<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Subsection 240.14a-11(c) or
Subsection 240.14a-12
SECURITY FEDERAL BANCORP, INC.
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
SECURITY FEDERAL BANCORP, INC.
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X ] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-
6(i)(1) and 0-11.
1. Title of each class of securities to which
transaction applies:
_________________________________________________________________
2. Aggregate number of securities to which transaction
applies:
_________________________________________________________________
3. Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11:
_________________________________________________________________
4. Proposed maximum aggregate value of transaction:
_________________________________________________________________
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
filing by registration statement number, or the Form or Schedule
and the date of its filing.
1. Amount Previously Paid:
____________________________________________
2. Form, Schedule or Registration Statement No.:
____________________________________________
3. Filing Party:
____________________________________________
4. Date Filed:
____________________________________________<PAGE>
<PAGE>
[SECURITY FEDERAL BANCORP LETTERHEAD]
February 4, 1997
Dear Stockholder:
We invite you to attend the Annual Meeting of Stockholders
of Security Federal Bancorp, Inc. to be held at the office of
Security Federal Bank, 2301 University Boulevard, Tuscaloosa,
Alabama on Wednesday, March 5, 1997 at 2:00 p.m., local time.
The accompanying notice and proxy statement describe the
formal business to be transacted at the Annual Meeting. Also
enclosed is an Annual Report to Stockholders for the 1996 fiscal
year. Directors and officers of the Company as well as
representatives of Jamison, Money, Farmer & Co., P.C., the
Company's independent auditors, will be present to respond to any
questions the stockholders may have.
You are cordially invited to attend the Annual Meeting.
REGARDLESS OF WHETHER YOU PLAN TO ATTEND, WE URGE YOU TO SIGN,
DATE AND RETURN THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE.
This will not prevent you from voting in person but will assure
that your vote is counted if you are unable to attend the Annual
Meeting.
Sincerely,
/s/ Marlin D. Moore, Jr.
Marlin D. Moore, Jr.
Chairman of the Board
<PAGE>
<PAGE>
SECURITY FEDERAL BANCORP, INC.
2301 UNIVERSITY BOULEVARD
TUSCALOOSA, ALABAMA 35401-1593
(205) 345-8800
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MARCH 5, 1997
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders ("Annual Meeting") of Security Federal Bancorp, Inc.
(the "Company"), will be held at the office of Security Federal
Bank, 2301 University Boulevard, Tuscaloosa, Alabama at 2:00
p.m., local time, on Wednesday, March 5, 1997.
A Proxy Card and a Proxy Statement for the Annual Meeting
are enclosed.
The Annual Meeting is for the purpose of considering and
acting upon:
1. The election of three directors of the Company; and
2. The transaction of such other matters as may properly
come before the Annual Meeting or any adjournments
thereof.
Note: The Board of Directors is not aware of any other
business to come before the Annual Meeting.
Any action may be taken on any one of the foregoing pro-
posals at the Annual Meeting on the date specified above or on
any date or dates to which, by original or later adjournment, the
Annual Meeting may be adjourned. Stockholders of record at the
close of business on January 27, 1997 are the stockholders
entitled to vote at the Annual Meeting and any adjournments
thereof.
You are requested to fill in and sign the enclosed Proxy
Card which is solicited by the Board of Directors and to mail it
promptly in the enclosed envelope. The Proxy Card will not be
used if you attend and vote at the Annual Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ John F. Harvard
John F. Harvard
President
Tuscaloosa, Alabama
February 4, 1997
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE THE COMPANY
THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO INSURE A
QUORUM. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES.
<PAGE>
<PAGE>
PROXY STATEMENT
OF
SECURITY FEDERAL BANCORP, INC.
2301 UNIVERSITY BOULEVARD
TUSCALOOSA, ALABAMA 35401-1593
ANNUAL MEETING OF STOCKHOLDERS
MARCH 5, 1997
GENERAL
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of Security
Federal Bancorp, Inc. (hereinafter called the "Company") to be
used at the 1997 Annual Meeting of Stockholders of the Company
(hereinafter called the "Annual Meeting") which will be held at
the office of Security Federal Bank ("Security Federal" or the
"Bank"), 2301 University Boulevard, Tuscaloosa, Alabama on
Wednesday, March 5, 1997, at 2:00 p.m., local time. The accom-
panying Notice of Annual Meeting and form of proxy and this Proxy
Statement are being first mailed to stockholders on or about
February 4, 1997.
