as to certain questions of fact.

     Based upon and subject to the foregoing, we are of the opinion that:

1.   South Alabama is a corporation duly organized, validly existing and in good
     standing under the laws of the State of Alabama with full corporate power
     and authority to carry on the business in which it is engaged and to own
     the properties owned by it.

2.   The execution and delivery of the Agreement and compliance with its terms
     do not and will not violate or contravene any provision of the Articles of
     Incorporation or Bylaws of South Alabama or, to the best of our knowledge
     but without any independent investigation, result in any conflict with,
     breach of, or default or acceleration under any mortgage, agreement, lease,
     indenture, or other instrument, order, arbitration award, judgment or
     decree to which South Alabama is a party or by which South Alabama is
     bound.

3.   In accordance with the Bylaws of South Alabama and pursuant to resolutions
     duly adopted by its Board of Directors and shareholders, the Agreement has
     been duly adopted and approved by the Board of Directors of South Alabama.

4.   The Agreement has been duly and validly executed and delivered by South
     Alabama.

5.   The authorized capital stock of South Alabama consists of 10,000,000
     shares of South Alabama Common Stock, of which ____________ shares were
     issued and outstanding as of ____________, 1999, and 500,000 shares of
     preferred stock, no par value, none of which is issued and outstanding.
     The shares of South Alabama Common Stock that are issued and outstanding
     were not issued in violation of any statutory preemptive rights of
     shareholders, were duly issued and are fully paid and nonassessable under
     the Alabama Business Corporation Act.  The shares of South Alabama Common
     Stock to be issued to the shareholders of Sweet Water as contemplated by
     the Agreement are duly authorized, have been registered under the
     Securities Act of 1933, as amended, and when properly issued and delivered
     following consummation of the Merger will be validly issued, fully paid
     and non-assessable.

     This opinion is delivered solely for reliance by Sweet Water.

                              Yours very truly,

                              HAND ARENDALL, L.L.C.


                              By:_________________________________________



                                                     Appendix B




                        June 24, 1999

 Board of Directors
 Sweet Water State Bancshares, Inc.
 101 Main Street
 Sweet Water, Alabama  36782

 Members of the Board:
 You have requested us to update our oral opinion rendered on March 30, 1999,
 as to the fairness, from a financial point of view, to the holders of the
 outstanding shares of common stock of Sweet Water Bancshares, Inc. ("Sweet
 Water") of the Merger Consideration to be received in the proposed merger
 between Sweet Water and South Alabama Bancorporation, Inc., Mobile, Alabama,
 (the "Corporation").  In consideration of the Merger, the Corporation has
 offered to  exchange $12,753,000 of its shares of common stock (the "Merger
 Consideration") for the outstanding shares of Sweet Water common stock
 subject to an exchange ratio based upon the formula contained in the Merger
 Agreement.  The shares will be exchanged pursuant to the  Agreement and Plan
 of Merger effective as of March 30, 1999 (the "Merger Agreement"). Pursuant
 to the Merger Agreement, the Corporation shall cause Sweet Water to be merged
 with and into the Corporation (the "Merger). Sweet Water did not retain
 Sheshunoff to act as its financial advisor in the proposed Merger and the
 terms and conditions of the Merger were negotiated directly between Sweet
 Water and the Corporation. Alex Sheshunoff & Co. Investment Banking
 ("Sheshunoff") is regularly engaged in the valuation of securities in
 connection with mergers and acquisitions, private placements, and valuations
 for estate, corporate and other purposes.

 In connection with our opinion, we have, among other things:

        1. Evaluated Sweet Water's consolidated results based upon a review of
        its annual financial statements for the two-year period ending
        December 31, 1997 and the unaudited consolidated results for the
        period ending December 31, 1998;
        2. Reviewed Call Report information as of December 1998 for Sweet
        Water;
        3. Conducted conversations with executive management regarding recent
        and projected financial performance of Sweet Water;
        4. Compared Sweet Water's recent operating results with those of
        certain other banks in the Southeast region of the United States
        which have recently been acquired;
        5. Compared Sweet Water's recent operating results with those of
        certain other banks in Alabama which have recently been acquired;
        6. Compared the pricing multiples for Sweet Water in the Merger to
        those of certain other banks in the Southeast region of the United
        States which have recently been acquired;
        7. Compared the pricing multiples for Sweet Water in the Merger to
        those of certain other banks in Alabama which have recently been
        acquired;
        8. Analyzed the net present value of the after-tax cash flows Sweet
        Water could produce through the year 2003, based on assumptions
        provided by management;
        9. Performed an affordability analysis based on the projections of
        earnings for the combined entity subsequent to the Merger;
        10.Reviewed the historical stock price data and trading volume of the
        Corporation common stock and the lack of any active market for the
        common stock of Sweet Water; and
        11.Performed such other analyses as we deemed appropriate.

 We have assumed and relied upon, without independent verification, the
 accuracy and completeness of the information provided to us by Sweet Water
 for the purposes of this opinion. In addition, where appropriate, we have
 relied upon publicly available information that we believe to be reliable,
 accurate, and complete; however, we cannot guarantee the reliability,
 accuracy, or completeness of any such publicly available information.
 We have not made an independent evaluation of the assets or liabilities of
 Sweet Water or the Corporation, nor have we been furnished with any such
 appraisals.  We are not experts in the evaluation of loan portfolios for the
 purposes of assessing the adequacy of the allowance for loan and lease
 losses and have assumed that such allowances for each of the companies are,
 in the aggregate, adequate to cover such losses.
 We have assumed that all required regulatory approvals will be received in a
 timely fashion and without any conditions or requirements that could
 adversely affect the Merger or the Corporation's operations following the
 Merger.  Based upon management's representations, we assumed that the
 Company and Sweet Water are in compliance with all of the Y2K requirements
 of their respective regulatory authorities.
 Our opinion is necessarily based on economic, market, and other conditions
 as in effect on, and the information made available to us as of, the date
 hereof.  Events occurring after the date hereof could materially affect the
 assumptions used in preparing this opinion.
 Our opinion is limited to the fairness of the Merger Consideration, from a
 financial point of view, to the holders of Sweet Water common stock.
 Moreover, this letter and the opinion expressed herein do not constitute a
 recommendation to any stockholder as to any approval of the Merger or the
 Merger Agreement.  It is understood that this letter is for the information
 of the Board of Directors of Sweet Water and may not be used for any other
 purpose without our prior written consent.
 Based on the foregoing and such other matters we have deemed relevant, it is
 our opinion, as of the date hereof, that the Merger Consideration to be
 received by the Sweet Water stockholders pursuant to the Merger is fair,
 from a financial point of view.

                                  Very truly yours,

                               /s/ Alex Sheshunoff & Co. Investment Banking
                               ALEX SHESHUNOFF & CO.
                               INVESTMENT BANKING

                                                             APPENDIX C


AUDITED FINANCIAL STATEMENTS

SWEET WATER STATE BANCSHARES, INC.
AND SUBSIDIARY
member FDIC

SWEET WATER, ALABAMA

DECEMBER 31, 1998 & 1997

SWEET WATER STATE BANCSHARES, INC. AND SUBSIDIARY
SWEET WATER STATE BANK





                                                  											Page
Independent Auditor's Report                                 2

Consolidated Statements of Income                            3

Consolidated Statements of Comprehensive Income              4

Consolidated Balance Sheets                                  5

Consolidated Statements of Stockholders' Equity              6

Consolidated Statements of Cash Flows                        7

Notes to Consolidated Financial Statements                   8




INDEPENDENT AUDITOR'S REPORT


Board of Directors
and Stockholders
Sweet Water State Bancshares, Inc.
Sweet Water, Alabama


We have audited the consolidated balance sheets of Sweet Water State
Bancshares, Inc. and its subsidiary, Sweet Water State Bank, as of December
31, 1998 and 1997, and the related statements of income, stockholders'
equity and cash flows for the years then ended.  These consolidated financial
statements are the responsibility of the Corporation'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 consolidated financial statements are
free of material misstatement.  An audit includes examining on a test basis,
evidence supporting amounts and disclosures in the consolidated financial
statements.  An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the
overall consolidated financial statement presentation.  We believe that our
audit provides a reasonable basis for our opinion.

In our opinion, the consolidated statements referred to above present fairly,
in all material respects, the financial position of Sweet Water State
Bancshares, Inc. and its subsidiary, Sweet Water State Bank, as of December
31, 1998 and 1997, and the consolidated results of their operations and cash
flows for the years then ended, in conformity with generally accepted
accounting principles.


                                              /s/McKean & Associates, P.A.
                                              McKEAN & ASSOCIATES, P.A.
February 19, 1999                             Certified Public Accountants


<TABLE>
SWEET WATER STATE BANCSHARES, INC. AND SUBSIDIARY
SWEET WATER STATE BANK
CONSOLIDATED STATEMENTS OF INCOME


<CAPTION>
For the Years Ended December 31,              1998              1997
<S>                                    <C>                 <C>
INTEREST INCOME
      Loans                            $  3,354,532        $   2,609,829
      Investment securities                 773,050              889,706
      Federal funds sold                    116,463               65,653

Total interest income                     4,244,045            3,565,188

INTEREST EXPENSE
      Deposits                            1,974,610            1,607,552

Total interest expense                    1,974,610            1,607,552

Net interest income before
 provision for loan losses                2,269,435            1,957,636
Provision for loan losses                   270,000               23,000

NET INTEREST INCOME                       1,999,435            1,934,636

NON-INTEREST INCOME
      Service charges on deposits           316,958              269,209
      Other income                           73,528               89,644
      Gains on disposal of securities        11,263                9,980

Total non-interest income                   401,749              368,833

NON-INTEREST EXPENSE
      Salaries                              939,052              807,992
      Depreciation                          104,127               82,091
      Insurance                              66,223               67,246
      Payroll tax                            65,413               55,423
      Merger                                 60,000                    0
      Retirement plan                        47,012               39,710
      Advertising                            43,571               45,189
      Losses on disposal of securities            0                7,013
      Other expenses                        448,837              411,429

Total non-interest expense                1,774,235            1,516,093

INCOME BEFORE INCOME TAXES                  626,949              787,376

Provision for income taxes                  113,441              177,982

                        NET INCOME     $    513,508        $     609,394


Average number of shares outstanding
  adjusted for stock exchanges               60,000               60,000

Net income per common share            $       8.56        $       10.16

See notes to the consolidated financial statements.
</TABLE>
<TABLE>
SWEET WATER STATE BANCSHARES, INC. AND SUBSIDIARY
SWEET WATER STATE BANK
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<CAPTION>
For the Years Ended December 31,                            1998            1997
<S>                                                         <C>             <C>
NET INCOME                                                  $513,508        $609,394

OTHER COMPREHENSIVE INCOME, net of tax
      Unrealized losses / (gains) on securities                1,920         (16,701)

Total other comprehensive income                               1,920         (16,701)

                   COMPREHENSIVE INCOME                     $515,428        $592,693

SWEET WATER STATE BANCSHARES, INC. AND SUBSIDIARY
SWEET WATER STATE BANK
CONSOLIDATED BALANCE SHEETS

December 31,                                           1998            1997
ASSETS
Cash and due from banks                             $ 1,823,311     $ 1,147,310
Federal funds sold                                    2,360,000       3,110,000
Investment securities, at carrying value             12,510,433      12,674,360
Loans, net of unearned interest and allowance
  for loan losses                                    34,604,104      28,475,241
Bank premises and equipment                           1,044,695         667,755
Accrued interest receivable                             996,532         827,885
Other assets                                            162,853         167,174

                           TOTAL                    $53,501,928     $47,069,725

LIABILITIES
Deposits
      Demand - non-interest bearing                 $ 4,984,758     $ 5,978,936
      Demand - interest bearing                       5,794,417       5,585,157
      Savings                                         3,979,235       3,751,148
      Time certificates of deposit                   32,610,980      26,037,246

TOTAL DEPOSITS                                       47,369,390      41,352,487
Accrued interest payable                                219,445         173,106
Other liabilities                                       129,070           5,537

                                                     47,717,905      41,531,130

STOCKHOLDERS' EQUITY
Common stock, par value $1.00 per share;
  60,000 shares authorized and issued                    60,000          60,000
Surplus                                                 640,000         640,000
Additional paid-in capital - treasury stock               7,781           7,781
Accumulated other comprehensive income                   12,301          10,381
Undivided profits                                     5,063,941       4,820,433

                                                      5,784,023       5,538,595

                           TOTAL                    $53,501,928     $47,069,725
See notes to the consolidated financial statements.
</TABLE>




<TABLE>
SWEET WATER STATE BANCSHARES, INC. AND SUBSIDIARY
SWEET WATER STATE BANK
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<CAPTION>
For the Years Ended December 31,                          1998            1997
<S>                                                   <C>             <C>
COMMON STOCK
      Balance at beginning, end of year               $   60,000      $   60,000

SURPLUS
      Balance at beginning, end of year                  640,000         640,000

ADDITIONAL PAID-IN CAPITAL - TREASURY STOCK
      Balance at beginning, end of year                    7,781           7,781

ACCUMULATED OTHER COMPREHENSIVE INCOME
      Balance at beginning of year                        10,381          27,082
      Other comprehensive income                           1,920         (16,701)

      Balance at end of year                              12,301          10,381

UNDIVIDED PROFITS
      Balance at beginning of year                     4,820,433       4,466,039
      Net income                                         513,508         609,394
      Cash dividends - $4.50 per share
        1998 and $4.25 per share 1997                   (270,000)       (255,000)

      Balance at end of year                           5,063,941       4,820,433

                           TOTAL                      $5,784,023      $5,538,595
See notes to the consolidated financial statements.
</TABLE>

<TABLE>
SWEET WATER STATE BANCSHARES, INC. AND SUBSIDIARY
SWEET WATER STATE BANK
CONSOLIDATED STATEMENTS OF CASH FLOWS


<CAPTION>
For the Years Ended December 31,                         1998           1997
<S>                                                <C>            <C>
OPERATING ACTIVITIES
      Net income                                   $   513,508    $    609,394
      Adjustments to reconcile net income to
      net cash flows from operating activities:
      Provision for loan losses                        270,000          23,000
      Depreciation and amortization                    104,127          82,091
      Gains on disposal of assets                      (11,263)         (5,351)
      Amortization and accretion of
        investment securities, net                      10,930           9,750
      (Increase) Decrease in assets
        Other assets                                     4,321         129,764
        Interest receivable                           (168,647)       (101,259)
      Increase (Decrease) in liabilities
        Other liabilities                              123,534        (555,070)
        Interest payable                                46,339           9,045

NET CASH FLOWS FROM OPERATING ACTIVITIES               892,849         201,364

INVESTING ACTIVITIES
      Proceeds from sales and maturities of
        investment securities
          Held to maturity                           3,078,213         857,570
          Available for sale                           909,026       3,281,634
      Purchases of investment securities
          Held to maturity                            (955,466)     (1,079,779)
          Available for sale                        (2,862,341)       (852,102)
      Net increase in loans                         (6,398,863)     (4,091,343)
      Net purchases of Bank premises & equipment      (484,320)       (162,778)

NET CASH FLOWS FROM INVESTING ACTIVITIES            (6,713,751)     (2,046,798)

FINANCING ACTIVITIES
      Net increase in deposits                       6,016,903       4,765,898
      Cash dividends                                  (270,000)       (255,000)

NET CASH FLOWS FROM FINANCING ACTIVITIES             5,746,903       4,510,898

(Decrease) Increase in cash and cash equivalents       (73,999)      2,665,464
Cash and cash equivalents at beginning of year       4,257,310       1,591,846

CASH AND CASH EQUIVALENTS AT END OF YEAR           $ 4,183,311    $  4,257,310


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
      Cash paid during the year for:
        Interest                                   $ 1,928,271    $  1,598,508
        Income taxes                               $   112,492    $    223,813
See notes to the consolidated financial statements.
</TABLE>

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

    The Corporation's accounting and reporting policies are in conformity
    with generally accepted accounting principles and comply with reporting
    guidelines prescribed by banking regulatory authorities in all material
    respects.  The Bank does not record accrued interest receivable on
    student loans, and it does not record accrued interest payable on money
    market and NOW deposit accounts.  Neither of these unaccrued amounts are
    significant to the financial statements presented as a whole.

    Basis of Consolidation

    The consolidated financial statements include the accounts of Sweet Water
    State Bancshares, Inc. (Bancshares) and its wholly-owned subsidiary,
    Sweet Water State Bank (Bank).  Significant intercompany accounts have
    been eliminated.

    Statement of Cash Flows

    Cash and cash equivalents include demand deposits with correspondent
    banks and federal funds sold on a daily basis to other banks.

    Investment Securities

    Investment securities are classified as held-to-maturity when the Bank
    has the positive intent and ability to hold the securities to maturity.
    Securities held-to-maturity are carried at amortized cost.  The
    amortization of premiums and accretion of discounts are recognized in
    interest income using methods approximating the interest method over the
    period to maturity.

    Investment securities not classified as held-to-maturity are classified
    as available-for-sale.  Securities available-for-sale are carried at fair
    value with unrealized gains and losses reported separately net of tax,
    through a separate component of stockholders' equity.  Gains and losses
    on sales of securities are determined on the specific-identification
    method.

    Loans and Allowance for Loan Losses

    Loans are reported at principal amounts outstanding less unearned
    interest and allowance for loan losses.  Interest on installment loans is
    recognized using the sum-of-the-digits method which approximates the
    interest method.  Interest on other loans is calculated by using the
    simple interest method on daily balances on the principal amount
    outstanding.

    The allowance for loan losses is increased by charges to operations.
    Loans are charged against the allowance for loan losses when management
    believes that the collectibility of the principal is unlikely.  The
    allowance is an amount that management believes will be adequate to
    absorb possible losses on existing loans that may become uncollectible
    and is based on evaluations of the collectibility of loans and prior loan
    loss experience.  The evaluations of the collectibility of loans take
    into consideration such factors as changes in the nature and volume of
    the loan portfolio, overall portfolio quality, review of specific problem
    loans and current economic conditions that may affect the borrower's
    ability to pay.  Accrual of interest is discontinued on a loan when
    management believes, after considering economic and business conditions
    and collection efforts, that the borrower's financial condition is such
    that collection of interest is doubtful.

SWEET WATER STATE BANCSHARES, INC. AND SUBSIDIARY
SWEET WATER STATE BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

    Bank Premises and Equipment

    Bank premises and equipment are reported at cost less an allowance for
    depreciation which is computed using the straight-line and accelerated
    methods over the estimated useful lives of the related assets.  Costs
    incurred for maintenance and repairs are expensed currently.  On disposal
    of properties, the related costs and allowances for depreciation are
    removed from the appropriate accounts, and any gains or losses are
    recognized.

    Other Real Estate

    Real estate properties acquired through or in lieu of foreclosure are
    initially recorded at the lower of the Bank's carrying amount or fair
    value.  Any write-downs based on the asset's fair value at the date of
    acquisition are charged to the allowance for loan losses.  After
    foreclosure, these assets are carried at the lower of their new cost
    basis or fair value.  Costs of significant property improvements are
    capitalized, while costs relating to holding property are expenses.

    Income Taxes

    The Bank accounts for certain income and expense items in different time
    periods for financial reporting purposes  versus income tax purposes.
    Provisions for deferred income taxes are made in recognition of these
    timing differences.  Operations of the Bank were included in the
    consolidated income tax return for the Parent.  Income taxes for the Bank
    are calculated as if the Bank had filed a separate return.

    The Bank adopted SFAS No. 109, Accounting for Income Taxes, as of January
    1, 1993.  Under SFAS 109, income taxes are accounted for using the asset
    and liability method where deferred tax assets and liabilities are
    recognized at current tax rates for future tax consequences of
    differences between the carrying value of assets and liabilities and their
    tax base and operating loss and tax credit carryforwards.

    Nature of Operations

    Sweet Water State Bank provides banking services in Sweet Water, Alabama
    and the surrounding areas of Marengo County and Clarke County, Alabama.

    Use of Estimates in the Preparation of Financial Statements

    The preparation of financial statements in conformity with generally
    accepted accounting principles requires the use of management's estimates.


2.  DEPOSITS WITH CORRESPONDENT BANKS

    In the normal course of business, the Bank had deposits with
    correspondent banks in excess of the federally insured limit.




3.  INVESTMENT SECURITIES

    The carrying amounts and approximate market value of investment securities
    are summarized as follows:

<TABLE>
<CAPTION>
                                                          Carrying      Approximate
    December 31, 1998                                    Amount       Market Value
    <S>                                                <C>             <C>
    U.S. Treasury                                      $ 1,778,049     $ 1,820,000
    U.S. Government Agencies                             2,197,013       2,212,047
    States and political subdivisions                    6,805,369       7,093,570
    Mortgage-backed securities                           1,234,675       1,264,816
    Corporate securities                                   344,227         364,660
    Other securities                                       151,100         151,100

    TOTAL                                              $12,510,433     $12,906,193


                                                          Carrying      Approximate
    December 31, 1997                                    Amount       Market Value
    U.S. Treasury                                      $ 1,764,563     $ 1,782,109
    U.S. Government Agencies                             2,469,593       2,482,047
    States and political subdivisions                    7,194,342       7,471,231
    Mortgage-backed securities                             799,831         802,037
    Corporate securities                                   346,031         361,854
    Other securities                                       100,000         100,000

    TOTAL                                              $12,674,360     $12,999,278
</TABLE>

    Investment securities with a carrying value of $3,729,992 and $5,688,598
    at December 31, 1998 and 1997, respectively, were pledged to secure
    public deposits.  Market value of these securities amounted to $3,902,395
    at December 31, 1998 and $5,803,359 at December 31, 1997.

    The income from investment securities for the years 1998 and 1997 is as
    follows:
<TABLE>


<CAPTION>
      For the Years Ended December 31,                      1998            1997
      <S>                                              <C>             <C>
      Taxable                                          $   385,773     $   444,937
      Non-taxable                                          387,277         444,769

      TOTAL                                            $   773,050     $   889,706
</TABLE>



3.  INVESTMENT SECURITIES (CONTINUED)

    The following table reflects the carrying amount and market value of
    investment securities held at December 31, 1998 and 1997, grouped by
    type and maturity.

<TABLE>
<CAPTION>
                                                         Carrying      Approximate
    December 31, 1998                                    Amount       Market Value
    <S>                                               <C>             <C>
    U.S. Treasury
     Within one year                                  $   250,000     $   250,000
     After one but within five years                    1,528,049       1,570,000
     After five but within ten years                            0               0
     After ten years                                            0               0
     Total                                              1,778,049       1,820,000

    U.S. Government Agencies
     Within one year                                      946,891         946,735
     After one but within five years                      250,122         265,156
     After five but within ten years                      500,000         500,156
     After ten years                                      500,000         500,000
     Total                                              2,197,013       2,212,047

    States and political subdivisions
     Within one year                                      661,159         663,332
     After one but within five years                    2,615,102       2,713,578
     After five but within ten years                    3,424,108       3,603,362
     After ten years                                      105,000         113,298
     Total                                              6,805,369       7,093,570

    Corporate securities
     Within one year                                      143,517         148,910
     After one but within five years                      200,710         215,750
     After five but within ten years                            0               0
     After ten years                                            0               0
     Total                                                344,227         364,660

    Mortgage-backed securities                          1,234,675       1,264,816
    Other securities                                      151,100         151,100

      TOTAL                                           $12,510,433     $12,906,193
</TABLE>

SWEET WATER STATE BANCSHARES, INC. AND SUBSIDIARY
SWEET WATER STATE BANK
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.	INVESTMENT SECURITIES (CONTINUED)


<TABLE>
<CAPTION>
                                                         Carrying      Approximate
    December 31, 1997                                    Amount       Market Value
    <S>                                                  <C>          <C>
    U.S. Treasury
     Within one year                                   $         0     $         0
     After one but within five years                     1,262,820       1,270,234
     After five but within ten years                       501,743         511,875
     After ten years                                             0               0
     Total                                               1,764,563       1,782,109

     U.S. Government Agencies
      Within one year                                      598,843         598,843
      After one but within five years                      698,694         698,141
      After five but within ten years                    1,172,056       1,185,063
      After ten years                                            0               0
      Total                                              2,469,593       2,482,047

     States and political subdivisions
      Within one year                                      175,055         177,079
      After one but within five years                    2,983,257       3,083,020
      After five but within ten years                    3,126,992       3,250,467
      After ten years                                      909,038         960,665
      Total                                              7,194,342       7,471,231

     Corporate securities
      Within one year                                            0               0
      After one but within five years                      346,031         361,854
      After five but within ten years                            0               0
      After ten years                                            0               0
      Total                                                346,031         361,854

     Mortgage-backed securities                            799,831         802,037
     Other securities                                      100,000         100,000

      TOTAL                                            $12,674,360     $12,999,278
</TABLE>





3.  INVESTMENT SECURITIES (CONTINUED)

    The amortized cost, gross unrealized gains, gross unrealized losses and
    estimated market value for each major category of securities are
    summarized as follows.

<TABLE>
<CAPTION>
                                          Gross        Gross      Estimated
                           Amortized    Unrealized   Unrealized     Market
   December 31, 1998          Cost        Gains        Losses       Value
   <S>                    <C>             <C>          <C>       <C>
   U.S. Treasury - HTM    $   752,190     $ 41,951     $      0  $   794,141
   U.S. Treasury - AFS      1,001,187       24,672            0    1,025,859
   Total                    1,753,377       66,623            0    1,820,000

   U.S. Government
     Agencies-HTM             250,122       15,034            0      265,156
   U.S. Government
     Agencies-AFS           1,951,083          156       (4,348)   1,946,891
   Total                    2,201,205       15,190       (4,348)   2,212,047

   State and political
     subdivisions - HTM     6,719,470      288,201            0    7,007,671
   State and political
     subdivisions - AFS        80,000        5,899            0       85,899
   Total                    6,799,470      294,100            0    7,093,570

   Mortgage-backed
   securities - HTM           786,593       32,181         (223)     818,551
   Mortgage backed
   securities - AFS           451,190            0       (4,925)     446,265
   Total                    1,237,783       32,181       (5,148)   1,264,816

   Corporate securities-
     HTM                      344,227       20,433            0      364,660
   Corporate securities-
     AFS                            0            0            0            0
   Total                      344,227       20,433            0      364,660

   Other securities           151,100            0            0      151,100

   TOTAL                  $12,487,162     $428,527     $ (9,496) $12,906,193
</TABLE>




3.  INVESTMENT SECURITIES (CONTINUED)

<TABLE>
<CAPTION>
                                          Gross        Gross      Estimated
                           Amortized    Unrealized   Unrealized     Market
   December 31, 1997          Cost        Gains        Losses       Value
   <S>                    <C>             <C>          <C>       <C>
   U.S. Treasury - HTM    $   752,767     $ 17,546     $      0  $   770,313
   U.S. Treasury - AFS        999,888       11,908            0    1,011,796
   Total                    1,752,655       29,454            0    1,782,109

   U.S. Government
     Agencies-HTM           1,870,749       13,398         (944)   1,883,203
   U.S. Government
     Agencies-AFS             598,692          563         (411)     598,844
   Total                    2,469,441       13,961       (1,355)   2,482,047

   State and political
     subdivisions - HTM     7,108,147      277,024         (134)   7,385,037
   State and political
     subdivisions - AFS        80,000        6,194            0       86,194
   Total                    7,188,147      283,218         (134)   7,471,231

   Mortgage-backed
   securities - HTM           799,831        2,206            0      802,037
   Mortgage backed
   securities - AFS                 0            0            0            0
   Total                      799,831        2,206            0      802,037

   Corporate securities-
     HTM                      346,031       15,823            0      361,854
   Corporate securities-
     AFS                            0            0            0            0
   Total                      346,031       15,823            0      361,854

   Other securities           100,000            0            0      100,000

   TOTAL                  $12,656,105     $344,662     $ (1,489) $12,999,278
</TABLE>

    Included in the other securities category is the following:
<TABLE>

<CAPTION>
    December 31,                                     1998            1997
    <S>                                            <C>                    <C>
    Federal Home Loan Bank stock                   $151,000               0
    CD's due to us                                        0         100,000
</TABLE>

    This stock is recorded at cost, and the issuing bank determines the
    investment amount.  The stock in the Federal Home Loan Bank (FHLB) is not
    pledged to secure FHLB borrowings.  These borrowings are secured by
    mortgage loans on 1 to 4 family residences.

    The Certificate of Deposit was recorded at cost and was issued by the
    First Commercial Bank. This certificate matured and was not renewed
    during 1998.


4   LOANS AND ALLOWANCES FOR LOAN LOSSES

    The  composition of  the loan portfolio was as follows:
<TABLE>
<CAPTION>

    December 31,                                          1998            1997
    <S>                                                <C>             <C>
    Commercial and single pay                          $21,213,697     $16,253,643
    Student loans                                          106,579         132,425
    Installments                                        14,949,971      13,421,407
    Overdrafts                                              60,079          59,565
    Unearned interest                                   (1,309,835)     (1,164,807)

    Total                                               35,020,491      28,702,233
    Allowance for loan losses                             (416,386)       (226,992)

    Net loans                                          $34,604,105     $28,475,241
</TABLE>

    Loans on which the accrual of interest has been discontinued or reduced
    total $92,077 at December 31, 1998, and $89,954 at December 31, 1997.
    If interest on non-accrual loans had been accrued, such income would have
    approximated $963 and $1,920 for 1998 and 1997, respectively.




    A summary of transactions in the allowance for loan losses is as follows:
<TABLE>
<CAPTION>

    For the Years Ended December 31,                      1998            1997
    <S>                                                  <C>             <C>
    Balance at beginning of year                         $ 226,992       $ 307,257
    Provision charged to operations                        270,000          23,000
    Recoveries                                              22,446          20,264
    Loans charged off                                     (103,052)       (123,529)

      Balance at end of year                             $ 416,386       $ 226,992
</TABLE>

5.  LOANS TO RELATED PARTIES

    The Bank has granted loans to officers and directors and their associates.
    Related party loans are made on substantially the same terms, including
    interest rates and collateral, as those prevailing at the time for
    comparable transactions with unrelated persons and do not involve more
    than the normal risk of collectibility.  The aggregate dollar amount was
    $2,240,277 and $2,128,629 at December 31, 1998 and 1997, respectively.

6.  BANK PREMISES AND EQUIPMENT

    Bank premises and equipment are summarized as follows:
<TABLE>
<CAPTION>

    December 31,                                          1998            1997
    <S>                                                <C>             <C>
    Bank premises                                      $ 1,382,009     $ 1,019,037
    Furniture, fixtures and equipment                      801,459         686,616

                                                         2,183,468       1,705,653
    Allowances for depreciation                         (1,138,773)     (1,037,898)

    TOTAL                                              $ 1,044,695     $   667,755
</TABLE>


7   TIME DEPOSITS

    Time deposits in denominations of $100,000 or more are summarized as
    follows:
<TABLE>
<CAPTION>

    December 31,                                          1998            1997
    <S>                                                <C>              <C>
    Certificates of deposit                            $10,793,951      $7,839,524
    Other time deposits-State of Alabama                 1,105,000       1,105,000

    TOTAL                                              $11,898,951      $8,944,524
</TABLE>

    Interest expense on time deposits of $100,000 or more totaled $487,904 in
    1998 and $384,244 in 1997.

    Maturities for each of the next five years for time deposits follows:

<TABLE>
<CAPTION>
    For the Year Ended December 31,                      Amount
    <S>                                                <C>
    1999                                               $25,037,693
    2000                                                 4,849,202
    2001                                                   505,501
    2002                                                   278,994
    2003                                                   346,588

    TOTAL                                              $31,017,978
</TABLE>

8.  ADVANCES FROM FEDERAL HOME LOAN BANK

    The Bank had no outstanding advances from the Federal Home Loan Bank
    (FHLB) at December 31, 1998 and 1997.  The Bank has an unused line of
    credit with the FHLB of $5,000,000.  Specific mortgage loans were pledged
    to the FHLB as collateral in the event the Bank requests future advances.

9.  INCOME TAXES

    The components of the income tax provision were as follows:
<TABLE>
<CAPTION>
    For the Years Ended December 31,                      1998            1997
    <S>                                                  <C>             <C>
    Currently payable
     Federal                                             $144,358        $112,485
     State                                                 40,977          31,460
     Total                                                185,335         143,945

    Deferred
     Federal                                              (60,530)         29,221
     State                                                (11,364)          4,816
     Total                                                (71,894)         34,037

    Provision for income taxes
     Federal                                               83,828         141,706
     State                                                 29,613          36,276
     Total                                               $113,441        $177,982
</TABLE>

    The components of deferred taxes resulting from timing differences in the
    recognition of income and expenses for tax and financial reporting
    purposes were as follows:

<TABLE>
<CAPTION>
    For the Years Ended December 31,                         1998            1997
    <S>                                                   <C>              <C>
    Provision for loan losses                             $(74,903)        $34,195
    Income tax expense                                       3,009            (158)

    Total deferred taxes                                  $(71,894)        $34,037
</TABLE>

    The provision for income taxes included in the accompanying statements of
    income differ from the expected tax provisions computed by multiplying
    income before taxes by the statutory rates.  The primary reason for this
    difference is tax exempt interest on obligations of states and political
    subdivisions.

10. SIMPLIFIED EMPLOYEE PENSION PLAN

    The Bank has adopted a simplified employee pension plan (SEP) for the
    benefit of its officers and employees.  The Bank makes contributions to
    this plan each year from current or accumulated profits in an amount
    determined by its Board of Directors.  The contribution to the simplified
    employee pension plan was $47,012 for 1998 and $39,710 for 1997.


11. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK

    The Bank is a party to financial instruments with off-balance-sheet risk
    in the normal course of business to meet the financing needs of its
    customers.  These financial instruments include commitments to extend
    credit and standby letters of credit.

    Financial instruments whose contract amounts represent credit risk are as
    follows:
<TABLE>
<CAPTION>
    December 31,                                      1998            1997
    <S>                                            <C>             <C>
    Commitments to extend credit                   $1,657,384      $2,273,686
    Standby letters of credit                         195,000         106,000
</TABLE>

    Commitments to extend credit are agreements to lend to a customer
    provided there are no violations of the contract.  Commitments generally
    have fixed expiration dates or other termination clauses.  Since many of
    the commitments are expected to expire without being drawn upon, the
    total commitment amounts do not necessarily represent future cash
    requirements.  The Bank evaluates each customer's credit-worthiness on a
    case-by-case basis.  The amount of collateral obtained, if deemed
    necessary by the Bank upon extension of credit, is based on management's
    credit evaluation of the customer.

    Standby letters of credit are conditional commitments issued by the Bank
    to guarantee the performance of a customer to a third party.  The credit
    risk involved in issuing letters of credit is essentially the same as
    that involved in extending loans to customers.

    It is the opinion of management than any losses resulting from these
    off-balance-sheet risks will not have a material effect on the financial
    statements.

12. RESTRICTIONS ON SUBSIDIARY'S DIVIDENDS

    Certain restrictions exist regarding the ability of Bancshares' subsidiary
    to transfer funds to the Corporation in the form of dividends.  The
    approval of the Bank's primary regulatory authority shall be required if
    the total of all dividends declared by its subsidiary in any calendar
    year shall exceed the total of its net income of that year combined with
    its retained net income of the two preceding years.  As of December 31,
    1998, approximately $1,450,000 of the subsidiary's earnings were
    available for distribution.

13. SUBSEQUENT EVENTS

    On October 27, 1998, the Bank announced an agreement in principle whereby
    the Bank will become a wholly-owned subsidiary of South Alabama
    Bancorporation, Inc., through the merger of Sweet Water State Bancshares,
    Inc. with South Alabama Bancorporation, Inc.  Shareholders of Bancshares
    will receive an agreed-upon number of shares of the acquiring corporation
    to consummate the merger.  As of December 31, 1998, the merger had yet to
    be completed, as consummation of the transaction is subject to the
    negotiation and execution of a definitive agreement, certain regulatory
    approvals, and approval of the shareholders of Bancshares.

14. CONDENSED PARENT COMPANY FINANCIAL STATEMENTS
    SWEET WATER STATE BANCSHARES, INC. (PARENT COMPANY)
<TABLE>
    INCOME STATEMENTS

<CAPTION>
    For the Years Ended December 31,                      1998            1997
    <S>                                                  <C>             <C>
    INCOME
     Dividends received                                  $274,000        $160,000
     Excess of income of subsidiary over
      dividends received                                  239,758         447,510
     Gain on sale of real estate                                0           2,384

    TOTAL INCOME                                          513,758         609,894

    EXPENSES
     Miscellaneous                                            250             500

                        NET INCOME                       $513,508        $609,394
</TABLE>




14. CONDENSED PARENT COMPANY FINANCIAL STATEMENTS (CONTINUED)
    SWEET WATER STATE BANCSHARES, INC. (PARENT COMPANY)
<TABLE>
    BALANCE SHEETS


<CAPTION>
    December 31,                                          1998            1997
    <S>                                                 <C>             <C>
                          ASSETS
    Cash on deposit                                     $      529      $      779
    Real estate                                              4,000               0
    Investment in Sweet Water State Bank                 5,782,746       5,537,816

                           TOTAL                        $5,787,275      $5,538,595


                   STOCKHOLDERS' EQUITY

    Stockholders' equity                                $5,787,275      $5,538,595

                           TOTAL                        $5,787,275      $5,538,595
</TABLE>




14. CONDENSED PARENT COMPANY FINANCIAL STATEMENTS (CONTINUED)
    SWEET WATER STATE BANCSHARES, INC. (PARENT COMPANY)
<TABLE>
    STATEMENTS OF CASH FLOWS



<CAPTION>
    For the Years Ended December 31,                      1998            1997
    <S>                                                  <C>             <C>
    OPERATING ACTIVITIES
    Net income                                           $ 513,508       $ 609,394
    Adjustments to reconcile net income to
    net cash flows from operating activities:
    Excess of income of subsidiary over
     dividends received                                   (239,758)       (447,510)
    Proceeds from sale of assets                                 0          (2,384)

    NET CASH FLOWS FROM OPERATING ACTIVITIES               273,750         159,500

    INVESTING ACTIVITIES
    Purchase of assets                                      (4,000)
    Sale of assets                                               0          95,000

    NET CASH FLOWS FROM INVESTING ACTIVITIES                (4,000)         95,000

    FINANCING ACTIVITIES
    Cash dividends paid                                   (270,000)       (255,000)

    NET CASH FLOWS FROM FINANCING ACTIVITIES              (270,000)       (255,000)

    Increase (Decrease) in cash and cash equivalents          (250)           (500)

    Cash and cash equivalents at beginning of year           3,163           3,663

    CASH AND CASH EQUIVALENTS AT END OF YEAR             $   2,913       $   3,163
</TABLE>

15. REGULATORY CAPITAL DISCLOSURES

    The Bank is subject to various regulatory capital requirements
    administered by its primary federal regulator, the Federal Deposit
    Insurance Corporation (FDIC).  Failure to meet the minimum regulatory
    capital requirements can initiate certain mandatory, and possible
    additional discretionary actions by regulators, that if undertaken, could
    have a direct and material effect on the Bank's financial statements.
    Under the regulatory capital adequacy guidelines and the regulatory
    framework for prompt corrective action, the Bank must meet specific
    capital guidelines involving quantitative measures of the Bank's assets,
    liabilities and certain off-balance-sheet items as calculated under
    regulatory accounting practices.  The Bank's capital amounts and
    classifications under the prompt corrective action guidelines are also
    subject to qualitative judgments by the regulators about components, risk
    weightings and other factors.

    Quantitative measures established by regulation to ensure capital adequacy
    require the Bank to maintain minimum amounts and ratios of total
    risk-based capital and Tier 1 capital to risk-weighted assets (as defined
    in the regulations) and Tier 1 capital to adjusted total assets (as
    defined).  Management believes, as of December 31, 1998, that the Bank
    meets all the capital adequacy requirements to which it is subject.

    As of December 31, 1998, the most recent notification from the FDIC, the
    Bank was categorized as well capitalized under the regulatory framework
    for prompt corrective action.  To remain categorized as well capitalized,
    the Bank will have to maintain minimum total risk-based, Tier 1 risk-based
    and Tier 1 leverage ratios as disclosed in the table below.  There are no
    conditions or events since the most recent notification that management
    believes have changed the Bank's prompt corrective action category.

<TABLE>
<CAPTION>
                                                                                       To Be Well
                                                                                      Capitalized Under
                                                               For Capital            Prompt Corrective
                                       Actual                 Adequacy Purposes       Action Provisions
                                 -------------------        -------------------      -------------------
                                 Amount        Ratio        Amount        Ratio      Amount        Ratio
<S>                              <C>           <C>          <C>           <C>        <C>           <C>
As of December 31, 1998:
   Total Risk-Based Capital
   (to Risk-Weighted Assets)     $6,145,261    14.4%        $3,410,695    8.0%       $4,263,368    10.0%
   Tier 1 Capital
   (to Risk-Weighted Assets)     $5,728,874    13.4%        $1,705,347    4.0%       $2,558,021     6.0%
   Tier 1 Capital
   (to Adjusted Total Assets)    $5,728,874    10.0%        $2,154,480    4.0%       $2,693,100     5.0%

As of December 31, 1997:
   Total Risk-Based Capital
   (to Risk-Weighted Assets)     $5,754,428    18.4%        $2,500,524    8.0%       $3,125,656    10.0%
   Tier 1 Capital
   (to Risk-Weighted Assets)     $5,527,435    17.6%        $1,250,652    4.0%       $1,875,393     6.0%
   Tier 1 Capital
   (to Adjusted Total Assets)    $5,527,435    11.0%        $1,867,800    4.0%       $2,334,750     5.0%
</TABLE>



16. COMPREHENSIVE INCOME

    The related tax effect allocated to other comprehensive income is as
    follows:


<TABLE>
<CAPTION>
                                           Before-Tax   (Expense)    Net-of-Tax
    For the Year Ended December 31, 1998   Amount       or Benefit   Amount
    <S>                                    <C>          <C>          <C>
    Unrealized gains on securities         $3,048       $(1,128)     $1,920

    Other comprehensive income             $3,048       $(1,128)     $1,920


                                                        Tax
                                           Before-Tax   (Expense)    Net-of-Tax
    For the Year Ended December 31, 1997   Amount       or Benefit   Amount
    Unrealized losses on securities        $(26,510)    $9,809       $(16,701)

    Other comprehensive income             $(26,510)    $9,809       $(16,701)
</TABLE>






16. COMPREHENSIVE INCOME (CONTINUED)

    The balance in accumulated other comprehensive income is as follows:


<TABLE>
<CAPTION>
                                                       Unrealized
                                                     Gains / (Losses)
    For the Year Ended December 31, 1998             on Securities
    <S>                                                    <C>
    Beginning balance                                      $10,381
    Current-period change                                    1,920

    Ending balance                                         $12,301

                                                       Unrealized
                                                     Gains / (Losses)
    For the Year Ended December 31, 1997             on Securities
    Beginning balance                                     $ 27,082
    Current-period change                                  (16,701)

    Ending balance                                        $ 10,381
</TABLE>










COMPILED FINANCIAL STATEMENTS

SWEET WATER STATE BANCSHARES, INC.
AND SUBSIDIARY
member FDIC

SWEET WATER, ALABAMA

MARCH 31, 1999 & 1998

COMPILATION REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors
     and Stockholders
Sweet Water State Bancshares, Inc. and Subsidiary
Sweet Water, Alabama


We have compiled the accompanying consolidated balance sheets of Sweet Water
State Bancshares, Inc., and its subsidiary, Sweet Water State Bank, as of
March 31, 1999 and 1998, and the related consolidated statements of income,
consolidated statements of comprehensive income, consolidated statements of
stockholders' equity, and consolidated statements of cash flows for the three
months then ended in accordance with Statement on Standards for Accounting
and Review Services issued by the American Institute of Certified Public
Accountants.

A compilation is limited to presenting in the form of financial statements
information that is the representation of management.  We have not audited or
reviewed the accompanying financial statements, and accordingly, do not
express an opinion or any other form of assurance on them.

Management has elected to omit substantially all of the disclosures required
by generally accepted accounting principles.  If the omitted disclosures were
included in the financial statements, they might influence the user's
conclusions about the Company's financial condition, results of operations
and cash flows.  Accordingly, these financial statements are not designed for
those who are not informed about such matters.



                                       /s/McKean & Associates, P.A.
                                       MCKEAN & ASSOCIATES, P.A.
June 16, 1999                          Certified Public Accountants




<TABLE>
SWEET WATER STATE BANCSHARES, INC. AND SUBSIDIARY
SWEET WATER STATE BANK
CONSOLIDATED STATEMENTS OF INCOME


<CAPTION>
For the Three Months Ended March 31,                         1999             1998
<S>                                                        <C>              <C>
INTEREST INCOME
      Loans                                                $  845,395       $  781,143
      Investment securities                                   205,426          205,701
      Federal funds sold                                       42,783           18,369

Total interest income                                       1,093,604        1,005,213

INTEREST EXPENSE
      Deposits                                                550,998          442,865

Total interest expense                                        550,998          442,865

Net interest income before provision for loan losses          542,606          562,348
Provision for loan losses                                       9,000           30,000

NET INTEREST INCOME                                           533,606          532,348

NON-INTEREST INCOME
      Service charges on deposits                              91,055           72,918
      Other income                                             22,619           22,731
      Gains on disposal of securities                           1,057            2,750

Total non-interest income                                     114,731           98,399

NON-INTEREST EXPENSE
      Salaries                                                251,582          241,009
      Depreciation                                             25,042           18,579
      Insurance                                                28,093           21,618
      Payroll tax                                              13,320           16,382
      Merger                                                        0                0
      Retirement plan                                          14,550           10,995
      Advertising                                               8,422           10,124
      Losses on disposal of securities                              0                0
      Other expenses                                          104,393          105,776

Total non-interest expense                                    445,402          424,483

INCOME BEFORE INCOME TAXES                                    202,935          206,264

Provision for income taxes                                     51,554           51,987

                        NET INCOME                         $  151,381       $  154,277


Average number of shares outstanding
  adjusted for stock exchanges                                 60,000           60,000

Net income per common share                                $     2.52       $     2.57
</TABLE>
<TABLE>
SWEET WATER STATE BANCSHARES, INC. AND SUBSIDIARY
SWEET WATER STATE BANK
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


<CAPTION>
For the Three Months Ended March 31,                         1999             1998
<S>                                                          <C>              <C>
NET INCOME                                                   $151,381         $154,277

OTHER COMPREHENSIVE INCOME, net of tax
      Unrealized losses / (gains) on securities               (42,452)           1,489

Total other comprehensive income                             $108,929         $155,766

                   COMPREHENSIVE INCOME                      $108,929         $155,766
</TABLE>
<TABLE>

SWEET WATER STATE BANCSHARES, INC. AND SUBSIDIARY
SWEET WATER STATE BANK
CONSOLIDATED BALANCE SHEETS


<CAPTION>
March 31,                                                    1999             1998
<S>                                                       <C>              <C>
ASSETS
Cash and due from banks                                   $ 1,135,540      $ 2,106,443
Federal funds sold                                          5,060,000          560,000
Investment securities, at carrying value                   14,287,543       12,807,839
Loans, net of unearned interest and allowance
  for loan losses                                          33,344,012       30,991,589
Bank premises and equipment                                 1,279,425          721,952
Accrued interest receivable                                   933,793          926,998
Other assets                                                  190,770           78,266

                           TOTAL                          $56,231,083      $48,193,087

LIABILITIES
Deposits
      Demand - non-interest bearing                       $ 5,069,404      $ 5,411,550
      Demand - interest bearing                             5,439,909        5,219,896
      Savings                                               4,247,451        3,932,682
      Time certificates of deposit                         35,169,284       27,645,550

TOTAL DEPOSITS                                             49,926,048       42,209,678
Accrued interest payable                                      251,205          202,963
Other liabilities                                             232,878           86,085

                                                           50,410,131       42,498,726

STOCKHOLDERS' EQUITY
Common stock, par value $1.00 per share;
  60,000 shares authorized and issued                          60,000           60,000
Surplus                                                       640,000          640,000
Additional paid-in capital - treasury stock                     7,781            7,781
Accumulated other comprehensive income                        (30,151)          11,870
Undivided profits                                           5,143,322        4,974,710

                                                            5,820,952        5,694,361

                           TOTAL                          $56,231,083      $48,193,087
</TABLE>




<TABLE>

SWEET WATER STATE BANCSHARES, INC. AND SUBSIDIARY
SWEET WATER STATE BANK
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY


<CAPTION>
For the Three Months Ended March 31,                         1999             1998
<S>                                                        <C>              <C>
COMMON STOCK
      Balance at beginning, end of period                  $   60,000       $   60,000

SURPLUS
      Balance at beginning, end of period                     640,000          640,000

ADDITIONAL PAID-IN CAPITAL - TREASURY STOCK
      Balance at beginning, end of period                       7,781            7,781

ACCUMULATED OTHER COMPREHENSIVE INCOME
      Balance at beginning of period                           12,301           10,381
      Other comprehensive income                              (42,452)           1,489

      Balance at end of period                                (30,151)          11,870

UNDIVIDED PROFITS
      Balance at beginning of period                        5,063,941        4,820,433
      Net income                                              151,381          154,277
      Cash dividends - $1.20 per share
      through 3/31/99                                         (72,000)               0

      Balance at end of period                              5,143,322        4,974,710

                           TOTAL                           $5,820,952       $5,694,361
</TABLE>


<TABLE>

SWEET WATER STATE BANCSHARES, INC. AND SUBSIDIARY
SWEET WATER STATE BANK
CONSOLIDATED STATEMENTS OF CASH FLOWS

<CAPTION>

For the Three Months Ended March 31,                         1999             1998
<S>                                                        <C>              <C>
OPERATING ACTIVITIES
      Net income                                           $  151,381       $  154,277
      Adjustments to reconcile net income to
      net cash flows from operating activities:
      Provision for loan losses                                 9,000           30,000
      Depreciation and amortization                            25,042           18,579
      Gains on disposal of investment securities               (1,057)          (2,750)
      Amortization and accretion of
        investment securities, net                              4,075            1,802
      (Increase) Decrease in assets
        Other assets                                              384           87,915
        Interest receivable                                    62,739          (99,113)
      Increase (Decrease) in liabilities
        Other liabilities                                     103,808           80,548
        Interest payable                                       31,760           29,857

NET CASH FLOWS FROM OPERATING ACTIVITIES                      387,132          301,115

INVESTING ACTIVITIES
      Proceeds from sales and maturities of
        investment securities
          Held to maturity                                    476,585          484,167
          Available for sale                                  294,534                0
      Purchases of investment securities
          Held to maturity                                   (605,000)        (614,216)
          Available for sale                               (2,017,000)               0
      Net decrease / (increase) in loans                    1,251,092       (2,546,348)
      Net purchases of Bank premises & equipment             (259,772)         (72,776)

NET CASH FLOWS FROM INVESTING ACTIVITIES                     (859,561)      (2,749,173)

FINANCING ACTIVITIES
      Net increase in deposits                              2,556,658          857,191
      Cash dividends                                          (72,000)               0

NET CASH FLOWS FROM FINANCING ACTIVITIES                    2,484,658          857,191

(Decrease) Increase in cash and cash equivalents            2,012,229       (1,590,867)
Cash and cash equivalents at beginning of period            4,183,311        4,257,310

CASH AND CASH EQUIVALENTS AT END OF PERIOD                 $6,195,540       $2,666,443


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
      Cash paid during the period for:
        Interest                                           $  496,671       $  411,505
        Income taxes                                       $   30,000       $        0
</TABLE>

                                                       Appendix D
                      ALABAMA CODE ANNOTATED
      TITLE 10. CORPORATIONS, PARTNERSHIPS AND ASSOCIATIONS
                CHAPTER 2B. BUSINESS CORPORATIONS

Article 13. Dissenters' Rights

section 10-2B-13. 01. Definitions.

               (1)  "Corporate action" means the filing of articles of merger
          or share exchange by the probate judge or Secretary of State, or
          other action giving legal effect to a transaction that is the
          subject of dissenters' rights.

               (2)  "Corporation" means the issuer of shares held by a
          dissenter before the corporate action, or the surviving or
          acquiring corporation by merger or share exchange of that issuer.

               (3)  "Dissenter" means a shareholder who is entitled to
          dissent from corporate action under Section 10-2B-13.02 and who
          exercises that right when and in the manner required by Sections
          10-2B-13.20 through 10-2B-13.28.

               (4)  "Fair Value," with respect to a dissenter's shares, means
          the value of the shares immediately before the effectuation of the
          corporate action to which the dissenter objects, excluding any
          appreciation or depreciation in anticipation of the corporate
          action unless exclusion would be inequitable.

               (5)  "Interest" means interest from the effective date of the
          corporate action until the date of payment, at the average rate
          currently paid by the corporation on its principal bank loans, or,
          if none, at a rate that is fair and equitable under all
          circumstances.

               (6)  "Record shareholder" means the person in whose name
          shares are registered in the records of a corporation or the
          beneficial owner of shares to the extent of the rights granted by a
          nominee certificate on file with a corporation.

               (7)  "Beneficial shareholder" means the person who is a
          beneficial owner of shares held in a voting trust or by a nominee
          as the record shareholder.

               (8)  "Shareholder" means the record shareholder or the
          beneficial shareholder.

Section 10-2B-13.02. Right to dissent.

                             (a)  A shareholder is entitled to dissent from,
                 and obtain payment of the fair value of his or her shares in
                 the event of, any of the following corporate actions:

                                  (1) Consummation of a plan of merger to
                 which the corporation is a party (i) if shareholder approval
                 is required for the merger by Section 10-2B-11.03 or the
                 articles of incorporation and the shareholder is entitled to
                 vote on the merger or (ii) if the corporation is a subsidiary
                 that is merged with its parent under Section 10-2B-11.04;

                                  (2) Consummation of a plan of share
                 exchange to which the corporation is a party as the corporation
                 whose shares will be acquired, if the shareholder is entitled
                 to vote on the plan;

                                  (3) Consummation of a sale or exchange by
                 all, or substantially all, of the property of the corporation
                 other than in the usual and regular course of business, if
                 the shareholder is entitled to vote on the sale or exchange,
                 including a sale in dissolution, but not including a sale
                 pursuant to court order or a sale for cash pursuant to a
                 plan by which all or substantially all of the net proceeds
                 of the sale will be distributed to the shareholders within
                 one year after the date of sale;

                                  (4) To the extent that the articles of
                 incorporation of the corporation so provide, an amendment of
                 the articles of incorporation that materially and adversely
                 affects rights in respect to a dissenter's shares because
                 it:

                                            (i)  Alters or abolishes a
                      preferential right of the shares;

                                            (ii) Creates, alters, or
                      abolishes a right in respect of redemption, including a
                      provision respecting a sinking fund for the redemption
                      or repurchase of the shares;

                                            (iii) Alters or abolishes a
                      preemptive right of the holder of the shares to acquire
                      shares or other securities;

                                            (iv) Excludes or limits the right
                      of the shares to vote on any matter, or to cumulate
                      votes, other than a limitation by dilution through
                      issuance of shares or other securities with similar
                      voting rights; or

                                            (v) Reduces the number of shares
                      owned by the shareholder to a fraction of a share if
                      the fractional share so created is to be acquired for
                      cash under Section 10-2B-6.04; or

                                  (5) Any corporate action taken pursuant to
                 a shareholder vote to the extent the articles of
                 incorporation, bylaws, or a resolution of the board of
                 directors provides that voting or nonvoting shareholders
                 are entitled to dissent and obtain payment for their shares.

                             (b)  A shareholder entitled to dissent and
                 obtain payment for shares under this chapter may not
                 challenge the corporate action creating his or her
                 entitlement unless the action is unlawful or fraudulent with
                 respect to the shareholder or the corporation.

Section 10-2B-13.03. Dissent by nominees and beneficial owners.

                             (a)  A record shareholder may assert dissenters'
                 rights as to fewer than all of the shares registered in his
                 or her name only if he or she dissents with respect to all
                 shares beneficially owned by any one person and notifies
                 the corporation in writing of the name and address of each
                 person on whose behalf he or she asserts dissenters' rights.
                 The rights of a partial dissenter under this subsection are
                 determined as if the shares to which he or she dissents and
                 his or her other shares were registered in the names of
                 different shareholders.

                             (b)  A beneficial shareholder may assert
                 dissenters' rights as to shares held on his or her behalf
                 only if:

                                  (1) He or she submits to the corporation
                 the record shareholder's written consent to the dissent not
                 later than the time the beneficial shareholder asserts
                 dissenters' rights; and

                                  (2) He or she does so with respect to all
                 shares of which he or she is the beneficial shareholder or
                 over which he or she has power to direct the vote.

Section 10-2B-13.20. Notice of dissenters' rights.

                             (a)  If proposed corporate action creating
                 dissenters' rights under Section 10-2B-13.02 is submitted to
                 a vote at a shareholders' meeting, the meeting notice must
                 state that shareholders are or may be entitled to assert
                 dissenters' rights under this article and be accompanied by
                 a copy of this article.

                             (b)  If corporate action creating dissenters'
                 rights under Section 10-2B-13.02 is taken without a vote of
                 shareholders, the corporation shall (1) notify in writing
                 all shareholders entitled to assert dissenters' rights that
                 the action was taken; and (2) send them the dissenters'
                 notice described in Section 10-2B-13.22.

Section 10-2B-13.21. Notice of intent to demand payment.

                             (a)  If proposed corporate action creating
                 dissenters' rights under Section 10-2B-13.02 is submitted to
                 a vote at a shareholder's meeting, a shareholder who wishes
                 to assert dissenters' rights (1) must deliver to the
                 corporation before the vote is taken written notice of his
                 or her intent to demand payment or [sic] his or her shares if
                 the proposed action is effectuated; and (2) must not vote
                 his or her shares in favor of the proposed action.

                             (b)  A shareholder who does not satisfy the
                 requirements of subsection (a) is not entitled to payment
                 for his or her shares under this article.

Section 10-2B-13.22. Dissenters' notice.

                             (a)  If proposed corporate action creating
                 dissenters' rights under Section 10-2B-13.02 is authorized
                 at a shareholders' meeting, the corporation shall deliver a
                 written dissenters' notice to all shareholders who satisfied
                 the requirements of Section 10-2B-13.21.

                             (b)  The dissenters' notice must be sent no
                 later than 10 days after the corporate action was taken, and
                 must:

                                  (1) State where the payment demand must be
                 sent;

                                  (2) Inform holders of shares to what extent
                 transfer of the shares will be restricted after the payment
                 demand is received;

                                  (3) Supply a form for demanding payment;

                                  (4) Set a date by which the corporation must
                 receive the payment demand, which date may not be fewer than
                 30 nor more than 60 days after the date the subsection (a)
                 notice is delivered; and

                                  (5) Be accompanied by a copy of this
                 article.

Section 10-2B-13.23. Duty to demand payment.

                             (a)  A shareholder sent a dissenters' notice
                 described in Section 10-2B-13.22 must demand payment in
                 accordance with the terms of the dissenters' notice.

                             (b)  The shareholder who demands payment retains
                 all other rights of a shareholder until those rights are
                 canceled or modified by the taking of the proposed corporate
                 action.

                             (c)  A shareholder who does not demand payment
                 by the date set in the dissenters' notice is not entitled to
                 payment for his or her shares under this article.

                             (d)  A shareholder who demands payment under
                 subsection (a) may not thereafter withdraw that demand and
                 accept the terms offered under the proposed corporate action
                 unless the corporation shall consent thereto.




Section 10-2B-13.24. Share restrictions.

                             (a)  Within 20 days after making a formal
                 payment demand, each shareholder demanding payment shall
                 submit the certificate or certificates representing his or
                 her shares to the corporation for (1) notation thereon by
                 the corporation that such demand has been made and (2)
                 return to the shareholder by the corporation.

                             (b)  The failure to submit his or her shares for
                 notation shall, at the option of the corporation, terminate
                 the shareholders' rights under this article unless a court
                 of competent jurisdiction, for good and sufficient cause,
                 shall otherwise direct.

                             (c)  If shares represented by a certificate on
                 which notation has been made shall be transferred, each new
                 certificate issued therefor shall bear similar notation,
                 together with the name of the original dissenting holder of
                 such shares.

                             (d)  A transferee of such shares shall acquire
                 by such transfer no rights in the corporation other than
                 those which the original dissenting shareholder had after
                 making demand for payment of the fair value thereof.

Section 10-2B-13.25. Offer of payment.

                             (a)  As soon as the proposed corporate action is
                 taken, or upon receipt of a payment demand, the corporation
                 shall offer to pay each dissenter who complied with Section
                 10-2B-13.23 the amount the corporation estimates to be the
                 fair value of his or her shares, plus accrued interest.

                             (b)  The offer of payment must be accompanied
                 by:

                                  (1) The corporation's balance sheet as of
                 the end of a fiscal year ending not more than 16 months
                 before the date of the offer, an income statement for that
                 year, and the latest available interim financial statements,
                 if any;

                                  (2) A statement of the corporation's
                 estimate of the fair value of the shares;

                                  (3) An explanation of how the interest was
                 calculated;

                                  (4) A statement of the dissenter's right to
                 demand payment under Section 10-2B-13.28; and

                                  (5) A copy of this article.

                             (c)  Each dissenter who agrees to accept the
                 corporation's offer of payment in full satisfaction of his
                 or her demand must surrender to the corporation the
                 certificate or certificates representing his or her shares
                 in accordance with terms of the dissenters' notice. Upon
                 receiving the certificate or certificates, the corporation
                 shall pay each dissenter the fair value of his or her shares,
                 plus accrued interest, as provided in subsection (a). Upon
                 receiving payment, a dissenting shareholder ceases to have
                 any interest in the shares.

Section 10-2B-13.26. Failure to take corporate action.

                             (a)  If the corporation does not take the
                 proposed action within 60 days after the date set for
                 demanding payment, the corporation shall release the
                 transfer restrictions imposed on shares.

                             (b)  If, after releasing transfer restrictions,
                 the corporation takes the proposed action, it must send a
                 new dissenters' notice under Section 10-2B-13.22 and repeat
                 the payment demand procedure.

Section 10-2B-13.27. Reserved.


Section 10-2B-13.28. Procedure if shareholder dissatisfied with offer of
payment.

                             (a)  A dissenter may notify the corporation in
                 writing of his or her own estimate of the fair value of his
                 or her shares and amount of interest due, and demand payment
                 of his or her estimate, or reject the corporation's offer
                 under Section 10-2B-13.25 and demand payment of the fair
                 value of his or her shares and interest due, if:

                                  (1) The dissenter believes that the amount
                 offered under Section 10-2B-13.25 is less than the fair
                 value of his or her shares or that the interest due is
                 incorrectly calculated;

                                  (2) The corporation fails to make an offer
                 under Section 10-2B-13.25 within 60 days after the date set
                 for demanding payment; or

                                  (3) The corporation, having failed to take
                 the proposed action, does not release the transfer
                 restrictions imposed on shares within 60 days after the date
                 set for demanding payment.

                             (b)  A dissenter waives his or her right to
                 demand payment under this section unless he or she notifies
                 the corporation of his or her demand in writing under
                 subsection (a) within 30 days after the corporation offered
                 payment for his or her shares.

Section 10-2B-13.30. Court action.

                             (a)  If a demand for payment under Section
                 10-2B-13.28 remains unsettled, the corporation shall
                 commence a proceeding within 60 days after receiving the
                 payment demand and petition the court to determine the fair
                 value of the shares and accrued interest. If the corporation
                 does not commence the proceeding within the 60 day period,
                 it shall pay each dissenter whose demand remains unsettled
                 the amount demanded.

                             (b)  The corporation shall commence the
                 proceeding in the circuit court of the county where the
                 corporation's principal office (or, if none in this state,
                 its registered office) is located. If the corporation is a
                 foreign corporation without a registered office in this
                 state, it shall commence the proceeding in the county in
                 this state where the registered office of the domestic
                 corporation merged with or whose shares were acquired by
                 the foreign corporation was located.

                             (c)  The corporation shall make all dissenters
                 (whether or not residents of this state) whose demands
                 remain unsettled parties to the proceeding as in an action
                 against their shares, and all parties must be served with
                 a copy of the petition.  Nonresidents may be served by
                 registered or certified mail or by publication as provided
                 under the Alabama Rules of Civil Procedure.

                             (d)  After service is completed, the corporation
                 shall deposit with the clerk of the court an amount
                 sufficient to pay unsettled claims of all dissenters party
                 to the action in an amount per share equal to its prior
                 estimate of fair value, plus accrued interest, under
                 Section 10-2B-13.25.

                             (e)  The jurisdiction of the court in which the
                 proceeding is commenced under subsection (b) is plenary and
                 exclusive. The court may appoint one or more persons as
                 appraisers to receive evidence and recommend decision on the
                 question of fair value. The appraisers have the powers
                 described in the order appointing them, or in any amendment
                 to it. The dissenters are entitled to the same discovery
                 rights as parties in other civil proceedings.

                             (f)  Each dissenter made a party to the
                 proceeding is entitled to judgment for the amount the court
                 finds to be the fair value of his or her shares, plus
                 accrued interest. If the court's determination as to the
                 fair value of a dissenter's shares, plus accrued interest,
                 is higher than the amount estimated by the corporation and
                 deposited with the clerk of the court pursuant to subsection
                 (d), the corporation shall pay the excess to the dissenting
                 shareholder. If the court's determination as to fair value,
                 plus accrued interest, of a dissenter's shares is less than
                 the amount estimated by the corporation and deposited with
                 the clerk of the court pursuant to subsection (d), then the
                 clerk shall return the balance of funds deposited, less any
                 costs under Section 10-2B-13.31, to the corporation.

                             (g)  Upon payment of the judgment, and surrender
                 to the corporation of the certificate or certificates
                 representing the appraised shares, a dissenting shareholder
                 ceases to have any interest in the shares.

Section 10-2B-13.31. Court costs and counsel fees.

                             (a)  The court in an appraisal proceeding
                 commenced under Section 10-2B-13.30 shall determine all
                 costs of the proceeding, including compensation and expenses
                 of appraisers appointed by the court. The court shall assess
                 the costs against the corporation, except that the court may
                 assess costs against all or some of the dissenters, in
                 amounts the court finds equitable, to the extent the court
                 finds the dissenters acted arbitrarily, vexatiously, or not
                 in good faith in demanding payment under Section 10-2B-13.28.

                             (b)  The court may also assess the reasonable
                 fees and expenses of counsel and experts for the respective
                 parties, in amounts the court finds equitable

                                  (1) Against the corporation and in favor of
                 any or all dissenters if the court finds the corporation did
                 not substantially comply with the requirements of Sections
                 10-2B-13.20 through 10-2B-13.28; or

                                  (2) Against either the corporation or a
                 dissenter, in favor of any other party, if the court finds
                 that the party against whom the fees and expenses are
                 assessed acted arbitrarily, vexatiously, or not in good faith
                 with respect to the rights provided by this chapter.

                             (c)  If the court finds that the services of
                 counsel for any dissenter were of substantial benefit to
                 other dissenters similarly situated, and that the fees for
                 those services should not be assessed against the
                 corporation, the court may award to these counsel reasonable
                 fees to be paid out of the amounts awarded the dissenters
                 who were benefitted.

Section 10-2B-13.32. Status of shares after payment.

            Shares acquired by a corporation pursuant to payment of the
agreed value therefor or to payment of the judgment entered therefor, as in
this chapter provided, may be held and disposed of by such corporation as in
the case of other treasury shares, except that, in the case of a merger or
share exchange, they may be held and disposed of as the plan of merger or
share exchange may otherwise provide.

                             PART II

              INFORMATION NOT REQUIRED IN PROSPECTUS

     Item 20.  Indemnification of Directors and Officers.

     Consistent with Division E of Article 8 of the Alabama Business
Corporation Act (the "ABCA"), Article 11 of South Alabama's Articles of
Incorporation ("Article 11") provides that South Alabama will indemnify its
directors and officers against reasonable expenses, judgments, fines and
amounts paid in settlement in connection with any claim, action, suit or
proceeding based on such person's status as a director or officer of the
corporation, provided such person acted in good faith and in a manner
reasonably believed to be in or, if not acting in such person's official
capacity, not opposed to the best interests of South Alabama.  With respect
to a criminal action or proceeding, the director or officer must also have
had no reasonable cause to believe his conduct was unlawful.  No
indemnification shall be made in the case of an action by or in the right of
the corporation against a director or officer where the director or officer
has been adjudged to be liable to South Alabama, unless and only to the
extent that the court in which such action or suit was brought or another
court of competent jurisdiction shall determine upon application that,
despite the adjudication of liability but in view of all circumstances of the
case, such person is fairly and reasonably entitled to indemnity for such
expenses as such court shall deem proper.

     Under Article 11, South Alabama may advance expenses in defending a
civil or criminal claim, action, suit or proceeding to a director or officer
seeking indemnification, provided such director or officer provides a written
affirmation of a good faith belief that he has met the standard of conduct
required under Article 11, and provided that such director or officer provides
an undertaking as an unlimited general obligation by or on behalf of the
director or officer to repay such amount if and to the extent that it shall
be ultimately determined that he is not entitled to be indemnified by South
Alabama.  Furthermore, those responsible for making the determination of
whether or not indemnification is proper must determine that the facts then
known to them would not preclude indemnification under Article 11.

     Under Article 11, South Alabama may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of
South Alabama, or is or was serving at the request of South Alabama as
a director, officer, partner, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any liability
asserted against such person and incurred by him in any such capacity or
arising out of his status as such, whether or not South Alabama had the power
to indemnify such person against such liability under the provisions of
Article 11.

     Pursuant to a policy of liability insurance with St. Paul Mercury
Insurance Company having a $4,000,000 directors' and officers' liability
limit per year, the directors and officers of South Alabama are insured,
subject to the limits, retentions, exceptions and other terms and conditions
of the policy, against liability for any actual or alleged error, omission,
act, misstatement, misleading statement or breach of duty actually or
allegedly committed or attempted by a director or officer, or any matter
claimed against a director or officer solely by reason of such persons being
a director or officer of South Alabama.  The policy also has a $2,000,000
Trust Errors and Omissions limit per year, wherein directors and officers are
indemnified for any actual or alleged error, omission, act or breach of duty
while acting solely in the capacity of (among other things) personal
representative of an estate, trustee, conservator, attorney in fact, escrow
agent, registrar, tax withholding agent, trustee under bond indenture,
fiduciary under an employee benefit plan or trust or a trustee exercising any
fiduciary powers permitted by law.


     Item 21.  Exhibits and Financial Statement Schedules.

     (a)  Exhibits:

                                   2.1  Agreement and Plan of Merger dated as
                    of April 5, 1999, is found at Appendix A to the Prospectus
                    included in Part I hereof.

                                   3.1  Articles of Incorporation of SAB
                    Newco, Inc., filed as Exhibit B to South Alabama's
                    Definitive Proxy Statement on Schedule 14A on November
                    15, 1996, are incorporated herein by reference.

                                   3.2  Certificate of Ownership and Merger
                    dated December 20, 1996, filed as Exhibit (4).2 to South
                    Alabama's Form 10-K for the year 1996 (no. 0-15423), is
                    incorporated herein by reference.

                                   3.3  Articles of Merger dated December 20,
                    1996, filed as Exhibit (3).1 to South Alabama's Quarterly
                    Report on Form 10-Q for the quarter ended March 31, 1997
                    (No. 0-15423), are incorporated herein by reference.

                                   3.4  Articles of Amendment to the Articles
                    of Incorporation of South Alabama Bancorporation, Inc.,
                    dated May 7, 1998, filed as Exhibit (3).1 to South
                    Alabama's Quarterly Report on Form 10-Q/A for the quarter
                    ended June 30, 1998 (No. 0-15423), are incorporated
                    herein by reference.

                                   3.5  Articles of Amendment to the Articles
                    of Incorporation of South Alabama Bancorporation, Inc.,
                    dated May 27, 1999.

                                   3.6  Bylaws of SAB Newco, Inc. filed as
                    Exhibit (3).3 to South Alabama's Form 10-K for the year
                    1996 (No. 0-15423), are incorporated herein by reference.

                                   4.1  Specimen of Common Stock Certificate,
                    filed as Exhibit 4.4 to South Alabama's Annual Report
                    Form on 10-K for the year 1996 (No. 0-15423), is
                    incorporated herein by reference.

                                   4.2  Articles of Incorporation of SAB
                    Newco, Inc., filed as Exhibit B to South Alabama's
                    Definitive Proxy Statement on Schedule 14A on November
                    15, 1996, are incorporated herein by reference.

                                   4.3  Certificate of Ownership and Merger
                    dated December 20, 1996, filed as Exhibit (4).2 to South
                    Alabama's Form 10-K for the year 1996 (no. 0-15423), is
                    incorporated herein by reference.

                                   4.4  Articles of Merger dated December 20,
                    1996, filed as Exhibit (3).1 to South Alabama's Quarterly
                    Report on Form 10-Q for the quarter ended March 31, 1997
                    (No. 0-15423), are incorporated herein by reference.

                                   4.5  Articles of Amendment to the Articles
                    of Incorporation of South Alabama Bancorporation, Inc.,
                    dated May 7, 1998, filed as Exhibit (3).1 to South
                    Alabama's Quarterly Report on Form 10-Q/A for the quarter
                    ended June 30, 1998 (No. 0-15423), are incorporated
                    herein by reference.

                                   4.6  Articles of Amendment to the Articles
                    of Incorporation of South Alabama Bancorporation, Inc.,
                    dated May 27, 1999, are filed as Exhibit 3.5 hereto.

                                   5.1  Opinion of Hand Arendall, L.L.C. re
                    legality dated July 1, 1999, is filed as Exhibit 5.1.

                                   8.1* Opinion of Hand Arendall, L.L.C. re
                    tax matters dated                    , 1999, is filed as
                    Exhibit 8.1.

                                   10.1 Lease, entered into March 11, 1986
                    between Dauphin 65 Partners, Ltd. and The Bank of Mobile,
                    N.A, filed as Exhibit (10).3 to South Alabama's annual
                    report on Form 10-K for the year 1986 (No. 0-15423), is
                    incorporated herein by reference.

                                   10.2 Lease Renewal and Extension Agreement,
                    dated March 18, 1992, between Dauphin 65 Partners, Ltd.
                    and The Bank of Mobile, filed as Exhibit (10).2 to South
                    Alabama's annual report on Form 10-K for the year 1991
                    (No. 0-15423), is incorporated herein by reference.

                                   10.3 Lease, entered into June 21, 1994
                    between Staples-Pake Realty, Inc. and The Bank of Mobile,
                    filed as Exhibit (10).3 to South Alabama's annual report
                    on Form 10-K for the year 1994 (No. 0-15423), is
                    incorporated herein by reference.

                                   10.4 Sublicense Agreement dated July 18,
                    1990, between National Commerce Bancorporation and The
                    Bank of Mobile, N.A, filed as Exhibit (10).5 to South
                    Alabama's annual report on Form 10-K for the year 1991
                    (No. 0-15423), is incorporated herein by reference.

                                   10.5 Stock Option Plan of Mobile National
                    Corporation, filed as Exhibit (10).3 to South Alabama's
                    annual report on Form 10-K for the year 1985 (No. 0-15423),
                    is incorporated herein by reference.

                                   10.6 The Bank of Mobile Retirement Plan
                    (Restated), dated September 12, 1990, filed as Exhibit
                    (10).8 to South Alabama's annual report on Form 10-K for
                    the year 1991 (No.0-15423), is incorporated herein by
                    reference.

                                   10.7 Contracts pursuant to Supplemental
                    Retirement Plan of The Bank of Mobile, N.A, effective
                    January 1, 1988, filed as Exhibit (10).7 to South Alabama's
                    annual report on Form 10-K for the year 1990 (No. 0-15423),
                    are incorporated herein by reference.

                                   10.8 Restated Contracts pursuant to
                    Supplement Retirement Plan of The Bank of Mobile,
                    dated April 1, 1992, filed as Exhibit (10).10 to South
                    Alabama's Form 10-K for the year 1992 (No. 0-15423), is
                    incorporated herein by reference.

                                   10.9 First National Bank Employees' Profit
                    Sharing Plan, as amended and restated effective January
                    1, 1989, filed as Exhibit (10).12 to South Alabama's
                    annual report on Form 10-K for the year 1993
                    (No. 0-15423), is incorporated by reference.

                                   10.10  First National Bank Employees'
                    Pension Plan, as amended and restated effective
                    January 1, 1989, filed as Exhibit (10).13 to South
                    Alabama's Form 10-K for the year 1993 (No. 0-15423), is
                    incorporated herein by reference.

                                   10.11 Split Dollar Insurance Agreements of
                    First National Bank, filed as Exhibit (10).15 to South
                    Alabama's annual report on Form 10-K for the year 1993
                    (No. 0-15423), is incorporated herein by reference.

                                   10.12 Deferred Compensation Agreements of
                    First National Bank, filed as Exhibit (10).16 to South
                    Alabama's annual report on Form 10-K for the year 1993
                    (No. 0-15423), is incorporated herein by reference.

                                   10.13 South Alabama Bancorporation 1993
                    Incentive Compensation Plan dated October 19, 1993 as
                    adopted by shareholders May 3, 1994 filed as Exhibit (10).18
                    to South Alabama's form 10-K for the year 1994
                    (No. 0-15423), is incorporated herein by reference.

                                   10.14 Lease, entered into April 17, 1995
                    between Augustine Meaher, Jr., Robert H. Meaher
                    individually and Executor of the Estate of R. Lloyd Hill,
                    Joseph L. Meaher and Augustine Meaher, III, and The Bank
                    of Mobile, filed as Exhibit (10).1 to South Alabama's Form
                    10-Q for the Quarter ended June 30, 1995 (No. 0-15423),
                    is incorporated herein by reference.

                                   10.15     Lease, entered into April 17,
                    1995 between Augustine Meaher, Jr. and Margaret L. Meaher,
                    and The Bank of Mobile, filed as Exhibit (10).2 to South
                    Alabama's Form 10-Q for the Quarter ended June 30, 1995
                    (No. 0-15423), is incorporated herein by reference.

                                   10.16 Lease, entered into April 17, 1995
                    between Hermione McMahon Sellers (f/k/a Hermione McMahon
                    Dempsey) a widow, William Michael Sellers, married, and
                    Mary S. Burnett, married, and The Bank of Mobile, filed
                    as Exhibit (10).3 to South Alabama's Form 10-Q for the
                    Quarter ended June 30, 1995 (No. 0-15423), is incorporated
                    herein by reference.

                                   10.17 Lease, entered into May 1, 1995
                    between Augustine Meaher, Jr., Robert H. Meaher
                    individually and Executor of the Estate of R. Lloyd Hill,
                    Joseph L. Meaher and Augustine Meaher, III, and The Bank
                    of Mobile, filed as Exhibit (10).4 to South Alabama's
                    Form 10-Q for the Quarter ended June 30, 1995 (No.
                    0-15423), is incorporated herein by reference.

                                   10.18     Change in Control Compensation
                    Agreement, dated as of November 14, 1995, between The Bank
                    of Mobile and W. Bibb Lamar, Jr., filed as Exhibit
                    (10).24 to South Alabama's annual report on Form 10-K for
                    the year 1995 (No. 0-15423) is incorporated herein by
                    reference.

                                   10.19 Change in control Compensation
                    Agreement, dated as of November 20, 1995, between First
                    National Bank, Brewton and J. Stephen Nelson, filed as
                    Exhibit (10).25 to South Alabama's annual report on Form
                    10-K for the year 1995 (No. 0-15423), is incorporated
                    herein by reference.

                                   10.20 Change in Control Compensation
                    Agreements, between The Bank of Mobile or First National
                    Bank, Brewton and certain officers filed as Exhibit
                    (10).25 to South Alabama's annual report on Form 10-K for
                    the year 1995 (No. 0-15423) is incorporated herein by
                    reference.

                                   10.21 Monroe County Bank Profit Sharing
                    Plan, Amended and Restated  January 1, 1989, filed as
                    Exhibit (10).23 to South Alabama's annual report on Form
                    10-K for the year 1996 (No. 0-15423), is incorporated
                    herein by reference.

                                   10.22 Monroe County Bank Pension Plan as
                    Amended and Restated January 1, 1989, filed as Exhibit
                    (10).24 to South Alabama's annual report on Form 10-K for
                    the year 1996 (No. 0-15423), is incorporated herein by
                    reference.

                                   10.23 Agreement and Plan of Merger, dated
                    as of May 31, 1996, as amended and restated as of August
                    21, 1996, filed as Exhibit (2).2 to South Alabama's
                    Registration Statement on Form S-4 filed on September 3,
                    1996 (No. 333-11305), is incorporated herein by reference.

                                   10.24  Amendment Number One to South
                    Alabama Bancorporation 1993 Incentive Compensation Plan,
                    dated May 9, 1997, filed as Exhibit (10).28 to South
                    Alabama's annual report on form 10-K for the year 1997
                    (No. 0-15423), is incorporated herein by reference.

                                   10.25 Change in Control Compensation
                    Agreement, dated as of March 31, 1997 between MCB and
                    John B. Barnett, III, filed as Exhibit (10).29 to South
                    Alabama's annual report on form 10-K for the year 1997
                    (No. 0-15423), is incorporated herein by reference.

                                   10.26 Change in Control Compensation
                    Agreement, dated as of March 31, 1997, between MCB and
                    Haniel F. Croft, filed as Exhibit (10).30 to South
                    Alabama's annual report on form 10-K for the year 1997
                    (No. 0-15423), is incorporated herein by reference.

                                   10.27 Agreement and Plan of Merger, dated
                    as of October 14, 1998,  as amended by Mutual Waiver and
                    Agreement dated as of March 25, 1998, between South
                    Alabama, MCB and Peterman State Bank, filed as Exhibit
                    2.1 to South Alabama's Registration Statement on Form S-4
                    filed on April 2, 1998 (No. 333-49203), is incorporated
                    herein by reference.

                                   10.28 Amended and Restated Agreement and
                    Plan of Reorganization dated as of October 26, 1998, by
                    and between South Alabama, and The Commercial National
                    Bank of Dempolis, filed as Appendix A to South Alabama's
                    Registration Statement on Form S-4/A filed on November 4,
                    1998 (No. 333-63701), is incorporated hereby by reference.

                                   10.29 Ground Lease Agreement, dated March
                    31, 1999, by and between Northside, Ltd. and South
                    Alabama Bank.

                                   10.30 Amendment Number Two to South
                    Alabama Bancorporation 1993 Incentive Compensation Plan.

                                   10.31 South Alabama Bancorporation
                    Employee Savings and Profit Sharing Plan.

                                   10.32 Agreement and Plan of Merger, dated
                    as of April 5, 1999, is found at Appendix A to the
                    Prospectus which is included in Part I hereof.

                                   13.1 South Alabama's Annual Report on Form
                    10-K for the year ended December 31, 1998 (No. 0-15423),
                    is incorporated herein by reference.

                                   13.2 South Alabama's Quarterly Report on
                    Form 10-Q for the quarter ended March 31, 1999
                    (No. 0-15423) is incorporated herein by reference.

                                   21.1 Subsidiaries of South Alabama
                    Bancorporation, Inc., filed as Exhibit (21).1 to South
                    Alabama's annual report on form 10-K for the year ended
                    December 31, 1998  (No.0-15423), is incorporated herein
                    by reference.

                                   23.1 Consent of Arthur Andersen LLP.

                                   23.2 Consent of McKean & Associates, P.A.

                                   23.3 Consent of Hand Arendall, L.L.C. is
                    included in its opinion re legality filed as Exhibit
                    5.1 hereto.

                                   23.4*     Consent of Hand Arendall, L.L.C.
                    is included in its opinion re tax matters filed as
                    Exhibit 8.1 hereto.

                                   23.5 Consent of Alex Sheshunoff & Co.
                    Investment Banking

                                   23.6 Consents of persons named to become
                    directors of South Alabama upon consummation of the
                    Merger.

                                   99.1 Form of Proxy to be used at Sweet
                    Water State Bancshares, Inc. special meeting.

     _________________________
     * To be filed by amendment.


     (b)  Financial Statement Schedules:

               None.

     Item 22.  Undertakings.

     (a)  The undersigned Registrant hereby furnishes the following
undertakings required by Item 512 of Regulation S-K:


     (1)  The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report  pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

    (2)  The undersigned Registrant hereby undertakes as follows:

        (i)  That prior to any public re-offering of the securities registered
hereunder through use of a prospectus which is a part of this Registration
Statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), the issuer undertakes that such re-offering
prospectus will contain the information called for by the applicable
registration form with respect to re-offerings by persons who may be deemed
to be underwriters, in addition to the information called for by other Items
of the applicable forms.

        (ii) That every prospectus (a) that is filed pursuant to paragraph
(2)(i) immediately preceding, or (b) that purports to meet the requirements
of Section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to
the Registration Statement and will not be used until such amendment is
effective, and that, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new Registration Statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.

        (3)  Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the Registrant pursuant to the foregoing provisions,
or otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Act and is, therefore, unenforceable.  In the
event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant 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, the
Registrant 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 Act and will be governed by the final
adjudication of such issue.

        (4)  The undersigned Registrant hereby undertakes to deliver or cause
to be delivered with the prospectus, to each person to whom the prospectus is
sent or given, the latest annual report to security holders that is
incorporated by reference in the prospectus and furnished pursuant to and
meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities
Exchange Act of 1934; and where interim financial information required to be
presented by Article 3 of Regulation S-X are not set forth in the prospectus,
to deliver, or cause to be delivered, to each person to whom the prospectus
is sent or given, the latest quarterly report that is specifically incorporated
by reference in the prospectus to provide such interim financial information.

            (b)  The undersigned Registrant hereby undertakes to respond to
requests for information that is incorporated by reference into the
prospectus pursuant to Items 4, 10(b), 11, or 13 of this Form, within one
business day of receipt of such request, and to send the incorporated
documents by first class mail or other equally prompt means. This includes
information contained in documents filed subsequent to the effective date of
the Registration Statement through the date of responding to the request.

            (c)  The undersigned Registrant hereby undertakes to supply by
means of a post-effective amendment all information concerning a transaction,
and the company being acquired involved therein, that was not the subject of
and included in the Registration Statement when it became effective.

                            SIGNATURES

     Pursuant to the requirements of the Securities Act of 1933, South
Alabama has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Mobile,
State of Alabama, on the 1st day of July, 1999.


                              SOUTH ALABAMA BANCORPORATION, INC.



                              By:    /s/W. Bibb Lamar, Jr.
                                     W. Bibb Lamar, Jr., President and
                                     Chief Executive Officer


     Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities indicated on the dates indicated below.  By so signing, each of
the undersigned, in his capacity as a director or officer, or both, as the
case may be, of  South Alabama, does hereby appoint F. Michael Johnson and R.
Preston Bolt, Jr., and each of them severally, his true and lawful attorney
to execute in his name, place and stead, in his capacity as a director or
officer, or both, as the case may be, of South Alabama, any and all
amendments to this Registration Statement and post-effective amendments
thereto and all instruments necessary or incidental in connection
therewith, and to file the same with the Securities and Exchange Commission.
Each of said attorneys shall have full power and authority to do and perform
in the name and on behalf of each of the undersigned, in any and all capacities,
every act whatsoever requisite or necessary to be done in the premises as
fully, and for all intents and purposes, as each of the undersigned might or
could do in person, the undersigned hereby ratifying and approving the acts
of said attorneys and each of them.


     Signatures                    Title                           Date


(1) Principal Executive Officer


/s/W, Bibb Lamar, Jr.      President and Chief Executive Officer   07/01/1999
W. Bibb Lamar, Jr.

(2) & (3) Principal Financial and
          Accounting Officer


/s/F. Michael Johnson    Chief Financial Officer and Secretary     06/30/1999
F. Michael Johnson


(4) Directors



/s/John B. Barnett, III Director                                   06/30/1999
John B. Barnett, III



/s/Stephen G. Crawford   Director                                  06/29/1999
Stephen G. Crawford



/s/Haniel F. Croft       Director                                  06/30/1999
Haniel F. Croft



                         Director
David C. De Laney



                         Director
Lowell J. Friedman



/s/Broox G. Garrett, Jr. Director                                  06/30/1999
Broox G. Garrett, Jr.



                         Director
W. Dwight Harrigan



                         Director
James P. Hayes, Jr.



                         Director
Clifton C. Inge



/s/W. Bibb Lamar, Jr.    Director                                  06/30/1999
W. Bibb Lamar, Jr.




                         Director
Richard S. Manley



                         Director
Kenneth R. McCartha



/s/Thomas E. McMillan, Jr.  Director                               06/30/1999
Thomas E. McMillan, Jr.



                         Director
J. Richard Miller, III



/s/Harris V. Morrissette Director                                  06/30/1999
Harris V. Morrissette



/s/J. Stephen Nelson     Director                                  06/30/1999
J. Stephen Nelson



/s/Paul D. Owen, Jr.     Director                                  06/30/1999
Paul D. Owens, Jr.



/s/Earl H. Weaver        Director                                  06/30/1999
Earl H. Weaver



                         Director
A. G. Westbrook


                          EXHIBIT INDEX



SEC Assigned
Exhibit
Number                Description of Exhibit                      Page No.

3.5                   Articles of Amendment to the Articles of
                      Incorporation of South Alabama
                      Bancorporation, Inc., dated May 27, 1999.



5.1                   Opinion of Hand Arendall, L.L.C. re legality
                      dated July 1, 1999



8.1*                  Opinion of Hand Arendall, L.L.C. re tax
                      matters dated _______________, 1999



10.29                 Ground Lease Agreement, dated March 31,
                      1999, by and between Northside, Ltd. and
                      South Alabama Bank.



10.30                 Amendment Number Two to South Alabama
                      Bancorporation 1993 Incentive Compensation
                      Plan.



10.31                 South Alabama Bancorporation Employee
                      Savings and Profit Sharing Plan



23.1                  Consent of Arthur Andersen LLP



23.2                  Consent of McKean & Associates, P.A.



23.5                  Consent of Alex Sheshunoff & Co. Investment
                      Banking



23.6                  Consents of persons named to become
                      directors of South Alabama upon
                      consummation of the Merger.



99.1                  Form of Proxy to be used at special meeting






__________________________

*To be filed by amendment.






                                                      Exhibit 3.5

                      ARTICLES OF AMENDMENT
                              TO THE
                    ARTICLES OF INCORPORATION
                                OF
                SOUTH ALABAMA BANCORPORATION, INC.



     These Articles of Amendment are executed on the    27th   day of May, 1999.

                           ARTICLE ONE
     The name of the corporation is South Alabama Bancorporation, Inc.

                           ARTICLE TWO
     The Articles of Incorporation of the corporation are amended by deleting
subparagraph (a) of Article Two in its entirety and replacing the same with
the following:

                    "(a) The total number of shares of capital stock which
          the Corporation shall have authority to issue is 20,500,000
          shares of the par value of $.01 per share, consisting of: (1)
          20,000,000 shares of Common Stock and (2) 500,000 shares of
          Preferred Stock."

                          ARTICLE THREE
     The foregoing amendment was adopted on May 13, 1998.

                           ARTICLE FOUR
     (a)  The number of outstanding shares entitled to vote on the foregoing
amendment is 7,729,425shares of common stock.  The corporation has no separate
voting groups, and 6,930,587 shares were represented at the meeting.

     (b)  The shares were voted 6,877,561 shares for said amendment and 13,160
shares against said amendment.

     IN WITNESS WHEREOF, the undersigned has caused these Articles of
Amendment to be executed by its officer thereunto duly authorized on the date
first above written.


                              SOUTH ALABAMA BANCORPORATION, INC.

                               By:     /s/  W. Bibb Lamar, Jr.
                                       W. BIBB LAMAR, JR., President and
                                       Chief Executive Officer






Prepared by:

Brooks P. Milling, Esquire
Hand Arendall, L.L.C.
P. O. Box 123
Mobile, Alabama  36601
(334) 432-5511



                                                      Exhibit 5.1



                [HAND ARENDALL, L.L.C. LETTERHEAD]




                      July 1, 1999



Sweet Water State Bancshares, Inc.
101 Main Street
Sweet Water, Alabama 36782-0128

               Re:  Merger of Sweet Water State Bancshares, Inc.
          ("Sweet Water") with and into South Alabama Bancorporation, Inc.
          ("South Alabama")

Gentlemen:

     We have represented South Alabama in connection with the proposed merger
of Sweet Water with and into South Alabama (the "Merger").  In that connection,
we have examined the following:

               1.   The Agreement and Plan of Merger by and between South
          Alabama and Sweet Water, dated as of April 5, 1999 (the "Agreement");

               2.   The Articles of Incorporation and Bylaws of South Alabama;

               3.   A resolution of the Board of Directors of South Alabama
          authorizing the necessary corporate actions to enable South Alabama
          to comply with the terms of the Agreement and to perform the
          matters contemplated thereby;

               4.   South Alabama's registration statement under the
          Securities Act of 1933 filed on Securities and Exchange Commission
          Form S-4 (the "Registration Statement"); and

               5.   Such other documents as we felt necessary to give this
          opinion.

     Based upon our examination of the foregoing, and assuming the Merger is
consummated in accordance with the terms of the Agreement, we are of the
opinion that, on the effective date of the Merger, the shares of common capital
stock of South Alabama to be issued to Sweet Water shareholders will be duly
authorized by South Alabama and, when issued, will be legally and validly
issued and will be fully paid and non-assessable.

     We consent to the use of this opinion as an exhibit to the Registration
Statement and to the reference to us under the heading "Legal Matters" in the
Prospectus included as part of the Registration Statement.  This opinion is
being provided solely for the use of Sweet Water and the shareholders of
Sweet Water. No other person or party shall be entitled to rely on this
opinion.

                              Yours very truly,

                              HAND ARENDALL, L.L.C.



                              By:/s/R. Preston Bolt, Jr.
                                    A Member






                                                    Exhibit 10.29

                      GROUND LEASE AGREEMENT

     THIS AGREEMENT OF LEASE (referred to hereinafter as the "Lease") made
and entered into effective the 31st day of March, 1999, by and between
NORTHSIDE, LTD., an Alabama Limited Partnership (herein called "Landlord")
and SOUTH ALABAMA BANK, an Alabama State Banking Association whose address is
100 St. Joseph Street, Mobile, Alabama, 36602, "Tenant"):

                           WITNESSETH:

1.01.     LEASED PREMISES.  Landlord, in consideration of the rents to which
reference is made herein and upon the covenants and conditions contained,
hereby leases to Tenant, and Tenant hereby leases from Landlord, the real
property located at the Northwest corner of the intersection of Northgate
Drive and Dauphin Street in the City and County of Mobile, and marked "Bank
Site" on Exhibit "A" attached hereto and by reference made a part hereof, the
legal description of which is marked Exhibit "B" and attached hereto.  The said
real property, [excluding however all buildings, structures and other
improvements located thereon, all of which Tenant has purchased from Landlord
concurrently herewith (collectively, the "Improvements")], shall be referred
to hereinafter as the "Leased Premises". All oil, gas, hydrocarbons and
mineral rights with respect thereto in and under the said property have been
previously reserved by prior owners and are excepted herefrom.  Landlord
reserves all minerals not previously reserved such minerals and are excepted
from this Lease; provided however that Landlord hereby waives all surface
rights appurtenant to its ownership of said minerals.

1.02.     COVENANT OF TITLE. AUTHORITY AND QUIET POSSESSION.  Landlord
represents and warrants to Tenant that Landlord has full right and lawful
authority to enter into this Lease for the full term hereof and to perform all
of its obligations hereunder, and that it has good and marketable title to
the Leased Premises in fee simple, free and clear of all contracts, leases,
tenancies, agreements, violations, mortgages, and other liens, encumbrances
or defects of every nature whatsoever, subject however to zoning regulations,
the easements and restrictive covenants described in Exhibit A hereto, rules
and ordinances, building restrictions and other laws and regulations now in
effect or hereafter adopted by any governmental authority having jurisdiction.