VOTING AND REVOCABILITY OF PROXIES
Proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein.
Where no instructions are indicated, proxies will be voted for
the nominees for directors set forth below. The proxy confers
discretionary authority on the persons named therein to vote with
respect to the election of any person as a director where the
nominee is unable to serve or for good cause will not serve, and
with respect to matters incident to the conduct of the Annual
Meeting. If any other business is presented at the Annual
Meeting, proxies will be voted by those named therein in
accordance with the determination of a majority of the Board of
Directors. Proxies marked as abstentions will not be counted as
votes cast. In addition, shares held in street name which have
been designated by brokers on proxy cards as not voted will not
be counted as votes cast. Proxies marked as abstentions or as
broker nonvotes, however, will be treated as shares present for
purposes of determining whether a quorum is present.
Stockholders who execute proxies retain the right to revoke
them at any time. Unless so revoked, the shares represented by
properly executed proxies will be voted at the Annual Meeting and
all adjournments thereof. Proxies may be revoked by written
notice to the Secretary of the Company at the address above or
the filing of a later dated proxy prior to a vote being taken on
a particular proposal at the Annual Meeting. A proxy will not be
voted if a stockholder attends the Annual Meeting and votes in
person. The presence of a stockholder alone at the Annual
Meeting will not revoke such stockholder's proxy.
VOTING SECURITIES AND SECURITY OWNERSHIP
The securities entitled to vote at the Annual Meeting
consist of the common stock, par value $.01 per share, of the
Company (the "Common Stock"). Stockholders of record as of the
close of business on January 27, 1997 (the "Record Date") are
entitled to one vote for each share then held. As of the Record
Date, there were 671,469 shares of the Common Stock issued and
outstanding. The presence, in person or by proxy, of at least
one-third of the total number of shares of Common Stock
outstanding and entitled to vote will be necessary to constitute
a quorum at the Annual Meeting.
Persons and groups beneficially owning more than 5% of the
Common Stock are required to file certain reports with respect to
such ownership pursuant to the Securities Exchange Act of 1934,
as amended. Other than as disclosed in the following tables,
management knows of no person who beneficially owned more than 5%
of the Common Stock at the Record Date.
<PAGE>
<PAGE>
The following table sets forth, as of the Record Date,
certain information as to the Common Stock beneficially owned by
any person (other than directors and executive officers of the
Company, whose ownership is disclosed below) or group of persons
who is known to the Company to be the beneficial owner of more
than 5% of the Common Stock.
<TABLE>
<CAPTION>
Amount and Percent of
Nature of Shares of
Name and Address Beneficial Common Stock
of Beneficial Owner Ownership(1) Outstanding
- ------------------ --------- ------------
<S> <C> <C>
Estate of H. Vann Waldrop
2301 University Boulevard
Tuscaloosa, Alabama 35401-1593 38,273 (2) 5.69%
<FN>
_____________
(1) In accordance with Rule 13d-3 under the Securities
Exchange Act of 1934, a person is deemed to be the
beneficial owner, for purposes of this table, of any shares
of the Common Stock if he or she has or shares voting or
investment power with respect to such security, or has a
right to acquire beneficial ownership at any time within 60
days from the Record Date. As used herein, "voting power"
is the power to vote or direct the voting of shares and
"investment power" is the power to dispose or direct the
disposition of shares. Except as otherwise noted,
ownership is direct and the named owner or owners exercise
sole voting and investment power over the shares of the
Common Stock.
(2) On December 21, 1995, H. Vann Waldrop, who had served as
President, Chief Executive Officer and Chairman of the
Board of the Company and the Bank, died in a plane crash.
Upon Mr. Waldrop's death, options to purchase 3,357 shares
of Common Stock granted to him under the 1995 Stock Option
and Incentive Plan (the "Option Plan") became fully vested
and may be exercised within two years from the date of his
death. In addition, pursuant to the Management Recognition
Plan ("MRP"), 1,343 shares of Common Stock subject to a MRP
award to Mr. Waldrop were deemed earned as of Mr. Waldrop's
last day of service. Shares underlying options granted to
Mr. Waldrop under the Option Plan and awards to Mr. Waldrop
under the MRP are included in the table above. Such shares
are deemed to be outstanding for the purpose of computing
the percentage of outstanding shares of Common Stock
beneficially owned by Mr. Waldrop's estate.
</FN>
</TABLE>
The following table sets forth information regarding the
shares of Common Stock beneficially owned as of the Record Date
by each director of the Company and by all directors and
executive officers as a group.
<TABLE>
<CAPTION>
Amount and Percent of
Nature of Shares of
Name and Address Beneficial Common Stock
of Beneficial Owner Ownership(1) Outstanding
- ------------------ --------- ------------
<S> <C> <C>
T. Gary Fitts 36,179 5.4%
John F. Harvard 37,511 5.6
Russell S. Lee 10,806 1.6
Marlin D. Moore, Jr. 41,379 6.2
Charles O. Sealy, Jr. 34,379 5.1
W. Ford Simpson, Jr. 20,806 3.1
E. B. Stansell 1,306 *
All directors and executive
officers of the Company
as a group (7 persons) 182,366 27.1%
<FN>______________
* Less than 1%.
(1) For the definition of "beneficial ownership," see footnote 1
to the table above. Includes certain shares of Common Stock
owned by businesses in which the executive officer or director
is an executive officer or major stockholder, or by spouses, by
immediate family members or as a custodian or trustee, or by
spouses as a custodian or trustee, over which shares such
executive officer or director effectively exercises sole or
shared voting and/or investment power.
(2) Includes 671 and 576 shares which Mr. Harvard and each non-
employee director, respectively, were entitled to purchase
pursuant to vested stock options under the Option Plan;
excludes 2,686 and 2,305 shares which Mr. Harvard and each
non-employee director, respectively, were not yet entitled
to purchase pursuant to unvested stock options under that
plan; excludes 1,075 and 922 unvested shares awarded to Mr.
Harvard and each non-employee director, respectively, under
the Company's MRP.
</FN>
</TABLE>
2<PAGE>
<PAGE>
ELECTION OF DIRECTORS
GENERAL
The Company's Board of Directors is composed of seven members.
The Company's Certificate of Incorporation requires that directors
be divided into three classes, as nearly equal in number as
possible, the members of each class to serve for a term of three
years and until their successors are elected and qualified, with
approximately one-third of the directors elected each year. The
Board of Directors has nominated for election as directors Russell
S. Lee, Marlin D. Moore, Jr. and E. B. Stansell, all of whom are
currently members of the Board, to each serve for three years and
until their successors are elected and qualified. Under Delaware
law, directors are elected by a plurality of the votes present in
person or by proxy and entitled to vote on the election of
directors.
It is intended that the persons named in the proxies solicited
by the Board of Directors will be voted for the election of the
named nominees. If any nominee is unable to serve, the shares
represented by all properly executed proxies which have not been
revoked will be voted for the election of such substitute as the
Board of Directors may recommend or the size of the Board of
Directors may be reduced to eliminate the vacancy. At this time,
the Board knows of no reason why any nominee might be unavailable to
serve.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ELECTION AS
DIRECTORS OF ALL OF THE NOMINEES LISTED BELOW.
The following table sets forth, for each nominee and each
continuing director, his name, age as of the Record Date, the year
he first became a director of the Security Federal, the Company's
principal subsidiary, and the expiration of his current term as a
director of each of the Company and the Bank. All such persons were
initially appointed as directors of the Company in June 1994 in
connection with the incorporation and organization of the Company.
Each director of the Company is also a member of the Board of
Directors of the Bank.