If Tenant shall discharge the obligations herein set forth to be performed by
Tenant, Tenant shall have and enjoy during the term hereof quiet and
undisturbed possession of the Leased Premises without hindrance or molestation
by anyone claiming by, through or under Landlord, subject, however, to the
exceptions, reservations and conditions in this Lease.

2.01.     PURPOSES AND USE OF PREMISES. The Leased Premises shall be used for
the sole purposes of operating a full service banking business, unless such
other use is consented to by Landlord in writing.  It is agreed that part of
the consideration for this Lease is Landlord's belief that Landlord's other
properties on the North side of Dauphin Street will be benefitted as a result
of having a full service operating bank at this location and the rents set
forth are fixed accordingly. Consequently, any requests for a change in use
of the premises would contemplate an increased rent including a percentage
rent clause.  In the event Tenant ceases to operate a full service bank on
the Leased Premises for a period of one hundred eighty (180) consecutive days
for any reason other than casualty loss, Landlord shall have the right to
terminate this Lease upon sixty (60) days written notice to Tenant, subject
to the following conditions:

     (a)  Landlord's right to terminate shall be exercised, if at all, not
later than six (6) months from date of the cessation of operation of a full
service bank as aforesaid; and

     (b)  Landlord shall purchase, and Tenant sell, all of Tenant's right,
title and interest in the Improvements and any additions thereto made by
Tenant on the following terms and conditions:

                        (i)  The purchase price for the Improvements and any
            such additions shall be computed as follows:  The sum of Sixty-Five
            Thousand and No/100 Dollars ($65,000.00) shall be amortized
            over a term of thirty (30) years and the purchase price shall be
            the unamortized portion remaining at the time of the effective
            date of the termination of the Lease.  For example, if the Lease
            is terminated on a date which is ten(10) years and six (6) months
            after the Commencement Date, the purchase price would be
            Forty-Two Thousand Two Hundred Fifty and No/100 Dollars
            ($42,500.00), computed as follows:  $65,000.00 minus ($65,000/30 x
            10.5) equals $42,250.00.

                         (ii) Conveyance shall be made by warranty deed
            subject to no liens or encumbrances other than those set forth in
            Landlord's deed of conveyance of the Improvements to Tenant
            concurrently herewith.

                         (iii)     The closing date of the purchase and sale
            and the effective date of the termination of the Lease shall
            occur not later than sixty (60) days after date of Landlord's
            notice to terminate the Lease.


                         (iv) Rent and other sums paid to Landlord for
            periods subsequent to the termination date of this Lease shall be
            prorated and credited to Tenant.

3.01.     PRIMARY TERM.  The primary term of this Lease shall be for a period
of fifteen (15) years commencing on April 1, 1999 ("Commencement Date"), and
expiring at midnight on March 31, 2014, unless the term is extended as
provided herein.

3.02.     LEASE YEAR.  As used in this Lease, "Lease Year" shall mean the
consecutive twelve (12) calendar month period beginning (i) on the first day
of the calendar month next succeeding the Commencement Date, unless the
Commencement Date falls on the first day of the calendar month (but if not,
then including in the first Lease Year the period, if any, between said
Commencement Date and the first day of the next succeeding calendar month),
and (ii) if this Lease is extended as herein provided, on the first day of
each Extended Term.

3.03.     EXTENDED TERM.  "Extended Term" as used in this Lease, shall mean
each five year period for which Tenant shall have effectively elected to
extend this Lease as provided herein.

4.01.     RENTAL DURING PRIMARY TERM.  Tenant shall pay to Landlord as rental
for the Leased Premises for the Primary Term of the sum reflected in the
following schedule, payable in monthly installments, in advance, the first
installment being due on the first day of the Commencement Date, and another
installment on the first day of each calendar month thereafter throughout the
Primary Term, as follows:

                                               Per Year            Per Month
                 (a) Years 1-5 plus 15 days    $55,000.00          $4,583.33
                 (b) Years 6-10                $63,250.00          $5,270.83
                 (c) Years 11-15               $72,737.50          $6,061.46

If the Commencement Date shall fall on a day other than the first day of the
month, rent for such partial period shall be prorated and paid with the first
installment of rent.

4.02. RENT REDUCTION DURING FIRST TWO YEARS.  Commencing with the Primary
Term of the Lease and extending for a period up to but not exceeding two (2)
years, the Tenant shall pay to Landlord, as rent, the sum of $4,583.33 per
month less and except the monthly rental it is then paying to its present
Landlord under the terms of that certain Lease dated May 2nd, 1997 by and
between Dauphin 65 Partners, LTD., as Landlord and The Bank of Mobile, as
Tenant, said rent being a maximum of $3,648.83 per month.  Tenant agrees to
use Tenant's best efforts to sublease said premises under lease with Dauphin
65 Partners, LTD.  and agrees to obtain from Dauphin 65 Partners, LTD. full
cooperation to sublease the property. In the event said premises are
subleased or Tenant is otherwise released from the obligation to pay rent
under said lease, then and in either event, this rent reduction shall cease
and Tenant shall commence paying the full monthly rental of $4,583.33. In any
event, at the end of the first two (2) years, the annual minimum rent payable
to Landlord will be $55,000.00 per year, payable $4,583.33 per month.

5.01. OPTIONS TO EXTEND.

     (a)  Provided this Lease is in effect at the end of the Primary term and
Tenant is not then in default hereunder, and provided that Tenant shall have
given Landlord written notice at least six (6) months prior to the expiration
of the Primary Term of its election to extend this Lease for a "First Extended
Term", the term of this Lease shall be extended for a first five (5) year
extended term commencing at the expiration of the Primary Term and ending at
midnight on the last day of the twentieth Lease Year (the "First Extended
Term") on the same terms and conditions herein set forth except that the
monthly rental shall be $6,970.68.

     (b)  Provided this Lease is in effect at the end of the First Extended
Term and Tenant is not then in default hereunder, and provided that Tenant
shall have given Landlord written notice at least six (6) months prior to the
expiration of said First Extended Term of its election to extend this Lease
further for a "Second Extended Term" the term of this Lease shall be extended
for a second five (5) year extended term commencing at the expiration of the
First Extended Term and ending at midnight on the last day of the twenty
fifth Lease Year (the "Second Extended Term") on the same terms and
conditions herein set forth except that the monthly rental shall be
$8,016.28.

     (c)  Provided this Lease is in effect at the end of the Second Extended
Term and Tenant is not then in default hereunder, and provided that Tenant
shall have given Landlord written notice at least six (6) months prior to the
expiration of said Second Extended Term of its election to extend this Lease
further for a "Third Extended Term", the term of this Lease shall be extended
for a third five (5) year extended term commencing at the expiration of the
Second Extended Term and ending at midnight on the last day of the thirtieth
Lease Year (the "Third Extended Term") on the same terms and conditions
herein set forth except that the monthly rental shall be $9,218.72.

6.01.     TAXES AND ASSESSMENTS.

     (a)  The Leased  Premises shall be assessed separately from other
property of Landlord. Throughout the Primary Term and all applicable extended
terms, in addition to the rental payments specified above, and provided that
Landlord furnishes Tenant prompt notice of all tax bills for same, Tenant
shall pay before the same become delinquent, all ad valorem taxes, user fees
and other charges which may be levied or assessed against, upon or with
respect to the Leased Premises by any state, county, city or other
governmental agency or taxing authority, whether levied against Landlord or
Tenant at any time or times and whether levied against the land, buildings or
improvements of the Leased Premises, and shall furnish written evidence
satisfactory to Landlord that all of same have been paid.  Also, Tenant shall
pay all taxes and assessments that may be lawfully charged, assessed, or
levied upon or with respect to the Improvements and any trade fixtures,
equipment or other property of Tenant situated in or upon the Leased Premises
at any time or times and all license fees, sales and use taxes which may be
lawfully imposed upon or with respect to the business or operations of Tenant
in or on the Leased Premises, and save Landlord harmless from same.  All
taxes and charges levied or assessed against, upon or with respect to the
Leased Premises and the Improvements for the first and last years of this
Lease shall be prorated between the parties as of the date of this Lease and
the date of termination, respectively.

     (b)  Tenant shall have the right to contest or protest any assessment
for taxes for which Tenant is liable hereunder, provided that Tenant takes
such action as is necessary to postpone foreclosure of any tax lien resulting
from any non-payment of taxes, and Tenant agrees to pay all or any portion of
such taxes which may be finally determined to be due and payable.

6.02.     TAXES ON RENTALS.  Except as provided in Section 20.01 hereof, in
the event that any federal, state, local or other governmental authority
shall impose or assess any tax, levy or other charge on or against all or any
part of the rentals paid or to be paid by Tenant under the terms of this
Lease, and Landlord is thereby required to collect from Tenant and/or pay
such tax, levy or charge to such authority, Tenant shall, within ten (10)
days from written demand therefor, pay to or reimburse Landlord (as the case
may be) all such taxes, levies, and charges as may be imposed or assessed
which for the purpose of this Lease, shall be deemed to be due from Tenant as
additional rent.

7.01.     IMPROVEMENTS AND ALTERATIONS.

     (a)  Simultaneously with the execution of this Lease, Landlord has
conveyed the Improvements to Tenant by separate instrument, including the
existing building located thereon (the "Building").  Tenant agrees that Tenant
will not make any structural or exterior changes to the Building without first
obtaining Landlord's written consent in accordance with the provisions of
subparagraph (b) herein.  In the event Tenant desires to make structural or
exterior changes or modifications to the Building, Tenant shall submit to
Landlord plans and specifications for such changes, including front, rear and
side elevations (collectively, the "Plans"), said Plans to be submitted and
authorization obtained prior to any structural or exterior work being
performed.  The Improvements on the Leased Premises and any additions thereto
made during the term of the Lease or any extension thereof, shall remain the
property of the Tenant until the expiration or termination of the Lease and
Tenant shall have the right to remove any of Tenant's personal property,
trade fixtures or furnishings, and exterior signage at any time during the
term of this Lease or at its expiration or other termination, subject to the
terms and conditions of the Lease.  Tenant may, without Landlord's consent,
obtain financing for such improvements and insure its interest in same.
Landlord does not agree to subordinate any of Landlord's rights to any
financing institution of Tenant.

     (b)  Landlord agrees that the consent required by subparagraph (a) above
will not be unreasonably withheld or delayed.  Unless within thirty (30) days
from receipt by Landlord of any Plans submitted by Tenant, Landlord has
furnished Tenant written approval or disapproval of same, said Plans shall be
deemed approved.  Should Landlord disapprove said Plans or any part thereof,
Landlord shall specifically set forth the reason forming the basis of such
disapproval.

     (c)  In no event shall exterior changes to the Building be deemed to
mean or include signs, logos or similar identifying structures and symbols,
or decorative improvements.  A structural change shall mean any enlargement
in or reduction of the size of the Building or any modification to or in the
roof or load bearing walls which affects the structural integrity thereof.

7.02.     TITLE TO BUILDING AND FIXTURES.

     (a)  Title to the Improvements of whatever nature at any time located on
the Leased Premises shall be and remain in Tenant throughout the term of this
Lease and at the expiration or other termination thereof title to any building
and improvements then located on the Leased Premises shall vest in Landlord,
free and clear of any and all liens and encumbrances which may have been
placed on the Leased Premises by Tenant or as a result of the act or acts of
Tenant.

     (b)  Title to all trade fixtures, equipment, signs, appliances,
furniture and other personal property of any nature at any time installed by
or for Tenant on the Leased Premises shall be and remain in Tenant and none
of such items shall be deemed a part of the realty.  Any of such items may be
removed from the Leased Premises at any time during the term hereof provided
Tenant shall repair any damage to the Improvements, including but not limited
to the Building, occasioned by such removal. Any such item not removed during
the term hereof shall become the property of Landlord unless Landlord
notifies Tenant in writing prior to the end of the term to remove such items,
in which event Tenant shall cause such items to be removed before the end of
the term.

7.03.     CONDITION ON EXPIRATION OR TERMINATION.  At the expiration hereof,
or upon any termination of this Lease, Tenant shall surrender the Improvements
to Landlord in the same condition they were in on the Commencement Date of
this Lease save and except for alterations and additions as permitted herein,
loss by fire or other casualty, reasonable wear and tear, and less any
portion which may have been taken pursuant to condemnation proceedings;
however, it is understood that all trade fixtures, including without
limitation any bank vault doors and steel linings; bank alarm systems and
bank safe deposit systems supplied and installed at the sole cost and expense
of Tenant may be removed from the property at any time if Tenant shall not be
in default hereunder. If so removed, Tenant, at its sole expense, shall
promptly repair all damages to the Improvements resulting from such removal.

8.01.     LIENS.  Tenant shall cause all work performed on the Improvements
and the Leased Premises to be performed in a good and workmanlike manner and
shall promptly discharge upon notice from Landlord, in order to prevent
foreclosure thereof, any lien upon the same created or permitted to be created
by Tenant. Tenant shall pay all assessments against the Improvements or the
Leased Premises, including without limitation, water, sewer and other utility
connection fees and charges, whether now or hereafter placed against the
Improvements or the Leased Premises, when the same shall become due and
whether or not the same are charged in lieu of hookup or connection fees.

9.01 UTILITIES.  Tenant shall pay for all water, sewage, service charges,
fuels, electricity, steam, gas and other utilities used in, on or for the
Leased Premises for any purpose. In no event shall Landlord be obligated to
supply, or be liable for any interruption or failure in the supply of any
such utilities to the Leased Premises. Any connection or "hookup" fees or
other fees or charges that are charged by any governmental authority with
respect to any drainage, sewer, water, gas, electric or other utilities used
in connection with the Improvements or the Leased Premises shall be paid by
Tenant.

10.01.   MAINTENANCE.  During the term and any extended term hereof, Tenant
shall keep the buildings, parking and drive ways, landscaping, signage,
subsurface improvements and all other improvements on the Leased Premises in
a state of good order, condition and repair. Tenant shall from time to time,
make any necessary and proper repairs, replacements, and/or restorations to
buildings and/or improvements, it being understood that Landlord shall under
no circumstances be responsible for the making of any such repairs,
restoration and/or maintenance of any kind or nature upon the Leased
Premises.  Structural and exterior changes in the Building are subject to the
provisions of paragraph 7.01 hereof.

11.01.   LANDLORD'S RIGHT TO INTERVENE.  If Tenant refuses or neglects to
repair property as required hereunder and to the reasonable satisfaction of
Landlord as soon as reasonably possible after written demand, Landlord may make
such repairs during reasonable times without liability to Tenant for any loss or
damage that may accrue to Tenant's merchandise, fixtures or other property or to
Tenant's business by reason thereof and upon completion thereof, Tenant shall
pay Landlord's reasonable costs of making such repairs upon presentation of
the bill therefor, as additional rent.

12.01.   FIRE AND CASUALTY INSURANCE.  Tenant shall keep the buildings and
all permanent improvements on the Leased Premises insured for their full
replacement value against loss or damage by fire, windstorm, explosion, and
other risks covered by the standard bureau form of "all risk" coverage
insurance policies currently in use in Alabama.  Tenant shall cause Landlord
to be named as a loss payee on such policies, as its interest may appear.

13.01.  DESTRUCTION OF IMPROVEMENTS.  In the event that the Improvements
on the Leased Premises are damaged or destroyed or rendered untenable in
whole or in part by any fire, the elements or any other cause, Tenant, at its
sole expense, shall promptly restore the Improvements as nearly as possible
to their condition prior to such damage or destruction or in accordance with
such Plans as Landlord may approve as provided in paragraph 7.01 (a) and (b),
and the proceeds of the aforesaid fire and casualty insurance shall be
applied to the costs of such repair or restoration.  In the event at any time
within 24 months of the expiration of the primary term or any Extended Term,
and provided the Tenant shall not have given notice of renewal or extension,
the Improvements are completely destroyed or so damaged by fire or other
casualty as to render them unfit for their intended use, and repair or
restoration is not economically feasible, the Tenant may, in lieu of
restoration, elect to remove the remnants of such damaged building to the
satisfaction of Landlord.  In such event, the proceeds of such insurance
shall be applied first to the balance remaining, if any, of any mortgage upon
the leasehold estate, second to the cost of removing the remnants and debris,
and the balance, if any, shall be paid to the Landlord.  In all events, there
shall be no abatement or reduction in the rental payable hereunder, and this
Lease shall not terminate on account of such damage or destruction.

14.01.  LEASEHOLD MORTGAGES.  Tenant is hereby given the right, without
Landlord's prior written consent, to mortgage its interest in this Lease, and
to assign this Lease and any sublease as collateral security for such
leasehold mortgage, upon the condition that all rights acquired under any
such leasehold mortgage shall be subject to each and all of the covenants,
conditions and restrictions set forth in this Lease. If Tenant shall mortgage
this leasehold, and if the holder of any such leasehold mortgage shall send
to Landlord a certified copy thereof, specifying the name and address of the
mortgagee, Landlord agrees that so long as any such leasehold mortgage shall
remain unsatisfied of record, or until written notice of satisfaction is
given by the holder to Landlord, the following provisions shall apply:

     (a)  There shall be no cancellation, surrender, or modification of this
Lease by joint action of Landlord and Tenant, without the prior written
consent of the leasehold mortgagee.

     (b)  Landlord shall, upon serving Tenant with any notice of default,
simultaneously serve a copy of such notice upon the holder of such leasehold
mortgage. The leasehold mortgagee shall thereupon have the same period, after
service of such notice upon it, to remedy or cause to be remedied the
default(s) complained of, and Landlord shall accept such performance by or at
the instigation of such leasehold mortgagee as if the same had been done by
Tenant.

     (c)  Anything herein contained to the contrary notwithstanding, if any
default shall occur which, pursuant to any provision of this Lease entitles
Landlord to terminate this Lease, or regain possession of the Leased Premises,
and if before the expiration of thirty (30) days from the date of such
leasehold mortgagee's receipt of service of notice of termination or of
Landlord's regaining possession of the Leased Premises, such leasehold
mortgagee shall have notified Landlord of its desire to nullify such notice
and shall have brought current all rent and other payments herein provided
for, and then in default, and shall have complied or shall commence the work
of complying with all of the other requirements of this Lease, if they are
then in default, and shall prosecute the same to completion with reasonable
diligence, then in such event, Landlord shall relinquish any possession
thereof.

     (d)  If the Landlord shall elect to terminate this Lease by reason of any
default of Tenant, the leasehold mortgagee shall not only have the right to
nullify any notice of termination by curing such default, as aforesaid, but
shall also have the right to postpone and extend the specified date for
termination of this Lease or the regaining of possession of the Leased
Premises, as fixed by Landlord in its notice of termination, for a period of
not more than six (6) months, provided that such leasehold mortgagee shall
cure or cause to be cured any then existing monetary default and meanwhile
pay the rent and comply with and perform all of the other terms, conditions
and provisions of this Lease on Tenant's part to be complied with and
performed, other than defaults which can only be cured by one in possession
of the Leased Premises; and provided further that the leasehold mortgagee
shall forthwith take steps to acquire or sell Tenant's interest in this Lease
by foreclosure of the leasehold mortgage or otherwise, and shall prosecute
the same to completion with all due diligence. If at the end of said six (6)
month period the leasehold mortgagee shall be actively engaged in steps to
acquire or sell Tenant's interest herein, the time for said leasehold
mortgagee to comply with the provisions of this Subsection (d) shall be
extended for such period as shall be reasonably necessary to complete such
steps with reasonable diligence and continuity. In the event of foreclosure,
provided this Lease is not then in default, the Landlord agrees that the
purchaser at foreclosure sale may assume this Lease, and in the event it is
purchased by the leasehold mortgagee, or acquired by assignment in lieu of
foreclosure, that the leasehold mortgagee may assign its interest to a
subsequent purchaser, who will also be permitted to assume this Lease.

     (e)  If the Tenant declines to allow the automatic renewal of any option
provided to it in this Lease, Landlord agrees to notify any such leasehold
mortgagee in writing of such failure, and any such leasehold mortgagee may
exercise any such extension or renewal option on behalf of Tenant by
notifying Landlord to this effect in writing within thirty (30) days of
receipt of such notice.

     (f)  Nothing herein contained shall require any leasehold mortgagee to
cure any default of Tenant.

     (g)  Landlord shall upon request, execute, acknowledge, and deliver to
each leasehold mortgagee an agreement prepared at the sole cost and expense
of Tenant, in form satisfactory to such leasehold mortgagee, confirming the
agreements in all of the provisions of this Section 14.01.  The term
"mortgage", whenever used herein, shall include whatever security instruments
are used in the locale of the Leased Premises, such as, without limitation,
deeds of trust, security deed and conditional deeds, as well as chattel
mortgages and security agreements, and said term shall also include any
instruments required in connection with a sale-leaseback transaction.

14.02.   ENVIRONMENTAL MATTERS.

     (a)  Tenant will not introduce or cause to be introduced on the Leased
Premises any toxic or hazardous materials, pollutants, contaminants or
hazardous wastes in violation of any Environmental Law, as defined
hereinafter.  As used herein, "Environmental Law" shall mean any one or more
of all federal, state and local environmental protection, occupational,
health, safety and similar laws, ordinances, restrictions, licenses, and
regulations, including, without limitation, the Federal Water Pollution
Control Act (33 U.S.C. Sec. 1251, et. seq.), Resource Conservation and
Recovery Act (42 U.S.C. Sec. 6901, et. seq.), Safe Drinking Water Act
(42 U.S.C. Sec. 300f, et. seq.), Toxic Substances Control Act (15 U.S.C. Sec.
2601, et. seq.), Clean Air Act, (42 U.S.C. Sec. 7401 et seq.), Comprehensive
Environmental Response, Compensation and Liability Act, (42 U.S.C. Sec. 9601
et. seq.), Hazardous Materials Transportation Act (49 U.S.C. Sec. 1802, et.
seq.), and other comparable federal, state or local laws, statutes,
ordinances, orders, decrees, rules, and/or regulations, regulating, relating
to or imposing liability or standards or conduct concerning any hazardous,
toxic or dangerous waste substance or material as now or at any time
hereafter in effect. In the event remediation of any environmental matter
(other than an environmental matter caused by Tenant's negligence) shall cause
the Leased Premises to be rendered unusable for Tenant's business, in whole
or in part, the rent shall be equitably abated. Tenant, at its election and
at its expense may cause a "phase one" or other environmental test,
inspection or examination of the Leased Premises to be made.

     (b)  In the event of any discharge, spillage, or other introduction on
the Leased Premises of any toxic or hazardous materials, pollutants,
contaminants, or hazardous wastes as a result of any conduct of or omission
by Tenant or any employee or agent of or independent contractor engaged by
Tenant, Tenant shall promptly contain, remove, or mitigate the same in
accordance with applicable Environmental Law.

     (c)  Landlord indemnifies, agrees to defend, and shall hold Tenant
harmless from and against all liability, laws, claims, damages and expenses,
including, but not limited to, reasonable attorneys' and experts' fees, clean
up or other remediation costs and expenses, and governmental fines, arising
out of or in connection with the existence of any toxic or hazardous materials,
pollutants, contaminants, or hazardous wastes on the Leased Premises, or of
the violation of any Environmental Law in connection with the Leased Premises
occurring on or before the date of this Lease. Landlord has no knowledge of
the existence of any toxic or hazardous materials, pollutants, contaminants
or hazardous wastes on the Leased Premises, or of the violation of any
Environmental Law in connection with the Leased Premises.

     (d)  Tenant indemnifies, agrees to defend and shall hold Landlord
harmless from and against all liability, laws, claims, damages and expenses,
including, but not limited to, reasonable attorneys' and experts' fees, clean
up or other remediation costs and expenses, and governmental fines, arising
out of or in connection with the existence of any toxic or hazardous
materials, pollutants, contaminants or hazardous wastes on the Leased
Premises first occurring after the date hereof, or of the violation of any
Environmental Law in connection with the Leased Premises first occurring
after the date of this Lease, except and excluding in all events any and all
liability, laws, claims, damages and expenses occurring at any time
heretofore or hereafter which arise or have arisen from the presence, whether
known or unknown on the date hereof, of any toxic or hazardous materials,
pollutants, contaminants, or hazardous wastes on the Leased Premises or which
occur after the date hereof as the result of the violation of any
Environmental Law prior to the date of this Lease.  Tenant has no knowledge
of the existence of any toxic or hazardous materials, pollutants,
contaminants, or hazardous wastes on the Leased Premises, or of the violation
of any Environmental Law in connection with the Leased Premises.

15.01.   PUBLIC LIABILITY INSURANCE.

     (a)  Tenant will provide and maintain public liability and property
damage and commercial general liability insurance policy or policies which
will (x) insure Tenant and Landlord against all claims (including all costs
and expenses of defending same) for the loss of life or injuries to persons
or damage to property occurring upon, in or about the Leased Premises, and
(y) contain a contractual liability clause insuring Tenant's indemnity in
subparagraph (d) herein, in at least the following amounts:

                         (i)  $2,000,000.00 in respect to each injury or
               death, each accident or disaster;

                         (ii) $2,000,000.00 in respect to personal injury or
               death of each person;

                              (iii)     $2,000,000.00 in respect to damage or
               destruction of property in each accident or disaster.

     (b)  Unless otherwise agreed by Landlord and Tenant from time to time,
commencing with the sixth (6th) Lease Year, the minimum insurance requirements
set forth above for each five (5) year period during the remainder of the
Primary Term and each Extended Term shall be one hundred ten (110%) percent
of the minimum insurance required for the immediately preceding five (5)
year period.

     (c)  Tenant agrees that the insurance company issuing such policy shall
have an A.M. Best rating of AA or better, or be reasonably approved by Landlord.
Tenant shall furnish Landlord with certificates of such insurance and all
renewals thereof, including certificates evidencing the contractual liability
coverage as required in clause (y) of subparagraph (a) of this paragraph
15.01.

     (d)  Tenant shall indemnify and save Landlord harmless from and against
any and all claims, actions, damages, liability and expense in connection with
the loss of life, personal injury and/or damage to property arising from or
out of any occurrence in, upon or about the Leased Premises, occurring after
the date hereof which is occasioned wholly or in part by the negligence or
wilful or wanton misconduct of Tenant, its agents, contractors or employees
acting within the scope of their employment or by its guests or invitees
while on the Leased Premises. Tenant's indemnification of Landlord hereunder
shall not apply or extend to liabilities of Landlord arising from the
negligence or misconduct of Landlord or its agents or employees, nor shall it
apply to any liabilities arising from ownership, possession or use of the
Leased Premises prior to the date hereof. Tenant's liability for indemnity
under this subparagraph shall be limited to an aggregate of $500,000.00 in
respect of each claim, which shall be in addition to and not in lieu of the
coverage afforded Landlord under the policies to be maintained by Tenant
under subparagraph (a) of this paragraph 15.01., which policies shall be
deemed to be primary coverage to the extent insured under this indemnity.

16.01.   ASSIGNMENT AND SUBLETTING.

     (a)  Tenant shall have the right to assign its interest in this Lease and
to sublet all or any portion of the Building and Leased Premises without the
consent of Landlord, but it is expressly agreed that any assignment or
subletting shall not release Tenant from any liability hereunder nor modify
any terms or conditions of this Lease; provided, however, that no assignment
shall be effective against Landlord until there is delivered to Landlord a
duplicate original of the assignment, in recordable form, containing the
assignee's name and address and the assignee's assumption of this Lease and
all of Tenant's obligations hereunder.

     (b)  Anything in subparagraph (a) to the contrary notwithstanding, it is
expressly agreed and understood by the parties that any assignment of the
Lease or subletting of the Building shall be subject to the limitations on
use of the Leased Premises as set forth in paragraph 2.01 of this Lease and
shall require the consent of Landlord as provided in said paragraph.

17.01. CONDEMNATION.

     (a)  Should the Leased Premises be taken by condemnation (or sold under
threat of condemnation) in its entirety in the exercise of the power of
eminent domain, this Lease shall automatically terminate and be of no further
force and effect as of the date that possession of the Leased Premises is
surrendered to the condemning authority.

     (b)  Should the Building or the Leased Premises be partially condemned
or taken in the exercise of the power of eminent domain (or a part sold in
lieu thereof) to the extent that (i) the portion of the Building or the
Leases Premises remaining after such taking does not, in the reasonable
judgment of Tenant, constitute an economically viable unit affording Tenant
substantially the same economic benefit as enjoyed by Tenant prior to such
taking or sale, or (ii) any portion of any driveways or other access way
which is reasonably necessary to the business on the Leased Premises is taken
and as a result thereof Tenant is denied material access to the Leased
Premises, then and in each of said events, Tenant shall have the option to
terminate this Lease upon written notice to Landlord within three (3) months
after the date that the possession of the property so taken is surrendered to
the condemning authority, such termination to be effective thirty (30) days
after date of Tenant's notice of election to terminate.

     (c)  In the event of a taking by condemnation and Tenant is not entitled to
or does not elect to exercise its right to terminate, then this Lease shall
continue in full force and effect, except that the rental shall be reduced as
of the date the condemning authority takes possession, so that for the
remainder of the term and all extensions thereof, Lessee shall pay only such
portion of the rental as the rental value of the part remaining after
condemnation bears to the rental value of the entire Leased Premises at the
date of condemnation.  In the event the parties are unable to agree upon such
rental values, such values shall be determined by appraisal as set forth in
paragraph 30.01 hereinafter.

     (d)  In the event that this Lease is automatically terminated as a result
of condemnation as provided hereinabove, the award made by the condemning
authority, or the compensation made or paid by such authority, in lieu of
condemnation, shall be allocated between Landlord and Tenant as provided in
subparagraph (e) hereunder.  In the event of any partial condemnation or
taking which does not effect a termination of this Lease, then the award made,
or compensation paid shall be applied to the costs of repairing or restoring
the improvements and the rent shall be reduced as provided in subparagraph
(c) above; or if Tenant has the right and elects to terminate, allocated to
Landlord and Tenant as provided in subparagraph (e) hereinbelow.

     (e)  The award made or proceeds paid (the "Award") as a result of any
condemnation or sale in lieu thereof shall be allocated as follows:

                         (i)  In the event this Lease is not terminated, then
               the Award shall be applied as provided in subparagraph (d)
               above.

                         (ii) In the event this Lease is terminated, then the
               value of each of the Leased Premises and the Improvements
               shall be separately determined, and the Award shall be
               apportioned between the respective values of the Leased
               Premises and the Improvements and paid as follows:

                                   (A)  The amount of the Award apportioned to
                    the Leased Premises shall be paid to Landlord; and

                                   (B)  The amount of the Award apportioned to
                    the Improvements shall be allocated between Landlord and
                    Tenant in accordance with the formula used in
                    subparagraph (b)(i) of paragraph 2.01 for computing the
                    purchase price in the event of termination of this Lease
                    and purchase of the Improvements by Landlord.

                              (iii)     In the event the parties cannot reach
                    mutual agreement as the respective values of the Leased
                    Premises and/or the Improvements, then such values shall
                    be determined by appraisal as set forth in paragraph
                    30.01 hereinafter.

18.01.   DEFAULT OF TENANT.  The happening of any one or more of the
following events shall separately and severally constitute a default
hereunder, viz:

     (a)  In the event the Tenant should fail to pay any one or more of said
installments of rent as and when the same becomes due and does not pay same
within ten (10) days after Tenant's receipt of written notice of such failure,
or to fail to pay any amount due Landlord and secured as additional rent
hereunder within ten (10) days after Tenant's receipt of written notice of such
failure;

     (b)  In the event Tenant removes, attempts to remove or permits to be
removed from said Leased Premises, except in accordance with this Lease or in
the usual course of trade or with the prior written consent of Landlord, the
goods, furniture, effects or other property of the Tenant brought thereon;

     (c)  In the event an execution or other legal process be levied upon the
goods, furniture, effects or other property of the Tenant brought on said
Leased Premises, or upon the interest of the Tenant in this Lease;

     (d)  In the event a petition in bankruptcy or a petition under the
Bankruptcy Act, or any amendment thereto, is filed by or against the Tenant
or the Tenant is adjudged a bankrupt;

     (e)  In the event any assignment creditors is made by the Tenant; for
the benefit of creditors is made by the Tenant;

     (f)  In the event of the appointment of a Receiver of Tenant's property;

     (g)  In the event the Tenant, before the expiration of the Primary Term or
any Extended Term, vacates said Leased Premises or abandons the possession
thereof, without having first provided notice to Landlord at least ninety (90)
days in advance thereof;

     (h)  In the event that Tenant shall cause or allow a mechanics' and
materialmans' lien to accrue against the Leased Premises; or

     (i)  In the event the Tenant violates any of the other terms, conditions or
covenants on the part of the Tenant herein contained.

Notwithstanding any other provision to the contrary, Tenant shall not be deemed
in default under this Lease if with respect to any non-monetary default, Tenant
cures such default within thirty (30) days from the date Tenant is deemed to
have received written notice thereof from Landlord (or if such default cannot
be cured within said thirty (30) day period, Tenant commences to cure such
default within such thirty (30) day period and diligently pursues the same).

19.01.   REMEDIES OF LANDLORD.  In the event of default by Tenant under this
Lease, Tenant shall not be relieved of its obligation to make the monthly
payments of rent and other payments herein reserved, at the time and in the
manner provided. In such event, Landlord may, at Landlord's option, relet the
Leased Premises, as agent for and in the name of Tenant, at any rental and
for any term obtainable, applying the proceeds thereof, first, to the payment
of such expenses as Landlord may incur in reletting, second, to the payment of
said rent or other payments as the same may from time to time become due, and
lastly, toward the fulfillment of the other covenants and obligations of the
Tenant herein contained. Any balance then remaining shall be paid over to
Tenant. Should the Landlord recover or take possession of said premises and
be unable to relet the same so as to realize a sum equal to the rent and
other payments hereby reserved, Tenant shall pay to Landlord any and all loss
or difference for the residue of the term.  Nothing mentioned in this Section
shall be construed to waive Landlord's right to cancel this Lease in event of
any default on the part of Tenant, all of which rights of cancellation are
herein specifically reserved by Landlord.  The remedies herein provided for
shall be cumulative and the exercise of any one or more of which shall not be
a bar to the exercise of any other remedies herein specified, nor of any
remedies to which Landlord may be entitled under the laws of the State of
Alabama.

19.02.   LATE CHARGES.  In addition to the foregoing remedies, if Tenant
fails to pay Landlord the monthly rent herein specified for more than ten
(10) days after the same becomes due and payable, then Tenant shall pay
Landlord a late charge of five (5%) percent for each month that the rent was
not paid within ten (10) days of its due date.

20.01.   NET LEASE CLAUSE.  It is the intention of these presents that the
Landlord shall receive the rents and additional costs chargeable to Tenant
herein reserved and any sum or sums which shall or may become payable
hereunder by the Tenant under any contingency, free from all taxes, charges,
improvements, assessments, expenses, damages, and deductions of every kind or
sort whatsoever, and that Tenant shall and will hereby expressly agree to pay
all such sums as "additional rent", and such other sums which, except for the
execution and delivery of these presents, would have been chargeable against
said premises and payable by the Landlord. Tenant, however, shall not be
under any obligation to pay any franchise or income tax or withholding tax
which is or may become payable by Landlord, or any gift, inheritance,
transfer, estate, or succession tax by reason of any existing law or any law
which may hereafter be enacted, or any commission for collection or rentals
hereunder.

21.01.  GOVERNMENT REGULATIONS.  Tenant will, at Tenant's sole cost and
expense, comply with all the requirements of all county, municipal, state,
federal and other applicable governmental authorities, now in force, or which
may hereafter be in force, pertaining to the Leased Premises, and shall
faithfully observe in the use of the Leased Premises all municipal and county
ordinances and state and federal statutes now in force or which may hereafter
be in force.

22.01.    ATTORNEY'S FEES.

     (a)  In the event of any default by Tenant and the subsequent employment
by Landlord of an attorney for the collection of any amount due hereunder or
for the institution of any suit filed for the purpose of enforcing the
correction of any default hereunder or seeking possession of the Leased
Premises, or on account of bankruptcy proceedings by or against Tenant,
Tenant agrees to pay and shall be taxed with a reasonable attorney's fee for
the services of such attorney.

     (b)  Notwithstanding the foregoing, in case either Landlord or Tenant
commences any litigation against the other involving this Lease or any
provisions hereof or any rights hereunder, the non-prevailing party to such
litigation shall pay to the prevailing party the reasonable attorney's fees
and other expenses incurred by the prevailing party in any such litigation.

23.01.    LIMITATION OF LIABILITY.  Anything to the contrary contained in
this Lease notwithstanding, it is specifically understood and agreed that
there shall be absolutely no personal liability on the part of the Landlord
or any distributee, assignee or grantee in the event of any of Landlord's
interest in the Leased Premises be distributed, assigned or conveyed
("successors and assigns") with respect to any of the terms, covenants,
conditions and provisions of this Lease, and Tenant shall look solely to the
equity of Landlord, its successors and assigns, in the Leased Premises for
the satisfaction of each and every remedy of Tenant in the event of any
breach of Landlord, its successors and assigns, of any of the terms,
conditions, covenants and provisions of this Lease to be performed by
Landlord, such exculpation of personal liability being absolute and without
exception whatsoever.

24.01.   NOTICES AND PAYMENTS.

     (a)  All notices to be given to Landlord hereunder shall be in writing
and mailed to Cummings & White-Spunner, Inc. 3201 Dauphin Street, Mobile,
Alabama, 36606, until Tenant is notified otherwise in writing.  All notices
to be given to Tenant hereunder shall be in writing and mailed to Tenant at
its address hereinabove stated until such time as Landlord is notified
otherwise in writing. The mailing of all such notices shall be by U. S.
Registered or Certified Mail, postage prepaid, and receipt requested.

     (b)  Landlord hereby designates Cummings & White-Spunner, Inc. as its
agent to collect all rents and other payments due or to become due Landlord
under this Lease, and payment to said agent shall constitute payment to
Landlord, until such time as Tenant is notified otherwise in writing by
Cummings & White-Spunner, Inc. or by Landlord and a new rental agent is
appointed by Landlord and said agent accepts such appointment in writing
delivered to Landlord and Tenant. Under no circumstances shall Tenant be
obliged or expected to see to the proper application by Landlord or Landlord's
designated rental agent or substitute rental agent of any rentals or other
payments made by Tenant to Landlord or to such agent or substitute agent.

25.01.    SUCCESSIVE INTERESTS.  The provision hereof shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns.

26.01.   ZONING RESTRICTIONS ETC.  The Leased Premises and this Lease are
subject to all applicable zoning restrictions and other city, county, state,
federal or other governmental rules, regulations, laws or requirements to
the lien for current ad valorem taxes; and to all easements and other matters
shown on Exhibit A. Landlord represents and warrants that the Leased Premises
is currently zoned B-3 and that such zoning classification permits Tenant's
permitted and intended use of the Leased Premises hereunder.

27.01.   WARRANTIES OF LANDLORD.  The Landlord hereby represents and
warrants to the Tenant that Landlord is the sole owner of the Leased Premises,
and has taken all necessary action to authorize the execution, delivery, and
performance of this Lease, which constitutes its legally valid and binding
agreement enforceable against Landlord in accordance with the terms of this
Lease.

28.01.   COVENANTS RUNNING WITH THE LAND.  All of the covenants,
agreements, conditions and restrictions set forth in this Lease are intended
to be and shall be construed as covenants running with the land, binding upon,
inuring to the benefit of and enforceable by the parties hereto and their
successors and assigns during the term of this Lease and all extensions
hereof.

29.01.   MEMORANDUM OF LEASE.  Upon the request of Tenant, Landlord will
execute, acknowledge and deliver to Tenant a short form or memorandum of
Lease in recordable form setting forth the parties hereto, the legal
description of the Leased Premises, the term of this Lease, the options
granted to Tenant hereunder and such other provisions as Tenant may elect to
incorporate therein. Tenant shall pay all charges in connection with the
recording of said document.

30.01     APPRAISAL OF VALUE.

     (a)  In the event Landlord and Tenant are unable to mutually agree upon
the amount of any reduction in rental to be made or the amount of any
condemnation award or payment to be made by reason of any condemnation of the
Improvements or Leased Premises as provided in paragraph 17.01 hereinabove,
then such reduction or values shall be determined by arbitration in accordance
with the provisions of subparagraph (b) herein.

     (b)  Either Landlord or Tenant may initially nominate one (1) person who
is a qualified MAI appraiser doing business in Mobile, Alabama.  Any nomination
must be in writing and delivered to the other party.  Any nomination made by the
other party must be made within thirty (30) days from receipt of the initiating
party's nomination.  If only one party shall so nominate an appraiser, then that
appraiser shall have the power to act alone, and his decision shall be binding
on both parties as if in fact it were made by appraisers selected by each
party.  If the two appraisers nominated and appointed by the parties shall
differ in judgment, then they shall appoint an impartial qualified MAI
appraiser to be umpire between them, and said two appraisers and umpire shall
serve their written decision upon the parties within thirty (30) days after
the selection of such umpire, which decision shall be final and be conclusive
and binding on the parties.  Each party shall bear the expense of its own
appraiser, but the fees and expenses of the umpire shall be shared equally.

     IN WITNESS WHEREOF, Landlord and Tenant have executed or caused this
Lease to be executed in their respective names, and their respective seals to
be affixed hereto, individually or by their duly authorized signatories to
this Lease, effective the day and year first above written, in multiple
counterparts, each of which shall be an original.

   LANDLORD:                  NORTHSIDE, LTD. an Alabama Limited
                              Liability Company


                              By:/s/ B. Whitespunner
                                 B. WHITESPUNNER, Surviving General
                                 Partner

                              TENANT:

                              SOUTH ALABAMA BANK, an Alabama
                              State Banking Association



                              By:/s/ Michael D. Fitzhugh
                                 MICHAEL D. FITZHUGH, President And
                                 Chief Operating Officer

STATE OF ALABAMA
COUNTY OF MOBILE

     I the undersigned Notary Public in and for said State and County, do
hereby certify that B. WHITESPUNNER, whose name as Surviving General Partner
of NORTHSIDE, LTD., an Alabama Limited Partnership, is signed to the
foregoing Lease and who is known to me, acknowledged before me on this day,
that being informed of the contents of said instrument, he, in his capacity
as such Surviving General Partner executed the same voluntarily, for and as
the act of said partnership on the day the same bears date.

     GIVEN UNDER my hand and seal this the   31st  day of   March  , 1999.


                              /s/ illegible
                              NOTARY PUBLIC


STATE OF ALABAMA
COUNTY OF MOBILE

     I the undersigned Notary Public in and for said State and County, do
hereby certify that MICHAEL D. FITZHUGH, whose name as President and Chief
Operating Officer of SOUTH ALABAMA BANK, an Alabama State Banking Association
is signed to the foregoing Lease and who is known to me, acknowledged
before me on this day, that being informed of the contents of said instrument,
he, as such officer and with full authority, executed the same voluntarily,
for and as the act of said association on the day the same bears date.

     GIVEN UNDER my hand and seal this the  31st  day of   March   1999.

                                 /s/ illegible
                                 NOTARY PUBLIC

THIS INSTRUMENT WAS PREPARED BY:
JERE AUSTILL, JR. ATTORNEY AT LAW
1005 VAN ANTWERP BUILDING
MOBILE, ALABAMA 36602



                                                    Exhibit 10.30

                       AMENDMENT NUMBER TWO
                 TO SOUTH ALABAMA BANCORPORATION
                 1993 INCENTIVE COMPENSATION PLAN



     The South Alabama Bancorporation 1993 Incentive Compensation Plan (the
"Plan") is hereby amended and modified as follows:

1.   Section 1.3(a) is deleted in its entirety, and the following is substituted
in lieu thereof:

          "The aggregate number of shares of Common Stock with respect to
     which Options, Stock Appreciation Rights, and Restricted Stock Awards
     may be granted shall not exceed 450,000 shares of Common Stock, subject
     to adjustment in accordance with Section 5.1."


     Except to the extent modified by the foregoing, the Plan shall remain in
full force and effect as originally adopted.

     IN WITNESS WHEREOF, the undersigned has caused this Amendment to be
executed by its duly authorized officer as of the 13th day of May, 1999.



                         South Alabama Bancorporation, Inc.


                         /s/  W. Bibb Lamar, Jr.
                         By: W. Bibb Lamar, Jr.
                         President and Chief Executive Officer




                                                    Exhibit 10.31

                                                    Prototype Cash or
                                                     Deferred Profit-
                                                    Sharing Plan #002

                                                            Plan #002

                             NONSTANDARDIZED
                           ADOPTION AGREEMENT
                PROTOTYPE CASH OR DEFERRED PROFIT-SHARING
                    PLAN AND TRUST/CUSTODIAL ACCOUNT
                              Sponsored by
                           FIRST NATIONAL BANK
  The Employer named below hereby establishes a Cash or Deferred Profit-Sharing
Plan for eligible Employees as provided in this Adoption Agreement and the
accompanying Basic Prototype Plan and Trust/Custodial Account Basic Plan
Document #04.

  1.   EMPLOYER INFORMATION

       NOTE:     If multiple Employers are adopting the Plan, complete this
section based on the lead Employer.  Additional Employers may adopt this
Plan by attaching executed signature pages to the back of the Employer's
Adoption Agreement.

       (a)  NAME AND ADDRESS:

            South Alabama Bancorporation
            P.O. Box 3067
            Mobile, AL  36652

       (b)  TELEPHONE NUMBER:   (334)867-3231

       (c)  TAX ID NUMBER:      630913333

       (d)  FORM OF BUSINESS:

            [  ] (i)  Sole Proprietor

            [  ] (ii) Partnership

            [x]  (iii)Corporation

            [  ] (iv) "S" Corporation (formerly known as Subchapter S)

            [  ] (v)  Other:


       (e)  NAME OF INDIVIDUAL AUTHORIZED TO ISSUE
            INSTRUCTIONS TO THE TRUSTEE/CUSTODIAN:



       (f)  NAME OF PLAN:  South Alabama Bancorporation
                           Employee Savings & Profit Sharing Plan

       (g)  THREE DIGIT PLAN NUMBER
            FOR ANNUAL RETURN/REPORT:   002

  2.   EFFECTIVE DATE

       (a)  This is a new Plan having an effective date of January 1, 1998.


       (b)  This is an amended Plan.

            The effective date of the original Plan was _________________ .

            The effective date of the amended Plan is   _________________ .

       (c)  If different from above, the Effective Date for the Plan's Elective
            Deferral provisions shall be ______________________ .

  3.   DEFINITIONS

       (a)  "Collective or Commingled Funds"  (Applicable to institutional
Trustees   only.)  Investment in collective or commingled funds as permitted
at paragraph 13.3(b) of the Basic Plan Document #04 shall only be made to the
following specifically named fund(s):





            Funds made available after the execution of this Adoption Agreement
            will be listed on schedules attached to the end of this Adoption
            Agreement.

       (b)  "Compensation"  Compensation shall be determined on the basis of
            the:

            [X]  (i)  Plan Year.

            [  ] (ii) Employer's Taxable Year.

            [  ] (iii)Calendar Year.

            Compensation shall be determined on the basis of the following
            safe-harbor definition of Compensation in IRS Regulation Section
            1.414(s)-1(c):

            [  ] (iv) Code Section 6041 and 6051 Compensation,

            [  ] (v)  Code Section 3401(a) Compensation, or

            [X]  (vi) Code Section 415 Compensation.

            Compensation [x] shall [  ] shall not include Employer contributions
            made pursuant to a Salary Savings Agreement which are not includable
            in the gross income of the Employee for the reasons indicated in the
            definition of Compensation at 1.12 of the Basic Plan Document #04.

            For purposes of the Plan, Compensation shall be limited to
            $________________________the maximum amount which will be considered
            for Plan purposes.  [If an amount is specified,   it will limit the
            amount of contributions allowed on behalf of higher compensated
            Employees.    Completion of this section is not intended to
            coordinate with the $200,000 of Section 415(d), thus the amount
            should be less than $200,000 as adjusted for cost-of-living
            increases.]