<TABLE>
<CAPTION>
AGE AS YEAR FIRST CURRENT
OF THE ELECTED DIRECTOR TERM
NAME RECORD DATE OF THE BANK TO EXPIRE
- ---- ----------- ----------------- ------------
<S> <C> <C> <C>
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2000
Russell S. Lee 73 1986 1997
Marlin D. Moore, Jr. 60 1965 1997
E. B. Stansell 86 1965 1997
DIRECTORS CONTINUING IN OFFICE
Charles O. Sealy, Jr. 48 1990 1998
W. Ford Simpson, Jr. 41 1989 1998
John F. Harvard 52 1986 1999
T. Gary Fitts 63 1987 1999
</TABLE>
3<PAGE>
<PAGE>
The principal occupation of each director of the Company for
the last five years is set forth below.
RUSSELL S. LEE is owner and president of Russell S. Lee
Floor and Tile Company in Tuscaloosa, Alabama.
MARLIN D. MOORE, JR. is co-owner of Pritchett-Moore, Inc., a
real estate and insurance company, in Tuscaloosa, Alabama. He
served as Vice President of the Bank from 1965 until December
1995 when he was elected Chairman of the Board and Chief
Executive Officer subsequent to Mr. Waldrop's death. Mr. Moore
served as the Company's Vice President since June 1994 until
December 1995 when he was elected Chairman and Chief Executive
Officer. Mr. Moore has served on the Board of the Industrial
Development Authority of Tuscaloosa, the Chamber of Commerce of
West Alabama and the President's Cabinet at the University of
Alabama. He also serves as a director of the Birmingham Board of
Directors of the Federal Reserve Bank of Atlanta. Mr. Moore is
not separately compensated for his services as Acting Chairman of
the Board and Chief Executive Officer of the Bank and the
Company.
E. B. STANSELL retired as owner of Stansell Pontiac-Cadillac
in 1976.
CHARLES O. SEALY, JR. is a self-employed realtor and
insurance executive for Sealy Insurance and Real Estate in
Tuscaloosa, Alabama. Mr. Sealy also is a member of the Chamber
of Commerce of West Alabama and the Tuscaloosa Board of Realtors.
W. FORD SIMPSON, JR. is a surgeon at Cardiovascular
Associates of Tuscaloosa, a practice he joined in 1989. Dr.
Simpson is a member of the AIDS Outreach Board of Tuscaloosa and
a director of the DCH Medical Center Foundation's Board of
Directors.
JOHN F. HARVARD served as the Bank's Secretary, Treasurer
and Managing Officer from 1972 when he joined the Bank until
December 1995 when he was elected President and Chief Operating
Officer subsequent to Mr. Waldrop's death. Mr. Harvard served as
the Company's Secretary and Treasurer since its organization in
June 1994 until December 1995 when he was elected President and
Chief Operating Officer. He also continues to serve as Treasurer
of the Bank and the Company. Mr. Harvard is a member of the
Chamber of Commerce of West Alabama, the Homebuilders Association
of Tuscaloosa and the Tuscaloosa Board of Realtors. He also
serves as a director and immediate past Chairman of the Southern
Community Bankers.
T. GARY FITTS is President of Fitts Agency, Inc. in
Tuscaloosa, Alabama, an insurance agency. Mr. Fitts has served
as Vice President of the Bank since 1990 and Vice President of
the Company since June 1994. In January 1996, he was elected
Acting Secretary of each of the Bank and the Company. Mr. Fitts
is a member and past president of the Tuscaloosa Rotary Club and
a member of the Chamber of Commerce of West Alabama. He also
serves as the State National Director for Alabama Independent
Insurance Agents and as an advisory director of the Tuscaloosa
Board of Directors of Compass Bank. Mr. Fitts is not separately
compensated for his services as Vice President and Acting
Secretary of the Bank and the Company.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During fiscal year 1996, the Company's Board of Directors
met eight times and the Board of Directors of Security Federal
met 13 times. Each member of the Company's Board of Directors is
also a member of the Bank's Board of Directors. No director of
the Company and the Bank attended fewer than 75% of the total
aggregate meetings of the boards of directors and committees on
which such director served during such fiscal year.
The Company's full Board of Directors acts as a Nominating
Committee for the annual selection of its nominees for election
as directors of the Company. While the Board of Directors will
consider nominees recommended by stockholders, it has not
actively solicited recommendations from the Company's
stockholders for nominees nor, subject to the procedural
requirements set forth in the Company's Certificate of
Incorporation and
4<PAGE>
<PAGE>
Bylaws, established any procedures for this purpose. The
Company's Board of Directors met once in its capacity as the
Nominating Committee for the Annual Meeting.
The Company's Audit Committee consists of directors Fitts,
Simpson and Stansell. The Committee meets periodically to
examine and approve the audit report prepared by the independent
auditors of the Company and the Bank, to review and recommend the
independent auditors to be engaged by the Company and the Bank,
to review the internal audit function and internal accounting
controls, and to review and approve conflict of interest and
ethics policies. This Committee meets as needed with the Bank's
internal and independent auditors to review the Bank's accounting
and financial reporting policies and practices. The Audit
Committee met once in connection with the fiscal 1996 audit.
The Company's Compensation Committee consists of directors
Lee, Looney and Simpson. The Compensation Committee meets
periodically to evaluate the compensation and fringe benefits of
the directors, officers and employees and recommend changes and
to evaluate employee morale. The Compensation Committee met
three times in connection with compensation paid for fiscal 1996.
DIRECTORS' COMPENSATION
The Company's directors receive fees of $700 per month.
Each director receives an additional $160 per committee meeting
attended, and the Bank's loan committee members receive an
additional $650 per month.
Director Retirement Plan. Under the Security Federal Bank
Retirement Plan for Directors (the "Directors' Plan") for its
employee and non-employee directors, each director will receive
monthly benefits for the ten-year period following termination of
service on the Board, in an amount equal to the product of his or
her "Benefit Percentage," his or her "Vested Percentage," and
$700. A participant's "Benefit Percentage" is based on his or
her overall years of service on the Board of Directors of the
Bank, and increases in increments of 33-1/3% from 0% for less
than five years of service, to 33-1/3% for five to nine years of
service, to 66-2/3% for ten to fourteen years of service, to 100%
for fifteen or more years of service. A participant's "Vested
Percentage" equals 33-1/3% if the participant serves on the Board
of Directors for one year following the date of the conversion,
increases to 66-2/3% if the participant completes a second year
of service following the conversion, and becomes 100% if the
participant completes a third year of service following the
conversion. However, in the event a participant fails to be
reelected to the Board after nomination, dies, terminates service
on the Board of Directors either due to his or her disability or
retirement at or after age 65, or in the event of a "change in
control" (as such term is defined in the Directors' Plan), the
participant's Vested Percentage becomes 100% regardless of his or
her years of service (provided the director is then serving on
the Board), and his or her benefit becomes immediately payable.
If a participant dies before beginning to collect any benefits,
his or her beneficiary, or, if none, his or her estate, will
receive an amount equal to 100% of the present value of the
benefits otherwise payable under the Directors' Plan, with such
present value computed as if the participant had terminated
service on the board on the date of his death. If a participant
dies after beginning to receive benefits under the Directors'
Plan, his or her beneficiary, or, if none, his or her estate,
will receive an amount equal to 100% of the present value of the
benefits that the participant would have received if he or she
had survived to collect all of the benefits otherwise remaining
to be paid to him or her under the Directors' Plan at the time of
his or her death. The Bank will pay benefits from its general
assets, and has established a trust in order to hold assets with
which to pay benefits. Trust assets are subject to the claims of
the Bank's general creditors. Assuming the current directors of
the Bank remain on the Board through the second year following
the conversion they would, in the aggregate, be entitled to
receive $26,000 per year for 10 years upon their retirement under
the Director Retirement Plan. This amount would increase an
additional $13,000 in the third year following the Conversion.
The Bank will be required to expense the remaining liability
(approximately $100,000 and $94,000 on a pre-tax basis) in each
of the second and third years following the Conversion,
respectively, to fund the Directors' Plan.
5<PAGE>
<PAGE>
1995 Stock Option and Incentive Plan. The Company adopted,
and the stockholders subsequently approved, the Option Plan.