            (iii)     Exclusions From Compensation:

                 (1)  overtime.

                 (2)  bonuses.

                 (3)  commissions.

                 (4)  ______________

            Type of Contribution(s)

            Exclusion(s)

            Elective Deferrals [Section 7(b)]

            Matching Contributions [Section 7(c)]

            Qualified Non-Elective Contributions [Section 7(d)]
            and Non-Elective Contributions [Section 7(e)]

       (c)  "Entry Date"

            [  ] (i)  The first day of the Plan Year nearest the date on which
                      an Employee meets the eligibility requirements.

            [x]  (ii) The earlier of the first day of the Plan Year or the first
                      day of the seventh month of the Plan Year coinciding with
                      or following the date on which an Employee meets the
                      eligibility requirements.

            [  ] (iii)The first day of the Plan Year following the date on
                      which the Employee meets the eligibility requirements.  If
                      this election is   made, the Service requirement at
                      4(a)(ii) may not exceed 1/2 year and the   age requirement
                      at 4(b)(ii) may not exceed 20-1/2.

            [  ] (iv) The first day of the month coinciding with or following
                      the date on which an Employee meets the eligibility
                      requirements.

            [  ] (v)  The first day of the Plan Year, or the first day of the
                      fourth month, or the first day of the seventh month or the
                      first day of the tenth month, of the Plan Year coinciding
                      with or following the date on which an Employee
                      meets the eligibility requirements.

       (d)  "Hours of Service"  Shall be determined on the basis of the method
            selected below.  Only one method may be selected. The method
            selected shall be applied to all Employees covered under the Plan as
            follows:

            [x]  (i)  On the basis of actual hours for which an Employee is paid
                      or entitled to payment.

            [  ] (ii) On the basis of days worked.  An Employee shall be
                      credited with ten (10) Hours of Service if under paragraph
                      1.42 of the Basic Plan Document #04 such Employee would be
                      credited with at least one (1) Hour of Service during the
                      day.

            [  ] (iii)On the basis of weeks worked.  An Employee shall be
                      credited with forty-five (45) Hours of Service if under
                      paragraph 1.42 of the Basic Plan Document #04 such
                      Employee would be credited with at least one (1) Hour of
                      Service during the week.

            [  ] (iv) On the basis of semi-monthly payroll periods.
                      An Employee shall be credited with ninety-five (95) Hours
                      of   Service if under paragraph 1.42 of the Basic Plan
                      Document #04 such Employee would be credited with at least
                      one (1) Hour of Service during the semi-monthly payroll
                      period.

            [  ] (v)  On the basis of months worked.
                      An Employee shall be credited with one-hundred-ninety
                      (190)   Hours of Service if under paragraph 1.42 of the
                      Basic Plan Document #04 such Employee would be credited
                      with at least one (1) Hour of Service during the month.

       (e)  "Limitation Year"  The 12-consecutive month period commencing on
            __________________ and ending on ___________________ .

            If applicable, the Limitation Year will be a short Limitation Year
            commencing on ________________and ending on ____________________ .
            Thereafter, the Limitation Year shall end on the date last specified
            above.

       (f)  "Net Profit"

            [x]  (i)  Not applicable (profits will not be required for any
                      contributions   to the Plan).

            [  ] (ii) As defined in paragraph 1.49 of the Basic Plan Document
                      #04.

            [  ] (iii)Shall be defined as:




             (Only use if definition in paragraph 1.49 of the Basic Plan
              Document#04 is to be superseded.)

       (g)  "Plan Year"  The 12-consecutive month period commencing on January 1
            and ending on December 31.

            If applicable, the Plan Year will be a short Plan Year commencing on
            _______________________and ending on________________.  Thereafter,
            the Plan Year shall end on the date last specified above.

       (h)  "Qualified Early Retirement Age"  For purposes of making
            distributions under the provisions of a Qualified Domestic Relations
            Order, the Plan's Qualified Early Retirement Age with regard to the
            Participant against whom the order is entered

            [x]shall   [  ] shall not

            be the date the order is determined to be qualified.  If "shall" is
            elected, this will only allow payout to the alternate payee(s).

       (i)  "Qualified Joint and Survivor Annuity"  The safe-harbor provisions
            of paragraph 8.7 of the Basic Plan Document #04 [x] are [  ] are not
            applicable.  If not applicable, the survivor annuity shall be _____%
            (50%, 66-2/3%, 75% or 100%) of the annuity payable during the
            lives of the Participant and Spouse.  If no answer is specified, 50%
            will be used.

       (j)  "Taxable Wage Base" [paragraph 1.79]

            [x]  (i)  Not Applicable - Plan is not integrated with Social
                      Security.

            [  ] (ii) The maximum earnings considered wages for such Plan Year
                      under Code Section 3121(a).

            [  ] (iii)_____________ % (not more than 100%) of the amount
                      considered wages   for such Plan Year under Code
                      Section 3121(a).

            [  ] (iv) $_____________, provided that such amount is not in excess
                      of the amount determined under paragraph 3(j)(ii) above.

            [  ] (v)  For the 1989 Plan Year $10,000.  For all subsequent Plan
                      Years, 20% of the maximum earnings considered wages for
                      such Plan Year under Code Section 3121(a).

            NOTE:     Using less than the maximum at (ii) may result in a change
                      in the allocation formula in Section 7.

       (k)  "Valuation Date(s)"  Allocations to Participant Accounts will be
            done   in accordance with Article V of the Basic Plan Document #04:

            (i)  Daily               (v)  Quarterly

            (ii) Weekly              (vi) Semi-Annually

            (iii)Monthly             (vii)Annually

            (iv) Bi-Monthly

            Indicate Valuation Date(s) to be used by specifying option from list
            above:

            Type of Contribution(s)                            Valuation Date(s)

            After-Tax Voluntary Contributions [Section 6]

            Elective Deferrals [Section 7(b)]                         v

            Matching Contributions [Section 7(c)]                     v

            Qualified Non-Elective Contributions [Section 7(d)]       vii

            Non-Elective Contributions [Section 7(e), (f) and (g)]    vii

            Minimum Top-Heavy Contributions [Section 7(i)]

       (l)  "Year of Service"

            (i)  For Eligibility Purposes:  The 12-consecutive month period
                 during which an Employee is credited with 1000
                 (not more than 1,000) Hours of Service.

            (ii) For Allocation Accrual Purposes:  The 12-consecutive month
                 period during which an Employee is credited with 1000
                 (not more than 1,000) Hours of   Service.

            (iii)For Vesting Purposes:  The 12-consecutive month period
                 during which an Employee is credited with 1000
                 (not more than 1,000) Hours of   Service.

  4.   ELIGIBILITY REQUIREMENTS

       (a)  Service:

            [  ] (i)  The Plan shall have no service requirement.

            [x]  (ii) The Plan shall cover only Employees having completed at
                      least 1  [not more than three (3)] Years of Service.
                      If more than one (1)   is specified, for Plan Years
                      beginning in 1989 and later, the answer will be
                      deemed to be one (1).

            NOTE:     If the eligibility period selected is less than one year,
                      an Employee will not be required to complete any specified
                      number of Hours of Service to receive credit for such
                      period.

       (b)  Age:

            [  ] (i)  The Plan shall have no minimum age requirement.

            [x]  (ii) The Plan shall cover only Employees having attained age 21
                      (not more than age 21).

       (c)  Classification:

            The Plan shall cover all Employees who have met the age and  service
            requirements with the following exceptions:

            [x]  (i)  No exceptions.

            [  ] (ii) The Plan shall exclude Employees included in a unit of
                      Employees covered by a collective bargaining agreement
                      between the Employer and Employee Representatives, if
                      retirement benefits were the subject of good faith bar-
                      gaining.  For this purpose, the term "Employee
                      Representative"   does not
                      include any organization more than half of whose members
                      are   Employees
                      who are owners, officers, or executives of the Employer.

            [  ] (iii)The Plan shall exclude Employees who are nonresident
                      aliens and who
                      receive no earned income from the Employer which
                      constitutes   income
                      from sources within the United States.

            [  ] (iv) The Plan shall exclude from participation any non-
                      discriminatory
                      classification of Employees determined as follows:




       (d)  Employees on Effective  Date:

            [  ] (i)  Not Applicable.  All Employees will be required to satisfy
                      both   the age and
                      Service requirements specified above.

            [x]  (ii) Employees employed on the Plan's Effective Date do not
                      have   to satisfy the
                      Service requirements specified above.

            [  ] (iii)Employees employed on the Plan's Effective Date do
                      not have to satisfy the
                      age requirements specified above.

  5.   RETIREMENT AGES

       (a)  Normal Retirement Age:

            If the Employer imposes a requirement that Employees retire upon
            reaching a specified age,
            the Normal Retirement Age selected below may not exceed the Employer
            imposed mandatory retirement age.

            [  ] (i)  Normal Retirement Age shall be  (not to exceed age 65).

            [x]  (ii) Normal Retirement Age shall be the later of attaining age
                      65 (not to exceed age 65) or the 5 (not to exceed the 5th)
                      anniversary   of the first
                      day of the first Plan Year in which the Participant
                      commenced participation in the Plan.

       (b)  Early Retirement Age:

            [x]  (i)  Not Applicable.

            [  ] (ii) The Plan shall have an Early Retirement Age of
                      (not less than 55) and completion of ___ Years of Service.

  6.   EMPLOYEE CONTRIBUTIONS

       [x]  (a)  Participants shall be permitted to make Elective Deferrals in
                 any   amount from 0% up to 10% of their Compensation.

                 If (a) is applicable, Participants shall be permitted to amend
                 their Salary Savings
                 Agreements to change the contribution percentage as provided
                 below:

                 [  ] (i)  On the Anniversary Date of the Plan,

                 [  ] (ii) On the Anniversary Date of the Plan and on the first
                           day   of the
                           seventh month of the Plan Year,

                 [  ] (iii)On the Anniversary Date of the Plan and on the
                           first   day following
                           any Valuation Date, or

                 [x]  (iv) Upon 30 days notice to the Employer.

       [  ] (b)  Participants shall be permitted to make after tax Voluntary
                 Contributions.

       [  ] (c)  Participants shall be required to make after tax Voluntary
                 Contributions   as follows
                 (Thrift Savings Plan):

                 [  ] (i)        % of Compensation.

                 [  ] (ii) A percentage determined by the Employee on his or
                 her enrollment
                           form.

       [  ] (d)  If necessary to pass the Average Deferral Percentage Test,
                 Participants   [  ] may
                 [  ] may not have Elective Deferrals recharacterized as
                 Voluntary   Contributions.

            NOTE:     The Average Deferral Percentage Test will apply to
                      contributions   under (a)
                      above.  The Average Contribution Percentage Test will
                      apply   to
                      contributions under (b) and (c) above, and may apply to
                      (a).

  7.   EMPLOYER CONTRIBUTIONS AND ALLOCATION THEREOF

       NOTE:     The Employer shall make contributions to the Plan in accordance
                 with   the formula
                 or formulas selected  below.  The Employer's contribution shall
                 be   subject to the
                 limitations contained in Articles III and X.  For this purpose,
                 a   contribution for a
                 Plan Year shall be limited for the Limitation Year which ends
                 with   or within such
                 Plan Year.  Also, the integrated allocation formulas below are
                 for   Plan Years
                 beginning in 1989 and later.  The Employer's allocation for
                 earlier   years shall be
                 as specified in its Plan prior to amendment for the Tax Reform
                 Act   of 1986.

       (a)  Profits Requirement:

            (i)  Current or Accumulated Net Profits are required for:

                 [  ] (A)  Matching Contributions.

                 [  ] (B)  Qualified Non-Elective Contributions.

                 [  ] (C)  discretionary contributions.

            (ii) No Net Profits are required for:

                 [  ] (A)  Matching Contributions.

                 [x]  (B)  Qualified Non-Elective Contributions.

                 [x]  (C)  discretionary contributions.

            NOTE:     Elective Deferrals can always be contributed regardless of
                      profits.

  [x]  (b)  Salary Savings Agreement:

            The Employer shall contribute and allocate to each Participant's
            account   an amount equal
            to the amount withheld from the Compensation of such Participant
            pursuant   to his or her
            Salary Savings Agreement.  If applicable, the maximum percentage is
            specified   in Section
            6 above.

            An Employee who has terminated his or her election under the Salary
            Savings   Agreement
            other than for hardship reasons may not make another Elective
            Deferral:

            [  ] (i)  until the first day of the next Plan Year.

            [x]  (ii) until the first day of the next valuation period.

            [  ] (iii)     for a period of          month(s) (not to exceed 12
            months).

  [c]  (c)  Matching Employer Contribution [See paragraphs (h) and (i)]:

            [  ] (i)  PERCENTAGE MATCH:  The Employer shall contribute and
                      allocate   to each
                      eligible Participant's account an amount equal to       %
                      of   the amount
                      contributed and allocated in accordance with paragraph
                      7(b)   above and (if checked)       % of [  ] the amount
                      of Voluntary
                      Contributions   made in accordance with paragraph 4.1 of
                      the Basic Plan Document
                      #04.    The
                      Employer shall not match Participant Elective Deferrals as
                      provided   above
                      in excess of $         or in excess of       % of the
                      Participant's   Compensation
                      or if applicable, Voluntary Contributions in excess of
                      $_______________
                      or in excess
                      of       % of the Participant's Compensation.  In no event
                      will   the match on
                      both Elective Deferrals and Voluntary Contributions exceed
                      a   combined
                      amount of $         or       %.

            [  ] (ii) DISCRETIONARY MATCH:  The Employer shall contribute and
                      allocate   to each
                      eligible Participant's account a percentage of the
                      Participant's   Elective
                      Deferral contributed and allocated in accordance with
                      paragraph   7(b)
                      above.  The Employer shall set such percentage prior to
                      the   end of the Plan
                      Year.  The Employer shall not match Participant Elective
                      Deferrals   in
                      excess of $         or in excess of       % of the
                      Participant's   Compensation.

            [x]  (iii)     TIERED MATCH:  The Employer shall contribute and
                      allocate   to each
                      Participant's account an amount equal to 100   % of
                      the   first 2     % of the
                      Participant's Compensation, to the extent deferred.
                      75    % of the next 2     % of the Participant's
                      Compensation,   to the extent deferred.
                      50    % of the next 2     % of the Participant's
                      Compensation,   to the extent deferred.

       NOTE:     Percentages specified in (iii) above may not increase as the
                 percentage   of
                 Participant's contribution increases.

            [  ] (iv) FLAT DOLLAR MATCH:  The Employer shall contribute and
                      allocate   to each
                      Participant's account $         if the Participant defers
                      at   least 1% of
                      Compensation.

            [  ] (v)  PERCENTAGE OF COMPENSATION MATCH:  The Employer shall
                      contribute   and
                      allocate to each Participant's account       % of
                      Compensation   if the
                      Participant defers at least 1% of Compensation.

            [  ] (vi) PROPORTIONATE COMPENSATION MATCH:  The Employer shall
                      contribute   and
                      allocate to each Participant who defers at least 1% of
                      Compensation,   an
                      amount determined by multiplying such Employer Matching
                      Contribution
                      by a fraction the numerator of which is the Participant's
                      Compensation   and
                      the denominator of which is the Compensation of all
                      Participants   eligible
                      to receive such an allocation.  The Employer shall set
                      such   discretionary
                      contribution prior to the end of the Plan Year.

            [  ] (vii)     QUALIFIED MATCH:  Employer Matching Contributions
                           will   be treated as
                           Qualified Matching Contributions to the extent
                           specified   below:

                      [  ] (A)  All Matching Contributions.

                      [  ] (B)  None.

                      [  ] (C)        % of the Employer's Matching Contribution.

                      [  ] (D)  Up to      % of each Participant's Compensation.

                      [  ] (E)  The amount necessary to meet the [  ] Average
                                Deferral
                                Percentage (ADP) Test, [  ] Average Contribution
                                Percentage (ACP) Test, [  ] Both the ADP and ACP
                                Tests.

                      (viii)    MATCHING CONTRIBUTION COMPUTATION PERIOD:  The
                                time   period
                                upon which matching contributions will be based
                                shall   be

                      [  ] (A)  weekly

                      [  ] (B)  bi-weekly

                      [  ] (C)  semi-monthly

                      [  ] (D)  monthly

                      [x]  (E)  quarterly

                      [  ] (F)  semi-annually

                      [  ] (G)  annually

                      (ix) ELIGIBILITY FOR MATCH:  Employer Matching
                           Contributions,
                           whether or not Qualified, will only be made on
                           Employee
                           Contributions not withdrawn prior to the end of the
                           [x]   valuation
                           period [  ] Plan Year.

  [x]  (d)  Qualified Non-Elective Employer Contribution - [See paragraphs (h)
and   (i)] These contributions are fully vested when contributed.

            The Employer shall have the right to make an additional
            discretionary   contribution which
            shall be allocated to each eligible Employee in proportion to his or
            her   Compensation as a
            percentage of the Compensation of all eligible Employees.  This part
            of   the Employer's
            contribution and the allocation thereof shall be unrelated to any
            Employee   contributions
            made hereunder.  The amount of Qualified non-Elective Contributions
            taken   into account
            for purposes of meeting the ADP or ACP test requirements is:

            [  ] (i)  All such Qualified non-Elective Contributions.

            [x]  (ii) The amount necessary to meet [x] the ADP test, [x] the ACP
                      test,   [  ] Both
                      the ADP and ACP tests.

            Qualified non-Elective Contributions will be made to:

            [  ] (iii)     All Employees eligible to participate.

            [x]  (iv) Only non-Highly Compensated Employees eligible to
            participate.

  [x]  (e)  Additional Employer Contribution Other Than Qualified Non-Elective
            Contributions   - Non-
            Integrated [See paragraphs (h) and (i)]

            The Employer shall have the right to make an additional
            discretionary   contribution which
            shall be allocated to each eligible Employee in proportion to his or
            her   Compensation as a
            percentage of the Compensation of all eligible Employees.  This part
            of   the Employer's
            contribution and the allocation thereof shall be unrelated to any
            Employee   contributions
            made hereunder.

  [  ] (f)  Additional Employer Contribution - Integrated Allocation Formula
            [See   paragraphs (h) and
            (i)]

            The Employer shall have the right to make an additional
            discretionary   contribution.  The
            Employer's contribution for the Plan Year plus any forfeitures shall
            be   allocated to the
            accounts of eligible Participants as follows:

            (i)  First, to the extent contributions and forfeitures are
                 sufficient,   all Participants will
                 receive an allocation equal to 3% of their Compensation.

            (ii) Next, any remaining Employer Contributions and forfeitures will
                 be   allocated to
                 Participants who have Compensation in excess of the Taxable
                 Wage   Base (excess
                 Compensation).  Each such Participant will receive an
                 allocation   in the ratio that
                 his or her excess compensation bears to the excess Compensation
                 of   all
                 Participants.  Participants may only receive an allocation of
                 3%   of excess
                 Compensation.

            (iii)     Next, any remaining Employer contributions and forfeitures
                      will   be allocated to all
                      Participants in the ratio that their Compensation plus
                      excess   Compensation bears
                      to the total Compensation plus excess Compensation of all
                      Participants.
                      Participants may only receive an allocation of up to 2.7%
                      of   their Compensation
                      plus excess Compensation, under this allocation method.
                      If   the Taxable Wage Base
                      defined at Section 3(j) is less than or equal to the
                      greater   of $10,000 or 20% of the
                      maximum, the 2.7% need not be reduced.  If the amount
                      specified   is greater than
                      the greater of $10,000 or 20% of the maximum Taxable Wage
                      Base,   but not more
                      than 80%, 2.7% must be reduced to 1.3%.  If the amount
                      specified   is greater than
                      80% but less than 100% of the maximum Taxable Wage Base,
                      the   2.7% must be
                      reduced to 2.4%.

       NOTE:     If the Plan is not Top-Heavy or if the Top-Heavy minimum
                 contribution   or benefit
                 is provided under another Plan [see Section 11(c)(ii)] covering
                 the   same Employees,
                 sub-paragraphs (i) and (ii) above may be disregarded and 5.7%,
                 4.3%   or 5.4%
                 may be substituted for 2.7%, 1.3% or 2.4% where it appears in
                 (iii)   above.

            (iv) Next, any remaining Employer contributions and forfeitures will
                 be   allocated to all
                 Participants (whether or not they received an allocation under
                 the   preceding
                 paragraphs) in the ratio that each Participant's Compensation
                 bears   to all
                 Participants' Compensation.

  [  ] (g)  Additional Employer Contribution-Alternative Integrated Allocation
            Formula.    [See
            paragraph (h) and (i)]

            The Employer shall have the right to make an additional
            discretionary   contribution.  To the
            extent that such contributions are sufficient, they shall be
            allocated   as follows:

                  % of each eligible Participant's Compensation plus       % of
            Compensation   in excess
            of the Taxable Wage Base defined at Section 3(j) hereof.  The
            percentage   on excess
            compensation may not exceed the lesser of (i) the amount first
            specified   in this paragraph
            or (ii) the greater of 5.7% or the percentage rate of tax under Code
            Section   3111(a) as in
            effect on the first day of the Plan Year attributable to the Old Age
            (OA)   portion of the
            OASDI provisions of the Social Security Act.  If the Employer
            specifies   a Taxable Wage
            Base in Section 3(j) which is lower than the Taxable Wage Base for
            Social   Security
            purposes (SSTWB) in effect as of the first day of the Plan Year, the
            percentage   contributed
            with respect to excess Compensation must be adjusted.  If the Plan's
            Taxable   Wage Base
            is greater than the larger of $10,000 or 20% of the SSTWB but not
            more   than 80% of the
            SSTWB, the excess percentage is 4.3%.  If the Plan's Taxable Wage
            Base   is greater than
            80% of the SSTWB but less than 100% of the SSTWB, the excess
            percentage   is 5.4%.

            NOTE:     Only one plan maintained by the Employer may be integrated
                      with   Social
                      Security.

       (h)  Allocation of Excess Amounts (Annual Additions)

            In the event that the allocation formula above results in an Excess
            Amount,   such excess
            shall be:

            [  ] (i)  placed in a suspense account accruing no gains or losses
                      for   the benefit of
                      the Participant.

            [x]  (ii) reallocated as additional Employer contributions to all
                      other   Participants
                      to the extent that they do not have any Excess Amount.

       (i)  Minimum Employer Contribution Under Top-Heavy Plans:

            For any Plan Year during which the Plan is Top-Heavy, the sum of the
            contributions   and
            forfeitures as allocated to eligible Employees under paragraphs
            7(d),   7(e), 7(f), 7(g) and 9
            of this Adoption Agreement shall not be less than the amount
            required   under paragraph 14.2
            of the Basic Plan document #04.  Top-Heavy minimums will be
            allocated   to:

            [  ] (i)  all eligible Participants.

            [x]  (ii) only eligible non-Key Employees who are Participants.

       (j)  Return of Excess Contributions and/or Excess Aggregate
            Contributions:

            In the event that one or more Highly Compensated Employees is
            subject   to both the ADP
            and ACP tests and the sum of such tests exceeds the Aggregate Limit,
            the   limit will be
            satisfied by reducing the:

            [x]  (i)  the ADP of the affected Highly Compensated Employees.

            [x]  (ii) the ACP of the affected Highly Compensated Employees.

            [  ] (iii)a combination of the ADP and ACP of the affected
                      Highly   Compensated Employees.

  8.   ALLOCATIONS TO TERMINATED EMPLOYEES

       [x]  (a)  The Employer will not allocate Employer related contributions
                 to   Employees who
                 terminate during a Plan Year, unless required to satisfy the
                 requirements   of Code
                 Section 401(a)(26) and 410(b).  (These requirements are
                 effective   for 1989 and
                 subsequent Plan Years.)

       [  ] (b)  The Employer will allocate Employer matching and other related
                 contributions   as
                 indicated below to Employees who terminate during the Plan Year
                 as   a result of:

                 Matching  Other

                 [  ] [  ] (i)  Retirement.

                 [  ] [  ] (ii) Disability.

                 [  ] [  ] (iii)Death.

                 [  ] [  ] (iv) Other termination of employment provided that
                                the
                                Participant has completed a Year of Service as
                                defined
                                for Allocation Accrual Purposes.

                 [  ] [  ] (v)  Other termination of employment even though the
                                Participant has not completed a Year of Service.


                 [  ] [  ] (vi) Termination of employment (for any reason)
                                provided
                                that the Participant had completed a Year of
                                Service   for
                                Allocation Accrual Purposes.

  9.   ALLOCATION OF FORFEITURES

       NOTE:     Subsections (a), (b) and (c) below apply to forfeitures of
                 amounts   other than Excess
                 Aggregate Contributions.

            (a)  Allocation Alternatives:

                 If forfeitures are allocated to Participants, such allocation
                 shall   be done in the same
                 manner as the Employer's contribution.

                 [  ] (i)  Not Applicable.  All contributions are always fully
                           vested.

                 [  ] (ii) Forfeitures shall be allocated to Participants in the
                           same   manner
                           as the Employer's contribution.

                           If allocation to other Participants is selected, the
                           allocation   shall
                           be as follows:

                           [1]  Amount attributable to Employer discretionary
                                contributions and Top-Heavy minimums will be
                                allocated
                                to:

                                [  ] all eligible Participants under the Plan.

                                [  ] only those Participants eligible for an
                                     allocation
                                     of Employer contributions in the current
                                     year.

                                [  ] only those Participants eligible for an
                                     allocation
                                     of matching contributions in the current
                                     year.

                           [2]  Amounts attributable to Employer Matching
                                contributions will be allocated to:

                                [  ] all eligible Participants.

                                [  ] only those Participants eligible for
                                     allocations   of
                                     matching contributions in the current year.

                 [x]  (iii)     Forfeitures shall be applied to reduce the
                                Employer's   contribution
                                for such Plan Year.

                 [  ] (iv) Forfeitures shall be applied to offset
                           administrative
                           expenses   of
                           the Plan.  If forfeitures exceed these expenses,
                           (iii)   above shall
                           apply.

       (b)  Date for Reallocation:

       NOTE:     If no distribution has been made to a former Participant,
                 sub-section   (i) below will
                 apply to such Participant even if the Employer elects (ii),
                 (iii)   or (iv) below as its
                 normal administrative policy.

                 [  ] (i)  Forfeitures shall be reallocated at the end of the
                           Plan   Year during
                           which the former Participant incurs his or her fifth
                           consecutive
                           one year Break In Service.

                 [  ] (ii) Forfeitures will be reallocated immediately (as of
                           the   next
                           Valuation Date).

                 [x]  (iii)Forfeitures shall be reallocated at the end of
                           the   Plan Year during
                           which the former Employee incurs his or her 1
                           (1st,   2nd, 3rd, or
                           4th) consecutive one year Break In Service.

                 [  ] (iv) Forfeitures will be reallocated immediately (as of
                           the   Plan Year
                           end).

       (c)  Restoration of Forfeitures:

            If amounts are forfeited prior to five consecutive 1-year Breaks in
            Service,   the Funds for
            restoration of account balances will be obtained from the following
            resources   in the order
            indicated (fill in the appropriate number):

            [1]  (i)  Current year's forfeitures.

            [3]  (ii) Additional Employer contribution.

            [2]  (iii)Income or gain to the Plan.

       (d)  Forfeitures of Excess Aggregate Contributions shall be:

            [x]  (i)  Applied to reduce Employer contributions.

            [  ] (ii) Allocated, after all other forfeitures under the Plan, to
                      the   Matching
                      Contribution account of each non-highly compensated
                      Participant   who
                      made Elective Deferrals or Voluntary Contributions in the
                      ratio   which each
                      such Participant's Compensation for the Plan Year bears to
                      the   total
                      Compensation of all Participants for such Plan Year.  Such
                      forfeitures
                      cannot be allocated to the account of any Highly
                      Compensated   Employee.

            Forfeitures of Excess Aggregate Contributions will be so applied at
            the   end of the Plan Year
            in which they occur.

  10.  CASH OPTION

       [  ] (a)  The Employer may permit a Participant to elect to defer to the
                 Plan,   an amount not
                 to exceed       % of any Employer paid cash bonus made for such
                 Participant   for
                 any year.  A Participant must file an election to defer such
                 contribution   at least
                 fifteen (15) days prior to the end of the Plan Year.  If the
                 Employee   fails to make
                 such an election, the entire Employer paid cash bonus to which
                 the   Participant
                 would be entitled shall be paid as cash and not to the Plan.
                 Amounts   deferred under
                 this section shall be treated for all purposes as Elective
                 Deferrals.    Notwithstanding
                 the above, the election to defer must be made before the bonus
                 is   made available to
                 the Participant.

       [  ] (b)  Not Applicable.

  11.  LIMITATIONS ON ALLOCATIONS

       [  ] This is the only Plan the Employer maintains or ever maintained,
            therefore,   this section is
            not applicable.

       [x]  The Employer does maintain or has maintained another Plan (including
            a   Welfare Benefit
            Fund or an individual medical account (as defined in Code Section
            415(l)(2)),   under which
            amounts are treated as Annual Additions) and has completed the
            proper   sections below.

            Complete (a), (b) and (c) only if the Employer maintains or ever
            maintained   another
            qualified plan, including a Welfare Benefit Fund or an individual
            medical   account [as
            defined in Code Section 415(l)(2)] in which any Participant in this
            Plan   is (or was) a
            participant or could possibly become a participant.

       (a)  If the Participant is covered under another qualified Defined
            Contribution   Plan maintained
            by the Employer, other than a Master or Prototype Plan:

            [x]  (i)  the provisions of Article X of the Basic Plan Document #04
                      will   apply, as
                      if the other plan were a Master or Prototype Plan.

            [  ] (ii) Attach provisions stating the method under which the plans
                      will   limit total
                      Annual Additions to the Maximum Permissible Amount, and
                      will   properly
                      reduce any Excess Amounts, in a manner that precludes
                      Employer
                      discretion.

       (b)  If a Participant is or ever has been a participant in a Defined
            Benefit   Plan maintained by the
            Employer:

            Attach provisions which will satisfy the 1.0 limitation of Code
            Section   415(e).  Such
            language must preclude Employer discretion.  The Employer must also
            specify   the interest
            and mortality assumptions used in determining Present Value in the
            Defined   Benefit Plan.


       (c)  The minimum contribution or benefit required under Code Section 416
            relating   to Top-
            Heavy Plans shall be satisfied by:

            [  ] (i)  this Plan.

            [x]  (ii) Retirement Plan for Employees
                      of South Alabama Bancorporation
                      (Name of other qualified plan of the Employer).

            [  ] (iii)Attach provisions stating the method under which the
                      minimum
                      contribution and benefit provisions of Code Section
                      416   will be satisfied.
                      If a Defined Benefit Plan is or was maintained, an
                      attachment   must be
                      provided showing interest and mortality assumptions
                      used   in the Top-
                      Heavy Ratio.

  12.  VESTING

       Employees shall have a fully vested and nonforfeitable interest in any
       Employer   contribution and the
       investment earnings thereon made in accordance with paragraphs (select
       one   or more options)
       [  ] 7(c), [  ] 7(e), [  ] 7(f), [  ] 7(g) and [  ] 7(i) hereof.
       Contributions   under paragraph 7(b), 7(c)(vii)
       and 7(d) are always fully vested.  If one or more of the foregoing
       options   are not selected, such
       Employer contributions shall be subject to the vesting table selected by
       the   Employer.

       Each Participant shall acquire a vested and nonforfeitable percentage in
       his   or her account balance
       attributable to Employer contributions and the earnings thereon under the
       procedures   selected below
       except with respect to any Plan Year during which the Plan is Top-Heavy,
       in   which case the Two-
       twenty vesting schedule [Option (b)(iv)] shall automatically apply unless
       the   Employer has already
       elected a faster vesting schedule.  If the Plan is switched to option
       (b)(iv),   because of its Top-Heavy
       status, that vesting schedule will remain in effect even if the Plan
       later   becomes non-Top-Heavy until
       the Employer executes an amendment of this Adoption Agreement indicating
       otherwise.

       (a)  Computation Period:

            The computation period for purposes of determining Years of Service
            and   Breaks in Service
            for purposes of computing a Participant's nonforfeitable right to
            his   or her account balance
            derived from Employer contributions:

            [  ] (i)  shall not be applicable since Participants are always
                      fully   vested,

            [  ] (ii) shall commence on the date on which an Employee first
                      performs   an Hour
                      of Service for the Employer and each subsequent
                      12-consecutive   month
                      period shall commence on the anniversary thereof, or

            [x]  (iii)shall commence on the first day of the Plan Year
                      during   which an
                      Employee first performs an Hour of Service for the
                      Employer   and each
                      subsequent 12-consecutive month period shall commence
                      on   the
                      anniversary thereof.

       A Participant shall receive credit for a Year of Service if he or she
       completes   at least 1,000 Hours
       of Service [or if lesser, the number of hours specified at 3(l)(iii) of
       this   Adoption Agreement] at any
       time during the 12-consecutive month computation period.  Consequently, a
       Year   of Service may
       be earned prior to the end of the 12-consecutive month computation period
       and the Participant need
       not be employed at the end of the 12-consecutive month computation period
       to   receive credit for a
       Year of Service.

       (b)  Vesting Schedules:

       NOTE:     The vesting schedules below only apply to a Participant who has
                 at   least one Hour
                 of Service during or after the 1989 Plan Year.  If applicable,
                 Participants   who
                 separated from Service prior to the 1989 Plan Year will remain
                 under   the vesting
                 schedule as in effect in the Plan prior to amendment for the
                 Tax   Reform Act of
                 1986.

            (i)  Full and immediate vesting.
                                    Years of Service
                     1    2    3    4    5    6    7
            (ii)     % 100%
            (iii)     %     %100%
            (iv)     %  20%  40%  60%  80% 100%
            (v)      %     % 20%  40%  60%  80% 100%
            (vi)   10%  20%  30%  40%  60%  80% 100%
            (vii)0    %0    %0    %0    %100%
            (viii)     %     %     %     %     %     %100%

       NOTE:     The percentages selected for schedule (viii) may not be less
                 for   any year than the
                 percentages shown at schedule (v).

            [x]  All contributions other than those which are fully vested when
                 contributed   will vest
                 under schedule vii   above.

            [  ] Contributions other than those which are fully vested when
                 contributed   will vest as
                 provided below:

                Vesting
             Option Selected         Type Of Employer Contribution

                                     7(c) Employer Match on Salary Savings

                                     7(c) Employer Match on
                                          Employee Voluntary

                                     7(e) Employer Discretionary

                                     7(f) & (g) Employer Discretionary -
                                     Integrated

       (c)  Service disregarded for Vesting:

            [x]  (i)  Not Applicable.  All Service shall be considered.

            [  ] (ii) Service prior to the Effective Date of this Plan or a
                      predecessor   plan shall
                      be disregarded when computing a Participant's vested and
                      nonforfeitable
                      interest.

            [  ] (iii)Service prior to a Participant having attained age 18
                      shall   be disregarded
                      when computing a Participant's vested and
                      nonforfeitable   interest.

  13.  SERVICE WITH PREDECESSOR ORGANIZATION

       For purposes of satisfying the Service requirements for eligibility,
       Hours   of Service shall include
       Service with the following predecessor organization(s):
       (These hours will also be used for vesting purposes.)

       First National Bank, Brewton, Alabama, The Bank of Mobile, and The
       Monroe County Bank

  14.  ROLLOVER/TRANSFER CONTRIBUTIONS

       (a)  Rollover Contributions, as described at paragraph 4.3 of the Basic
            Plan   Document #04,
            [x] shall [  ] shall not be permitted.  If permitted, Employees [  ]
            may   [  ] may not make
            Rollover Contributions prior to meeting the eligibility requirements
            for   participation in the
            Plan.

       (b)  Transfer Contributions, as described at paragraph 4.4 of the Basic
            Plan   Document #04
            [x] shall [  ] shall not be permitted.  If permitted, Employees [  ]
            may   [  ] may not make
            Transfer Contributions prior to meeting the eligibility requirements
            for   participation in the
            Plan.

       NOTE:     Even if available, the Employer may refuse to accept such
                 contributions   if its Plan
                 meets the safe-harbor rules of paragraph 8.7 of the Basic Plan
                 Document   #04.

  15.  HARDSHIP WITHDRAWALS

       Hardship withdrawals, as provided for in paragraph 6.9 of the Basic Plan
       Document   #04, [  ] are
       [x] are not permitted.

  16.  PARTICIPANT LOANS

       Participant loans, as provided for in paragraph 13.5 of the Basic Plan
       Document   #04, [  ] are [x] are
       not permitted.  If permitted, repayments of principal and interest shall
       be   repaid to [  ] the
       Participant's segregated account or [  ] the general Fund.

  17.  INSURANCE POLICIES

       The insurance provisions of paragraph 13.6 of the Basic Plan Document #04
       [    ] shall [x] shall not
       be applicable.

  18.  EMPLOYER INVESTMENT DIRECTION

       The Employer investment direction provisions, as set forth in paragraph
       13.7   of the Basic Plan
       Document #04, [x] shall [  ] shall not be applicable.

  19.  EMPLOYEE INVESTMENT DIRECTION

       (a)  The Employee investment direction provisions, as set forth in
            paragraph   13.8 of the Basic
            Plan Document #04, [  ] shall [x] shall not be applicable.

            If applicable, Participants may direct their investments:

            [  ] (i)  among funds offered by the Trustee.

            [  ] (ii) among any allowable investments.

       (b)  Participants may direct the following kinds of contributions and the
            earnings   thereon (check
            all applicable):

            [  ] (i)  All Contributions

            [  ] (ii) Elective Deferrals

            [  ] (iii)     Employee Voluntary Contributions (after-tax)

            [  ] (iv) Employee Mandatory Contributions (after-tax)

            [  ] (v)  Employer Qualified Matching Contributions

            [  ] (vi) Other Employer Matching Contributions

            [  ] (vii)     Employer Qualified Non-Elective Contributions

            [  ] (viii)    Employer Discretionary Contributions

            [  ] (ix) Rollover Contributions

            [  ] (x)  Transfer Contributions

            [  ] (xi) All of above which are checked, but only to the extent
                      that   the Participant
                      is vested in those contributions.

       NOTE:     To the extent that Employee investment direction was previously
                 allowed,   the
                 Trustee shall have the right to either make the assets part of
                 the   general Trust, or
                 leave them as separately invested subject to the rights of
                 paragraph   13.8.


  20.  EARLY PAYMENT OPTION

       (a)  A Participant who separates from Service prior to retirement, death
            or   Disability [  ] may
            [x] may not make application to the Employer requesting an early
            payment   of his or her
            vested account balance.

       (b)  A Participant who has attained age 59-1/2 and who has not separated
            from   Service [  ] may
            [x] may not obtain a distribution of his or her vested Employer
            contributions.    Distribution
            can only be made if the Participant is 100% vested.

       (c)  A Participant who has attained the Plan's Normal Retirement Age and
            who   has not
            separated from Service [x] may [  ] may not receive a distribution
            of   his or her vested
            account balance.

       NOTE:     If the Participant has had the right to withdraw his or her
                 account   balance in the
                 past, this right may not be taken away.  Notwithstanding the
                 above,   to the contrary,
                 required minimum distributions will be paid.  For timing of
                 distributions,   see item
                 21(a) below.

  21.  DISTRIBUTION OPTIONS

       (a)  Timing of Distributions:

            In cases of termination for other than death, Disability or
            retirement,   benefits shall be paid:

            [x]  (i)  As soon as administratively feasible, following the close
                      of   the valuation
                      period during which a distribution is requested or is
                      otherwise   payable.

            [  ] (ii) As soon as administratively feasible following the close
                      of   the Plan Year
                      during which a distribution is requested or is otherwise
                      payable.

            [  ] (iii)As soon as administratively feasible, following the
                      date   on which a
                      distribution is requested or is otherwise payable.

            [  ] (iv) As soon as administratively feasible, after the close of
                      the   Plan Year during
                      which the Participant incurs       consecutive one-year
                      Breaks   in Service.

            [  ] (v)  Only after the Participant has achieved the Plan's Normal
                      Retirement   Age,
                      or Early Retirement Age, if applicable.

            In cases of death, Disability or retirement, benefits shall be paid:

            [x]  (vi) As soon as administratively feasible, following the close
                      of   the valuation
                      period during which a distribution is requested or is
                      otherwise   payable.

            [  ] (vii)As soon as administratively feasible following the
                      close   of the Plan Year
                      during which a distribution is requested or is
                      otherwise   payable.

            [  ] (viii)    As soon as administratively feasible, following the
                           date   on which a
                           distribution is requested or is otherwise payable.

       (b)  Optional Forms of Payment:

            [x]  (i)  Lump Sum.

            [  ] (ii) Installment Payments.

            [  ] (iii)Life Annuity*.

            [  ] (iv) Life Annuity  Term Certain*.
                      Life Annuity with payments guaranteed for
                      years   (not to exceed
                      20 years, specify all applicable).

            [  ] (v)  Joint and [  ] 50%, [  ] 66-2/3%, [  ] 75% or [  ] 100%
                      survivor   annuity*
                      (specify all applicable).

            [  ] (vi) Other form(s) specified:

            *Not available in Plan meeting provisions of paragraph 8.7 of Basic
             Plan   Document #04.

       (c)  Recalculation of Life Expectancy:

            In determining required distributions under the Plan, Participants
            and/or   their Spouse
            (Surviving Spouse) [x] shall [  ] shall not have the right to have
            their   life expectancy
            recalculated annually.

            If "shall",

            [  ] only the Participant shall be recalculated.

            [  ] both the Participant and Spouse shall be recalculated.

            [x]  who is recalculated shall be determined by the Participant.

  22.  SPONSOR CONTACT

       Employers should direct questions concerning the language contained in
       and   qualification of the
       Prototype to:

       Raymond F. Lynn, Jr.
       (Job Title)
       (Phone Number)  (334)867-3231

       In the event that the Sponsor amends, discontinues or abandons this
       Prototype   Plan, notification will
       be provided to the Employer's address provided on the first page of this
       Agreement.

  23.  SIGNATURES:

       DUE TO THE SIGNIFICANT TAX RAMIFICATIONS, THE SPONSOR RECOMMENDS THAT
       BEFORE   YOU EXECUTE THIS
       ADOPTION AGREEMENT, YOU CONTACT YOUR ATTORNEY OR TAX ADVISOR, IF ANY.

       (a)  EMPLOYER:

            Name and address of Employer if different than specified in Section
            1   above.

            W. Bibb Lamar, Jr.
            President & CEO


            This agreement and the corresponding provisions of the Plan and
            Trust/Custodial   Account
            Basic Plan Document #04 were adopted by the Employer the       day
            of                    , 19    .


            Signed for the Employer by:


            Title:


            Signature:

            THE EMPLOYER UNDERSTANDS THAT ITS FAILURE TO PROPERLY COMPLETE THE
            ADOPTION
            AGREEMENT MAY RESULT IN DISQUALIFICATION OF ITS PLAN.

            Employer's Reliance:  The adopting Employer may not rely on an
            opinion   letter issued by
            the National Office of the Internal Revenue Service as evidence that
            the   Plan is qualified
            under Code Section 401.  In order to obtain reliance with respect to
            Plan   qualification, the
            Employer must apply to the appropriate Key District Office for a
            determination   letter.

            This Adoption Agreement may only be used in conjunction with Basic
            Plan   Document #04

[  ] (b)  TRUSTEE:

            Name of Trustee:



            The assets of the Fund shall be invested in accordance with
            paragraph   13.3 of the Basic
            Plan Document #04 as a Trust.  As such, the Employer's Plan as
            contained   herein was
            accepted by the Trustee the        day of                       ,
            19  .

       Signed for the Trustee by:


       Title:


       Signature:

  [  ] (c)  CUSTODIAN:

            Name of Custodian:



            The assets of the Fund shall be invested in accordance with
            paragraph   13.4 of the Basic
            Plan Document #04 as a Custodial Account.  As such, the Employer's
            Plan   as contained
            herein was accepted by the Custodian the        day of
            , 19    .

       Signed for the Custodian by:


       Title:


       Signature:

       (d)  SPONSOR:

            The Employer's Agreement and the corresponding provisions of the
            Plan   and
            Trust/Custodial Account Basic Plan Document #04 were accepted by the
            Sponsor   the
            day of                       , 19    .

       Signed for the Sponsor by:


       Title:


       Signature:







              PROTOTYPE CASH OR DEFERRED PROFIT-SHARING PLAN
                        AND TRUST/CUSTODIAL ACCOUNT

                               Sponsored By
                            FIRST NATIONAL BANK

                             Brewton, Alabama
                          BASIC PLAN DOCUMENT #04







                                             February 1993

              COPYRIGHT 1993 THE McKAY HOCHMAN COMPANY, INC.
THIS DOCUMENT IS COPYRIGHTED UNDER THE LAWS OF THE UNITED STATES.  USE,
DUPLICATION OR REPRODUCTION, INCLUDING THE USE OF ELECTRONIC MEANS, IS
PROHIBITED BY LAW WITHOUT THE EXPRESS CONSENT OF THE AUTHOR.