Each director of the Company as of November 20, 1995 (i.e., the
date that the Option Plan was approved by a majority of the
Company's stockholders) who was not also an employee at that time
received a one-time grant of stock options in the form of non-
incentive stock options ("Non-ISOs") to purchase 2,881 shares of
Common Stock at an exercise price of $13.75 per share. The
effective date of the grant was November 20, 1995, and the
exercise price of the options so granted was the fair market
value of the Common Stock on such date. In addition, each non-
employee director who joins the Board of Directors of the Company
or an affiliate (including the Bank) after the effective date
will receive, on the date of joining the Board, Non-ISOs to
purchase 1,342 shares of Common Stock at an exercise price per
share equal to the fair market value of a share of the Common
Stock on the date of grant. Non-ISOs generally vest over a five-
year period following the date of grant at the rate of 20% per
year, which is based upon an optionee's completion of each year
of service following the effective date of the grant of the
option. These options have a term of 10 years.
Management Recognition Plan. The Company and the Bank
adopted, and the Company's stockholders subsequently approved,
the MRP. Each director of the Company or the Bank as of November
20, 1995 (i.e., the date that the MRP was approved by a majority
of the Company's stockholders) who was not an employee at such
time received a one-time award of 1,152 shares of Common Stock
under the MRP. Such shares are subject to a vesting schedule
that limits their transferability and unvested shares are
forfeited upon a participant's termination of service. In
addition, each non-employee director who joins the Board of
Directors subsequent to November 20, 1995 will receive a one-time
MRP award of 269 shares.
EXECUTIVE COMPENSATION AND OTHER BENEFITS
Summary. The following table sets forth cash and noncash
compensation awarded to or earned by the current and former Chief
Executive Officers for each of the last three fiscal years. No
other executive officer received salary and bonus in excess of
$100,000 during the fiscal year 1996, 1995 or 1994.
<TABLE>
<CAPTION>
Long-Term
Compensation Awards (2)
Annual Compensation ------------------------
Name and ------------------------------- Restricted Securities
Principal Fiscal Other Annual Stock Underlying All Other
Position Year Salary(1) Bonus Compensation(1) Award(s) Options Compensation(3)
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MMarlin D. Moore, Jr. 1996* $ 18,000 $ -- $ -- $15,840 2,881 $15,800
Chairman of the Board
and Chief Executive
Officer
H. Vann Waldrop 1996* 27,825 6,000 -- 18,466 3,357 9,795
Former President 1995 109,975 6,000 -- -- -- 15,512
and Chief Executive 1994 104,500 10,000 -- -- -- 14,629
<FN>
_____________
* Mr. Waldrop died on December 21, 1995, and Mr. Moore became
chief executive officer later that month.
(1) Includes $65,000 that was contributed in each year before
fiscal 1996 to Mr. Waldrop's account under the Bank's
deferred compensation plan.
(2) Restricted stock award amounts based on last known trading
price of shares ($13.75) as of award date, November 20,
1995; all awards subject to vesting over five years, except
awards to Mr. Waldrop fully vested upon his death.
(3) Includes directors' fees, loan committee fees and
contributions to the Bank's profit sharing retirement plan.
</FN>
</TABLE>
6<PAGE>
<PAGE>
Stock Options. The following table sets forth information
regarding stock options granted under the Company's stock option
and incentive plan to the Company's current and former Chief
Executive Officers during fiscal 1996.
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Options
Underlying Granted to
Options Participants Exercise Expiration
Name Granted (#) in Year Price ($)(1) Date
- ---- --------------- ------------ --------- -----------
<S> <C> <C> <C> <C>
Marlin D. Moore, Jr. 2,881 10.7 13.75 11/20/05
H. Vann Waldrop 3,357 12.5 13.75 11/20/05
<FN>
_________________
(1) Last known trading price of shares as of award date, November 20, 1995.
</FN>
</TABLE>
The following table sets forth information regarding the
number and value of options held by the Company's current and
former Chief Executive Officers at the end of fiscal 1996. No
options were exercised during the year.
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying Unexercised Options at
Options at Year End (1) Year End ($) (1)
------------------------ ----------------
<S> <C> <C>
Marlin D. Moore, Jr. 2,881 $13,685
Estate of H. Vann Waldrop 3,357 $15,946
<FN>
_______________
(1) All options awarded November 20, 1995 subject to vesting
over five years, except options awarded to Mr. Waldrop fully
vested upon his death; option values based on difference
between exercise price ($13.75) and last known trading price
of shares as of September 30, 1996 ($18.50).