                             TABLE OF CONTENTS
PARAGRAPH                                       PAGE

                              ARTICLE I
                             DEFINITIONS

1.1       Actual Deferral Percentage                                 1
1.2       Adoption Agreement                                         1
1.3       Aggregate Limit                                            1
1.4       Annual Additions                                           2
1.5       Annuity Starting Date                                      2
1.6       Applicable Calendar Year                                   2
1.7       Applicable Life Expectancy                                 2
1.8       Average Contribution Percentage (ACP)                      2
1.9       Average Deferral Percentage (ADP)                          2
1.10      Break In Service                                           2
1.11      Code                                                       3
1.12      Compensation                                               3
1.13      Contribution Percentage                                    4
1.14      Custodian                                                  5
1.15      Defined Benefit Plan                                       5
1.16      Defined Benefit (Plan) Fraction                            5
1.17      Defined Contribution Dollar Limitation                     5
1.18      Defined Contribution Plan                                  5
1.19      Defined Contribution (Plan) Fraction                       5
1.20      Designated Beneficiary                                     6
1.21      Disability                                                 6
1.22      Distribution Calendar Year                                 6
1.23      Early Retirement Age                                       6
1.24      Earned Income                                              6
1.25      Effective Date                                             6
1.26      Election Period                                            6
1.27      Elective Deferral                                          6
1.28      Eligible Participant                                       7
1.29      Employee                                                   7
1.30      Employer                                                   7
1.31      Entry Date                                                 7
1.32      Excess Aggregate Contributions                             7
1.33      Excess Amount                                              7
1.34      Excess Contribution                                        7
1.35      Excess Elective Deferrals                                  8
1.36      Family Member                                              8
1.37      First Distribution Calendar Year                           8
1.38      Fund                                                       8
1.39      Hardship                                                   8
1.40      Highest Average Compensation                               8
1.41      Highly Compensated Employee                                8
1.42      Hour Of Service                                            9
1.43      Key Employee                                              10
1.44      Leased Employee                                           10
1.45      Limitation Year                                           10
1.46      Master Or Prototype Plan                                  10
1.47      Matching Contribution                                     10
1.48      Maximum Permissible Amount                                10
1.49      Net Profit                                                10
1.50      Normal Retirement Age                                     11
1.51      Owner-Employee                                            11
1.52      Paired Plans                                              11
1.53      Participant                                               11
1.54      Participant's Benefit                                     11
1.55      Permissive Aggregation Group                              11
1.56      Plan                                                      11
1.57      Plan Administrator                                        11
1.58      Plan Year                                                 11
1.59      Present Value                                             11
1.60      Projected Annual Benefit                                  11
1.61      Qualified Deferred Compensation Plan                      12
1.62      Qualified Domestic Relations Order                        12
1.63      Qualified Early Retirement Age                            12
1.64      Qualified Joint And Survivor Annuity                      12
1.65      Qualified Matching Contribution                           12
1.66      Qualified Non-Elective Contributions                      12
1.67      Qualified Voluntary Contribution                          12
1.68      Required Aggregation Group                                12
1.69      Required Beginning Date                                   13
1.70      Rollover Contribution                                     13
1.71      Salary Savings Agreement                                  13
1.72      Self-Employed Individual                                  13
1.73      Service                                                   13
1.74      Shareholder Employee                                      13
1.75      Simplified Employee Pension Plan                          13
1.76      Sponsor                                                   13
1.77      Spouse (Surviving Spouse)                                 13
1.78      Super Top-Heavy Plan                                      13
1.79      Taxable Wage Base                                         14
1.80      Top-Heavy Determination Date                              14
1.81      Top-Heavy Plan                                            14
1.82      Top-Heavy Ratio                                           14
1.83      Top-Paid Group                                            15
1.84      Transfer Contribution                                     16
1.85      Trustee                                                   16
1.86      Valuation Date                                            16
1.87      Vested Account Balance                                    16
1.88      Voluntary Contribution                                    16
1.89      Welfare Benefit Fund                                      16
1.90      Year Of Service                                           16

                              ARTICLE II
                       ELIGIBILITY REQUIREMENTS

2.1       Participation                                             17
2.2       Change In Classification Of Employment                    17
2.3       Computation Period                                        17
2.4       Employment Rights                                         17
2.5       Service With Controlled Groups                            17
2.6       Owner-Employees                                           17
2.7       Leased Employees                                          18
2.8       Thrift Plans                                              18

                             ARTICLE III
                        EMPLOYER CONTRIBUTIONS

3.1       Amount                                                    19
3.2       Expenses And Fees                                         19
3.3       Responsibility For Contributions                          19
3.4       Return Of Contributions                                   19

                              ARTICLE IV
                        EMPLOYEE CONTRIBUTIONS

4.1       Voluntary Contributions                                   20
4.2       Qualified Voluntary Contributions                         20
4.3       Rollover Contribution                                     20
4.4       Transfer Contribution                                     21
4.5       Employer Approval Of Transfer Contributions               21
4.6       Elective Deferrals                                        21
4.7       Required Voluntary Contributions                          21
4.8       Direct Rollover of Benefits                               22

                              ARTICLE V
                         PARTICIPANT ACCOUNTS

5.1       Separate Accounts                                         23
5.2       Adjustments To Participant Accounts                       23
5.3       Allocating Employer Contributions                         24
5.4       Allocating Investment Earnings And Losses                 24
5.5       Participant Statements                                    24

                              ARTICLE VI
                RETIREMENT BENEFITS AND DISTRIBUTIONS

6.1       Normal Retirement Benefits                                25
6.2       Early Retirement Benefits                                 25
6.3       Benefits On Termination Of Employment                     25
6.4       Restrictions On Immediate Distributions                   26
6.5       Normal Form Of Payment                                    27
6.6       Commencement Of Benefits                                  28
6.7       Claims Procedures                                         28
6.8       In-Service Withdrawals                                    28
6.9       Hardship Withdrawal                                       29

                             ARTICLE VII
                      DISTRIBUTION REQUIREMENTS

7.1       Joint And Survivor Annuity Requirements                   32
7.2       Minimum Distribution Requirements                         32
7.3       Limits On Distribution Periods                            32
7.4       Required Distributions On Or After The
           Required Beginning Date                                  32
7.5       Required Beginning Date                                   33
7.6       Transitional Rule                                         34
7.7       Designation Of Beneficiary For Death Benefit              35
7.8       Nonexistence Of Beneficiary                               35
7.9       Distribution Beginning Before Death                       35
7.10      Distribution Beginning After Death                        35
7.11      Distribution Of Excess Elective Deferrals                 36
7.12      Distributions of Excess Contributions                     37
7.13      Distribution Of Excess Aggregate Contributions            37

                             ARTICLE VIII
               JOINT AND SURVIVOR ANNUITY REQUIREMENTS

8.1       Applicability Of Provisions                               39
8.2       Payment Of Qualified Joint And Survivor Annuity           39
8.3       Payment Of Qualified Pre-Retirement Survivor Annuity      39
8.4       Qualified Election                                        39
8.5       Notice Requirements For Qualified Joint And Survivor
           Annuity                                                  40
8.6       Notice Requirements For Qualified Pre-Retirement
           Survivor Annuity                                         40
8.7       Special Safe-Harbor Exception For Certain Profit-
           Sharing Plans                                            40
8.8       Transitional Joint And Survivor Annuity Rules             41
8.9       Automatic Joint And Survivor Annuity And Early
           Survivor Annuity                                         41
8.10      Annuity Contracts                                         42

                              ARTICLE IX
                               VESTING

9.1       Employee Contributions                                    43
9.2       Employer Contributions                                    43
9.3       Computation Period                                        43
9.4       Requalification Prior To Five Consecutive One-Year Breaks
           In Service                                               43
9.5       Requalification After Five Consecutive One-Year Breaks
           In Service                                               43
9.6       Calculating Vested Interest                               43
9.7       Forfeitures                                               43
9.8       Amendment Of Vesting Schedule                             44
9.9       Service With Controlled Groups                            44

                              ARTICLE X
                      LIMITATIONS ON ALLOCATIONS

                    AND ANTIDISCRIMINATION TESTING
10.1      Participation In This Plan Only                           45
10.2      Disposition Of Excess Annual Additions                    45
10.3      Participation In This Plan And Another Master and
           Prototype Defined Contribution Plan, Welfare Benefit Fund
           Or Individual Medical Account Maintained By The Employer 46
10.4      Disposition Of Excess Annual Additions Under Two Plans    46
10.5      Participation In This Plan And Another Defined
           Contribution Plan Which Is Not A Master Or Prototype
           Plan                                                     47
10.6      Participation In This Plan And A Defined Benefit Plan     47
10.7      Average Deferral Percentage (ADP) Test                    47
10.8      Special Rules Relating To Application Of ADP Test         47
10.9      Recharacterization                                        48
10.10     Average Contribution Percentage (ACP) Test                49
10.11    Special Rules Relating To Application Of ACP Test          49

                              ARTICLE XI
                            ADMINISTRATION

11.1      Plan Administrator                                        51
11.2      Trustee/Custodian                                         51
11.3      Administrative Fees And Expenses                          52
11.4      Division Of Duties And Indemnification                    52

                             ARTICLE XII
                     TRUST FUND/CUSTODIAL ACCOUNT

12.1      The Fund                                                  54
12.2      Control Of Plan Assets                                    54
12.3      Exclusive Benefit Rules                                   54
12.4      Assignment And Alienation Of Benefits                     54
12.5      Determination Of Qualified Domestic Relations Order(QDRO) 54

                             ARTICLE XIII
                             INVESTMENTS

13.1      Fiduciary Standards                                       56
13.2      Funding Arrangement                                       56
13.3      Investment Alternatives Of The Trustee                    56
13.4      Duties Of The Custodian                                   57
13.5      Participant Loans                                         57
13.6      Insurance Policies                                        59
13.7      Employer Investment Direction                             60
13.8      Employee Investment Direction                             60
                                                                    61

                             ARTICLE XIV
                         TOP-HEAVY PROVISIONS

14.1      Applicability Of Rules                                    62
14.2      Minimum Contribution                                      62
14.3      Minimum Vesting                                           62
14.4      Limitations On Allocations                                63

                              ARTICLE XV
                      AMENDMENT AND TERMINATION

15.1      Amendment By Sponsor                                      64
15.2      Amendment By Employer                                     64
15.3      Termination                                               64
15.4      Qualification Of Employer's Plan                          64
15.5      Mergers And Consolidations                                64
15.6      Resignation And Removal                                   65
15.7      Qualification Of Prototype                                65

                             ARTICLE XVI
                            GOVERNING LAW

    PROTOTYPE CASH OR DEFERRED PROFIT-SHARING PLAN AND TRUST/CUSTODIAL
                                 ACCOUNT
                               SPONSORED BY
                            FIRST NATIONAL BANK


The Sponsor hereby establishes the following Prototype Retirement Plan and
Trust/Custodial Account for use by those of its
customers who qualify and wish to adopt a qualified retirement program.  Any
Plan and Trust/Custodial Account established
hereunder shall be administered for the exclusive benefit of Participants and
their beneficiaries under the following terms and
conditions:

                                 ARTICLE I

                                DEFINITIONS

1.1  ACTUAL DEFERRAL PERCENTAGE  The ratio (expressed as a percentage and
calculated separately for each Participant) of:

       (a)  the amount of Employer contributions [as defined at (c) and (d)]
            actually paid over to the Fund on behalf of such Participant for
            the Plan Year to

       (b)  the Participant's Compensation for such Plan Year.  Compensation
            will only include amounts for the period during which the
            Employee was eligible to participate.

Employer contributions on behalf of any Participant shall include:

       (c)  any Elective Deferrals made pursuant to the Participant's deferral
election, including Excess Elective Deferrals, but excluding Elective
Deferrals that are either taken into account in the Contribution Percentage
test (provided the ADP test is satisfied both with and without exclusion of
these Elective Deferrals) or are returned as excess Annual Additions; and

       (d)  at the election of the Employer, Qualified Non-Elective
            Contributions and Qualified Matching Contributions.

For purposes of computing Actual Deferral Percentages, an Employee who would
be a Participant but for the failure to make
Elective Deferrals shall be treated as a Participant on whose behalf no
Elective Deferrals are made.

1.2  ADOPTION AGREEMENT  The document attached to this Plan by which an
Employer elects to establish a qualified retirement plan and trust/custodial
account under the terms of this Prototype Plan and Trust/Custodial Account.

1.3  AGGREGATE LIMIT  The sum of:

       (a)  125 percent of the greater of the ADP of the non-Highly
Compensated Employees for the Plan Year or the ACP of non-Highly Compensated
Employees under the Plan subject to Code Section 401(m) for the Plan Year
beginning with or within the Plan Year of the cash or deferred arrangement as
described in Code Section 401(k) or Code Section 402(h)(1)(B), and

       (b)  the lesser of 200% or two percent plus the lesser of such ADP or
ACP.

Alternatively, the aggregate limit can be determined by substituting "the
lesser of 200% or 2 percent plus" for "125% of" in (a)
above, and substituting "125% of" for "the lesser of 200% or 2 percent plus"
in (b) above.

1.4  ANNUAL ADDITIONS  The sum of the following amounts credited to a
Participant's account for the Limitation Year:

          (a)  Employer Contributions,

          (b)  Employee Contributions (under Article IV),

          (c)  forfeitures,

          (d)  amounts allocated after March 31, 1984 to an individual medical
account, as defined in Code Section 415(l)(2), which is part of a pension or
annuity plan maintained by the Employer (these amounts are treated as Annual
Additions to a Defined Contribution Plan though they arise under a Defined
Benefit Plan), and

          (e)  amounts derived from contributions paid or accrued after 1985,
in taxable years ending after 1985, which are either attributable to
post-retirement medical benefits allocated to the account of a Key Employee,
or to a Welfare Benefit Fund maintained by the Employer, are also treated as
Annual Additions to a Defined Contribution Plan.  For purposes of this
paragraph, an Employee is a Key Employee if he or she meets the requirements
of paragraph 1.43 at any time during the Plan Year or any preceding Plan
Year.  Welfare Benefit Fund is defined at paragraph 1.89.

Excess amounts applied in a Limitation Year to reduce Employer contributions
will be considered Annual Additions for such
Limitation Year, pursuant to the provisions of Article X.

1.5  ANNUITY STARTING DATE  The first day of the first period for which an
amount is paid as an annuity or in any other form.


1.6  APPLICABLE CALENDAR YEAR  The First Distribution Calendar Year, and in
the event of the recalculation of life
expectancy, such succeeding calendar year.  If payments commence in accordance
with paragraph 7.4(e) before the Required
Beginning Date, the Applicable Calendar Year is the year such payments
commence.  If distribution is in the form of an
immediate annuity purchased after the Participant's death with the
Participant's remaining interest, the Applicable Calendar Year
is the year of purchase.

1.7  APPLICABLE LIFE EXPECTANCY  Used in determining the required minimum
distribution.  The life expectancy (or joint
and last survivor expectancy) calculated using the attained age of the
Participant (or Designated Beneficiary) as of the
Participant's (or Designated Beneficiary's) birthday in the Applicable
Calendar Year reduced by one for each calendar year
which has elapsed since the date life expectancy was first calculated.  If
life expectancy is being recalculated, the Applicable
Life Expectancy shall be the life expectancy as so recalculated.  The life
expectancy of a non-Spouse Beneficiary may not be
recalculated.

1.8  AVERAGE CONTRIBUTION PERCENTAGE (ACP)  The average of the Contribution
Percentages for each Highly Compensated
Employee and for each non-Highly Compensated Employee.

1.9  AVERAGE DEFERRAL PERCENTAGE (ADP)  The average of the Actual Deferral
Percentages for each Highly Compensated
Employee and for each non-Highly Compensated Employee.

1.10 BREAK IN SERVICE  A 12-consecutive month period during which an Employee
fails to complete more than 500 Hours
of Service.

1.11 CODE  The Internal Revenue Code of 1986, including any amendments.

1.12 COMPENSATION  The Employer may select one of the following three
safe-harbor definitions of Compensation in the
Adoption Agreement.  Compensation shall only include amounts earned while a
Participant if Plan Year is chosen as the
applicable computation period.

     (a)  CODE SECTION 3401(A) WAGES.  Compensation is defined as wages within
the meaning of Code Section 3401(a)
          for the purposes of Federal income tax withholding at the source but
determined without regard to any rules
          that limit the remuneration included in wages based on the nature or
location of the employment or the services
          performed [such as the exception for agricultural labor in Code
Section 3401(a)(2)].

     (b)  CODE SECTION 6041 AND 6051 WAGES.  Compensation is defined as wages
as defined in Code Section 3401(a)
          and all other payments of compensation to an Employee by the
Employer (in the course of the Employer's trade
          or business) for which the Employer is required to furnish the
employee a written statement under Code Section
          6041(d) and 6051(a)(3).  Compensation must be determined without
regard to any rules under Code Section
          3401(a) that limit the remuneration included in wages based on the
nature or location of the employment or the
          services performed [such as the exception for agricultural labor in
Code Section 3401(a)(2)].

     (c)  CODE SECTION 415 COMPENSATION.  For purposes of applying the
limitations of Article X and Top-Heavy
          Minimums, the definition of Compensation shall be Code Section 415
Compensation defined as follows:  a
          Participant's Earned Income, wages, salaries, and fees for
professional services and other amounts received
          (without regard to whether or not an amount is paid in cash) for
personal services actually rendered in the
          course of employment with the Employer maintaining the Plan to the
extent that the amounts are includible in
          gross income [including, but not limited to, commissions paid
salesmen, Compensation for services on the basis
          of a percentage of profits, commissions on insurance premiums, tips,
bonuses, fringe benefits and
          reimbursements or other expense allowances under a nonaccountable
plan (as described in Regulation 1.62-
          2(c)], and excluding the following:

          1.   Employer contributions to a plan of deferred compensation which
are not includible in the Employee's
               gross income for the taxable year in which contributed, or
Employer contributions under a Simplified
               Employee Pension Plan or any distributions from a plan of
deferred compensation,

          2.   Amounts realized from the exercise of a non-qualified stock
option, or when restricted stock (or
               property) held by the Employee either becomes freely
transferable or is no longer subject to a
               substantial risk of forfeiture,

          3.   Amounts realized from the sale, exchange or other disposition
of stock acquired under a qualified stock
               option; and

          4.   other amounts which received special tax benefits, or
contributions made by the Employer (whether
               or not under a salary reduction agreement) towards the purchase
of an annuity contract described in
               Code Section 403(b) (whether or not the contributions are
actually excludible from the gross income
               of the Employee).

For purposes of applying the limitations of Article X and Top-Heavy Minimums,
the definition of Compensation shall be Code
Section 415 Compensation described in this paragraph 1.12(c). Also, for
purposes of applying the limitations of Article X,
Compensation for a Limitation Year is the Compensation actually paid or made
available during such Limitation Year.
Notwithstanding the preceding sentence, Compensation for a Participant in a
defined contribution plan who is permanently and
totally disabled [as defined in Code Section 22(e)(3)] is the Compensation
such Participant would have received for the
Limitation Year if the Participant had been paid at the rate of Compensation
paid immediately before becoming permanently
and totally disabled.  Such imputed Compensation for the disabled Participant
may be taken into account only if the participant
is not a Highly Compensated Employee [as defined in Code Section 414(q)] and
contributions made on behalf of such
Participant are nonforfeitable when made.

If the Employer fails to pick the applicable period in the Adoption Agreement,
the Plan Year shall be used.  Unless otherwise
specified by the Employer in the Adoption Agreement, Compensation shall be
determined as provided in Code Section 3401(a)
[as defined in this paragraph 1.12(a)].  In nonstandardized Adoption Agreement
002, the Employer may choose to eliminate or
exclude categories of Compensation which do not violate the provisions of Code
Sections 401(a)(4), 414(s) the regulations
thereunder and Revenue Procedure 89-65.

Beginning with 1989 Plan Years, the annual Compensation of each Participant
which may be taken into account for determining
all benefits provided under the Plan (including benefits under Article XIV)
for any year shall not exceed $200,000, as adjusted
under Code Section 415(d).  In determining the Compensation of a Participant
for purposes of this limitation, the rules of Code
Section 414(q)(6) shall apply, except in applying such rules, the term
"family" shall include only the Spouse of the Participant
and any lineal descendants of the Participant who have not attained age 19
before the end of the Plan year.  If, as a result of the
application of such rules the adjusted $200,000 limitation is exceeded, then
(except for purposes of determining the portion of
Compensation up to the integration level if this Plan provides for permitted
disparity),  the limitation shall be prorated among
the affected individuals in proportion to each such individual's Compensation
as determined under this section prior to the
application of this limitation.

If a Plan has a Plan Year that contains fewer than 12 calendar months, then
the annual Compensation limit for that period is
an amount equal to the $200,000 as adjusted for the calendar year in which the
Compensation period begins, multiplied by a
fraction the numerator of which is the number of full months in the Short Plan
Year and the denominator of which is 12.  If
Compensation for any prior Plan Year is taken into account in determining an
Employee's contributions or benefits for the
current year, the Compensation for such prior year is subject to the
applicable annual Compensation limit in effect for that prior
year.  For this purpose, for years beginning before January 1, 1990, the
applicable annual Compensation limit is $200,000.

Compensation shall not include deferred Compensation other than contributions
through a salary reduction agreement to a cash
or deferred plan under Code Section 401(k), a Simplified Employee Pension Plan
under Code Section 402(h)(1)(B), a cafeteria
plan under Code Section 125 or a tax-deferred annuity under Code Section
403(b).  Unless elected otherwise by the Employer
in the Adoption Agreement, these deferred amounts will be considered as
Compensation for Plan purposes.  These deferred
amounts are not counted as Compensation for purposes of Articles X and XIV.
When applicable to a Self-Employed Individual,
Compensation shall mean Earned Income.

1.13 CONTRIBUTION PERCENTAGE  The ratio (expressed as a percentage and
calculated separately for each Participant) of:

       (a)  the Participant's Contribution Percentage Amounts [as defined at
(c)-(f)] for  the Plan Year, to

       (b)  the Participant's Compensation for the Plan Year.  Compensation
will only include amounts for the period during which the Employee was
eligible to participate.

Contribution Percentage Amounts on behalf of any Participant shall include:

       (c)  the amount of Employee Voluntary Contributions, Matching
Contributions, and Qualified Matching Contributions (to the extent not taken
into account for purposes of the ADP test) made under the Plan on behalf of
the Participant for the Plan Year,

       (d)  forfeitures of Excess Aggregate Contributions or Matching
Contributions allocated to the Participant's account which shall be taken
into account in the year in which such forfeiture is allocated,

       (e)  at the election of the Employer, Qualified Non-Elective
Contributions, and

       (f)  the Employer also may elect to use Elective Deferrals in the
Contribution Percentage Amounts so long as the ADP test is met before the
Elective Deferrals are used in the ACP test and continues to be met
following the exclusion of those Elective Deferrals that are used to meet the
ACP test.

Contribution Percentage Amounts shall not include Matching Contributions,
whether or not Qualified, that are forfeited either
to correct Excess Aggregate Contributions, or because the contributions to
which they relate are Excess Deferrals, Excess
Contributions, or Excess Aggregate Contributions.

1.14 CUSTODIAN  The Sponsor of this Prototype Plan, or if applicable, an
affiliate or successor, shall serve as Custodian, if
a Custodian is appointed in the Adoption Agreement.

1.15 DEFINED BENEFIT PLAN  A Plan under which a Participant's benefit is
determined by a formula contained in the Plan and
no individual accounts are maintained for Participants.

1.16 DEFINED BENEFIT (PLAN) FRACTION  A fraction, the numerator of which is
the sum of the Participant's Projected Annual
Benefits under all the Defined Benefit Plans (whether or not terminated)
maintained by the Employer, and the denominator of
which is the lesser of 125 percent of the dollar limitation determined for the
Limitation Year under Code Sections 415(b) and
(d) or 140 percent of the Highest Average Compensation, including any
adjustments under Code Section 415(b).

Notwithstanding the above, if the Participant was a Participant as of the
first day of the first Limitation Year beginning after
1986, in one or more Defined Benefit Plans maintained by the Employer which
were in existence on May 6, 1986, the
denominator of this fraction will not be less than 125 percent of the sum of
the annual benefits under such plans which the
Participant had accrued as of the close of the last Limitation Year beginning
before 1987, disregarding any changes in the terms
and conditions of the plan after May 5, 1986.  The preceding sentence applies
only if the Defined Benefit Plans individually and
in the aggregate satisfied the requirements of Section 415 for all Limitation
Years beginning before 1987.

1.17 DEFINED CONTRIBUTION DOLLAR LIMITATION  Thirty thousand dollars ($30,000)
or if greater, one-fourth of the defined
benefit dollar limitation set forth in Code Section 415(b)(1) as in effect for
the Limitation Year.

1.18 DEFINED CONTRIBUTION PLAN  A Plan under which individual accounts are
maintained for each Participant to which all
contributions, forfeitures, investment income and gains or losses, and
expenses are credited or deducted.  A Participant's benefit
under such Plan is based solely on the fair market value of his or her account
balance.

1.19 DEFINED CONTRIBUTION (PLAN) FRACTION  A Fraction, the numerator of which
is the sum of the Annual Additions to the
Participant's account under all the Defined Contribution Plans (whether or not
terminated) maintained by the Employer for the
current and all prior Limitation Years (including the Annual Additions
attributable to the Participant's nondeductible Employee
contributions to all Defined Benefit Plans, whether or not terminated,
maintained by the Employer, and the Annual Additions
attributable to all Welfare Benefit Funds, as defined in paragraph 1.89 and
individual medical accounts, as defined in Code
Section 415(l)(2), maintained by the Employer), and the denominator of which
is the sum of the maximum aggregate amounts
for the current and all prior Limitation Years of service with the Employer
(regardless of whether a Defined Contribution Plan
was maintained by the Employer).  The maximum aggregate amount in the
Limitation Year is the lesser of 125 percent of the
dollar limitation determined under Code Sections 415(b) and (d) in effect
under Code Section 415(c)(1)(A) or 35 percent of the
Participant's Compensation for such year.

If the Employee was a Participant as of the end of the first day of the first
Limitation Year beginning after 1986, in one or more
Defined Contribution Plans maintained by the Employer which were in existence
on May 6, 1986, the numerator of this fraction
will be adjusted if the sum of this fraction and the Defined Benefit Fraction
would otherwise exceed 1.0 under the terms of this
Plan.  Under the adjustment, an amount equal to the product of (1) the excess
of the sum of the fractions over 1.0 times (2) the
denominator of this fraction will be permanently subtracted from the numerator
of this fraction.  The adjustment is calculated
using the fractions as they would be computed as of the end of the last
Limitation Year beginning before 1987, and disregarding
any changes in the terms and conditions of the Plan made after May 6, 1986,
but using the Section 415 limitation applicable
to the first Limitation Year beginning on or after January 1, 1987.  The
Annual Addition for any Limitation Year beginning
before 1987, shall not be re-computed to treat all Employee Contributions as
Annual Additions.

1.20 DESIGNATED BENEFICIARY  The individual who is designated as the
beneficiary under the Plan in accordance with Code
Section 401(a)(9) and the regulations thereunder.

1.21 DISABILITY  An illness or injury of a potentially permanent nature,
expected to last for a continuous period of not less
than 12 months, certified by a physician selected by or satisfactory to the
Employer, which prevents the Employee from engaging
in any occupation for wage or profit for which the Employee is reasonably
fitted by training, education or experience.

1.22 DISTRIBUTION CALENDAR YEAR  A calendar year for which a minimum
distribution is required.

1.23 EARLY RETIREMENT AGE  The age set by the Employer in the Adoption
Agreement (but not less than 55), which is the
earliest age at which a Participant may retire and receive his or her benefits
under the Plan.

1.24 EARNED INCOME  Net earnings from self-employment in the trade or business
with respect to which the Plan is
established, determined without regard to items not included in gross income
and the deductions allocable to such items, provided
that personal services of the individual are a material income-producing
factor.  Earned income shall be reduced by contributions
made by an Employer to a qualified plan to the extent deductible under Code
Section 404.  For tax years beginning after 1989,
net earnings shall be determined taking into account the deduction for
one-half of self-employment taxes allowed to the Employer
under Code Section 164(f) to the extent deductible.

1.25 EFFECTIVE DATE  The date on which the Employer's retirement plan or
amendment to such plan becomes effective. For
amendments reflecting statutory and regulatory changes post Tax Reform Act of
1986, the Effective Date will be the earlier
of the date upon which such amendment is first administratively applied or the
first day of the Plan Year following the date of
adoption of such amendment.

1.26 ELECTION PERIOD  The period which begins on the first day of the Plan
Year in which the Participant attains age 35 and
ends on the date of the Participant's death.  If a Participant separates from
service prior to the first day of the Plan Year in which
age 35 is attained, the Election Period shall begin on the date of separation,
with respect to the account balance as of the date
of separation.

1.27 ELECTIVE DEFERRAL  Employer contributions made to the Plan at the
election of the Participant, in lieu of cash
Compensation.  Elective Deferrals shall also include contributions made
pursuant to a Salary Savings Agreement or other
deferral mechanism, such as a cash option contribution.  With respect to any
taxable year, a Participant's Elective Deferral is
the sum of all Employer contributions made on behalf of such Participant
pursuant to an election to defer under any qualified
cash or deferred arrangement as described in Code Section 401(k), any
simplified employee pension cash or deferred
arrangement as described in Code Section 402(h)(1)(B), any eligible deferred
compensation plan under Code Section 457, any
plan as described under Code Section 501(c)(18), and any Employer
contributions made on the behalf of a Participant for the
purchase of an annuity contract under Code Section 403(b) pursuant to a Salary
Savings Agreement.  Elective Deferrals shall
not include any deferrals properly distributed as Excess Annual Additions.

1.28 ELIGIBLE PARTICIPANT  Any Employee who is eligible to make a Voluntary
Contribution, or an Elective Deferral (if the
Employer takes such contributions into account in the  calculation of the
Contribution Percentage), or to receive a Matching
Contribution (including forfeitures) or a Qualified Matching Contribution.  If
a Voluntary Contribution or Elective Deferral
is required as a condition of participation in the Plan, any Employee who
would be a Participant in the Plan if such Employee
made such a contribution shall be treated as an Eligible Participant even
though no Voluntary Contributions or Elective
Deferrals are made.

1.29 EMPLOYEE  Any person employed by the Employer (including Self-Employed
Individuals and partners), all Employees
of a member of an affiliated service group [as defined in Code Section
414(m)], Employees of a controlled group of corporations
[as defined in Code Section 414(b)], all Employees of any incorporated or
unincorporated trade or business which is under
common control [as defined in Code Section 414(c)], Leased Employees [as
defined in Code Section 414(n)] and any Employee
required to be aggregated by Code Section 414(o).  All such Employees shall be
treated as employed by a single Employer.

1.30 EMPLOYER  The Self-Employed Individual, partnership, corporation or other
organization which adopts this Plan
including any firm that succeeds the Employer and adopts this Plan.  For
purposes of Article X, Limitations on Allocations,
Employer shall mean the Employer that adopts this Plan, and all members of a
controlled group of corporations [as defined in
Code Section 414(b) as modified by Code Section 415(h)], all commonly
controlled trades or businesses [as defined in Code
Section 414(c) as modified by Code Section 415(h)] or affiliated service
groups [as defined in Code Section 414(m)] of which
the adopting Employer is a part, and any other entity required to be
aggregated with the Employer pursuant to regulations under
Code Section 414(o).

1.31 ENTRY DATE  The date on which an Employee commences participation in the
Plan as determined by the Employer in
the Adoption Agreement.

1.32 EXCESS AGGREGATE CONTRIBUTIONS  The excess, with respect to any Plan
Year, of:

       (a)  The aggregate Contribution Percentage Amounts taken into account in
computing the numerator of the Contribution Percentage actually made on
behalf of Highly Compensated Employees for such Plan Year, over

       (b)  The maximum Contribution Percentage Amounts permitted by the ACP
test (determined by reducing contributions made on behalf of Highly
Compensated Employees in order of their Contribution Percentages beginning
with the highest of such percentages).

Such determination shall be made after first determining Excess Elective
Deferrals pursuant to paragraph 1.35 and then
determining Excess Contributions pursuant to paragraph 1.34.

1.33 EXCESS AMOUNT  The excess of the Participant's Annual Additions for the
Limitation Year over the Maximum
Permissible Amount.

1.34 EXCESS CONTRIBUTION  With respect to any Plan Year, the excess of:

       (a)  The aggregate amount of Employer contributions actually taken into
account in computing the ADP of Highly Compensated Employees for such Plan
Year, over

       (b)  The maximum amount of such contributions permitted by the ADP test
(determined by reducing contributions made on behalf of Highly Compensated
Employees in order of the

            ADPs, beginning with the highest of such percentages).

1.35 EXCESS ELECTIVE DEFERRALS  Those Elective Deferrals that are includible
in a Participant's gross income under Code
Section 402(g) to the extent such Participant's Elective Deferrals for a
taxable year exceed the dollar limitation under such Code
Section.  Excess Elective Deferrals shall be treated as Annual Additions under
the Plan, unless such amounts are distributed
no later than the first April 15th following the close of the Participant's
taxable year.

1.36 FAMILY MEMBER  The Employee's Spouse, any lineal descendants and
ascendants and the Spouse of such lineal
descendants and ascendants.

1.37 FIRST DISTRIBUTION CALENDAR YEAR  For distributions beginning before the
Participant's death, the First Distribution
Calendar Year is the calendar year immediately preceding the calendar year
which contains the Participant's Required Beginning
Date.  For distributions beginning after the Participant's death, the First
Distribution Calendar Year is the calendar year in which
distributions are required to begin pursuant to paragraph 7.10.

1.38 FUND  All contributions received by the Trustee/Custodian under this Plan
and Trust/Custodial Account, investments
thereof and earnings and appreciation thereon.

1.39 HARDSHIP  An immediate and heavy financial need of the Employee where
such Employee lacks other available
resources.

1.40 HIGHEST AVERAGE COMPENSATION  The average Compensation for the three
consecutive Years of Service with the
Employer that produces the highest average.  A Year of Service with the
Employer is the 12-consecutive month period defined
in the Adoption Agreement.

1.41 HIGHLY COMPENSATED EMPLOYEE  Any Employee who performs service for the
Employer during the determination year
and who, during the immediate prior year:

       (a)  received Compensation from the Employer in excess of $75,000 [as
adjusted pursuant to Code Section 415(d)]; or


       (b)  received Compensation from the Employer in excess of $50,000
[as adjusted pursuant to Code Section 415(d)] and was a member of the
Top-Paid Group for such year; or

       (c)  was an officer of the Employer and received Compensation during
such year that is greater than 50 percent of the dollar limitation in effect
under Code Section 415(b)(1)(A).

Notwithstanding (a), (b) and (c), an Employee who was not Highly Compensated
during the preceding Plan Year shall not be treated as a Highly Compensated
Employee with respect to the current Plan Year unless such Employee is a
member of the 100 Employees paid the greatest Compensation during the year
for which such determination is being made.

       (d)  Employees who are five percent (5%) Owners at any time during the
immediate prior year or determination year.

Highly Compensated Employee includes Highly Compensated active Employees and
Highly Compensated former Employees.

1.42 HOUR OF SERVICE

       (a)  Each hour for which an Employee is paid, or entitled to payment,
for the performance of duties for the Employer.  These hours shall be
credited to the Employee for the computation period in which the duties are
performed; and

       (b)  Each hour for which an Employee is paid, or entitled to payment,
by the Employer on account of a period of time during which no duties are
performed (irrespective of whether the employment relationship has
terminated) due to vacation, holiday, illness, incapacity (including
disability), layoff, jury duty, military duty or leave of absence. No more
than 501 Hours of Service shall be credited under this paragraph for any
single continuous period (whether or not such period occurs in a single
computation period). Hours under this paragraph shall be calculated and
credited pursuant to Section 2530.200b-2 of the Department of Labor
Regulations which are incorporated herein by this reference; and

       (c)  Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer.  The same Hours of
Service shall not be credited both under paragraph (a) or paragraph (b), as
the case may be, and under this paragraph (c).  These hours shall be credited
to the Employee for the computation period or periods to which the award or
agreement pertains rather than the computation period in which the award,
 agreement or payment is made.

       (d)  Hours of Service shall be credited for employment with the Employer
and with other members of an affiliated service group [as defined in Code
Section 414(m)], a controlled group of corporations [as defined in Code
Section 414(b)], or a group of trades or businesses under common control [as
defined in Code Section 414(c)] of which the adopting Employer is a member,
and  any other entity required to be aggregated with the Employer pursuant to
Code Section 414(o) and the regulations thereunder. Hours of Service shall
also be credited for any individual considered an Employee for purposes of
this Plan under Code Section 414(n) or Code Section 414(o) and the
regulations thereunder.

       (e)  Solely for purposes of determining whether a Break in Service, as
defined in paragraph 1.10, for participation and vesting purposes has
occurred in a computation period, an individual who is absent from work for
maternity or paternity reasons shall receive credit for the Hours of Service
which would otherwise have been credited to such individual but for such
absence, or in any case in which such hours cannot be determined, 8 Hours of
Service per day of such absence.  For purposes of this paragraph, an absence
from work for maternity or paternity reasons means an absence by reason of
the pregnancy of the individual, by reason of a birth of a child of the
individual, by reason of the placement of a child with the individual in
connection with the adoption of such child by such individual, or for
purposes of caring for such child for a period beginning immediately
following such birth or placement. The Hours of Service credited under this
paragraph shall be credited in the computation period in which the absence
begins if the crediting is necessary to prevent a Break in Service in that
period, or in all other cases, in the following computation period.  No more
than 501 hours will be credited under this paragraph.

       (f)  Hours of Service shall be determined on the basis of the method
selected in the Adoption Agreement.

1.43 KEY EMPLOYEE  Any Employee or former Employee (and the beneficiaries of
such employee) who at any time during
the determination period was an officer of the Employer if such individual's
annual compensation exceeds 50% of the dollar
limitation under Code Section 415(b)(1)(A) (the defined benefit maximum annual
benefit), an owner (or considered an owner
under Code Section 318) of one of the ten largest interests in the employer if
such individual's compensation exceeds 100% of
the dollar limitation under Code Section 415(c)(1)(A), a 5% owner of the
Employer, or a 1% owner of the Employer who has
an annual compensation of more than $150,000.  For purposes of determining who
is a Key Employee, annual compensation
shall mean Compensation as defined for Article X, but including amounts
deferred through a salary reduction agreement to a
cash or deferred plan under Code Section 401(k), a Simplified Employee Pension
Plan under Code Section 408(k), a cafeteria
plan under Code Section 125 or a tax-deferred annuity under Code Section
403(b).  The determination period is the Plan Year
containing the Determination Date and the four preceding Plan Years.  The
determination of who is a Key Employee will be
made in accordance with Code Section 416(i)(1) and the regulations thereunder.

1.44 LEASED EMPLOYEE  Any person (other than an Employee of the recipient)
who, pursuant to an agreement between the
recipient and any other person ("leasing organization"), has performed
services for the recipient [or for the recipient and related
persons determined in accordance with Code Section 414(n)(6)] on a
substantially full-time basis for a period of at least one
year, and such services are of a type historically performed by Employees in
the business field of the recipient Employer.

1.45 LIMITATION YEAR  The calendar year or such other 12-consecutive month
period designated by the Employer in the
Adoption Agreement for purposes of determining the maximum Annual Addition to
a Participant's account.  All qualified plans
maintained by the Employer must use the same Limitation Year.  If the
Limitation Year is amended to a different 12-consecutive
month period, the new Limitation Year must begin on a date within the
Limitation Year in which the amendment is made.

1.46 MASTER OR PROTOTYPE PLAN  A plan, the form of which is the subject of a
favorable opinion letter from the Internal
Revenue Service.

1.47 MATCHING CONTRIBUTION  An Employer contribution made to this or any other
defined contribution plan on behalf of
a Participant on account of an Employee Voluntary Contribution made by such
Participant, or on account of a Participant's
Elective Deferral, under a Plan maintained by the Employer.

1.48 MAXIMUM PERMISSIBLE AMOUNT  The maximum Annual Addition that may be
contributed or allocated to a Participant's
account under the plan for any Limitation Year shall not exceed the lesser of:

       (a)  the Defined Contribution Dollar Limitation, or

       (b)  25% of the Participant's Compensation for the Limitation Year.


The compensation limitation referred to in (b) shall not apply to any
contribution for medical benefits [within the meaning of
Code Section 401(h) or Code Section 419A(f)(2)] which is otherwise treated as
an Annual Addition under Code Section
415(l)(1) or 419(d)(2).  If a short Limitation Year is created because of an
amendment changing the Limitation Year to a
different 12-consecutive month period, the Maximum Permissible Amount will not
exceed the Defined Contribution Dollar
Limitation multiplied by the following fraction:  Number of months in the
short Limitation Year divided by 12.

1.49 NET PROFIT  The current and accumulated operating earnings of the
Employer before Federal and State income taxes,
excluding nonrecurring or unusual items of income, and before contributions to
this and any other qualified plan of the
Employer.  Alternatively, the Employer may fix another definition in the
Adoption Agreement.

1.50 NORMAL RETIREMENT AGE  The age, set by the Employer in the Adoption
Agreement, at which a Participant may retire
and receive his or her benefits under the Plan.

1.51 OWNER-EMPLOYEE  A sole proprietor, or a partner owning more than 10% of
either the capital or profits interest of the
partnership.

1.52 PAIRED PLANS  Two or more Plans maintained by the Sponsor designed so
that a single or any combination of Plans
adopted by an Employer will meet the antidiscrimination rules, the
contribution and benefit limitations, and the Top-Heavy
provisions of the Code.

1.53 PARTICIPANT  Any Employee who has met the eligibility requirements and is
participating in the Plan.

1.54 PARTICIPANT'S BENEFIT  The account balance as of the last Valuation Date
in the calendar year immediately preceding
the Distribution Calendar Year (valuation calendar year) increased by the
amount of any contributions or forfeitures allocated
to the account balance as of the dates in the valuation calendar year after
the Valuation Date and decreased by distributions
made in the valuation calendar year after the Valuation Date.  A special
exception exists for the second distribution Calendar
Year.  For purposes of this paragraph, if any portion of the minimum
distribution for the First Distribution Calendar Year is
made in the second  Distribution Calendar Year on or before the Required
Beginning Date, the amount of the minimum
distribution made in the second distribution calendar year shall be treated as
if it had been made in the immediately preceding
Distribution Calendar Year.

1.55 PERMISSIVE AGGREGATION GROUP  Used for Top-Heavy testing purposes, it is
the Required Aggregation Group of plans
plus any other plan or plans of the Employer which, when considered as a group
with the Required Aggregation Group, would
continue to satisfy the requirements of Code Sections 401(a)(4) and 410.

1.56 PLAN  The Employer's retirement plan as embodied herein and in the
Adoption Agreement.

1.57 PLAN ADMINISTRATOR  The Employer.

1.58 PLAN YEAR  The 12-consecutive month period designated by the Employer in
the Adoption Agreement.

1.59      PRESENT VALUE  Used for Top-Heavy test and determination purposes,
when determining the Present Value of accrued
benefits, with respect to any Defined Benefit Plan maintained by the Employer,
interest and mortality rates shall be determined
in accordance with the provisions of the respective plan.  If applicable,
interest and mortality assumptions will be specified in
Section 11 of the Adoption Agreement.

1.60 PROJECTED ANNUAL BENEFIT  Used to test the maximum benefit which may be
obtained from a combination of retirement
plans, it is the annual retirement benefit (adjusted to an actuarial
equivalent straight life annuity if such benefit is expressed in
a form other than a straight life annuity or Qualified Joint and Survivor
Annuity) to which the Participant would be entitled
under the terms of a Defined Benefit Plan or plans, assuming:

       (a)  the Participant will continue employment until Normal Retirement Age
under the plan (or current age, if later), and

       (b)  the Participant's Compensation for the current Limitation Year and
all other relevant factors used to determine benefits under the plan will
remain constant for all future Limitation Years.

1.61 QUALIFIED DEFERRED COMPENSATION PLAN  Any pension, profit-sharing, stock
bonus, or other plan which meets the
requirements of Code Section 401 and includes a trust exempt from tax under
Code Section 501(a) or any annuity plan described
in Code Section 403(a).

An Eligible Retirement Plan is an individual retirement account (IRA) as
described in Code Section 408(a), an individual
retirement annuity (IRA) as described in Code Section 408(b), an annuity plan
as described in Code Section 403(a), or a
qualified trust as described in Code Section 401(a), which accepts Eligible
Rollover Distributions.  However in the case of an
Eligible Rollover Distribution to a Surviving Spouse, an Eligible Retirement
Plan is an individual retirement account or
individual retirement annuity.

1.62 QUALIFIED DOMESTIC RELATIONS ORDER  A QDRO is a signed Domestic Relations
Order issued by a State Court which
creates, recognizes or assigns to an alternate payee(s) the right to receive
all or part of a Participant's Plan benefit and which
meets the requirements of Code Section 414(p).  An alternate payee is a
Spouse, former Spouse, child, or other dependent who
is treated as a beneficiary under the Plan as a result of the QDRO.

1.63 QUALIFIED EARLY RETIREMENT AGE  For purposes of paragraph 8.9, Qualified
Early Retirement Age is the latest of:

       (a)  the earliest date, under the Plan, on which the Participant may
elect to receive retirement benefits, or

       (b)  the first day of the 120th month beginning before the Participant
reaches Normal Retirement Age, or

       (c)  the date the Participant begins participation.

1.64 QUALIFIED JOINT AND SURVIVOR ANNUITY  An immediate annuity for the life
of the Participant with a survivor annuity
for the life of the Participant's Spouse which is at least one-half of but not
more than the amount of the annuity payable during
the joint lives of the Participant and the Participant's Spouse.  The exact
amount of the Survivor Annuity is to be specified by
the Employer in the Adoption Agreement.  If not designated by the Employer,
the Survivor Annuity will be 1/2 of the amount
paid to the Participant during his or her lifetime.  The Qualified Joint and
Survivor Annuity will be the amount of benefit which
can be provided by the Participant's Vested Account Balance.

1.65 QUALIFIED MATCHING CONTRIBUTION  Matching Contributions which when made
are subject to the distribution and
nonforfeitability requirements under Code Section 401(k).

1.66 QUALIFIED NON-ELECTIVE CONTRIBUTIONS  Contributions (other than Matching
Contributions or Qualified Matching
Contributions) made by the Employer and allocated to Participants' accounts
that the Participants may not elect to receive in
cash until distributed from the Plan; that are nonforfeitable when made; and
that are distributable only in accordance with the
distribution provisions that are applicable to Elective Deferrals and
Qualified Matching Contributions.

1.67 QUALIFIED VOLUNTARY CONTRIBUTION  A tax-deductible voluntary Employee
contribution.  These contributions may no
longer be made to the Plan.

1.68 REQUIRED AGGREGATION GROUP  Used for Top-Heavy testing purposes, it
consists of:

       (a)  each qualified plan of the Employer in which at least one Key
Employee participates or participated at any time during the determination
period (regardless of whether the plan has terminated), and

       (b)  any other qualified plan of the Employer which enables a plan
described in (a) to meet the requirements of Code Sections 401(a)(4) or 410.

1.69 REQUIRED BEGINNING DATE  The date on which a Participant is required to
take his or her first minimum distribution
under the Plan.  The rules are set forth at paragraph 7.5.

1.70 ROLLOVER CONTRIBUTION  A contribution made by a Participant of an amount
distributed to such Participant from another
Qualified Deferred Compensation Plan in accordance with Code Sections
402(a)(5), (6), and (7).

An Eligible Rollover Distribution is any distribution of all or any portion of
the balance to the credit of the Participant except
that an Eligible Rollover Distribution does not include:

     (a)  any distribution that is one of a series of substantially equal
periodic payments (not less frequently than
          annually) made for the life (or life expectancy) of the Participant
or the joint lives (or joint life expectancies)
          of the Participant and the Participant's Designated Beneficiary, or
for a specified period of ten years or more;

     (b)  any distribution to the extent such distribution is required under
Code Section 401(a)(9); and

     (c)  the portion of any distribution that is not includible in gross
income (determined without  regard to the exclusion for net unrealized
appreciation with respect to Employer securities).

A Direct Rollover is a payment by the plan to the Eligible Retirement Plan
specified by the Participant.

1.71 SALARY SAVINGS AGREEMENT  An agreement between the Employer and a
participating Employee where the Employee
authorizes the Employer to withhold a specified percentage of his or her
Compensation for deposit to the Plan on behalf of such
Employee.

1.72 SELF-EMPLOYED INDIVIDUAL  An individual who has Earned Income for the
taxable year from the trade or business for
which the Plan is established including an individual who would have had
Earned Income but for the fact that the trade or
business had no Net Profit for the taxable year.

1.73 SERVICE  The period of current or prior employment with the Employer. If
the Employer maintains a plan of a
predecessor employer, Service for such predecessor shall be treated as Service
for the Employer.

1.74 SHAREHOLDER EMPLOYEE  An Employee or Officer who owns [or is considered
as owning within the meaning of Code
Section 318(a)(1)], on any day during the taxable year of an electing small
business corporation (S Corporation), more than
5% of such corporation's outstanding stock.

1.75 SIMPLIFIED EMPLOYEE PENSION PLAN  An individual retirement account which
meets the requirements of Code Section
408(k), and to which the Employer makes contributions pursuant to a written
formula.  These plans are considered for
contribution limitation and Top-Heavy testing purposes.

1.76 SPONSOR First National Bank, or any successor(s) or assign(s).

1.77 SPOUSE (SURVIVING SPOUSE)  The Spouse or Surviving Spouse of the
Participant, provided that a former Spouse will
be treated as the Spouse or Surviving Spouse and a current Spouse will not be
treated as the Spouse or Surviving Spouse to
the extent provided under a Qualified Domestic Relations Order as described in
Code Section 414(p).

1.78 SUPER TOP-HEAVY PLAN  A Plan described at paragraph 1.81 under which the
Top-Heavy Ratio [as defined at
paragraph 1.82] exceeds 90%.

1.79 TAXABLE WAGE BASE  For plans with an allocation formula which takes into
account the Employer's contribution under
the Federal Insurance Contributions Act (FICA), the maximum amount of earnings
which may be considered wages for such
Plan Year under the Social Security Act [Code Section 3121(a)(1)], or the
amount elected by the Employer in the Adoption
Agreement.

1.80 TOP-HEAVY DETERMINATION DATE  For any Plan Year subsequent to the first
Plan Year, the last day of the preceding
Plan Year.  For the first Plan Year of the Plan, the last day of that year.

1.81 TOP-HEAVY PLAN  For any Plan Year beginning after 1983, the Employer's
Plan is top-heavy if any of the following
conditions exist:

     (a)  If the Top-Heavy Ratio for the Employer's Plan exceeds 60% and this
Plan is not part of any required
          Aggregation Group or Permissive Aggregation Group of Plans.