</FN>
</TABLE>
TRANSACTIONS WITH MANAGEMENT
The Bank offers loans to its directors, executive officers
and members of their immediate families. Such loans were made in
the ordinary course of business on substantially the same terms,
including interest rates and collateral, as those prevailing for
comparable transactions with non-affiliated persons. All future
transactions with affiliates of the Company are to be on terms no
less favorable than could be obtained from an unaffiliated third
party and must be approved by a majority of the directors
including the majority of disinterested directors. It is the
belief of management that such loans neither involved more than
the normal risk of collectibility nor presented other unfavorable
features.
Insured Titles of Tuscaloosa, Inc. received compensation of
$163,000 for examination and document preparation fees in
connection with the closing of mortgage loans originated by the
Bank during the fiscal year ended September 30, 1996. The fees
were not paid by the Bank, but were paid by the buyers or sellers
of the properties being financed. H. Vann Waldrop, the former
Chairman of the Board, President and Chief Executive Officer of
the Bank, owned a 100% interest in Insured Titles of Tuscaloosa,
Inc. During the same twelve month period, Pritchett-Moore, Inc.
received compensation of $170,000 in real estate commissions and
for homeowners insurance premiums from the closing of mortgage
loans originated by the Bank. The fees were not paid by the
Bank, but were paid by the buyers and sellers of the properties
being financed. Marlin D. Moore, Jr., Chairman of the Board of
the Bank, owns a 50% interest in Pritchett-Moore, Inc.
7<PAGE>
<PAGE>
OTHER MATTERS
The Board of Directors is not aware of any business to come
before the Annual Meeting other than those matters described
above in this Proxy Statement and matters incident to the conduct
of the Annual Meeting. However, if any other matters should pro-
perly come before the Annual Meeting, it is intended that proxies
in the accompanying form will be voted in respect thereof in
accordance with the determination of a majority of the Board of
Directors.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Effective April 1, 1996, the Company's Board of Directors
replaced the Company's former independent auditor, Morrison and
Smith, CPAs, with the Company's current independent auditor,
Jamison, Money, Farmer & Co, P.C. The decision to change
independent auditors was recommended by the Audit Committee of
the Company and approved by the Board of Directors. In
connection with their audit of the fiscal year ended September
30, 1995, there have been no disagreements with Morrison and
Smith, CPAs on any matter of accounting principles or practices,
financial statement disclosure or auditing scope or procedure
which, if not resolved to the satisfaction of Morrison and Smith,
CPAs, would have caused them to make reference to the subject of
such disagreement in connection with their report. In addition,
during this period there was no adverse opinion or disclaimer of
opinion or any opinion qualified or modified as to uncertainty,
audit scope or accounting principles.
The Company's Board of Directors currently expects to retain
Jamison, Money, Farmer & Co, P.C. to be the Company's auditors
for fiscal 1997. A representative of Jamison, Money, Farmer &
Co, P.C. is expected to be present at the Meeting, and he will
have the opportunity to make a statement if he desires to do so
and will be available to respond to appropriate questions.
MISCELLANEOUS
The cost of soliciting proxies will be borne by the Company.
The Company will reimburse brokerage firms and other custodians,
nominees and fiduciaries for reasonable expenses incurred by them
in sending proxy materials to the beneficial owners of Common
Stock. In addition to solicitations by mail, directors, officers
and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional
compensation.
The Company's Annual Report to Stockholders, including
consolidated financial statements, has been mailed to all
stockholders of record as of the close of business on the Record
Date. Any stockholder who has not received a copy of such Annual
Report may obtain a copy by writing to the Secretary of the
Company. Such Annual Report is not to be treated as a part of
the proxy solicitation material or as having been incorporated
herein by reference.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to the Rules and Regulations of the Securities and
Exchange Commission under Section 16(a) of the Securities
Exchange Act of 1934, as amended, the Company's directors and
executive officers, and certain other persons, are required to
report their ownership and changes of ownership in the common
stock; based solely on the Company's review of ownership reports
received for the fiscal year ended September 30, 1996, or written
representations from reporting persons that no annual report of
change in beneficial ownership is required, other than Mr. Moore
who inadvertently filed a late report of changes of ownership
regarding two transactions, management of the Company is not
aware that any director or executive officer did not comply with
the reporting requirements for the year.