     (b)  If the Employer's plan is a part of a Required Aggregation Group of
plans but not part of a Permissive
          Aggregation Group and the Top-Heavy Ratio for the group of plans
exceeds 60%.

     (c)  If the Employer's plan is a part of a Required Aggregation Group and
part of a Permissive Aggregation Group
          of plans and the Top-Heavy Ratio for the Permissive Aggregation
Group exceeds 60%.

1.82 TOP-HEAVY RATIO

       (a)  If the Employer maintains one or more Defined Contribution plans
(including any Simplified Employee Pension Plan) and the Employer has not
maintained any Defined Benefit Plan which during the 5-year period ending on
the Determination Date(s) has or has had accrued benefits, the Top-Heavy
Ratio for this Plan alone, or for the Required or Permissive Aggregation
Group as appropriate, is a fraction,

            (1)  the numerator of which is the sum of the account balances of
                 all Key Employees as of the Determination Date(s) [including
                 any part of any account balance distributed in the 5-year
                 period ending on the Determination Date(s)], and

            (2)  the denominator of which is the sum of all account balances
                 [including any part of  any account balance distributed in
                 the 5-year period ending on the Determination Date(s)], both
                 computed in accordance with Code Section 416 and the
                 regulations thereunder.

            Both the numerator and denominator of the Top-Heavy Ratio are
increased to reflect any contribution not actually made as of the
Determination Date, but which is required to be taken into account on that
date under Code Section 416 and the regulations thereunder.

       (b)  If the Employer maintains one or more Defined Contribution Plans
(including any Simplified Employee Pension Plan) and the Employer maintains
or has maintained one or more Defined Benefit Plans which during the 5-year
period ending on the Determination Date(s) has or has had any accrued
benefits, the Top-Heavy Ratio for any Required or Permissive Aggregation
Group as appropriate is a fraction, the numerator of which is the sum of
account balances under the aggregated Defined Contribution Plan or Plans
for all
Key Employees, determined in accordance with (a) above, and the Present
Value of accrued benefits under the aggregated Defined Benefit Plan or Plans
for all Key Employees as of the Determination Date(s), and the denominator of
which is the sum of the account balances under the aggregated Defined
Contribution Plan or Plans for all Participants, determined in accordance
with (a) above, and the Present Value of accrued benefits under the Defined
Benefit Plan or Plans for all Participants as of the Determination Date(s),
all determined in accordance with Code Section 416 and the regulations
thereunder. The accrued benefits under a Defined Benefit Plan in both the
numerator and denominator of the Top-Heavy Ratio are increased for any
distribution of an accrued benefit made in the 5-year period ending on the
Determination Date.

       (c)  For purposes of (a) and (b) above, the value of account balances
and the Present Value of accrued benefits will be determined as of the most
recent Valuation Date that falls within or ends with the 12-month period
ending on the Determination Date, except as provided in Code Section 416 and
the regulations thereunder for the first and second plan years of a Defined
Benefit Plan.  The account balances and accrued benefits of a participant
(1) who is not a Key Employee but who was a Key Employee in a prior year, or
(2) who has not been credited with at least one hour of service with any
Employer maintaining the Plan at any time during the 5-year period ending on
the Determination Date, will be disregarded. The calculation of the Top-Heavy
Ratio, and the extent to which distributions, rollovers, and transfers are
taken into account will be made in accordance with Code Section 416 and
the regulations thereunder.  Qualified Voluntary Employee Contributions
will not be taken into account for purposes of computing the Top-Heavy Ratio.
When aggregating plans the value of account balances and accrued benefits
will be calculated with reference to the Determination Dates that fall within
the same calendar year.  The accrued benefit of a Participant other than a
Key Employee shall be determined under (1) the method, if any, that uniformly
applies for accrual purposes under all Defined Benefit Plans maintained by
the Employer, or (2) if there is no such method, as if such benefit accrued
not more rapidly than the slowest accrual rate permitted under the fractional
rule of Code Section 411(b)(1)(C).

1.83 TOP-PAID GROUP  The group consisting of the top 20% of Employees when
ranked on the basis of Compensation paid
during such year.  For purposes of determining the number of Employees in the
group (but not who is in it), the following
Employees shall be excluded:

       (a)  Employees who have not completed 6 months of Service.

       (b)  Employees who normally work less than 17-1/2 hours per week.

       (c)  Employees who normally do not work more than 6 months during any
year.

       (d)  Employees who have not attained age 21.

       (e)  Employees included in a collective bargaining unit, covered by an
agreement between employee representatives and the Employer, where retirement
benefits were the subject of good faith bargaining and provided that 90% or
more of the Employer's Employees are covered by the agreement.

       (f)  Employees who are nonresident aliens and who receive no earned
income which constitutes income from sources within the United States.

1.84 TRANSFER CONTRIBUTION  A non-taxable transfer of a Participant's benefit
directly from a Qualified Deferred
Compensation Plan to this Plan.

1.85 TRUSTEE  The individual(s) or institution appointed by the Employer to
invest the Fund.

1.86 VALUATION DATE  The last day of the Plan Year or such other date as
agreed to by the Employer and the
Trustee/Custodian on which Participant accounts are revalued in accordance
with Article V hereof.  For Top-Heavy purposes,
the date selected by the Employer as of which the Top-Heavy Ratio is
calculated.

1.87 VESTED ACCOUNT BALANCE  The aggregate value of the Participant's Vested
Account Balances derived from Employer
and Employee contributions (including Rollovers), whether vested before or
upon death, including the proceeds of insurance
contracts, if any, on the Participant's life.  The provisions of Article VIII
shall apply to a Participant who is vested in amounts
attributable to Employer contributions, Employee contributions (or both) at
the time of death or distribution.

1.88 VOLUNTARY CONTRIBUTION  An Employee contribution made to the Plan by or
on behalf of a Participant that is included
in the Participant's gross income in the year in which made and that is
maintained under a separate account to which earnings
and losses are allocated.

1.89 WELFARE BENEFIT FUND  Any fund that is part of a plan of the Employer, or
has the effect of a plan, through which the
Employer provides welfare benefits to Employees or their beneficiaries.  For
these purposes, Welfare Benefits means any benefit
other than those with respect to which Code Section 83(h) (relating to
transfers of property in connection with the performance
of services), Code Section 404 (relating to deductions for contributions to an
Employee's trust or annuity and Compensation
under a deferred payment plan), Code Section 404A (relating to certain foreign
deferred compensation plans) apply.  A "Fund"
is any social club, voluntary employee benefit association, supplemental
unemployment benefit trust or qualified group legal
service organization described in Code Section 501(c)(7), (9), (17) or (20);
any trust, corporation, or other organization not
exempt from income tax, or to the extent provided in regulations, any account
held for an Employer by any person.

1.90 YEAR OF SERVICE  A 12-consecutive month period during which an Employee
is credited with not less than 1,000 (or
such lesser number as specified by the Employer in the Adoption Agreement)
Hours of Service.

                                ARTICLE II

                         ELIGIBILITY REQUIREMENTS

2.1  PARTICIPATION   Employees who meet the eligibility requirements in the
Adoption Agreement on the Effective Date of
the Plan shall become Participants as of the Effective Date of the Plan.  If
so elected in the Adoption Agreement, all Employees
employed on the Effective Date of the Plan may participate, even if they have
not satisfied the Plan's specified eligibility
requirements.  Other Employees shall become Participants on the Entry Date
coinciding with or immediately following the date
on which they meet the eligibility requirements.  The Employee must satisfy
the eligibility requirements specified in the Adoption
Agreement and be employed on the Entry Date to become a Participant in the
Plan.  In the event an Employee who is not a
member of the eligible class of Employees becomes a member of the eligible
class, such Employee shall participate immediately
if such Employee has satisfied the minimum age and service requirements and
would have previously become a Participant had
he or she been in the eligible class.  A former Participant shall again become
a Participant upon returning to the employ of the
Employer at the next Entry Date or if earlier, the next Valuation Date.  For
this purpose, Participant's Compensation and Service
shall be considered from date of rehire.

2.2  CHANGE IN CLASSIFICATION OF EMPLOYMENT  In the event a Participant
becomes ineligible to participate because he or
she is no longer a member of an eligible class of Employees, such Employee
shall participate upon his or her return to an eligible
class of Employees.

2.3  COMPUTATION PERIOD  To determine Years of Service and Breaks in Service
for purposes of eligibility, the
12-consecutive month period shall commence on the date on which an Employee
first performs an Hour of Service for the
Employer and each anniversary thereof, such that the succeeding 12-consecutive
month period commences with the employee's
first anniversary of employment and so on.  If, however, the period so
specified is one year or less, the succeeding 12-
consecutive month period shall commence on the first day of the Plan Year
prior to the anniversary of the date they first
performed an Hour of Service regardless of whether the Employee is entitled to
be credited with 1,000 (or such lesser number
as specified by the Employer in the Adoption Agreement) Hours of Service
during their first employment year.

2.4  EMPLOYMENT RIGHTS  Participation in the Plan shall not confer upon a
Participant any employment rights, nor shall it
interfere with the Employer's right to terminate the employment of any
Employee at any time.

2.5  SERVICE WITH CONTROLLED GROUPS  All Years of Service with other members
of a controlled group of corporations [as
defined in Code Section 414(b)], trades or businesses under common control [as
defined in Code Section 414(c)], or members
of an affiliated service group [as defined in Code Section 414(m)] shall be
credited for purposes of determining an Employee's
eligibility to participate.

2.6  OWNER-EMPLOYEES  If this Plan provides contributions or benefits for one
or more Owner-Employees who control both
the business for which this Plan is established and one or more other trades
or businesses, this Plan and the Plan established for
other trades or businesses must, when looked at as a single Plan, satisfy Code
Sections 401(a) and (d) for the Employees of this
and all other trades or businesses.

If the Plan provides contributions or benefits for one or more Owner-Employees
who control one or more other trades or
businesses, the Employees of the other trades or businesses must be included
in a Plan which satisfies Code Sections 401(a)
and (d) and which provides contributions and benefits not less favorable than
provided for Owner-Employees under this Plan.

If an individual is covered as an Owner-Employee under the plans of two or
more trades or businesses which are not controlled,
and the individual controls a trade or business, then the contributions or
benefits of the Employees under the plan of the trades
or businesses which are controlled must be as favorable as those provided for
him or her under the most favorable plan of the
trade or business which is not controlled.

For purposes of the preceding sentences, an Owner-Employee, or two or more
Owner-Employees, will be considered to control
a trade or business if the Owner-Employee, or two or more Owner-Employees
together:

       (a)  own the entire interest in an unincorporated trade or business, or

       (b)  in the case of a partnership, own more than 50% of either the
capital interest or the profits interest in the partnership.

For purposes of the preceding sentence, an Owner-Employee, or two or more
Owner-Employees shall be treated as owning any
interest in a partnership which is owned, directly or indirectly, by a
partnership which such Owner-Employee, or such two or
more Owner-Employees, are considered to control within the meaning of the
preceding sentence.

2.7  LEASED EMPLOYEES  Any Leased Employee shall be treated as an Employee of
the recipient Employer; however,
contributions or benefits provided by the leasing organization which are
attributable to services performed for the recipient
Employer shall be treated as provided by the recipient Employer.  A Leased
Employee shall not be considered an Employee of
the recipient if such Employee is covered by a money purchase pension plan
providing:

       (a)  a non-integrated Employer contribution rate of at least 10% of
Compensation, [as defined in Code Section 415(c)(3) but including amounts
contributed by the Employer pursuant to a salary reduction agreement, which
are excludable from the Employee's gross income under a cafeteria plan
covered by Code Section 125, a cash or deferred profit-sharing plan under
Section 401(k) of the Code, a Simplified Employee Pension Plan under Code
Section 402(h)(1)(B ) and a tax-sheltered annuity under Code Section 403(b)],

       (b)  immediate participation, and

       (c)  full and immediate vesting.

This exclusion is only available if Leased Employees do not constitute more
than twenty percent (20%) of the recipient's
non-highly compensated work force.

2.8  THRIFT PLANS  If the Employer makes an election in the Adoption Agreement
to require Voluntary Contributions to
participate in this Plan, the Employer shall notify each eligible Employee in
writing of his or her eligibility for participation at
least 30 days prior to the appropriate Entry Date.  The Employee shall
indicate his or her intention to join the Plan by
authorizing the Employer to withhold a percentage of his or her Compensation
as provided in the Plan.  Such authorization shall
be returned to the Employer at least 10 days prior to the Employee's Entry
Date.  The Employee may decline participation by
so indicating on the enrollment form or by failure to return the enrollment
form to the Employer prior to the Employee's Entry
Date.  If the Employee declines to participate, such Employee shall be given
the opportunity to join the Plan on the next Entry
Date.  The taking of a Hardship Withdrawal under the provisions of paragraph
6.9 will impact the Participant's ability to make
these contributions.

                                ARTICLE III

                          EMPLOYER CONTRIBUTIONS


3.1  AMOUNT  The Employer intends to make periodic contributions to the Plan
in accordance with the formula or formulas
selected in the Adoption Agreement. However, the Employer's contribution for
any Plan Year shall be subject to the limitations
on allocations contained in Article X.

3.2  EXPENSES AND FEES  The Employer shall also be authorized to reimburse the
Fund for all expenses and fees incurred
in the administration of the Plan or Trust/Custodial Account and paid out of
the assets of the Fund.  Such expenses shall include,
but shall not be limited to, fees for professional services, printing and
postage.  Brokerage commissions may not be reimbursed.


3.3  RESPONSIBILITY FOR CONTRIBUTIONS  Neither the Trustee/Custodian nor the
Sponsor shall be required to determine if
the Employer has made a contribution or if the amount contributed is in
accordance with the Adoption Agreement or the Code.
The Employer shall have sole responsibility in this regard.  The
Trustee/Custodian shall be accountable solely for contributions
actually received by it, within the limits of Article XI.

3.4  RETURN OF CONTRIBUTIONS  Contributions made to the Fund by the Employer
shall be irrevocable except as provided
below:

       (a)  Any contribution forwarded to the Trustee/Custodian because of a
mistake of fact, provided that the contribution is returned to the Employer
within one year of the contribution.

       (b)  In the event that the Commissioner of Internal Revenue determines
that the Plan is not initially qualified under the Internal Revenue Code, any
contribution made incident to that initial qualification by the Employer must
be returned to the Employer within one year after the date the initial
qualification is denied, but only if the application for the qualification is
made by the time prescribed by law for filing the Employer's return for the
taxable year in which the Plan is adopted, or such later date as the
Secretary of the Treasury may prescribe.

       (c)  Contributions forwarded to the Trustee/Custodian are presumed to
be deductible and are conditioned on their deductibility.  Contributions
which are determined to not be deductible will be returned to the Employer.


                                    ARTICLE IV

                              EMPLOYEE CONTRIBUTIONS


4.1  VOLUNTARY CONTRIBUTIONS  An Employee may make Voluntary Contributions to
the Plan established hereunder if so
authorized by the Employer in a uniform and nondiscriminatory manner.  Such
contributions are subject to the limitations on
Annual Additions and are subject to antidiscrimination testing.

4.2  QUALIFIED VOLUNTARY CONTRIBUTIONS  A Participant may no longer make
Qualified Voluntary Contributions to the Plan.
Amounts already contributed may remain in the Trust Fund/Custodial Account
until distributed to the Participant.  Such
amounts will be maintained in a separate account which will be nonforfeitable
at all times.  The account will share in the gains
and losses of the Trust in the same manner as described at paragraph 5.4 of
the Plan.  No part of the Qualified Voluntary
Contribution account will be used to purchase life insurance.  Subject to
Article VIII, Joint and Survivor Annuity Requirements
(if applicable), the Participant may withdraw any part of the Qualified
Voluntary Contribution account by making a written
application to the Plan Administrator.

4.3  ROLLOVER CONTRIBUTION  Unless provided otherwise in the Adoption
Agreement, a Participant may make a Rollover
Contribution to any Defined Contribution Plan established hereunder of all or
any part of an amount distributed or distributable
to him or her from a Qualified Deferred Compensation Plan provided:

     (a)  the amount distributed to the Participant is deposited to the Plan
no later than the sixtieth day after such
          distribution was received by the Participant,

     (b)  the amount distributed is not one of a series of substantially equal
periodic payments made for the life (or life
          expectancy) of the Participant or the joint lives (or joint life
expectancies) of the Participant and the
          Participant's Designated Beneficiary, or for a specified period of
ten years or more;

     (c)  the amount distributed is not required under Code Section 401(a)(9);

     (d)  if the amount distributed included property such property is rolled
over, or if sold the proceeds of such property
          may be rolled over,

     (e)  the amount distributed is not includible in gross income (determined
without regard to the exclusion for net
          unrealized appreciation with respect to employer securities).

In addition, if the Adoption Agreement allows Rollover Contributions, the Plan
will also accept any Eligible    Rollover
Distribution (as defined at paragraph 1.70) directly to the Plan.

Rollover Contributions, which relate to distributions prior to January 1,
1993, must be made in accordance with paragraphs
(a) through (e) and additionally meet the requirements of paragraph (f):

     (f)  The distribution from the Qualified Deferred Compensation Plan
constituted the Participant's entire interest in such Plan and was
distributed within one taxable year to the Participant:

          (1)  on account of separation from Service, a Plan termination, or
in the case of a profit-sharing or stock
               bonus plan, a complete discontinuance of contributions under
such plan within the meaning of Code
               Section 402(a)(6)(A), or

          (2)  in one or more distributions which constitute a qualified lump
sum distribution within the meaning of
               Code Section 402(e)(4)(A), determined without reference to
subparagraphs (B) and (H).

Such Rollover Contribution may also be made through an individual retirement
account qualified under Code Section 408 where
the IRA was used as a conduit from the Qualified Deferred Compensation Plan,
the Rollover Contribution is made in accordance
with the rules provided under paragraphs (a) through (e) and the Rollover
Contribution does not include any regular IRA
contributions, or earnings thereon, which the Participant may have made to the
IRA.  Rollover Contributions, which relate to
distributions prior to January 1, 1993, may be made through an IRA in
accordance with paragraphs (a) through (f) and
additional requirements as provided in the previous sentence.  The
Trustee/Custodian shall not be held responsible for
determining the tax-free status of any Rollover Contribution made under this
Plan.

4.4  TRANSFER CONTRIBUTION  Unless provided otherwise in the Adoption
Agreement a Participant may, subject to the
provisions of paragraph 4.5, also arrange for the direct transfer of his or
her benefit from a Qualified Deferred Compensation
Plan to this Plan.  For accounting and record keeping purposes, Transfer
Contributions shall be treated in the same manner as
Rollover Contributions.

In the event the Employer accepts a Transfer Contribution from a Plan in which
the Employee was directing the investments
of his or her account, the Employer may continue to permit the Employee to
direct his or her investments in accordance with
paragraph 13.7 with respect only to such Transfer Contribution.
Notwithstanding the above, the Employer may refuse to accept
such Transfer Contributions.

4.5  EMPLOYER APPROVAL OF TRANSFER CONTRIBUTIONS  The Employer maintaining a
Safe-Harbor Profit-Sharing Plan in
accordance with the provisions of paragraph 8.7, acting in a nondiscriminatory
manner, may in its sole discretion refuse to allow
Transfer Contributions to its profit-sharing plan, if such contributions are
directly or indirectly being transferred from a defined
benefit plan, a money purchase pension plan (including a target benefit plan),
a stock bonus plan, or another profit-sharing plan
which would otherwise provide for a life annuity form of payment to the
Participant.

4.6  ELECTIVE DEFERRALS  A Participant may enter into a Salary Savings
Agreement with the Employer authorizing the
Employer to withhold a portion of such Participant's Compensation not to
exceed $7,000 per calendar year as adjusted under
Code Section 415(d) or, if lesser, the percentage of Compensation specified in
the Adoption Agreement and to deposit such
amount to the Plan.  No Participant shall be permitted to have Elective
Deferrals made under this Plan or any other qualified
plan maintained by the Employer, during any taxable year, in excess of the
dollar limitation contained in Code Section 402(g)
in effect at the beginning of such taxable year.  Thus, the $7,000 limit may
be reduced if a Participant contributes pre-tax
contributions to qualified plans of this or other Employers.  Any such
contribution shall be credited to the Employee's Salary
Savings Account.  Unless otherwise specified in the Adoption Agreement, a
Participant may amend his or her Salary Savings
Agreement to increase, decrease or terminate the percentage upon 30 days
written notice to the Employer.  If a Participant
terminates his or her agreement, such Participant shall not be permitted to
put a new Salary Savings Agreement into effect until
the first pay period in the next Plan Year, unless otherwise stated in the
Adoption Agreement.  The Employer may also amend
or terminate said agreement on written notice to the Participant.  If a
Participant has not authorized the Employer to withhold
at the maximum rate and desires to increase the total withheld for a Plan
Year, such Participant may authorize the Employer
upon 30 days notice to withhold a supplemental amount up to 100% of his or her
Compensation for one or more pay periods.
In no event may the sum of the amounts withheld under the Salary Savings
Agreement plus the supplemental withholding exceed
25% of a Participant's Compensation for a Plan Year.  The Employer may also
recharacterize as after-tax Voluntary
Contributions all or any portion of amounts previously withheld under any
Salary Savings Agreement within the Plan Year as
provided for at paragraph 10.9.  This may be done to insure that the Plan will
meet one of the antidiscrimination tests  under
Code Section 401(k).  Elective Deferrals shall be deposited in the Trust
within 30 days after being withheld from the
Participant's pay.

4.7  REQUIRED VOLUNTARY CONTRIBUTIONS  If the Employer makes a thrift election
in the Adoption Agreement, each eligible
Participant shall be required to make Voluntary Contributions to the Plan for
credit to his or her account as provided  in the
Adoption Agreement.  Such Voluntary Contributions shall be withheld from the
Employee's Compensation and shall be
transmitted by the Employer to the Trustee/Custodian as agreed between the
Employer and Trustee/Custodian.  A Participant
may discontinue participation or change his or her Voluntary Contribution
percentage by so advising the Employer at least 10
days prior to the date on which such discontinuance or change is to be
effective.  If a Participant discontinues his or her
Voluntary Contributions, such Participant may not again authorize Voluntary
Contributions for a period of one year from the
date of discontinuance.  A Participant may voluntarily change his or her
Voluntary Contribution percentage once during any
Plan Year and may also agree to have a reduction in his or her contribution,
if required to satisfy the requirements of the ACP
test.

4.8  DIRECT ROLLOVER OF BENEFITS  Notwithstanding any provision of the Plan to
the contrary that would otherwise limit a
Participant's election under this paragraph, for distributions made on or
after January 1, 1993, a Participant may elect, at the
time and in the manner prescribed by the Plan Administrator, to have any
portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Participant in a
Direct Rollover.  Any portion of a distribution which
is not paid directly to an Eligible Retirement Plan shall be distributed to
the Participant.  For purposes of this paragraph, a
Surviving Spouse or a Spouse or former Spouse who is an alternate payee under
a Qualified Domestic Relations Order as
defined in Code Section 414(p), will be permitted to elect to have any
Eligible Rollover Distribution paid directly to an individual
retirement account (IRA) or an individual retirement annuity (IRA).

The plan provisions otherwise applicable to distributions continue to apply to
Rollover and Transfer Contributions.

                                 ARTICLE V

                           PARTICIPANT ACCOUNTS

5.1  SEPARATE ACCOUNTS  The Employer shall establish a separate bookkeeping
account for each Participant showing the
total value of his or her interest in the Fund.  Each Participant's account
shall be separated for bookkeeping purposes into the
following sub-accounts:

       (a)  Employer contributions.

            (1)  Matching Contributions.

            (2)  Qualified Matching Contributions.

            (3)  Qualified Non-Elective Contributions.

            (4)  Discretionary Contributions.

            (5)  Elective Deferrals.

       (b)  Voluntary Contributions (and additional amounts including required
contributions and, if applicable, either repayments of loans previously
defaulted on and treated as "deemed distributions" on which a tax report has
been issued, and amounts paid out upon a separation from service which have
been included in income and which are repaid after being re-hired by the
Employer).

       (c)  Qualified Voluntary Contributions (if the Plan previously
accepted these).

       (d)  Rollover Contributions and Transfer Contributions.

5.2  ADJUSTMENTS TO PARTICIPANT ACCOUNTS  As of each Valuation Date of the
Plan, the Employer shall add to each account:

       (a)  the Participant's share of the Employer's contribution and
forfeitures as determined in the Adoption Agreement,

       (b)  any Elective Deferrals, Voluntary, Rollover or Transfer
Contributions made by the Participant,

       (c)  any repayment of amounts previously paid out to a Participant
upon a separation from Service and repaid by the Participant since the last
Valuation Date, and

       (d)  the Participant's proportionate share of any investment
earnings and increase in the fair market value of the Fund since the last
Valuation Date, as determined at paragraph 5.4.


The Employer shall deduct from each account:

       (e)  any withdrawals or payments made from the Participant's account
since the last Valuation Date, and

       (f)  the Participant's proportionate share of any decrease in the fair
market value of the Fund since the last Valuation Date, as determined at
paragraph 5.4.

5.3  ALLOCATING EMPLOYER CONTRIBUTIONS  The Employer's contribution shall be
allocated to Participants in accordance with
the allocation formula selected by the Employer in the Adoption Agreement, and
the minimum contribution and allocation
requirements for Top-Heavy Plans.  Beginning with the 1990 Plan Year and
thereafter, for plans on Standardized Adoption
Agreement 001, Participants who are credited with more than 500 Hours of
Service or are employed on the last day of the Plan
Year must receive a full allocation of Employer contributions.  In
Nonstandardized Adoption Agreement 002, Employer
contributions shall be allocated to the accounts of Participants employed by
the Employer on the last day of the Plan Year unless
indicated otherwise in the Adoption Agreement.  In the case of a
non-Top-Heavy, Nonstandardized Plan, Participants must also
have completed a Year of Service unless otherwise specified in the Adoption
Agreement.  For Nonstandardized Adoption
Agreement 002, the Employer may only apply the last day of the Plan Year and
Year of Service requirements if the Plan satisfies
the requirements of Code Sections 401(a)(26) and 410(b) and the regulations
thereunder including the exception for 401(k)
plans.  If, when applying the last day and Year of Service requirements, the
Plan fails to satisfy the aforementioned
requirements, additional Participants will be eligible to receive an
allocation of Employer Contributions until the requirements
are satisfied.  Participants who are credited with a Year of Service, but not
employed at Plan Year end, are the first category
of additional Participants eligible to receive an allocation.  If the
requirements are still not satisfied, Participants credited with
more than 500 Hours of Service and employed at Plan Year end are the next
category of Participants eligible to receive an
allocation.  Finally, if necessary to satisfy the said requirements, any
Participant credited with more than 500 Hours of Service
will be eligible for an allocation of Employer Contributions.  The Service
requirement is not applicable with respect to any Plan
Year during which the Employer's Plan is Top-Heavy.

5.4  ALLOCATING INVESTMENT EARNINGS AND LOSSES  A Participant's share of
investment earnings and any increase or
decrease in the fair market value of the Fund shall be based on the
proportionate value of all active accounts (other than accounts
with segregated investments) as of the last Valuation Date less withdrawals
since the last Valuation Date.  If Employer
contributions are made monthly, quarterly, or on some other systematic basis,
the adjusted value of such accounts for allocation
of investment income and gains or losses shall include one-half the Employer
contributions for such period.  If Employer
contributions are not made on a systematic basis, it is assumed that they are
made at the end of the valuation period and
therefore will not receive an allocation of investment earnings and gains or
losses for such period.  Account balances not yet
forfeited shall receive an allocation of earnings and/or losses.  Accounts
with segregated investments shall receive only the
income or loss on such segregated investments.

Alternatively, at the Plan Administrator's option, all Employer contributions
will be credited with an allocation of the actual
investment earnings and gains and losses from the actual date of deposit of
each such contribution until the end of the period.
Accounts with segregated investments shall receive only the income or loss on
such segregated investments.  In no event shall
the selection of a method of allocating gains and losses be used to
discriminate in favor of the Highly Compensated Employees.

5.5  PARTICIPANT STATEMENTS  Upon completing the allocations described above
for the Valuation Date coinciding with the
end of the Plan Year, the Employer shall prepare a statement for each
Participant showing the additions to and subtractions from
his or her account since the last such statement and the fair market value of
his or her account as of the current Valuation Date.
Employers so choosing may prepare Participant statements for each Valuation
Date.

                                ARTICLE VI

                   RETIREMENT BENEFITS AND DISTRIBUTIONS


6.1  NORMAL RETIREMENT BENEFITS  A Participant shall be entitled to receive
the balance held in his or her account from
Employer contributions upon attaining Normal Retirement Age or at such earlier
dates as the provisions of this Article VI may
allow.  If the Participant elects to continue working past his or her Normal
Retirement Age, he or she will continue as an active
Plan Participant and no distribution shall be made to such Participant until
his or her actual retirement date unless the employer
elects otherwise in the Adoption Agreement, or a minimum distribution is
required by law.  Settlement shall be made in the
normal form, or if elected, in one of the optional forms of payment provided
below.

6.2  EARLY RETIREMENT BENEFITS  If the Employer so provides in the Adoption
Agreement, an Early Retirement Benefit will
be available to individuals who meet the age and Service requirements.  An
individual who meets the Early Retirement Age
requirements and separates from Service, will become fully vested, regardless
of any vesting schedule which otherwise might
apply.  If a Participant separates from Service before satisfying the age
requirements, but after having satisfied the Service
requirement, the Participant will be entitled to elect an Early Retirement
benefit upon satisfaction of the age requirement.

6.3  BENEFITS ON TERMINATION OF EMPLOYMENT

       (a)  If a Participant terminates employment prior to Normal Retirement
Age, such Participant shall be entitled to receive the vested balance held in
his or her account payable at Normal Retirement Age in the normal form, or if
elected, in one of the optional forms of payment provided hereunder.  If
applicable, the Early Retirement Benefit provisions may be elected.
Notwithstanding the preceding sentence, a former Participant may, if allowed
in the Adoption Agreement, make application to the Employer requesting early
payment of any deferred vested and nonforfeitable benefit due.

       (b)  If a Participant terminates employment, and the value of that
Participant's Vested Account Balance derived from Employer and Employee
contributions is not greater than $3,500, the Participant may receive a lump
sum distribution of the value of the entire vested portion of such account
balance and the non-vested portion will be treated as a forfeiture.
The Employer shall continue to follow their consistent policy, as may be
established, regarding immediate cash-outs of Vested Account Balances of
$3,500 or less. For purposes of this Article, if the value of a Participant's
Vested Account Balance is zero, the Participant shall be deemed to have
received a distribution of such Vested Account Balance immediately following
termination.  Likewise, if the Participant is  reemployed prior to incurring
5 consecutive 1-year Breaks in Service they will be deemed to have immediately
repaid such distribution.  For Plan Years beginning prior to 1989, a
Participant's Vested Account Balance shall not include Qualified Voluntary
Contributions.  Notwithstanding the above, if the Employer maintains or
has maintained a policy of not distributing any amounts until the
Participant's Normal Retirement Age, the Employer can continue to uniformly
apply such policy.

       (c)  If a Participant terminates employment with a Vested Account
Balance derived from Employer and Employee contributions in excess of $3,500,
and elects (with his or her Spouse's consent, if required) to receive 100% of
the value of his or her Vested Account Balance in a lump sum, the non-vested
portion will be treated as a forfeiture. The Participant (and his or her
Spouse, if required) must consent to any distribution, when the Vested
Account Balance described above exceeds $3,500 or if at the time of any prior
distribution it exceeded $3,500.  For purposes of this paragraph, for
Plan Years beginning prior to 1989, a Participant's Vested Account Balance
shall not include Qualified Voluntary Contributions.

       (d)  Distribution of less than 100% of the Participant's Vested
Account Balance shall only be permitted if the Participant is fully vested
upon termination of employment.

       (e)  If a Participant who is not 100% vested receives or is deemed to
receive a distribution pursuant to this paragraph and resumes employment
covered under this Plan, the Participant shall have the right to repay to the
Plan the full amount of the distribution attributable to Employer
contributions on or before the earlier of the date that the Participant
incurs 5 consecutive 1-year Breaks in Service following the date of
distribution or five years after the first date on which the Participant
is subsequently reemployed.  In such event, the Participant's account shall
be restored to the value thereof at the time the distribution was made and
may further be increased by the Plan's income and investment gains and/or
losses on the undistributed amount from the date of distribution to the date
of repayment.

       (f)  A Participant shall also have the option, to postpone payment of
his or her Plan benefits until the first day of April following the calendar
year in which he or she attains age 70-1/2. Any balance of a Participant's
account resulting from his or her Employee contributions not previously
withdrawn, if any, may be withdrawn by the Participant immediately following
separation from Service.

       (g)  If a Participant ceases to be an active Employee as a result of a
Disability as defined at paragraph 1.21, such Participant shall be able to
make an application for a disability retirement benefit payment.  The
Participant's account balance will be deemed "immediately distributable" as
set forth in paragraph 6.4, and will be fully vested pursuantto paragraph 9.2.

6.4  RESTRICTIONS ON IMMEDIATE DISTRIBUTIONS

       (a)  An account balance is immediately distributable if any part of the
account balance could be distributed to the Participant (or Surviving Spouse)
before the Participant attains (or would have attained if not deceased) the
later of the Normal Retirement Age or age 62.

       (b)  If the value of a Participant's Vested Account Balance derived
from Employer and Employee Contributions exceeds (or at the time of any prior
distribution exceeded) $3,500, and the account balance is immediately
distributable, the Participant and his or her Spouse (or where either the
Participant or the Spouse has died, the survivor) must consent to any
distribution of such account balance.  The consent of the Participant and
the Spouse shall be obtained in writing within the 90-day period ending
on the annuity starting date, which is the first day of the first period for
which an amount is paid as an annuity or any other form.  The Plan
Administrator shall notify the Participant and the Participant's Spouse of
the right to defer any distribution until the Participant's account
balance is no longer immediately distributable.  Such notification shall
include a general description of the material features, and an explanation of
the relative values of, the optional forms of benefit available under the
plan in a manner that would satisfy the notice requirements of Code Section
417(a)(3), and shall be provided no less than 30 days and no more than 90
days prior to the annuity starting date.

       (c)  Notwithstanding the foregoing, only the Participant need consent
to the commencement of a distribution in the form of a qualified Joint and
Survivor Annuity while the account balance is immediately distributable.
Furthermore, if payment in the form of a Qualified Joint and Survivor Annuity
is not required with respect to the Participant pursuant to paragraph 8.7 of
the Plan, only the Participant need consent to the distribution of an
account balance that is immediately distributable.  Neither the consent
of the Participant nor the Participant's Spouse shall be required to the
extent that a distribution is required to satisfy Code Section 401(a)(9) or
Code Section 415.  In addition, upon termination of this Plan if the Plan
does not offer an annuity option (purchased from a commercial provider), the
Participant's account balance may, without the Participant's consent, be
distributed to the Participant or transferred to another Defined
Contribution Plan [other than an employee stock ownership plan as defined in
Code Section 4975(e)(7)] within the same controlled group.

       (d)  For purposes of determining the applicability of the
foregoing consent requirements to distributions made before the first day of
the first Plan Year beginning after 1988, the Participant's Vested Account
Balance shall not include amounts attributable to Qualified Voluntary
Contributions.

6.5  NORMAL FORM OF PAYMENT  The normal form of payment for a profit- sharing
plan satisfying the requirements of
paragraph 8.7 hereof shall be a lump sum with no option for annuity payments.
For all other plans, the normal form of payment
hereunder shall be a Qualified Joint and Survivor Annuity as provided under
Article VIII.  A Participant whose Vested Account
Balance derived from Employer and Employee contributions exceeds $3,500, or if
at the time of any prior distribution it
exceeded $3,500, shall (with the consent of his or her Spouse) have the right
to receive his or her benefit in a lump sum or in
monthly, quarterly, semi-annual or annual payments from the Fund over any
period not extending beyond the life expectancy
of the Participant and his or her Beneficiary.  For purposes of this
paragraph, for Plan Years prior to 1989, a Participant's
Vested Account Balance shall not include Qualified Voluntary Contributions.
The normal form of payment shall be automatic,
unless the Participant files a written request with the Employer prior to the
date on which the benefit is automatically payable,
electing a lump sum or installment payment option.  No amendment to the Plan
may eliminate one of the optional distribution
forms listed above.


6.6  COMMENCEMENT OF BENEFITS

       (a)  Unless the Participant elects otherwise, distribution of benefits
will begin  no later than the 60th day after the close of the Plan Year in
which the latest of the following events  occurs:

            (1)  the Participant attains age 65 (or normal retirement age if
                 earlier),

            (2)  the 10th anniversary of the year in which the Participant
                 commenced participation in the Plan, or

            (3)  the Participant terminates Service with the Employer.

       (b)  Notwithstanding the foregoing, the failure of a Participant and
Spouse (if necessary) to consent to a distribution while a benefit is
immediately distributable, within the meaning of paragraph 6.4 hereof, shall
be deemed an election to defer commencement of payment of any benefit
sufficient to satisfy this paragraph.

6.7  CLAIMS PROCEDURES  Upon retirement, death, or other severance of
employment, the Participant or his or her
representative may make application to the Employer requesting payment of
benefits due and the manner of payment.  If no
application for benefits is made, the Employer shall automatically pay any
vested benefit due hereunder in the normal form at
the time prescribed at paragraph 6.4.  If an application for benefits is made,
the Employer shall accept, reject, or modify such
request and shall notify the Participant in writing setting forth the response
of the Employer and in the case of a denial or
modification the Employer shall:

       (a)  state the specific reason or reasons for the denial,

       (b)  provide specific reference to pertinent Plan provisions on which
the denial is based,

       (c)  provide a description of any additional material or information
necessary for the Participant or his representative to perfect the claim and
an explanation of why such material or information is necessary, and

       (d)  explain the Plan's claim review procedure as contained in this
Plan.

In the event the request is rejected or modified, the Participant or his or
her representative may within 60 days following receipt
by the Participant or representative of such rejection or modification, submit
a written request for review by the Employer of
its initial decision.  Within 60 days following such request for review, the
Employer shall render its final decision in writing to
the Participant or representative stating specific reasons for such decision.
If the Participant or representative is not satisfied
with the Employer's final decision, the Participant or representative can
institute an action in a federal court of competent
jurisdiction; for this purpose, process would be served on the Employer.

6.8  IN-SERVICE WITHDRAWALS  An Employee may withdraw all or any part of the
fair market value of his or her Mandatory
Contributions, Voluntary Contributions, Qualified Voluntary Contributions or
Rollover Contributions, upon written request
to the Employer.  Transfer Contributions, which originate from a Plan meeting
the safe-harbor provisions of paragraph 8.7, may
also be withdrawn by an Employee upon written request to the Employer.
Transfer Contributions not meeting the safe-harbor
provisions may only be withdrawn upon retirement, death, Disability,
termination or termination of the Plan, and will be subject
to Spousal consent requirements contained in Code Sections 411(a)(11) and 417.
 No such withdrawals are permitted from a
money purchase plan until the participant reaches Normal Retirement Age.  Such
request shall include the Employee's address,
social security number, birthdate, and amount of the withdrawal.  If at the
time a distribution of Qualified Voluntary
Contributions is received the Participant has not attained age 59-1/2 and is
not disabled, as defined at Code Section 22(e)(3),
the Participant will be subject to a federal income tax penalty, unless the
distribution is rolled over to a qualified plan or
individual retirement plan within 60 days of the date of distribution.  A
Participant may withdraw all or any part of the fair
market value of his or her pre-1987 Voluntary Contributions with or without
withdrawing the earnings attributable thereto.
Post-1986 Voluntary Contributions may only be withdrawn along with a portion
of the earnings thereon.  The amount of the
earnings to be withdrawn is determined by using the formula: DA [1-(V / V+E)],
where DA is the distribution amount, V is
the amount of Voluntary Contributions  and V+E is the amount of Voluntary
Contributions plus the earnings attributable
thereto.  A Participant withdrawing his or her other contributions prior to
attaining age 59-1/2, will be subject to a federal tax
penalty to the extent that the withdrawn amounts are includible in income.
Unless the Employer provides otherwise in the
Adoption Agreement, any Participant in a profit-sharing plan who is 100% fully
vested in his or her Employer contributions
may withdraw all or any part of the fair market value of any of such
contributions that have been in the account at least two
years, plus the investment earnings thereon, after attaining 59-1/2 without
separation from Service.  Such Employer
contributions may not have been used to satisfy the antidiscrimination test of
Code Section 401(k).  Such distributions shall not
be eligible for redeposit to the Fund.  A withdrawal under this paragraph
shall not prohibit such Participant from sharing in any
future Employer Contribution he or she would otherwise be eligible to share
in.  A request to withdraw amounts pursuant to
this paragraph must if applicable, be consented to by the Participant's
Spouse.  The consent shall comply with the requirements
of paragraph 6.4 relating to immediate distributions.  Elective Deferrals,
Qualified Non-elective Contributions, and Qualified
Matching Contributions, and income allocable to each are not distributable to
a Participant or his or her Beneficiary or
Beneficiaries, in accordance with such Participant's or Beneficiary's or
Beneficiaries' election, earlier than upon separation from
Service, death, or Disability.  Such amounts may also be distributed upon:

       (a)  Termination of the Plan without the establishment of another
Defined Contribution Plan.

       (b)  The disposition by a corporation to an unrelated corporation of
substantially all of the
assets [within the meaning of Code Section 409(d)(2)] used in a trade or
business of such
corporation if such corporation continues to maintain this Plan after the
disposition, but
only with respect to Employees who continue employment with the
corporation acquiring such assets.

       (c)  The disposition by a corporation to an unrelated entity of such
corporation's interest in a subsidiary [within the meaning of Code Section
409(d)(3)] if such corporation continues to maintain this plan, but only with
respect to Employees who continue employment with such subsidiary.

       (d)  The attainment of age 59-1/2.

       (e)  The Hardship of the Participant as described in paragraph 6.9.

All distributions that may be made pursuant to one or more of the foregoing
distributable events are subject to the Spousal and
Participant consent requirements, if applicable, contained in Code Sections
401(a)(11) and 417.
6.9  HARDSHIP WITHDRAWAL  If permitted by the Trustee/Custodian and the
Employer in the Adoption Agreement, a
Participant may request a Hardship withdrawal prior to attaining age 59-1/2.
If the Participant has not attained age 59-1/2,
the Participant may be subject to a federal income tax penalty.  Such request
shall be in writing to the Employer who shall have
sole authority to authorize a hardship withdrawal, pursuant to the rules
below.  Hardship withdrawals may include Elective
Deferrals regardless of when contributed and any earnings accrued and credited
thereon as of the last day of the Plan Year
ending before July 1, 1989 and Employer related contributions, including but
not limited to Employer Matching Contributions,
plus the investment earnings thereon to the extent vested.  Qualified Matching
Contributions, Qualified Non-Elective
Contributions and Elective Deferrals reclassified as Voluntary Contributions
plus the investment earnings thereon are only
available for Hardship withdrawal prior to age 59-1/2 to the extent that they
were credited to the Participant's Account as of
the last day of the Plan Year ending prior to July 1, 1989.  The Plan
Administrator may limit withdrawals to Elective Deferrals
and the earnings thereon as stipulated above.  Hardship withdrawals are
subject to the Spousal consent requirements contained
in Code Sections 401(a)(11) and 417.  Only the following reasons are valid to
obtain hardship withdrawal:

       (a)  medical expenses [within the meaning of Code Section 213(d)],
incurred or necessary for the medical care, of the Participant, his or her
Spouse, children and other dependents,

       (b)  the purchase (excluding mortgage payments) of the principal
residence for the Participant,

       (c)  payment of tuition and related educational expenses for the next
twelve (12) months of post-secondary education for the Participant, his or
her Spouse, children or other dependents, or

       (d)  the need to prevent eviction of the Employee from or a
foreclosure on the mortgage of, the Employee's principal residence.

Furthermore, the following conditions must be met in order for a withdrawal
to be authorized:

       (e)  the Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans under all plans maintained
by the Employer,

       (f)  all plans maintained by the Employer provide that the Employee's
Elective Deferrals and Voluntary Contributions will be suspended for twelve
months after the receipt of the Hardship distribution,

       (g)  the distribution is not in excess of the amount of the
immediate and heavy financial need [(a) through (d)] above, and

       (h)  all plans maintained by the Employer provide that an Employee may
not make Elective Deferrals for the Employee's taxable year immediately
following the taxable year of the hardship distribution in excess of the
applicable limit under Code Section 402(g) for such taxable year, less the
amount of such Employee's pre-tax contributions for the taxable year of the
hardship distribution.

If a distribution is made at a time when a Participant has a nonforfeitable
right to less than 100% of the account balance derived
from Employer contributions and the Participant may increase the
nonforfeitable percentage in the account:

       (a)  A separate account will be established for the Participant's
interest in the Plan as of the time of the distribution, and

       (b)  At any relevant time the Participant's nonforfeitable portion of
the separate account will be equal to an amount ("X") determined by the
formula:

                        X = P [AB + (R X D)] - (R X D)

For purposes of applying the formula:  "P" is the nonforfeitable percentage at
the relevant time, "AB" is the account balance
at the relevant time, "D" is the amount of the distribution and "R" is the
ratio of the account balance at the relevant time to the
account balance after distribution.


                              ARTICLE VII

                       DISTRIBUTION REQUIREMENTS


7.1  JOINT AND SURVIVOR ANNUITY REQUIREMENTS  All distributions made under the
terms of this Plan must comply with
the provisions of Article VIII including, if applicable, the safe harbor
provisions thereunder.

7.2  MINIMUM DISTRIBUTION REQUIREMENTS  All distributions required under this
Article shall be determined and made in
accordance with the minimum distribution requirements of Code Section
401(a)(9) and the regulations thereunder, including
the minimum distribution incidental benefit rules found at Regulations Section
1.401(a)(9)-2.  The entire interest of a Participant
must be distributed or begin to be distributed no later than the Participant's
Required Beginning Date.  Life expectancy and joint
and last survivor life expectancy are computed by using the expected return
multiples found in Tables V and VI of Regulations
Section 1.72-9.

7.3  LIMITS ON DISTRIBUTION PERIODS  As of the First Distribution Calendar
Year, distributions if not made in a single-sum,
may only be made over one of the following periods (or a combination thereof):


       (a)  the life of the Participant,

       (b)  the life of the Participant and a Designated Beneficiary,

       (c)  a period certain not extending beyond the life expectancy of the
participant,        or

       (d)  a period certain not extending beyond the joint and last survivor
expectancy        of
            the Participant and a designated beneficiary.

7.4  REQUIRED DISTRIBUTIONS ON OR AFTER THE REQUIRED BEGINNING DATE

       (a)  If a participant's benefit is to be distributed over (1) a period
not extending beyond the life
expectancy of the Participant or the joint life and last survivor expectancy
of the
Participant and the Participant's Designated Beneficiary or (2) a period
not extending
beyond the life expectancy of the Designated Beneficiary, the amount
required to be
distributed for each calendar year, beginning with distributions for the
First Distribution
Calendar Year, must at least equal the quotient obtained by dividing the
Participant's benefit by the Applicable Life Expectancy.

       (b)  For calendar years beginning before 1989, if the Participant's
Spouse is not the
Designated Beneficiary, the method of distribution selected must have
assured that at least
50% of the Present Value of the amount available for distribution was to
be paid within
the life expectancy of the Participant.

       (c)  For calendar years beginning after 1988, the amount to be
distributed each year,
beginning with distributions for the First Distribution Calendar Year
shall not be less than
the quotient obtained by dividing the Participant's benefit by the lesser
of(1) the
Applicable Life Expectancy or (2) if the Participant's Spouse is not the
Designated Beneficiary, the applicable divisor determined from the table set
forth in Q&A-4 of Regulations Section 1.401(a)(9)-2.  Distributions after the
death of the Participant shall be distributed using the Applicable Life
Expectancy as the relevant divisor without regard to Regulations Section
1.401(a)(9)-2.

       (d)  The minimum distribution required for the Participant's First
Distribution Calendar Year
must be made on or before the Participant's Required Beginning Date.  The
minimum distribution for other calendar years, including the minimum
distribution for the Distribution Calendar Year in which the Participant's
Required Beginning Date occurs, must be made on or before December 31 of that
Distribution Calendar Year.

       (e)  If the Participant's benefit is distributed in the form of an
annuity purchased from an insurance company, distributions thereunder shall
be made in accordance with the requirements of Code Section 401(a)(9) and the
Regulations thereunder.

       (f)  For purposes of determining the amount of the required
distribution for each Distribution
Calendar Year, the account balance to be used is the account balance
determined as of the
last valuation preceding the Distribution Calendar Year.  This balance
will be increased
by the amount of any contributions or forfeitures allocated to the
account balance after
the valuation date in such preceding calendar year.  Such balance will
also be decreased
by distributions made after the Valuation Date in such preceding Calendar
Year.

       (g)  For purposes of subparagraph 7.4(f), if any portion of the minimum
distribution for the
First Distribution Calendar Year is made in the second Distribution
Calendar Year on or
before the Required Beginning Date, the amount of the minimum
distribution made in the
second Distribution Calendar Year shall be treated as if it had been made
in the
immediately preceding Distribution Calendar Year.

7.5  REQUIRED BEGINNING DATE

       (a)  General Rule.  The Required Beginning Date of a Participant is the
first day of April of
the calendar year following the calendar year in which the Participant
attains age 70-1/2.

       (b)  Transitional Rules.  The Required Beginning Date of a Participant
who attains age 70-1/2
before 1988, shall be determined in accordance with (1) or (2) below:

            (1)  Non-5-percent owners.  The Required Beginning Date of a
                 Participant
                 who is not a 5-percent owner is the first day of April of the
                 calendar year following the calendar year in which the later
                 of retirement or attainment of age 70-1/2 occurs.  In the
                 case of a Participant who is not a 5-percent owner who
                 attains age 70-1/2 during 1988 and who has not retired as of
                 January 1, 1989, the Required Beginning Date is April 1,
                 1990.

            (2)  5-percent owners.  The Required Beginning Date of a
                 Participant who
                 is a 5-percent owner during any year beginning after 1979,
                 is the first
                 day of April following the later of:

                 (i)  the calendar year in which the Participant attains age
                      70-1/2, or

                 (ii) the earlier of the calendar year with or within which
                      ends the plan year in which the Participant becomes a
                      5-percent owner, or the calendar year in which the
                      Participant retires.

       (c)  A Participant is treated as a 5-percent owner for purposes of this
Paragraph if such
Participant is a 5-percent owner as defined in Code Section 416(i)
(determined in
accordance with Code Section 416 but without regard to whether the
Plan
is Top-Heavy)
at any time during the Plan Year ending with or within the calendar year
in which such
Owner attains age 66-1/2 or any subsequent Plan Year.

       (d)  Once distributions have begun to a 5-percent owner under this
paragraph,
they must
continue to be distributed, even if the Participant ceases to be a
5-percent owner in a
subsequent year.

7.6  TRANSITIONAL RULE

       (a)  Notwithstanding the other requirements of this Article and
subject to the requirements
of Article VIII, Joint and Survivor Annuity Requirements, distribution on
behalf of any
Employee, including a 5-percent owner, may be made in accordance with all
of the
following requirements (regardless of when such distribution commences):

            (1)  The distribution by the Trust is one which would not have
                 disqualified
                 such Trust under Code Section 401(a)(9) as in effect prior
                 to amendment
                 by the Deficit Reduction Act of 1984.

            (2)  The distribution is in accordance with a method of
                 distribution
                 designated by the Employee whose interest in the Trust is
                 being distributed or, if the Employee is deceased, by a
                 beneficiary of such Employee.

            (3)  Such designation was in writing, was signed by the Employee
                 or the beneficiary, and was made before 1984.

            (4)  The Employee had accrued a benefit under the Plan as of
                 December 31, 1983.

            (5)  The method of distribution designated by the Employee or the
                 beneficiary specifies the time at which distribution will
                 commence, the period over which distributions will be made,
                 and in the case of any distribution upon the Employee's
                 death, the beneficiaries of the Employee listed in order of
                 priority.

       (b)  A distribution upon death will not be covered by this transitional
rule unless the information in the designation contains the required information
described above with
respect to the distributions to be made upon the death of the Employee.

       (c)  For any distribution which commences before 1984, but continues
after 1983, the
Employee or the beneficiary, to whom such distribution is being made,
will be presumed
to have designated the method of distribution under which the
distribution is being made
if the method of distribution was specified in writing and the
distribution satisfies the
requirements in subparagraphs (a)(1) and (5) above.

       (d)  If a designation is revoked, any subsequent distribution must
satisfy the requirements of
Code Section 401(a)(9) and the regulations thereunder.  If a designation
is revoked
subsequent to the date distributions are required to begin, the Trust
must distribute by the
end of the calendar year following the calendar year in which the
revocation occurs the
total amount not yet distributed which would have been required to have
been distributed
to satisfy Code Section 401(a)(9) and the regulations thereunder, but for
the section
242(b)(2) election of the Tax Equity and Fiscal Responsibility Act of
1982. For calendar
years beginning after 1988, such distributions must meet the minimum
distribution
incidental benefit requirements in section 1.401(a)(9)-2 of the Income
Tax Regulations.
Any changes in the designation will be considered to be a revocation of
the designation.
However, the mere substitution or addition of another beneficiary (one
not named in the
designation) under the designation will not be considered to be a
revocation of the
designation, so long as such substitution or addition does not alter the
period over which
distributions are to be made under the designation, directly or
indirectly (for example, by
altering the relevant measuring life).  In the case in which an amount is
transferred or
rolled over from one plan to another plan, the rules in Q&A J-2 and Q&A
J-3 of the
regulations shall apply.

7.7  DESIGNATION OF BENEFICIARY FOR DEATH BENEFIT  Each Participant shall file
a written designation of beneficiary with
the Employer upon qualifying for participation in this Plan.  Such designation
shall remain in force until revoked by the
Participant by filing a new beneficiary form with the Employer.  The
Participant may elect to have a portion of his or her
account balance invested in an insurance contract.  If an insurance contract
is purchased under the Plan, the Trustee must be
named as Beneficiary under the terms of the contract.  However, the
Participant shall designate a Beneficiary to receive the
proceeds of the contract after settlement is received by the Trustee.  Under a
profit-sharing plan satisfying the requirements of
paragraph 8.7, the Designated Beneficiary shall be the Participant's Surviving
Spouse, if any, unless such Spouse properly
consents otherwise.

7.8  NONEXISTENCE OF BENEFICIARY  Any portion of the amount payable hereunder
which is not disposed of because of the
Participant's or former Participant's failure to designate a beneficiary, or
because all of the Designated Beneficiaries predeceased
the Participant, shall be paid to his or her Spouse.  If the Participant had
no Spouse at the time of death, payment shall be made
to the personal representative of his or her estate in a lump sum.

7.9  DISTRIBUTION BEGINNING BEFORE DEATH  If the Participant dies after
distribution of his or her interest has begun, the
remaining portion of such interest will continue to be distributed at least as
rapidly as under the method of distribution being
used prior to the Participant's death.

7.10 DISTRIBUTION BEGINNING AFTER DEATH  If the Participant dies before
distribution of his or her interest begins, distribution
of the Participant's entire interest shall be completed by December 31 of the
calendar year containing the fifth anniversary of
the Participant's death except to the extent that an election is made to
receive distributions in accordance with (a) or (b) below:

       (a)  If any portion of the Participant's interest is payable to a
Designated Beneficiary,
distributions may be made over the life or over a period certain not
greater than
the life expectancy of the Designated Beneficiary commencing on or before
December 31 of the calendar year immediately following the calendar year in
which the Participant died;

       (b)  If the Designated Beneficiary is the Participant's surviving Spouse,
the date
distributions are required to begin in accordance with (a) above shall
not be
earlier than the later of (1) December 31 of the calendar year immediately
following the calendar year in which the participant died or (2) December
31 of
the calendar year in which the Participant would have attained age 70-1/2.

If the Participant has not made an election pursuant to this paragraph 7.10 by
the time of his or her death, the Participant's
Designated Beneficiary must elect the method of distribution no later than the
earlier of (1) December 31 of the calendar year
in which distributions would be required to begin under this section, or (2)
December 31 of the calendar year which contains
the fifth anniversary of the date of death of the participant.  If the
Participant has no Designated Beneficiary, or if the Designated
Beneficiary does not elect a method of distribution, then distribution of the
Participant's entire interest must be completed by
December 31 of the calendar year containing the fifth anniversary of the
Participant's death.

For purposes of this paragraph if the Surviving Spouse dies after the
Participant, but before payments to such Spouse begin,
the provisions of this paragraph with the exception of paragraph (b) therein,
shall be applied as if the Surviving Spouse were
the Participant.  For the purposes of this paragraph and paragraph 7.9,
distribution of a Participant's interest is considered to
begin on the Participant's Required Beginning Date (or, if the preceding
sentence is applicable, the date distribution is required
to begin to the Surviving Spouse).  If distribution in the form of an annuity
described in paragraph 7.4(e) irrevocably commences
to the Participant before the Required Beginning Date, the date distribution
is considered to begin is the date distribution actually
commences.

For purposes of paragraph 7.9 and this paragraph, if an amount is payable to
either a minor or an individual who has been
declared incompetent, the benefits shall be paid to the legally appointed
guardian for the benefit of said minor or incompetent
individual, unless the court which appointed the guardian has ordered otherwise.

7.11 DISTRIBUTION OF EXCESS ELECTIVE DEFERRALS

       (a)  Notwithstanding any other provision of the Plan, Excess Elective
Deferrals plus any
income and minus any loss allocable thereto, shall be distributed no
later than April 15,
1988, and each April 15 thereafter, to Participants to whose
accounts
Excess Elective
Deferrals were allocated for the preceding taxable year, and who claim
Excess Elective
Deferrals for such taxable year.  Excess Elective Deferrals shall be
treated as Annual
Additions under the Plan, unless such amounts are distributed no later
than the first April
15th following the close of the Participant's taxable year.  A
Participant is deemed to
notify the Plan Administrator of any Excess Elective Deferrals that arise
by taking into
account only those Elective Deferrals made to this Plan and any other
plans of this Employer.

       (b)  Furthermore, a Participant who participates in another plan
allowing
Elective Deferrals
may assign to this Plan any Excess Elective Deferrals made during a
taxable year of the
Participant, by notifying the Plan Administrator of the amount of the
Excess Elective
Deferrals to be assigned.  The Participant's claim shall be in writing;
shall be submitted
to the Plan Administrator not later than March 1 of each year; shall
specify the amount
of the Participant's Excess Elective Deferrals for the preceding taxable
year; and shall be
accompanied by the Participant's written statement that if such amounts
are not
distributed, such Excess Elective Deferrals, when added to amounts
deferred under other
plans or arrangements described in Code Sections 401(k), 408(k)
[Simplified Employee
Pensions], or 403(b) [annuity programs for public schools and charitable
organizations]
will exceed the $7,000 limit as adjusted under Code Section 415(d)
imposed on the
Participant by Code Section 402(g) for the year in which the deferral occurred.

       (c)  Excess Elective Deferrals shall be adjusted for any income or
loss up to the end of the
taxable year, during which such excess was deferred.  Income or loss will
be calculated
under the method used to calculate investment earnings and losses
elsewhere in the Plan.

       (d)  If the Participant receives a return of his or her Elective
Deferrals,
the amount of such
contributions which are returned must be brought into the Employee's
taxable income.

7.12 DISTRIBUTIONS OF EXCESS CONTRIBUTIONS

       (a)  Notwithstanding any other provision of this Plan, Excess
Contributions,
plus any income
and minus any loss allocable thereto, shall be distributed no later than
the last day of each
Plan Year to Participants to whose accounts such Excess Contributions
were allocated
for the preceding Plan Year.  If such excess amounts are distributed more
than 2-1/2
months after the last day of the Plan Year in which such excess amounts
arose, a ten (10)
percent excise tax will be imposed on the Employer maintaining the Plan
with respect to
such amounts.  Such distributions shall be made to Highly Compensated
Employees on
the basis of the respective portions of the Excess Contributions
attributable to each of
such Employees.  Excess Contributions shall be allocated to Participants
who are subject
to the Family Member aggregation rules of Code Section 414(q)(6) in the manner
prescribed by the regulations.

       (b)  Excess Contributions (including the amounts recharacterized) shall
be treated as Annual  Additions under the Plan.

       (c)  Excess Contributions shall be adjusted for any income or loss up to
the end of the Plan
Year.  Income or loss will be calculated under the method used to
calculate investment
earnings and losses elsewhere in the Plan.

       (d)  Excess Contributions shall be distributed from the Participant's
Elective Deferral account
and Qualified Matching Contribution account (if applicable) in proportion
to the
Participant's Elective Deferrals and Qualified Matching Contributions (to
the extent used
in the ADP test) for the Plan Year.  Excess Contributions shall be
distributed from the
Participant's Qualified Non-Elective Contribution account only to the
extent that such
Excess Contributions exceed the balance in the Participant's Elective
Deferral account and
Qualified Matching Contribution account.

7.13 DISTRIBUTION OF EXCESS AGGREGATE CONTRIBUTIONS

       (a)  Notwithstanding any other provision of this Plan, Excess
Aggregate Contributions, plus
any income and minus any loss allocable thereto, shall be forfeited, if
forfeitable, or if not
forfeitable, distributed no later than the last day of each Plan Year to
Participants to
whose accounts such Excess Aggregate Contributions were allocated for the
preceding Plan Year.  Excess Aggregate Contributions shall be allocated to
Participants who are
subject to the Family Member aggregation rules of Code Section 414(q)(6)
in the manner
prescribed by the regulations.  If such Excess Aggregate Contributions
are distributed
more than 2-1/2 months after the last day of the Plan Year in which such
excess amounts
arose, a ten (10) percent excise tax will be imposed on the Employer
maintaining the Plan
with respect to those amounts.  Excess Aggregate Contributions shall be
treated as
Annual Additions under the plan.

       (b)  Excess Aggregate Contributions shall be adjusted for any income or
loss up to the end of
the Plan Year.  The income or loss allocable to Excess Aggregate
Contributions is the
sum of income or loss for the Plan Year allocable to the Participant's Voluntary
Contribution account, Matching Contribution account (if any, and  if all
amounts therein
are not used in the ADP test) and, if applicable, Qualified Non-Elective
Contribution
account and Elective Deferral account.  Income or loss will be calculated
under the
method used to calculate investment earnings and losses elsewhere in the
Plan.

       (c)  Forfeitures of Excess Aggregate Contributions may either be
reallocated to the accounts
of non-Highly Compensated Employees or applied to reduce Employer
contributions, as
elected by the employer in the Adoption Agreement.

       (d)  Excess Aggregate Contributions shall be forfeited if such amount is
not vested. If vested,
such excess shall be distributed on a pro-rata basis from the
Participant's Voluntary
Contribution account (and, if applicable, the Participant's Qualified Non-
Elective
Contribution account, Matching Contribution account, Qualified Matching
Contribution
account, or Elective Deferral account, or both).

                                ARTICLE VIII

                   JOINT AND SURVIVOR ANNUITY REQUIREMENTS

8.1  APPLICABILITY OF PROVISIONS  The provisions of this Article shall apply
to any Participant who is credited with at least
one Hour of Service with the Employer on or after August 23, 1984 and such
other Participants as provided in paragraph 8.8.

8.2  PAYMENT OF QUALIFIED JOINT AND SURVIVOR ANNUITY  Unless an optional form
of benefit is selected pursuant to a
Qualified Election within the 90-day period ending on the Annuity Starting
Date, a married Participant's Vested Account
Balance will be paid in the form of a Qualified Joint and Survivor Annuity and
an unmarried Participant's Vested Account
Balance will be paid in the form of a life annuity.  The Participant may elect
to have such annuity distributed upon attainment
of the Early Retirement Age under the Plan.

8.3  PAYMENT OF QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY  Unless an optional
form of benefit has been selected within
the Election Period pursuant to a Qualified Election, if a Participant dies
before benefits have commenced then the Participant's
Vested Account Balance shall be paid in the form of an annuity for the life of
the Surviving Spouse.  The Surviving Spouse may
elect to have such annuity distributed within a reasonable period after the
Participant's death.

A Participant who does not meet the age 35 requirement set forth in the
Election Period as of the end of any current Plan Year
may make a special qualified election to waive the qualified Pre-retirement
Survivor Annuity for the period beginning on the
date of such election and ending on the first day of the Plan Year in which
the Participant will attain age 35.  Such election shall
not be valid unless the Participant receives a written explanation of the
Qualified Pre-retirement Survivor Annuity in such terms
as are comparable to the explanation required under paragraph 8.5.  Qualified
Pre-retirement Survivor Annuity coverage will
be automatically reinstated as of the first day of the Plan Year in which the
Participant attains age 35.  Any new waiver on or
after such date shall be subject to the full requirements of this Article.

8.4  QUALIFIED ELECTION  A Qualified Election is an election to either waive a
Qualified Joint and Survivor Annuity or a
qualified pre-retirement survivor annuity.  Any such election shall not be
effective unless:

       (a)  the Participant's Spouse consents in writing to the election;

       (b)  the election designates a specific beneficiary, including any class
of beneficiaries or any
contingent beneficiaries, which may not be changed without spousal
consent (or the
Spouse expressly permits designations by the Participant without any
further spousal
consent);

       (c)  the Spouse's consent acknowledges the effect of the election; and

       (d)  the Spouse's consent is witnessed by a Plan representative or
notary public.

Additionally, a Participant's waiver of the Qualified Joint and  Survivor
Annuity shall not be effective unless the election
designates a form of benefit payment which may not be changed without spousal
consent (or the Spouse expressly permits
designations by the Participant without any further spousal consent).  If it
is established to the satisfaction of the Plan
Administrator that there is no Spouse or that the Spouse cannot be located, a
waiver will be deemed a Qualified Election.  Any
consent by a Spouse obtained under this provision (or establishment that the
consent of a Spouse may not be obtained) shall
be effective only with respect to such Spouse.  A consent that permits
designations by the Participant without any requirement
of further consent by such Spouse must acknowledge that the Spouse has the
right to limit consent to a specific beneficiary, and
a specific form of benefit where applicable, and that the Spouse voluntarily
elects to relinquish either or both of such rights.
A revocation of a  prior waiver may be made by a Participant without the
consent of the Spouse at any time before the
commencement of benefits.  The number of revocations shall  not be limited.
No consent obtained under this provision shall
be valid unless the Participant has received notice as provided in paragraphs
8.5 and 8.6 below.

8.5  NOTICE REQUIREMENTS FOR QUALIFIED JOINT AND SURVIVOR ANNUITY  In the case
of a Qualified Joint and Survivor
Annuity, the Plan Administrator shall, no less than 30 days and no more than
90 days prior to the Annuity Starting date, provide
each Participant a written explanation of:

       (a)  the terms and conditions of a Qualified Joint and Survivor Annuity;

       (b)  the Participant's right to make and the effect of an election to
waive the Qualified Joint and Survivor Annuity form of benefit;

       (c)  the rights of a Participant's Spouse; and

       (d)  the right to make, and the effect of, a revocation of a previous
election to waive the  Qualified Joint and Survivor Annuity.

8.6  NOTICE REQUIREMENTS FOR QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY  In the
case of a qualified pre-retirement
survivor annuity as described in paragraph 8.3, the Plan Administrator shall
provide each Participant within the applicable
period for such Participant a written explanation of the qualified
pre-retirement survivor annuity in such terms and in such
manner as would be comparable to the explanation provided for meeting the
requirements of paragraph 8.5 applicable to a
Qualified Joint and Survivor Annuity.  The applicable period for a Participant
is whichever of the following periods ends last:

       (a)  the period beginning with the first day of the Plan Year in which
the Participant attains
age 32 and ending with the close of the Plan Year preceding the Plan Year
in which the
Participant attains age 35;

       (b)  a reasonable period ending after the individual becomes a
Participant;

       (c)  a reasonable period ending after this Article first applies to the
Participant.
Notwithstanding the foregoing, notice must be provided within a
reasonable period ending
after separation from Service in the case of a Participant who separates
from        Service
            before attaining age 35.

For purposes of applying the preceding paragraph, a reasonable  period ending
after the events described in (b) and (c) is the
end of the two-year period beginning one-year prior to the date the applicable
event occurs, and ending one-year after that date.
In the case of a Participant who separates from Service before the Plan Year
in which age 35 is attained, notice shall be provided
within the two-year period beginning one year prior to separation and ending
one year after separation.  If such a Participant
subsequently returns to employment with the Employer, the applicable period
for such Participant shall be re-determined.

8.7  SPECIAL SAFE-HARBOR EXCEPTION FOR CERTAIN PROFIT-SHARING PLANS

       (a)  This paragraph shall apply to a Participant in a profit-sharing
plan, and
to any
distribution, made on or after the first day of the first plan year
beginning after 1988,
from or under a separate account attributable solely to Qualified
Voluntary contributions,
as maintained on behalf of a Participant in a money purchase pension
plan, (including a
target benefit plan) if the following conditions are satisfied:

            (1)  the Participant does not or cannot elect payments in the form
                 of a life annuity; and

            (2)  on the death of a Participant, the Participant's Vested
                 Account Balance will be paid to the Participant's Surviving
                 Spouse, but if there is no Surviving Spouse, or if the
                 Surviving Spouse has consented in a manner conforming to a
                 Qualified Election, then to the Participant's Designated
                 Beneficiary.

            The Surviving Spouse may elect to have distribution of the Vested
Account Balance
commence within the 90-day period following the date of the Participant's
death. The
account balance shall be adjusted for gains or losses occurring after the
Participant's
death in accordance with the provisions of the Plan governing the
adjustment of account
balances for other types of distributions.  These safe-harbor rules shall
not be operative
with respect to a Participant in a profit-sharing plan if that plan is a
direct or indirect
transferee of a Defined Benefit Plan, money purchase plan, a target
benefit plan, stock
bonus plan, or profit-sharing plan which is subject to the survivor
annuity requirements
of Code Section 401(a)(11) and Code Section 417, and would therefore have
a Qualified
Joint and Survivor Annuity as its normal form of benefit.

       (b)  The Participant may waive the spousal death benefit described in
this paragraph at any
time provided that no such waiver shall be effective unless it satisfies
the conditions
(described in paragraph 8.4) that would apply to the Participant's waiver
of the Qualified
Pre-Retirement Survivor Annuity.

       (c)  If this paragraph 8.7 is operative, then all other provisions of
this Article other than paragraph 8.8 are inoperative.

8.8  TRANSITIONAL JOINT AND SURVIVOR ANNUITY RULES  Special transition rules
apply to Participants who were not receiving
benefits on August 23, 1984.

       (a)  Any living Participant not receiving benefits on August 23, 1984,
who would otherwise
not receive the benefits prescribed by the previous paragraphs of this
Article, must be
given the opportunity to elect to have the prior paragraphs of this
Article apply if such
Participant is credited with at least one Hour of Service under this Plan
or a predecessor
Plan in a Plan Year beginning on or after January 1, 1976 and such
Participant had at
least 10 Years of Service for vesting purposes when he or she separated
from Service.

       (b)  Any living Participant not receiving benefits on August 23, 1984,
who was credited with
at least one Hour of Service under this Plan or a predecessor Plan on or after
September 2, 1974, and who is not otherwise credited with any Service in
a Plan Year
beginning on or after January 1, 1976, must be given the opportunity to
have his or her
benefits paid in accordance with paragraph 8.9.

       (c)  The respective opportunities to elect [as described in (a) and (b)
above] must be afforded
to the appropriate Participants during the period commencing on August
23, 1984 and
ending on the date benefits would otherwise commence to said Participants.

8.9  AUTOMATIC JOINT AND SURVIVOR ANNUITY AND EARLY SURVIVOR ANNUITY  Any
Participant who has elected pursuant
to paragraph 8.8(b) and any Participant who does not elect under paragraph
8.8(a) or who meets the requirements of paragraph
8.8(a), except that such Participant does not have at least 10 years of
vesting Service when he or she separates from Service,
shall have his or her benefits distributed in accordance with all of the
following requirements if benefits would have been payable
in the form of a life annuity.

       (a)  Automatic Joint and Survivor Annuity.  If benefits in the form of
a life annuity become payable to a married Participant who:

            (1)  begins to receive payments under the Plan on or after Normal
                 Retirement Age, or

            (2)  dies on or after Normal Retirement Age while still working
                 for the Employer, or

            (3)  begins to receive payments on or after the Qualified Early
                 Retirement Age, or

            (4)  separates from Service on or after attaining Normal
                 Retirement (or the Qualified Early Retirement Age) and after
                 satisfying the eligibility requirements for the payment of
                 benefits under the Plan and thereafter dies before beginning
                 to receive such benefits,

               then such benefits will be received under this Plan in the form
of a Qualified Joint and Survivor
               Annuity, unless the Participant has elected otherwise during
the Election Period.  The Election Period
               must begin at least 6 months before the Participant attains
Qualified Early Retirement Age and end
               not more than 90 days before the commencement of benefits.  Any
election will be in writing and may
               be changed by the Participant at any time.

       (b)  Election of Early Survivor Annuity.  A Participant who is employed
after attaining the
Qualified Early Retirement Age will be given the opportunity to elect,
during the Election
Period, to have a survivor annuity payable on death.  If the Participant
elects the survivor
annuity, payments under such annuity must not be less than the payments
which would
have been made to the Spouse under the Qualified Joint and Survivor
Annuity if the
Participant had retired on the day before his or her death.  Any election
under this
provision will be in writing and may be changed by the Participant at any
time.The
            Election Period begins on the later of:

            (1)  the 90th day before the Participant attains the Qualified Early
                 Retirement Age, or

            (2)  the date on which participation begins, and ends on the date
                 the Participant terminates employment.

8.10 ANNUITY CONTRACTS  Any annuity contract distributed under this Plan must
be nontransferable.  The terms of any
annuity contract purchased and distributed by the Plan to a Participant or
Spouse shall comply with the requirements of this
Plan.


                                ARTICLE IX

                                  VESTING


9.1  EMPLOYEE CONTRIBUTIONS  A Participant shall always have a 100% vested and
nonforfeitable interest in his or her
Elective Deferrals, Voluntary Contributions, Qualified Voluntary
Contributions, Rollover Contributions, and Transfer
Contributions plus the earnings thereon.  No forfeiture of Employer related
contributions (including any minimum contributions
made under paragraph 14.2) will occur solely as a result of an Employee's
withdrawal of any Employee contributions.

9.2  EMPLOYER CONTRIBUTIONS  A Participant shall acquire a vested and
nonforfeitable interest in his or her account
attributable to Employer contributions in accordance with the table selected
in the Adoption Agreement, provided that if a
Participant is not already fully vested, he or she shall become so upon
attaining Normal Retirement Age, Early Retirement Age,
on death prior to normal retirement, on retirement due to Disability, or on
termination of the Plan.

9.3  COMPUTATION PERIOD  The computation period for purposes of determining
Years of Service and Breaks in Service for
purposes of computing a Participant's nonforfeitable right to his or her
account balance derived from Employer contributions
shall be determined by the Employer in the Adoption Agreement.  In the event a
former Participant with no vested interest in
his or her Employer contribution account requalifies for participation in the
Plan after incurring a Break in Service, such
Participant shall be credited for vesting with all pre-break and post-break
Service.

9.4  REQUALIFICATION PRIOR TO FIVE CONSECUTIVE ONE-YEAR BREAKS IN SERVICE  The
account balance of such Participant
shall consist of any undistributed amount in his or her account as of the date
of re-employment plus any future contributions
added to such account plus the investment earnings on the account.  The Vested
Account Balance of such Participant shall be
determined by multiplying the Participant's account balance (adjusted to
include any distribution or redeposit made under
paragraph 6.3) by such Participant's vested percentage.  All Service of the
Participant, both prior to and following the break,
shall be counted when computing the Participant's vested percentage.

9.5  REQUALIFICATION AFTER FIVE CONSECUTIVE ONE-YEAR BREAKS IN SERVICE  If
such Participant is not fully vested upon
re-employment, a new account shall be established for such Participant to
separate his or her deferred vested and nonforfeitable
account, if any, from the account to which new allocations will be made.  The
Participant's deferred account to the extent
remaining shall be fully vested and shall continue to share in earnings and
losses of the Fund.  When computing the Participant's
vested portion of the new account, all pre-break and post-break Service shall
be counted.  However, notwithstanding this
provision, no such former Participant who has had five consecutive one-year
Breaks in Service shall acquire a larger vested and
nonforfeitable interest in his or her prior account balance as a result of
requalification hereunder.

9.6  CALCULATING VESTED INTEREST  A Participant's vested and nonforfeitable
interest shall be calculated by multiplying the
fair market value of his or her account attributable to Employer contributions
on the Valuation Date preceding distribution by
the decimal equivalent of the vested percentage as of his or her termination
date.  The amount attributable to Employer
contributions for purposes of the calculation includes amounts previously paid
out pursuant to paragraph 6.3 and not repaid.
The Participant's vested and nonforfeitable interest, once calculated above,
shall be reduced to reflect those amounts previously
paid out to the Participant and not repaid by the Participant.  The
Participant's vested and nonforfeitable interest so determined
shall continue to share in the investment earnings and any increase or
decrease in the fair market value of the Fund up to the
Valuation Date preceding or coinciding with payment.

9.7  FORFEITURES  Any balance in the account of a Participant who has
separated from Service to which he or she is not
entitled under the foregoing provisions, shall be forfeited and applied as
provided in the Adoption Agreement.  A forfeiture may
only occur if the Participant has received a distribution from the Plan or if
the Participant has incurred five consecutive 1-year
Breaks in Service.  Furthermore, a Highly Compensated Employee's Matching
Contributions may be forfeited, even if vested,
if the contributions to which they relate are Excess Deferrals, Excess
Contributions or Excess Aggregate Contributions.

9.8  AMENDMENT OF VESTING SCHEDULE  No amendment to the Plan shall have the
effect of decreasing a Participant's vested
interest determined without regard to such amendment as of the later of the
date such amendment is adopted or the date it
becomes effective.  Further, if the vesting schedule of the Plan is amended,
or the Plan is amended in any way that directly or
indirectly affects the computation of any Participant's nonforfeitable
percentage or if the Plan is deemed amended by an
automatic change to or from a Top-Heavy vesting schedule, each Participant
with at least three Years of Service with the
Employer may elect, within a reasonable period after the adoption of the
amendment, to have his or her nonforfeitable percentage
computed under the Plan without regard to such amendment.  For Participants
who do not have at least one Hour of Service
in any Plan Year beginning after 1988, the preceding sentence shall be applied
 by substituting "Five Years of Service" for
"Three Years of Service" where such language appears.  The period during which
the election may be made shall commence
with the date the amendment is adopted and shall end on the later of:

       (a)  60 days after the amendment is adopted;

       (b)  60 days after the amendment becomes effective; or

       (c)  60 days after the Participant is issued written notice of the
amendment by the Employer
            or the Trustee/Custodian.  If the Trustee/Custodian is asked to so
notify,        the Fund will
            be charged for the costs thereof.

No amendment to the Plan shall be effective to the extent that it has the
effect of decreasing a Participant's accrued benefit.
Notwithstanding the preceding sentence, a Participant's account balance may be
reduced to the extent permitted under section
412(c)(8) of the Code (relating to financial hardships).  For purposes of this
paragraph, a Plan amendment which has the effect
of decreasing a Participant's account balance or eliminating an optional form
of benefit, with respect to benefits attributable to
service before the amendment, shall be treated as reducing an accrued benefit.


9.9  SERVICE WITH CONTROLLED GROUPS  All Years of Service with other members
of a controlled group of corporations [as
defined in Code Section 414(b)], trades or businesses under common control [as
defined in Code Section 414(c)], or members
of an affiliated service group [as defined in Code Section 414(m)] shall be
considered for purposes of determining a Participant's
nonforfeitable percentage.

                                 ARTICLE X

                        LIMITATIONS ON ALLOCATIONS
                      AND ANTIDISCRIMINATION TESTING

10.1 PARTICIPATION IN THIS PLAN ONLY  If the Participant does not participate
in and has never participated in another
qualified plan, a Welfare Benefit Fund (as defined in paragraph 1.89) or an
individual medical account, as defined in Code
Section 415(l)(2), maintained by the adopting Employer, which provides an
Annual Addition as defined in paragraph 1.4, the
amount of Annual Additions which may be credited to the Participant's account
for any Limitation Year will not exceed the
lesser of the Maximum Permissible Amount or any other limitation contained in
this Plan.  If the Employer contribution that
would otherwise be contributed or allocated to the Participant's account would
cause the Annual Additions for the Limitation
Year to exceed the Maximum Permissible Amount, the amount contributed or
allocated will be reduced so that the Annual
Additions for the Limitation Year will equal the Maximum Permissible Amount.
Prior to determining the Participant's actual
Compensation for the Limitation Year, the Employer may determine the Maximum
Permissible Amount for a Participant on
the basis of a reasonable estimate of the Participant's Compensation for the
Limitation Year, uniformly determined for all
Participants similarly situated.  As soon as is administratively feasible
after the end of the Limitation Year, the Maximum
Permissible Amount for the Limitation Year will be determined on the basis of
the Participant's actual Compensation for the
Limitation Year.

10.2 DISPOSITION OF EXCESS ANNUAL ADDITIONS  If, pursuant to paragraph 10.1 or
as a result of the allocation of forfeitures,
there is an Excess Amount, the excess will be disposed of under one of the
following methods as determined in the Adoption
Agreement.  If no election is made in the Adoption Agreement then method "(a)"
below shall apply.

     (a)  Suspense Account Method

            (1)  Any nondeductible Employee Voluntary, Required Voluntary
                 Contributions and unmatched Elective Deferrals to the extent
                 they would
                 reduce the Excess Amount will be returned to the Participant.
                 To the
                 extent necessary to reduce the Excess Amount, non-Highly
                 Compensated
                 Employees will have all Elective Deferrals returned whether
                 or not there
                 was a corresponding match.

            (2)  If after the application of paragraph (1) an Excess Amount
                 still exists,
                 and the Participant is covered by the Plan at the end of the
                 Limitation
                 Year, the Excess Amount in the Participant's account will be
                 used to
                 reduce Employer contributions (including any allocation of
                 forfeitures)
                 for such Participant in the next Limitation Year, and each
                 succeeding
                 Limitation Year if necessary;

            (3)  If after the application of paragraph (1) an Excess Amount
                 still exists,
                 and the Participant is not covered by the Plan at the end of
                 the Limitation
                 Year, the Excess Amount will be held unallocated in a suspense
                 account.
                 The suspense account will be applied to reduce future
                 Employer
                 contributions (including allocation of any forfeitures) for
                 all remaining
                 Participants in the next Limitation Year, and each succeeding
                 Limitation
                 Year if necessary;

            (4)  If a suspense account is in existence at any time during the
                 Limitation
                 Year pursuant to this paragraph, it will not participate in
                 the allocation
                 of investment gains and losses.  If a suspense account is in
                 existence at
                 any time during a particular Limitation Year, all amounts in
                 the
                 suspense account must be allocated and reallocated to
                 Participants'
                 accounts before any Employer contributions or any Employee
                 Contributions may be made to the Plan for that Limitation
                 Year.  Excess
                 amounts may not be distributed to Participants or former
                 Participants.


       (b)  Spillover Method

            (1)  Any nondeductible Employee Voluntary, Required Voluntary
                 Contributions and unmatched Elective Deferrals to the extent
                 they would
                 reduce the Excess Amount will be returned to the Participant.
                 To the
                 extent necessary to reduce the Excess Amount, non-Highly
                 Compensated
                 Employees will have all Elective Deferrals returned whether or
                 not there
                 was a corresponding match.

            (2)  Any Excess Amount which would be allocated to the account of
                 an individual Participant under the Plan's allocation formula
                 will be reallocated to other Participants in the same manner
                 as other Employer contributions.  No such reallocation shall
                 be made to the extent that it will result in an Excess Amount
                 being created in such Participant's own account.

            (3)  To the extent that amounts cannot be reallocated under
                 (1) above, the suspense account provisions of (a) above
                 will apply.

10.3 PARTICIPATION IN THIS PLAN AND ANOTHER MASTER AND PROTOTYPE DEFINED
CONTRIBUTION PLAN, WELFARE BENEFIT FUND
OR INDIVIDUAL MEDICAL ACCOUNT MAINTAINED BY THE EMPLOYER  The Annual Additions
which may be credited to a
Participant's account under this Plan for any Limitation Year will not exceed
the Maximum Permissible Amount reduced by
the Annual Additions credited to a Participant's account under the other
Master or Prototype Defined Contribution Plans,
Welfare Benefit Funds, and individual medical accounts as defined in Code
Section 415(l)(2), maintained by the Employer,
which provide an Annual Addition as defined in paragraph 1.4 for the same
Limitation Year.  If the Annual Additions, with
respect to the Participant under other Defined Contribution Plans and Welfare
Benefit Funds maintained by the Employer, are
less than the Maximum Permissible Amount and the Employer contribution that
would otherwise be contributed or allocated
to the Participant's account under this Plan would cause the Annual Additions
for the Limitation Year to exceed this limitation,
the amount contributed or allocated will be reduced so that the Annual
Additions under all such plans and funds for the
Limitation Year will equal the Maximum Permissible Amount.  If the Annual
Additions with respect to the Participant under
such other Defined Contribution Plans and Welfare Benefit Funds in the
aggregate are equal to or greater than the Maximum
Permissible Amount, no amount will be contributed or allocated to the
Participant's account under this Plan for the Limitation
Year.  Prior to determining the Participant's actual Compensation for the
Limitation Year, the Employer may determine the
Maximum Permissible Amount for a Participant in the manner described in
paragraph 10.1.  As soon as administratively
feasible after the end of the Limitation Year, the Maximum Permissible Amount
for the Limitation Year will be determined on
the basis of the Participant's actual Compensation for the Limitation Year.

10.4 DISPOSITION OF EXCESS ANNUAL ADDITIONS UNDER TWO PLANS  If, pursuant to
paragraph 10.3 or as a result of
forfeitures, a Participant's Annual Additions under this Plan and such other
plans would result in an Excess Amount for a
Limitation Year, the Excess Amount will be deemed to consist of the Annual
Additions last allocated except that Annual
Additions attributable to a Welfare Benefit Fund or Individual Medical Account
as defined in Code Section 415(l)(2) will be
deemed to have been allocated first regardless of the actual allocation date.
If an Excess Amount was allocated to a Participant
on an allocation date of this Plan which coincides with an allocation date of
another plan, the Excess Amount attributed to this
Plan will be the product of:

       (a)  the total Excess Amount allocated as of such date, times

       (b)  the ratio of:

            (1)  the Annual Additions allocated to the Participant for the
                 Limitation Year
                 as of such date under the Plan, to

            (2)  the total Annual Additions allocated to the Participant for
                 the Limitation
                 Year as of such date under this and all the other qualified
                 Master or
                 Prototype Defined Contribution Plans.

Any Excess Amount attributed to this Plan will be disposed of in the manner
described in paragraph 10.2.

10.5 PARTICIPATION IN THIS PLAN AND ANOTHER DEFINED CONTRIBUTION PLAN WHICH IS
NOT A MASTER OR PROTOTYPE PLAN
If the Participant is covered under another qualified Defined Contribution
Plan maintained by the Employer which is not a
Master or Prototype Plan, Annual Additions which may be credited to the
Participant's account under this Plan for any
Limitation Year will be limited in accordance with paragraphs 10.3 and 10.4 as
though the other plan were a Master or
Prototype Plan, unless the Employer provides other limitations in the Adoption
Agreement.

10.6 PARTICIPATION IN THIS PLAN AND A DEFINED BENEFIT PLAN  If the Employer
maintains, or at any time maintained, a
qualified Defined Benefit Plan covering any Participant in this Plan, the sum
of the Participant's Defined Benefit Plan Fraction
and Defined Contribution Plan Fraction will not exceed 1.0 in any Limitation
Year. For any Plan Year during which the Plan
is Top-Heavy, the Defined Benefit and Defined Contribution Plan Fractions
shall be calculated in accordance with Code Section
416(h).  The Annual Additions which may be credited to the Participant's
account under this Plan for any Limitation Year will
be limited in accordance with the provisions set forth in the Adoption
Agreement.

10.7 AVERAGE DEFERRAL PERCENTAGE (ADP) TEST  With respect to any Plan Year,
the Average Deferral Percentage for
Participants who are Highly Compensated Employees and the Average Deferral
Percentage for Participants who are non-Highly
Compensated Employees must satisfy one of the following tests:

       (a)  BASIC TEST - The Average Deferral Percentage for Participants who
            are Highly
            Compensated Employees for the Plan Year is not more than 1.25
            times the Average
            Deferral Percentage for Participants who are non-Highly
            Compensated Employees for the
            same Plan Year, or

       (b)  ALTERNATIVE TEST - The Average Deferral Percentage for
            Participants who
            are Highly
            Compensated Employees for the Plan Year does not exceed the
            Average Deferral
            Percentage for Participants who are non-Highly Compensated
            Employees for the same
            Plan Year by more than 2 percentage points provided that the
            Average Deferral
            Percentage for Participants who are Highly Compensated Employees
            is not more than 2.0
            times the Average Deferral Percentage for Participants who are
            non-Highly Compensated Employees.

10.8 SPECIAL RULES RELATING TO APPLICATION OF ADP TEST

       (a)  The Actual Deferral Percentage for any Participant who is a
Highly Compensated
Employee for the Plan Year and who is eligible to have Elective Deferrals
(and Qualified
Non-Elective Contributions or Qualified Matching Contributions, or both,
if treated as
Elective Deferrals for purposes of the ADP test) allocated to his or her
accounts under
two or more arrangements described in Code Section 401(k), that are
maintained by the
Employer, shall be determined as if such Elective Deferrals (and, if
applicable, such
Qualified Non-Elective Contributions or Qualified Matching Contributions,
or both) were
made under a single arrangement.  If a Highly Compensated Employee
participates in two
or more cash or deferred arrangements that have different Plan Years, all
cash or deferred
arrangements ending with or within the same calendar year shall be
treated as a single arrangement.

       (b)  In the event that this Plan satisfies the requirements of Code
Sections 401(k), 401(a)(4),
or 410(b), only if aggregated with one or more other plans, or if one or
more other plans
satisfy the requirements of such Code Sections only if aggregated with
this Plan, then this
Section shall be applied by determining the Actual Deferral Percentage of
Employees as
if all such plans were a single plan.  For Plan Years beginning after
1989, plans may be
aggregated in order to satisfy Code Section 401(k) only if they have the
same Plan Year.


       (c)  For purposes of determining the Actual Deferral Percentage of a
Participant who is a
5-percent owner or one of the ten most highly-paid Highly Compensated
Employees, the
Elective Deferrals (and Qualified Non-Elective Contributions or Qualified
Matching Contributions, or both, if treated as Elective Deferrals for
purposes of the ADP test) and
Compensation of such Participant shall include the Elective Deferrals
(and, if applicable,
Qualified Non-Elective Contributions and Qualified Matching
Contributions, or both) for
the Plan Year of Family Members as defined in paragraph 1.36 of this
Plan. Family
Members, with respect to such Highly Compensated Employees, shall be
disregarded as
separate Employees in determining the ADP both for Participants who are
non-Highly  Compensated Employees and for Participants who are Highly
Compensated Employees.

            In the event of repeal of the family aggregation rules under Code
Section  414(q)(6), all
applications of such rules under this Plan will cease as of the effective
date of such repeal.

       (d)  For purposes of determining the ADP test, Elective Deferrals,
Qualified Non-Elective
Contributions and Qualified Matching Contributions must be made before
the last day of
the twelve-month period immediately following the Plan Year to which
contributions relate.

       (e)  The Employer shall maintain records sufficient to demonstrate
satisfaction of the ADP
test and the amount of Qualified Non-Elective Contributions or Qualified
Matching Contributions, or both, used in such test.

       (f)  The determination and treatment of the Actual Deferral
Percentage amounts
of any
Participant shall satisfy such other requirements as may be prescribed by
the Secretary  of the Treasury.

10.9 RECHARACTERIZATION  If the Employer allows for Voluntary Contributions in
the Adoption Agreement, a Participant may
treat his or her Excess Contributions as an amount distributed to the
Participant and then contributed by the Participant to the
Plan.  Recharacterized amounts will remain nonforfeitable and subject to the
same distribution requirements as Elective
Deferrals.  Amounts may not be recharacterized by a Highly Compensated
Employee to the extent that such amount in
combination with other Employee Contributions made by that Employee would
exceed any stated limit under the Plan on
Voluntary Contributions.  Recharacterization must occur no later than two and
one-half months after the last day of the Plan
Year in which such Excess Contributions arose and is deemed to occur no
earlier than the date the last Highly Compensated
Employee is informed in writing of the amount recharacterized and the
consequences thereof.  Recharacterized amounts will
be taxable to the Participant for the Participant's tax year in which the
Participant would have received them in cash.

10.10     AVERAGE CONTRIBUTION PERCENTAGE (ACP) TEST  If the Employer makes
Matching Contributions or if the Plan allows
Employees to make Voluntary Contributions the Plan must meet additional
nondiscrimination requirements provided under Code
Section 401(m).  If Employee Contributions (including any Elective Deferrals
recharacterized as Voluntary Contributions) are
made pursuant to this Plan, then in addition to the ADP test referenced in
paragraph 10.7, the Average Contribution Percentage
test is also applicable.  The Average Contribution Percentage for Participants
who are Highly Compensated Employees for each
Plan Year and the Average Contribution Percentage for Participants who are
Non-Highly Compensated Employees for the same
Plan Year must satisfy one of the following tests:

       (a)  BASIC TEST - The Average Contribution Percentage for Participants
            who are Highly
            Compensated Employees for the Plan Year shall not exceed the
            Average Contribution
            Percentage for Participants who are non-Highly Compensated
            Employees for the same
            Plan Year multiplied by 1.25; or

       (b)  ALTERNATIVE TEST - The ACP for Participants who are Highly
            Compensated Employees
            for the Plan Year shall not exceed the Average Contribution
            Percentage for Participants
            who are non-Highly Compensated Employees for the same Plan Year
            multiplied by two
            (2), provided that the Average Contribution Percentage for
            Participants who are Highly
            Compensated Employees does not exceed the Average Contribution
            Percentage for
            Participants who are non-Highly Compensated Employees by more
            than two (2)
            percentage points.

10.11    SPECIAL RULES RELATING TO APPLICATION OF ACP TEST

       (a)  If one or more Highly Compensated Employees participate in both
            a cash or deferred
            arrangement and a plan subject to the ACP test maintained by the
            Employer and the sum
            of the ADP and ACP of those Highly Compensated Employees subject
            to either or both
            tests exceeds the Aggregate Limit, then the ADP or ACP of those
            Highly Compensated
            Employees who also participate in a cash or deferred arrangement
            will be reduced
            (beginning with such Highly Compensated Employee whose ADP or ACP
            is the highest)
            as set forth in the Adoption Agreement so that the limit is not
            exceeded. The amount by
            which each Highly Compensated Employee's Contribution Percentage
            Amounts is reduced
            shall be treated as an Excess Aggregate Contribution.  The ADP
            and ACP of the Highly
            Compensated Employees are determined after any corrections
            required to meet the ADP
            and ACP tests.  Multiple use does not occur if both the ADP and
            ACP of the  Highly
            Compensated Employees does not exceed 1.25 multiplied by the ADP
            and ACP of the
            non-Highly Compensated Employees.