8<PAGE>
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STOCKHOLDER PROPOSALS
In order to be eligible for inclusion in the Company's proxy
materials for next year's Annual Meeting of Stockholders, any
stockholder proposal to take action at such meeting must be
received at the Company's executive office at 2301 University
Boulevard, Tuscaloosa, Alabama 35401-1593 no later than October
7, 1997. Any such proposals shall be subject to the requirements
of the proxy rules adopted under the Securities Exchange Act of
1934, as amended.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ John F. Harvard
John F. Harvard
President
Tuscaloosa, Alabama
February 4, 1997
ANNUAL REPORT ON FORM 10-KSB
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE
FISCAL YEAR ENDED SEPTEMBER 30, 1996 AS FILED WITH THE SECURITIES
AND EXCHANGE COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO EACH
STOCKHOLDER AS OF THE RECORD DATE UPON WRITTEN REQUEST TO
CORPORATE SECRETARY, SECURITY FEDERAL BANCORP, INC., 2301
UNIVERSITY BOULEVARD, TUSCALOOSA, ALABAMA 35401-1593.
9<PAGE>
<PAGE>
REVOCABLE PROXY
SECURITY FEDERAL BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
MARCH 5, 1997
The undersigned hereby appoints W. Ford Simpson, Jr., Charles O.
Sealy, Jr. and T. Gary Fitts, with full powers of substitution to
act, as attorneys and proxies for the undersigned, to vote all
shares of Common Stock of Security Federal Bancorp, Inc. which
the undersigned is entitled to vote at the Annual Meeting of
Stockholders (the "Annual Meeting"), to be held at the office of
Security Federal Bank, 2301 University Boulevard, Tuscaloosa,
Alabama on Wednesday, March 5, 1997 at 2:00 p.m., local time, and
at any and all adjournments thereof, as indicated below and in
accordance with the determination of a majority of the Board of
Directors with respect to other matters which come before the
Annual Meeting.
VOTE
FOR WITHHELD
--- --------
The election as directors of all
nominees listed below (except as
marked to the contrary below). [ ] [ ]
Russell S. Lee
Marlin D. Moore, Jr.
E. B. Stansell
INSTRUCTION: To withhold your vote for any individual
nominee, insert that nominee's name on the line provided
below.
_________________________________________
The Board of Directors recommends a vote "FOR" each of the
nominees listed above.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR EACH OF THE NOMINEES. IF
ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL MEETING, THIS PROXY
WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN ACCORDANCE WITH THE
DETERMINATION OF A MAJORITY OF THE BOARD OF DIRECTORS. AT THE
PRESENT TIME, THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS
TO BE PRESENTED AT THE ANNUAL MEETING. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY ON THE HOLDERS THEREOF TO VOTE WITH
RESPECT TO THE ELECTION OF ANY PERSON AS DIRECTOR WHERE THE
NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE AND
MATTERS INCIDENT TO THE CONDUCT OF THE ANNUAL MEETING.
<PAGE>
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Annual Meeting or at any adjournment thereof and after notifica-
tion to the Secretary of the Company at the Annual Meeting of the
stockholder's decision to terminate this proxy, then the power of
said attorneys and proxies shall be deemed terminated and of no
further force and effect. The undersigned hereby revokes any and
all proxies heretofore given with respect to the shares of Common
Stock held of record by the undersigned.
The undersigned acknowledges receipt from the Company prior
to the execution of this proxy of a Notice of Annual Meeting, the
Company's Proxy Statement for the Annual Meeting and an Annual
Report to Stockholders.
Dated: _______________________, 1997
__________________________ __________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
__________________________ __________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope in which
this card was mailed. When signing as attorney, executor, admin-
istrator, trustee or guardian, please give your full title. If
shares are held jointly, each holder should sign.
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE-PREPAID ENVELOPE.