       (b)  For purposes of this Article, the Contribution Percentage for any
            Participant who is a
            Highly Compensated Employee and who is eligible to have
            Contribution Percentage
            Amounts allocated to his or her account under two or more plans
            described in Code
            Section 401(a), or arrangements described in Code Section 401(k)
            that are maintained by
            the Employer, shall be determined as if the total of such
            Contribution Percentage Amounts
            was made under each Plan.  If a Highly Compensated Employee
            participates in two or
            more cash or deferred arrangements that have different plan
            years, all cash or deferred
            arrangements ending with or within the same calendar year shall
            be treated as a single arrangement.

       (c)  In the event that this Plan satisfies the requirements of Code
            Sections (401(k))(4), 401(m),
            or 410(b) only if aggregated with one or more other plans, or if
            one or more other plans
            satisfy the requirements of such Code Sections only if aggregated
            with this Plan, then this
            Section shall be applied by determining the Contribution
            Percentage of Employees as if
            all such plans were a single plan.  For plan years beginning
            after 1989, plans may be
            aggregated in order to satisfy Code Section 401(m) only if the
            aggregated plans  have the same Plan Year.

       (d)  For purposes of determining the Contribution percentage of a
            Participant who is a
            five-percent owner or one of the ten most highly-paid, Highly
            Compensated Employees, the Contribution Percentage Amounts and
            Compensation of such Participant shall include
            the Contribution Percentage Amounts and Compensation for the Plan
            Year of Family
            Members as defined in Paragraph 1.36 of this Plan.  Family Members,
            with respect to
            Highly Compensated Employees, shall be disregarded as separate
            Employees in
            determining the Contribution Percentage both for Participants who
            are non-Highly
            Compensated Employees and for Participants who are Highly
            Compensated Employees.
            In the event of repeal of the family aggregation rules under
            Code Section 414(q)(6),  all
            applications of such rules under this Plan will cease as of the
            effective date of such repeal.

       (e)  For purposes of determining the Contribution Percentage test,
            Employee Contributions
            are considered to have been made in the Plan Year in which
            contributed to the trust.
            Matching Contributions and Qualified Non-Elective Contributions
            will be considered
            made for a Plan Year if made no later than the end of the
            twelve-month period beginning
            on the day after the close of the Plan Year.

       (f)  The Employer shall maintain records sufficient to demonstrate
            satisfaction of the ACP
            test and the amount of Qualified Non-Elective Contributions or
            Qualified Matching Contributions, or both, used in such test.

       (g)  The determination and treatment of the Contribution Percentage of
            any Participant shall
            satisfy such other requirements as may be prescribed by the
            Secretary of the Treasury.

       (h)  Qualified Matching Contributions and Qualified Non-Elective
            Contributions used to
            satisfy the ADP test may not be used to satisfy the ACP test.

                                 ARTICLE XI

                               ADMINISTRATION


11.1 PLAN ADMINISTRATOR  The Employer shall be the named fiduciary and Plan
Administrator. These duties shall include:

       (a)  appointing the Plan's attorney, accountant, actuary, or any other
            party needed to administer the Plan,

       (b)  directing the Trustee/Custodian with respect to payments from
            the Fund,

       (c)  communicating with Employees regarding their participation and
            benefits under the Plan,
            including the administration of all claims procedures,

       (d)  filing any returns and reports with the Internal Revenue Service,
            Department of Labor, or any other governmental agency,

       (e)  reviewing and approving any financial reports, investment reviews,
            or other reports
            prepared by any party appointed by the Employer under paragraph
            (a),

       (f)  establishing a funding policy and investment objectives
            consistent with the purposes of
            the Plan and the Employee Retirement Income Security Act of 1974,
            and

       (g)  construing and resolving any question of Plan interpretation.  The
            Plan Administrator's
            interpretation of Plan provisions including eligibility and
            benefits under the Plan is final,
            and unless it can be shown to be arbitrary and capricious will
            not be subject to "de novo"
            review.

11.2 TRUSTEE/CUSTODIAN  The Trustee/Custodian shall be responsible for the
administration of investments held in the Fund.
These duties shall include:

       (a)  receiving contributions under the terms of the Plan,

       (b)  making distributions from the Fund in accordance with written
            instructions received from
            an authorized representative of the Employer, and

       (c)  keeping accurate records reflecting its administration of the
            Fund and making such
            records available to the Employer for review and audit. Within 90
            days after each Plan
            Year, and within 90 days after its removal or resignation, the
            Trustee/Custodian shall file
            with the Employer an accounting of its administration of the Fund
            during such year or
            from the end of the preceding Plan Year to the date of removal or
            resignation. Such
            accounting shall include a statement of cash receipts and
            disbursements since the date of
            its last accounting and shall contain an asset list showing the
            fair market value of
            investments held in the Fund as of the end of the Plan Year.  The
            value of marketable
            investments shall be determined using the most recent price
            quoted on a national securities
            exchange or over the counter market.  The value of non-marketable
            investments shall be
            determined in the sole judgement of the Trustee/Custodian which
            determination shall be
            binding and conclusive.  The value of investments in securities
            or obligations of the
            Employer in which there is no market shall be determined in the
            sole judgement of the
            Employer and the Trustee/Custodian shall have no responsibility
            with respect to the
            valuation of such assets.  The Employer shall review the
            Trustee/Custodian's accounting
            and notify the Trustee/Custodian in the event of its disapproval
            of the report within 90
            days, providing the Trustee/Custodian with a written description
            of the items in question.
            The Trustee/Custodian shall have 60 days to provide the Employer
            with a written  explanation of the items in question.  If the
            Employer again disapproves, the
            Trustee/Custodian shall file its accounting in a court of
            competent jurisdiction for audit
            and adjudication.

       (d)  employing such agents, attorneys or other professionals as the
            Trustee may deem
            necessary or advisable in the performance of its duties.

The Trustee's/Custodian's duties shall be limited to those described above.
The Employer shall be responsible for any other
administrative duties required under the Plan or by applicable law.

11.3 ADMINISTRATIVE FEES AND EXPENSES  All reasonable costs, charges and
expenses incurred by the Trustee/Custodian
in connection with the administration of the Fund and all reasonable costs,
charges and expenses incurred by the Plan
Administrator in connection with the administration of the Plan (including
fees for legal services rendered to the
Trustee/Custodian or Plan Administrator) may be paid by the Employer, but if
not paid by the Employer when due, shall be
paid from the Fund.  Such reasonable compensation to the Trustee/Custodian as
may be agreed upon from time to time between
the Employer and the Trustee/Custodian and such reasonable compensation to the
Plan Administrator as may be agreed upon
from time to time between the Employer and Plan Administrator may be paid by
the Employer, but if not paid by the Employer
when due shall be paid by the Fund.  The Trustee shall have the right to
liquidate trust assets to cover its fees.  Notwithstanding
the foregoing, no compensation other than reimbursement for expenses shall be
paid to a Plan Administrator who is the
Employer or a full-time Employee of the Employer.  In the event any part of
the Trust/Custodial Account becomes subject to
tax, all taxes incurred will be paid from the Fund unless the Plan
Administrator advises the Trustee/Custodian not to pay such
tax.

11.4 DIVISION OF DUTIES AND INDEMNIFICATION

       (a)  The Trustee/Custodian shall have the authority and discretion to
            manage and govern the
            Fund to the extent provided in this instrument, but does not
            guarantee the Fund in any
            manner against investment loss or depreciation in asset value,
            or guarantee the adequacy
            of the Fund to meet and discharge all or any liabilities of the
            Plan.

       (b)  The Trustee/Custodian shall not be liable for the making,
            retention or sale of any
            investment or reinvestment made by it, as  herein provided, or
            for any loss  to, or
            diminution of the Fund, or for any other loss or damage which may
            result from the
            discharge of its duties hereunder except to the extent it is
            judicially determined that the
            Trustee/Custodian has failed to exercise the care, skill,
            prudence and diligence under the
            circumstances then prevailing that a prudent person acting in a
            like capacity and familiar
            with such matters would use in the conduct of an enterprise of a
            like character with like  aims.

       (c)  The Employer warrants that all directions  issued to the
            Trustee/Custodian by it or the
            Plan Administrator will be in accordance with the terms of the
            Plan and not contrary to
            the provisions of the Employee Retirement Income Security Act of
            1974 and regulations issued thereunder.

       (d)  The Trustee/Custodian shall not be answerable for any action
            taken pursuant to any
            direction, consent, certificate, or other paper or document on
            the belief that the same is
            genuine and signed by the proper person.  All directions by the
            Employer, Participant or
            the Plan Administrator shall be in writing.  The Employer shall
            deliver to the
            Trustee/Custodian certificates evidencing the  individual or
            individuals authorized to act
            as set forth in the Adoption Agreement or as the Employer may
            subsequently inform the
            Trustee/Custodian in writing and shall deliver to the
            Trustee/Custodian specimens of their
            signatures.

       (e)  The duties and obligations of the Trustee/Custodian shall be
            limited to those expressly
            imposed upon it by this instrument or subsequently agreed upon by
            the parties.
            Responsibility for administrative duties required under the Plan
            or applicable law not
            expressly imposed upon or agreed to by the Trustee/Custodian,
            shall rest solely with the Employer.

       (f)  The Trustee shall be indemnified and saved harmless by the
            Employer from and against
            any and all liability to which the Trustee/Custodian may be
            subjected, including all
            expenses reasonably incurred in its defense, for any action or
            failure to act resulting from
            compliance with the instructions of the Employer, the employees
            or agents of the
            Employer, the Plan Administrator, or any other fiduciary to the
            Plan, and for any liability
            arising from the actions or non-actions of any predecessor
            Trustee/Custodian or fiduciary
            or other fiduciaries of the Plan.

       (g)  The Trustee/Custodian shall not be responsible in any way for the
            application of any
            payments it is directed to make or for the adequacy of the Fund
            to meet and discharge any and all liabilities under the Plan.

                                 ARTICLE XII

                        TRUST FUND/CUSTODIAL ACCOUNT


12.1 THE FUND  The Fund shall consist of all contributions made under Article
III and Article IV of the Plan and the
investment thereof and earnings thereon. All contributions and the earnings
thereon less payments made under the terms of the
Plan, shall constitute the Fund.  The Fund shall be administered as provided
in this document.

12.2 CONTROL OF PLAN ASSETS  The assets of the Fund or evidence of ownership
shall be held by the Trustee/Custodian under
the terms of the Plan and Trust/Custodial Account.  If the assets represent
amounts transferred from another trustee/custodian
under a former plan, the Trustee/Custodian named hereunder shall not be
responsible for the propriety of any investment under
the former plan.

12.3 EXCLUSIVE BENEFIT RULES  No part of the Fund shall be used for, or
diverted to, purposes other than for the exclusive
benefit of Participants, former Participants with a vested interest, and the
beneficiary or beneficiaries of deceased Participants
having a vested interest in the Fund at death.

12.4 ASSIGNMENT AND ALIENATION OF BENEFITS  No right or claim to, or interest
in, any part of the Fund, or any payment
from the Fund, shall be assignable, transferable, or subject to sale,
mortgage, pledge, hypothecation, commutation, anticipation,
garnishment, attachment, execution, or levy of any kind.  The
Trustee/Custodian shall not recognize any attempt to assign,
transfer, sell, mortgage, pledge, hypothecate, commute, or anticipate the
same, except to the extent required by law.  The
preceding sentences shall also apply to the creation, assignment, or
recognition of a right to any benefit payable with respect
to a Participant pursuant to a domestic relations order, unless such order is
determined to be a qualified domestic relations order,
as defined in Code Section 414(p), or any domestic relations order entered
before January 1, 1985 which the Plan attorney and
Plan Administrator deem to be qualified.

12.5 DETERMINATION OF QUALIFIED DOMESTIC RELATIONS ORDER(QDRO)  A Domestic
Relations Order shall specifically state
all of the following in order to be deemed a Qualified Domestic Relations
Order ("QDRO"):

       (a)  The name and last known mailing address (if any) of the
            Participant and of each alternate
            payee covered by the QDRO.  However, if the QDRO does not specify
            the current mailing
            address of the alternate payee, but the Plan Administrator has
            independent knowledge of
            that address, the QDRO will still be valid.

       (b)  The dollar amount or percentage of the Participant's benefit to
            be paid by the Plan to each
            alternate payee, or the manner in which the amount or percentage
            will be determined.

       (c)  The number of payments or period for which the order applies.

       (d)  The specific plan (by name) to which the Domestic Relations Order
            applies.

The Domestic Relations Order shall not be deemed a QDRO if it requires the
Plan to provide:

       (e)  any type or form of benefit, or any option not already provided
            for in the Plan;

       (f)  increased benefits, or benefits in excess of the Participant's
            vested rights;

       (g)  payment of a benefit earlier than allowed by the Plan's earliest
            retirement provisions or
            in the case of a profit-sharing plan, prior to the allowability
            of in-service withdrawals, or

       (h)  payment of benefits to an alternate payee which are required to
            be paid to another alternate payee under another QDRO.

Promptly, upon receipt of a Domestic Relations Order ("Order") which may or
may not be "Qualified", the Plan Administrator
shall notify the Participant and any alternate payee(s) named in the Order of
such receipt, and include a copy of this paragraph
12.5.  The Plan Administrator shall then forward the Order to the Plan's legal
counsel for an opinion as to whether or not the
Order is in fact "Qualified" as defined in Code Section 414(p).  Within a
reasonable time after receipt of the Order, not to exceed
60 days, the Plan's legal counsel shall make a determination as to its
"Qualified" status and the Participant and any alternate
payee(s) shall be promptly notified in writing of the determination.

If the "Qualified" status of the Order is in question, there will be a delay
in any payout to any payee including the Participant,
until the status is resolved.  In such event, the Plan Administrator shall
segregate the amount that would have been payable to
the alternate payee(s) if the Order had been deemed a QDRO.  If the Order is
not Qualified, or the status is not resolved (for
example, it has been sent back to the Court for clarification or modification)
within 18 months beginning with the date the first
payment would have to be made under the Order, the Plan Administrator shall
pay the segregated amounts plus interest to the
person(s) who would have been entitled to the benefits had there been no
Order.  If a determination as to the Qualified status
of the Order is made after the 18-month period described above, then the Order
shall only be applied on a prospective basis.
If the Order is determined to be a QDRO, the Participant and alternate
payee(s) shall again be notified promptly after such
determination.  Once an Order is deemed a QDRO, the Plan Administrator shall
pay to the alternate payee(s) all the amounts
due under the QDRO, including segregated amounts plus interest which may have
accrued during a dispute as to the Order's
qualification.

Unless specified otherwise in the Adoption Agreement, the earliest retirement
age with regard to the Participant against whom
the order is entered shall be the date the order is determined to be
qualified.  This will only allow payouts to alternate payee(s)
and not the Participant.


                               ARTICLE XIII

                                INVESTMENTS


13.1 FIDUCIARY STANDARDS  The Trustee/Custodian shall invest and reinvest
principal and income in the same Fund in
accordance with the investment objectives established by the Employer,
provided that:

       (a)  such investments are prudent under the Employee Retirement Income
Security        Act of
            1974 and the regulations thereunder,

       (b)  such investments are sufficiently diversified or otherwise insured
            or guaranteed to
            minimize the risk of large losses, and

       (c)  such investments are similar to those which would be purchased
            by another professional
            money manager for a like plan with similar investment objectives.

13.2 FUNDING ARRANGEMENT  The Employer shall, in the Adoption Agreement,
appoint a Trustee to administer the Fund
and/or a Custodian to have custody of the Fund.  The Trustee shall invest the
Fund in any of the alternatives available under
paragraph 13.3.  If a Custodian is appiointed, the Fund shall be invested as
provided in paragraph 13.4.

13.3 INVESTMENT ALTERNATIVES OF THE TRUSTEE  As Trustee, the Sponsor shall
implement an investment program based on
the Employer's investment objectives and the Employee Retirement Income
Security Act of 1974.  In addition to powers given
by law, the Trustee may:

       (a)  invest the Fund in any form of property, including common and
            preferred stocks, exchange traded put and call options, bonds,
            money market instruments, mutual funds
            (including funds for which the Trustee or its affiliates serve as
            investment advisor),
            savings accounts, certificates of deposit, Treasury bills,
            insurance policies and contracts,
            or in any other property, real or personal, having a ready market
            including securities
            issued by the Trustee and/or affiliates of the Trustee.  The
            Trustee may invest in its own
            deposits and, if applicable, those of affiliates, which bear a
            reasonable interest rate.  No
            portion of any Qualified Voluntary Contribution, or the earnings
            thereon, may be invested
            in life insurance contracts or, as with any Participant-directed
            investment, in tangible
            personal property characterized by the IRS as a collectible,

       (b)  transfer any assets of the Fund to a group or collective trust
            established to permit the
            pooling of funds of separate pension and profit-sharing trusts,
            provided the Internal Revenue Service has ruled such group or
            collective trust to be qualified under Code
            Section 401(a) and exempt under Code Section 501(a) (or the
            applicable corresponding provision of any other Revenue Act) or
            to any other common, collective, or commingled
            trust fund which has been or may hereafter be established and
            maintained by the Trustee
            and/or affiliates of the Trustee.  Such commingling of assets of
            the Fund with assets of
            other qualified trusts is specifically authorized, and to the
            extent of the investment of the
            Fund in such a group or collective trust, the terms of the
            instrument establishing the group
            or collective trust shall be a part hereof as though set forth
            herein,

       (c)  invest up to 100% of the Fund in the common stock, debt
            obligations, or any other
            security issued by the Employer or by an affiliate of the
            Employer within the limitations
            provided under Sections 406, 407, and 408 of the Employee
            Retirement Income Security Act of 1974 and further provided that
            such investment does
            not constitute a prohibited transaction under Code Section 4975.
            Any such investment
            in Employer securities shall only be made upon written direction
            of the Employer who
            shall be solely responsible for propriety of such investment,

       (d)  hold cash uninvested and deposit same with any banking or savings
            institution, including its own banking department,

       (e)  join in or oppose the reorganization, recapitalization,
            consolidation, sale or merger of
            corporations or properties, including those in which it is
            interested as Trustee, upon such
            terms as it deems wise,

       (f)  hold investments in nominee or bearer form,

       (g)  vote proxies and, if appropriate, pass them on to any investment
            manager which may have
            directed the investment in the equity giving rise to the proxy,

       (h)  exercise all ownership rights with respect to assets held in the
            Fund.

13.4 DUTIES OF THE CUSTODIAN  As Custodian, the Sponsor shall be depository of
all or part of the Fund and shall, at the
direction of the Trustee hold any assets received from the Trustee or its
agents.  The Custodian shall receive and deliver assets
as instructed by the Trustee or its agents.  To the extent that the Custodian
holds title to Plan assets and such ownership requires
action on the part of the registered owner, such action will be taken by the
Custodian only upon receipt of specific instructions
from the Trustee or its agents.  Proxies shall be voted by or pursuant to the
express direction of the Trustee or authorized agent
of the Trustee.  As Custodian, the Sponsor shall not give any investment
advice, including any opinion on the prudence of
directed investments.  The Employer and Trustee and the agents thereof assume
all responsibility for adherence to fiduciary
standards under the Employee Retirement Income Security Act of 1974 (ERISA)
and all amendments thereof, and regulations
thereunder.

13.5 PARTICIPANT LOANS  If agreed upon by the Trustee and permitted by the
Employer in the Adoption Agreement, a Plan
Participant may make application to the Employer requesting a loan from the
Fund.  The Employer shall have the sole right to
approve or disapprove a Participant's application provided that loans shall be
made available to all Participants on a reasonably
equivalent basis. Loans shall not be made available to highly compensated
employees [as defined in Code Section 414(q)] in
an amount greater than the amount made available to other Employees.  Any loan
granted hereunder shall be made subject to
the following rules:

          (a)  No loan, when aggregated with any outstanding Participant
loan(s), shall exceed the lesser of (i)
          $50,000 reduced by the excess, if any, of the highest outstanding
balance of loans during the one year period
          ending on the day before the loan is made, over the outstanding
balance of loans from the Plan on the date the
          loan is made or (ii) one-half of the fair market value of a
Participant's vested account balance built up from
          Employer Contributions, Voluntary Contributions, and Rollover
Contributions.  If the Participant's vested
          account balance is $20,000 or less, the maximum loan shall not
exceed the lesser of $10,000 or 100% of the
          Participant's vested account balance.  For the purpose of the above
limitation, all loans from all plans of the
          Employer and other members of a group of employers described in Code
Sections 414(b), 414(c), and 414(m)
          are aggregated.  An assignment or pledge of any portion of the
Participant's interest in the Plan and a loan,
          pledge, or assignment with respect to any insurance contract
purchased under the Plan, will be treated as a loan
          under this paragraph.

     (b)  All applications must be made on forms provided by the Employer and
must be signed by the Participant.

     (c)  Any loan granted hereunder shall bear interest at a rate reasonable
at the time of application, considering the
          purpose of the loan and the rate being charged by representative
commercial banks in the local area for a
          similar loan unless the Employer sets forth a different method for
determining loan interest rates in its loan
          procedures.  The loan agreement shall also provide that the payment
of principal and interest be amortized in
          level payments not less frequently than quarterly.

     (d)  The term of such loan shall not exceed five years except in the case
of a loan for the purpose of acquiring any
          house, apartment, condominium, or mobile home (not used on a
transient basis) which is used or is to be used
          within a reasonable time as the principal residence of the
Participant.  The term of such loan shall be
          determined by the Employer considering the maturity dates quoted by
representative commercial banks in the
          local area for a similar loan.

     (e)  The principal and interest paid by a Participant on his or her loan
shall be credited to the Fund in the same
          manner as for any other Plan investment.  If elected in the Adoption
Agreement, loans may be treated as
          segregated investments of the individual Participants.  This
provision is not available if its election will result
          in discrimination in operation of the Plan.

     (f)  If a Participant's loan application is approved by the Employer,
such Participant shall be required to sign a
          note, loan agreement, and assignment of one-half of his or her
interest in the Fund as collateral for the loan.
          The Participant, except in the case of a profit-sharing plan
satisfying the requirements of paragraph 8.7 must
          obtain the consent of his or her Spouse, if any, within the 90 day
period before the time his or her account
          balance is used as security for the loan.  A new consent is required
if the account balance is used for any
          renegotiation, extension, renewal or other revision of the loan,
including an increase in the amount thereof.  The
          consent must be written, must acknowledge the effect of the loan,
and must be witnessed by a plan
          representative or notary public.  Such consent shall thereafter be
binding with respect to the consenting Spouse
          or any subsequent Spouse.

     (g)  If a valid Spousal consent has been obtained, then, notwithstanding
any other provision of this Plan, the portion
          of the Participant's vested account balance used as a security
interest held by the Plan by reason of a loan
          outstanding to the Participant shall be taken into account for
purposes of determining the amount of the account
          balance payable at the time of death or distribution, but only if
the reduction is used as repayment of the loan.
          If less than 100% of the Participant's vested account balance
(determined without regard to the preceding
          sentence) is payable to the surviving Spouse, then the account
balance shall be adjusted by first reducing the
          vested account balance by the amount of the security used as
repayment of the loan, and then determining the
          benefit payable to the Surviving Spouse.

     (h)  The Employer may also require additional collateral in order to
adequately secure the loan.

     (i)  A Participant's loan shall immediately become due and payable if
such Participant terminates employment for
          any reason or fails to make a principal and/or interest payment as
provided in the loan agreement.  If such
          Participant terminates employment, the Employer shall immediately
request payment of principal and interest
          on the loan.  If the Participant refuses payment following
termination, the Employer shall reduce the
          Participant's vested account balance by the remaining principal and
interest on his or her loan.  If the
          Participant's vested account balance is less than the amount due,
the Employer shall take whatever steps are
          necessary to collect the balance due directly from the Participant.
However, no foreclosure on the Participant's
          note or attachment of the Participant's account balance will occur
until a distributable event occurs in the Plan.

     (j)  No loans will be made to Owner-Employees (as defined in paragraph
1.51) or Shareholder-Employees (as
          defined in paragraph 1.74), unless an exemption from the prohibited
transactions rules is first obtained from
          the Department of Labor.

13.6 INSURANCE POLICIES  If agreed upon by the Trustee and approved by the
Employer in the Adoption Agreement,
Employees may elect the purchase of life insurance policies under the Plan.
If elected, the maximum annual premium for a
whole life policy shall not exceed 50% of the aggregate Employer contributions
allocated to the account of a Participant.  For
profit-sharing plans the 50% test need only be applied against Employer
contributions allocated in the last two years.  Whole
life policies are policies with both nondecreasing death benefits and
nonincreasing premiums.  The maximum annual premium
for term contracts or universal life policies and all other policies which are
not whole life shall not exceed 25% of aggregate
Employer contributions allocated to the account of a Participant.  The two
year rule for profit-sharing plans again applies. The
maximum annual premiums for a Participant with both a whole life and a term
contract or universal life policies shall be limited
to one-half of the whole life premiums plus the term premium but shall not
exceed one-half of the whole life premium plus the
term premium shall not exceed 25% of the aggregate Employer contributions
allocated to the account of a Participant, subject
to the two year rule for profit-sharing plans.  Any policies purchased
hereunder shall be held subject to the following rules:

          (a)  The Trustee shall be applicant and owner of any policies
               issued hereunder.

          (b)  All policies or contracts purchased hereunder, shall be
               endorsed as nontransferable, and must provide
               that proceeds will be payable to the Trustee; however, the
               Trustee shall be required to pay over all
               proceeds of the contracts to the Participant's Designated
               Beneficiary in accordance with the
               distribution provisions of this Plan.  Under no circumstances
               shall the Trust retain any part of the
               proceeds.

          (c)  Each Participant shall be entitled to designate a beneficiary
               under the terms of any contract issued
               hereunder; however, such designation will be given to the
               Trustee which must be the named beneficiary
               on any policy.  Such designation shall remain in force, until
               revoked by the Participant, by filing a new
               beneficiary form with the Trustee.  A Participant's Spouse will
               be the Designated Beneficiary of the
               proceeds in all circumstances unless a Qualified Election has
               been made in accordance with paragraph
               8.4.  The beneficiary of a deceased Participant shall receive
               in addition to the proceeds of the
               Participant's policy or policies, the amount credited to such
               Participant's investment account.

          (d)  A Participant who is uninsurable or insurable at substandard
               rates, may elect to receive a reduced
               amount of insurance, if available, or may waive the purchase of
               any insurance.

          (e)  All dividends or other returns received on any policy purchased
               hereunder, shall be applied to reduce
               the next premium due on such policy, or if no further premium
               is due, such amount shall be credited
               to the Fund as part of the account of the Participant for whom
               the policy is held.

          (f)  If Employer contributions are inadequate to pay all premiums on
               all insurance policies, the Trustee
               may, at the option of the Employer, utilize other amounts
               remaining in each Participant's account to
               pay the premiums on his respective policy or policies, allow
               the policies to lapse, reduce the policies
               to a level at which they may be maintained, or borrow against
               the policies on a prorated basis,
               provided that the borrowing does not discriminate in favor of
               the policies on the lives of Officers,
               Shareholders, and highly compensated Employees.

          (g)  On retirement or termination of employment of a Participant,
               the Employer shall direct the Trustee to
               cash surrender the Participant's policy and credit the proceeds
               to his or her account for distribution
               under the terms of the Plan.  However, before so doing, the
               Trustee shall first offer to transfer
               ownership of the policy to the Participant in exchange for
               payment by the Participant of the cash value
               of the policy at the time of transfer.  Such payment shall be
               credited to the Participant's account for
               distribution under the terms of the Plan.  All distributions
               resulting from the application of this
               paragraph shall be subject to the Joint and Survivor Annuity
               Rules of Article VIII, if applicable.

          (h)  The Employer shall be solely responsible to see that these
               insurance provisions are administered
               properly and that if there is any conflict between the
               provisions of this Plan and any insurance
               contracts issued hereunder that the terms of this Plan will
               control.

13.7 EMPLOYER INVESTMENT DIRECTION  If agreed upon by the Trustee and approved
by the Employer in the Adoption
Agreement, the Employer shall have the right to direct the Trustee with
respect to investments of the Fund, may appoint an
investment manager (registered as an investment advisor under the Investment
Advisors Act of 1940) to direct investments, or
may give the Trustee sole investment management responsibility.  The Employer
may purchase and sell interests in a registered
investment company (i.e., mutual funds) for which the Sponsor, its parent,
affiliates, or successors, may serve as investment
advisor and receive compensation from the registered investment company for
its services as investment advisor.  The Employer
shall advise the Trustee in writing regarding the retention of investment
powers, the appointment of an investment manager, or
the delegation of investment powers to the Trustee.  Any investment directive
hereunder shall be made in writing by the
Employer or investment manager, as the case may be.  In the absence of such
written directive, the Trustee shall automatically
invest the available cash in its discretion in an appropriate interim
investment until specific investment directions are received.
Such instructions regarding the delegation of investment responsibility shall
remain in force until revoked or amended in writing.
The Trustee shall not be responsible for the propriety of any directed
investment made hereunder and shall not be required to
consult with or advise the Employer regarding the investment quality of any
directed investment held hereunder.  If the Employer
fails to designate an investment manager, the Trustee shall have full
investment authority.  If the Employer does not issue
investment directions, the Trustee shall have authority to invest the Fund in
its sole discretion.  While the Employer may direct
the Trustee with respect to Plan investments, the Employer may not:

     (a)  borrow from the Fund or pledge any of the assets of the Fund as
security for a loan,

     (b)  buy property or assets from or sell property or assets to the Fund,

     (c)  charge any fee for services rendered to the Fund, or

     (d)  receive any services from the Fund on a preferential basis.

13.8 EMPLOYEE INVESTMENT DIRECTION  If agreed to by the Trustee and approved
by the Employer in the Adoption
Agreement, Participants shall be given the option to direct the investment of
their personal contributions and their share of the
Employer's contribution among alternative investment funds established as part
of the overall Fund.  Unless otherwise specified
by the Employer in the Adoption Agreement, such investment funds shall be
restricted to funds offered by the Trustee.  If
investments outside the Trustee's control are allowed, Participants may not
direct that investments be made in collectibles, other
than U.S. Government or State issued gold and silver coins.  In this
connection, a Participant's right to direct the investment of
any contribution shall apply only to selection of the desired fund.  The
following rules shall apply to the administration of such
funds.

     (a)  At the time an Employee becomes eligible for the Plan, he or she
shall complete an investment designation form
          stating the percentage of his or her contributions to be invested in
the available funds.

     (b)  A Participant may change his or her election with respect to future
contributions by filing a new investment
          designation form with the Employer in accordance with the procedures
established by the Plan Administrator.


     (c)  A Participant may elect to transfer all or part of his or her
balance from one investment fund to another by
          filing an investment designation form with the Employer in
accordance with the procedures established by the
          Plan Administrator.

     (d)  The Employer shall be responsible when transmitting Employee and
Employer contributions to show the dollar
          amount to be credited to each investment fund for each Employee.

     (e)  Except as otherwise provided in the Plan, neither the Trustee, nor
the Employer, nor any fiduciary of the Plan
          shall be liable to the Participant or any of his or her
beneficiaries for any loss resulting from action taken at
          the direction of the Participant.

                                 ARTICLE XIV

                            TOP-HEAVY PROVISIONS


14.1 APPLICABILITY OF RULES  If the Plan is or becomes Top-Heavy in any Plan
Year beginning after 1983, the provisions
of this Article will supersede any conflicting provisions in the Plan or
Adoption Agreement.

14.2 MINIMUM CONTRIBUTION  Notwithstanding any other provision in the
Employer's Plan, for any Plan Year in which the
Plan is Top-Heavy or Super Top-Heavy, the aggregate Employer contributions and
forfeitures allocated on behalf of any
Participant (without regard to any Social Security contribution) under this
Plan and any other Defined Contribution Plan of the
Employer shall be lesser of 3% of such Participant's Compensation or the
largest percentage of Employer contributions and
forfeitures, as a percentage of the first $200,000, as adjusted under Code
Section 415(d), of the Key Employee's Compensation,
allocated on behalf of any Key Employee for that year.

Each Participant who is employed by the Employer on the last day of the Plan
Year shall be entitled to receive an allocation of
the Employer's minimum contribution for such Plan Year.  The minimum
allocation applies even though under other Plan
provisions the Participant would not otherwise be entitled to receive an
allocation, or would have received a lesser allocation
for the year because the Participant fails to make Mandatory Contributions to
the Plan, the Participant's Compensation is less
than a stated amount, or the Participant fails to complete 1,000 Hours of
Service (or such lesser number designated by the
Employer in the Adoption Agreement) during the Plan Year.  A Paired
profit-sharing plan designated to provide the minimum
Top-Heavy contribution must do so regardless of profits.  An Employer may make
the minimum Top-Heavy contribution
available to all Participants or just non-Key Employees.

For purposes of computing the minimum allocation, Compensation shall mean
Compensation as defined in paragraph 1.12(c)
of the Plan.

The Top-Heavy minimum contribution does not apply to any Participant to the
extent the Participant is covered under any other
plan(s) of the Employer and the Employer has provided in Section 11 of the
Adoption Agreement that the minimum allocation
or benefit requirements applicable to Top-Heavy Plans will be met in the other
plan(s).

If a Key Employee makes an Elective Deferral or has an allocation of Matching
Contributions made to his or her account, a
Top-Heavy minimum will be required for non-Key Employees who are Participants,
however, neither Elective Deferrals by nor
Matching Contributions to non-Key Employees may be taken into account for
purposes of satisfying the top-heavy Minimum
Contribution requirement.

14.3 MINIMUM VESTING  For any Plan Year in which this Plan is Top-Heavy, the
minimum vesting schedule elected by the
Employer in the Adoption Agreement will automatically apply to the Plan.  If
the vesting schedule selected by the Employer in
the Adoption Agreement is less liberal than the allowable schedule, the
schedule will automatically be modified.  If the vesting
schedule under the Employer's Plan shifts in or out of the Top-Heavy schedule
for any Plan Year, such shift is an amendment
to the vesting schedule and the election in paragraph 9.8 of the Plan applies.
 The minimum vesting schedule applies to all
accrued benefits within the meaning of Code Section 411(a)(7) except those
attributable to Employee contributions, including
benefits accrued before the effective date of Code Section 416 and benefits
accrued before the Plan became Top-Heavy.
Further, no reduction in vested benefits may occur in the event the Plan's
status as Top-Heavy changes for any Plan Year.
However, this paragraph does not apply to the account balances of any Employee
who does not have an Hour of Service after
the Plan initially becomes Top-Heavy and such Employee's account balance
attributable to Employer contributions and
forfeitures will be determined without regard to this paragraph.


14.4 LIMITATIONS ON ALLOCATIONS  In any Plan Year in which the Top-Heavy Ratio
exceeds 90% (i.e., the Plan becomes
Super Top-Heavy), the denominators of the Defined Benefit Fraction (as defined
in paragraph 1.16) and Defined Contribution
Fraction (as defined in paragraph 1.19) shall be computed using 100% of the
dollar limitation instead of 125%.

                                ARTICLE XV

                         AMENDMENT AND TERMINATION


15.1 AMENDMENT BY SPONSOR  The Sponsor may amend any or all provisions of this
Plan and Trust/Custodial Account at
any time without obtaining the approval or consent of any Employer which has
adopted this Plan and Trust/Custodial Account
provided that no amendment shall authorize or permit any part of the corpus or
income of the Fund to be used for or diverted
to purposes other than for the exclusive benefit of Participants and their
beneficiaries, or eliminate an optional form of
distribution.  In the case of a mass-submitted plan, the mass-submitter shall
amend the Plan on behalf of the Sponsor.

15.2 AMENDMENT BY EMPLOYER  The Employer may amend any option in the Adoption
Agreement, and may include
language as permitted in the Adoption Agreement,

       (a)  to satisfy Code Section 415, or

       (b)  to avoid duplication of minimums under Code Section 416

because of the required aggregation of multiple plans.

The Employer may add certain model amendments published by the Internal
Revenue Service which specifically provide that
their adoption will not cause the Plan to be treated as an individually
designed plan for which the Employer must obtain a
separate determination letter.

If the Employer amends the Plan and Trust/Custodial Account other than as
provided above, the Employer's Plan shall no longer
participate in this Prototype Plan and will be considered an individually
designed plan.

15.3 TERMINATION  Employers shall have the right to terminate their Plans upon
60 days notice in writing to the
Trustee/Custodian.  If the Plan is terminated, partially terminated, or if
there is a complete discontinuance of contributions under
a profit-sharing plan maintained by the Employer, all amounts credited to the
accounts of Participants shall vest and become
nonforfeitable.  In the event of a partial termination, only those who are
affected by such partial termination shall be fully vested.
In the event of termination, the Employer shall direct the Trustee/Custodian
with respect to the distribution of accounts to or
for the exclusive benefit of Participants or their beneficiaries.  The
Trustee/Custodian shall dispose of the Fund in accordance
with the written directions of the Plan Administrator, provided that no
liquidation of assets and payment of benefits, (or
provision therefor), shall actually be made by the Trustee/Custodian until
after it is established by the Employer in a manner
satisfactory to the Trustee/Custodian, that the applicable requirements, if
any, of the Employee Retirement Income Security Act
of 1974 and the Internal Revenue Code governing the termination of employee
benefit plans, have been or are being, complied
with, or that appropriate authorizations, waivers, exemptions, or variances
have been, or are being obtained.

15.4 QUALIFICATION OF EMPLOYER'S PLAN  If the adopting Employer fails to
attain or retain Internal Revenue Service
qualification, such Employer's Plan shall no longer participate in this
Prototype Plan and will be considered an individually
designed plan.

15.5 MERGERS AND CONSOLIDATIONS

       (a)  In the case of any merger or consolidation of the Employer's Plan
            with, or transfer of
            assets or liabilities of the Employer's Plan to, any other plan,
            Participants in the
            Employer's Plan shall be entitled to receive benefits immediately
            after the merger,
            consolidation, or transfer which are equal to or greater than
            the benefits they would have
            been entitled to receive immediately before the merger,
            consolidation, or transfer if the
            Plan had then terminated.

       (b)  Any corporation into which the Trustee/Custodian or any successor
            trustee/custodian may
            be merged or with which it may be consolidated, or any corporation
            resulting from any
            merger or consolidation to which the Trustee/Custodian or any
            successor trustee/custodian may be a party, or any corporation to
            which all or substantially all the
            trust business of the Trustee/Custodian or any successor
            trustee/custodian may be
            transferred, shall be the successor of such Trustee/Custodian
            without the filing of any
            instrument or performance of any further act, before any court.

15.6 RESIGNATION AND REMOVAL  The Trustee/Custodian may resign by written
notice to the Employer which shall be
effective 60 days after delivery.  The Employer may discontinue its
participation in this Prototype Plan and Trust/Custodial
Account effective upon 60 days written notice to the Sponsor.  In such event
the Employer shall, prior to the effective date
thereof, amend the Plan to eliminate any reference to this Prototype Plan and
Trust/Custodial Account and appoint a successor
trustee or custodian or arrange for another funding agent.  The
Trustee/Custodian shall deliver the Fund to its successor on the
effective date of the resignation or removal, or as soon thereafter as
practicable, provided that this shall not waive any lien the
Trustee/Custodian may have upon the Fund for its compensation or expenses.  If
the Employer fails to amend the Plan and
appoint a successor trustee, custodian, or other funding agent within the said
60 days, or such longer period as the
Trustee/Custodian may specify in writing, the Plan shall be deemed
individually designed and the Employer shall be deemed
the successor trustee/custodian.  The Employer must then obtain its own
determination letter.

15.7 QUALIFICATION OF PROTOTYPE  The Sponsor intends that this Prototype Plan
will meet the requirements of the Code as
a qualified Prototype Retirement Plan and Trust/Custodial Account.  Should the
Commissioner of Internal Revenue or any
delegate of the Commissioner at any time determine that the Plan and
Trust/Custodial Account fails to meet the requirements
of the Code, the Sponsor will amend the Plan and Trust/Custodial Account to
maintain its qualified status.


                                ARTICLE XVI

                               GOVERNING LAW

Construction, validity and administration of the Prototype Plan and
Trust/Custodial Account, and any Employer Plan and
Trust/Custodial Account as embodied in the Prototype document and accompanying
Adoption Agreement, shall be governed
by Federal law to the extent applicable and to the extent not applicable by
the laws of the State/Commonwealth in which the
principal office of the Sponsor is located.



                PART I - SECTION 401(A)(17) LIMITATION
                [MAY BE ADOPTED BY DEFINED CONTRIBUTION
                       AND DEFINED BENEFIT PLANS]

       In addition to other applicable limitations set forth in the Plan, and
notwithstanding   any other
  provision of the Plan to the contrary, for Plan Years beginning on or after
January   1, 1994, the
  annual Compensation of each Employee taken into account under the Plan shall
not   exceed the
  OBRA '93 annual compensation limit.  The OBRA '93 annual compensation limit is
$150,000,   as
  adjusted by the Commissioner for increases in the cost of living in accordance
with   Section
  401(a)(17)(B) of the Internal Revenue Code.  The cost-of-living in effect for
a   calendar year
  applies to any period, not exceeding 12 months, over which Compensation is
determined (determination period) beginning in such calendar year.  If a
determination period   consists of fewer
  than 12 months, the OBRA '93 annual compensation limit will be multiplied by a
fraction,   the
  numerator of which is the number of months in the determination period, and
the   denominator of
  which is 12.

       For Plan Years beginning on or after January 1, 1994, any reference in
this   Plan to the
  limitation under Section 401(a)(17) of the Code shall mean the OBRA '93
annual compensation limit set forth in this provision.

       If Compensation for any prior determination period is taken into account
in   determining an
  Employee's benefits accruing in the current Plan Year, the Compensation for
that   prior
  determination period is subject to the OBRA '93 annual compensation limit in
effect   for that prior
  determination period.  For this purpose, for determination periods beginning
before   the first day of
  the first Plan Year beginning on or after January 1, 1994, the OBRA '93 annual
compensation   limit
  is $150,000.






                            MODEL AMENDMENT
                        REVENUE PROCEDURE 93-47

  (This model amendment allows Participants receiving distribution from
safe-harbored   profit
  sharing plans to waive the 30-day period required under the Unemployment
Compensation   Act of
  1992.  Non-safe harbored plans must still provide notice not less than 30 days
and   not more than
  90 days prior to the distribution.)

  If a distribution is one to which Section 401(a)(11) and 417 of the Internal
Revenue   Code do not
  apply, such distribution may commence less than 30 days after the notice
required   under Section
  1.411(a)-11(c) of the Income Tax Regulations is given, provided that:

       (1)  the plan administrator clearly informs the Participant that the
Participant   has a right to
            a period of at least 30 days after receiving the notice to consider
the   decision of
            whether or not to elect a distribution (and, if applicable, a
particular   distribution
            option), and

       (2)  the Participant, after receiving the notice, affirmatively elects a
       distribution.




                                        Exhibit 23.1

          CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation by
reference in this Registration Statement of our report dated January 29, 1999
incorporated by reference in South Alabama Bancorporation's Form 10-K for the
year ended December 31, 1998 and to all references to our Firm included in
or made a part of this Registration Statement,



                                   /s/Arthur Andersen LLP

Birmingham, Alabama
June 30, 1999


                                                     Exhibit 23.2


       CPA




                       ACCOUNTANT'S CONSENT


The Board of Directors
Sweet Water State Bancshares, Inc.



We consent to the use of our report from the 1997 through 1998, which our firm
has submitted, signed, and to the reference to our firm under the heading
"Experts" in the Prospectus and Registration Statement on Form S-4 filed with
the SEC, in connection with your merger with and into South Alabama
Bancorporation, Inc.


June 28, 1999






                              /s/ McKean & Associates, P.A.
                              McKean & Associates, P.A.
                              Certified Public Accountants








                                             Exhibit 23.5

                     ALEX SHESHUNOFF & CO.
                      INVESTMENT BANKING



      CONSENT OF ALEX SHESHUNOFF & CO. INVESTMENT BANKING


     We hereby consent to the incorporation by reference in the Registration
     Statement on Form S-4 of South Alabama Bancorporation, Inc. of our
     updated opinion, dated June 24, 1999 with respect to the merger of South
     Alabama Bancorporation, Inc. and Sweet Water Bancshares, Inc., and to
     our firm, respectively, included in the Registration Statement No.
     333-__________ of South Alabama Bancorporation, Inc. and to the
     inclusion of such opinion as an annex to the Registration Statement.
     By giving such consent, we do not thereby admit that we come within
     the category of persons whose consent is required under Section 7 of
     the Securities Act of 1933 or the rules and regulations of the
     Securities and Exchange Commission thereunder.



                                ALEX SHESHUNOFF & CO.
                                INVESTMENT BANKING


                                By: /s/ James E. Magee

     AUSTIN, TX
     June 30, 1999



                                                     Exhibit 23.6






                             CONSENT



     In accordance with Commission Rule 438 pursuant to the Securities Act of
1933, as amended, I hereby consent to the use of my name as a proposed
director of South Alabama Bancorporation, Inc. as set forth in this
Registration Statement on Form S-4.





                               /s/ Jack O. Kerby, Sr.
                              Jack O. Kerby, Sr.





                                                     Exhibit 23.6






                             CONSENT



     In accordance with Commission Rule 438 pursuant to the Securities Act of
1933, as amended, I hereby consent to the use of my name as a proposed
director of South Alabama Bancorporation, Inc. as set forth in this
Registration Statement on Form S-4.





                                   /s/ Stratton F. Lewis, Jr.
                                   Stratton F. Lewis, Jr.








                                                     Exhibit 99.1
                SWEET WATER STATE BANCSHARES, INC.
     Proxy for Special Meeting of Shareholders, ______, 1999

               Solicited by the Board of Directors

KNOW ALL MEN BY THESE PRESENTS that I, the undersigned shareholder of Sweet
Water State Bancshares, Inc., do hereby nominate, constitute and appoint
_________________ and _____________________, and each of them, with full
power to act alone, my true and lawful attorneys and proxies with full power
of substitution, for me and in my name, place and stead to vote all Common
Stock of Sweet Water State Bancshares, Inc. standing in my name on its books
on _______, 1999, at the Special Meeting of its Shareholders to be held at
101 Main Street, Sweet Water, Alabama, on ______, 1999 at _____ a.m., Central
Time, and at any adjournment thereof, with all powers that the undersigned
would possess if personally present, conferring upon my said attorneys and
proxies all discretionary authority permitted by applicable law and
regulations, as follows:


     1.   Plan of Merger.  Adoption  of the Agreement and Plan of Merger, as
     described in the Prospectus dated _______, 1999, whereby:  (i) Sweet
     Water State Bancshares, Inc. will be merged with and into South Alabama
     Bancorporation,
     Inc.; and (ii) shareholders of Sweet Water State Bancshares, Inc. will
     receive 14.17 shares of South Alabama Bancorporation, Inc. Common Stock
     subject to adjustment for fluctuation of South Alabama Bancorporation,
     Inc.'s stock price, for each share of their stock of Sweet Water State
     Bancshares, Inc..



                                                     FOR ________

                                                 AGAINST ________

                                                 ABSTAIN ________


      2.  Other Business.  The proxies are authorized to vote in their
     discretion upon such other business as may  be brought before the
     meeting or any adjournment thereof.  The Board of Directors currently
     knows of no  other business to be presented.

     If properly executed and returned, the shares represented by this proxy
will be voted in accordance with the directions given herein.  If no specific
directions are given, the shares will be voted, subject to and in accordance
with the provisions contained in the Prospectus dated ________, 1999, "For"
the approval of the merger.  If any other business is presented at the
meeting, the shares will be voted in accordance with the recommendations of
the Board of Directors.

     This proxy may be revoked at any time prior to its exercise by written
notice or a subsequently dated proxy delivered to Sweet Water State
Bancshares, Inc..

Please date, sign and mail this proxy in the envelope provided.
Postage not necessary if mailed in the United States.

             Proxy Number                    Number of Shares





                              DATED:_____________________, 1999



                              SIGNED:


                              __________________________________________________
                              (Please sign exactly as the name appears
                              hereon. If stock is held in the names of joint
                              owners, each should sign.  Attorneys,
                              Executors, Administrators, etc. should so
                              indicate.)



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