<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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 Rule 14a-11(c) or
Rule 14a-12
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14a-6(e)(2))
SECURITY FEDERAL BANCORP, INC.
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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 (Set
forth the amount on which the filing fee is calculated and state
how it was determined):
________________________________________________________________
4. Proposed maximum aggregate value of transaction:
________________________________________________________________
5. Total fee paid:
________________________________________________________________
[ ] Fee paid previously with preliminary materials:
[ ] 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]
March 20, 1998
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 Bank, 2301 University Boulevard, Tuscaloosa, Alabama on
Monday, April 20, 1998 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 1997 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 APRIL 20, 1998
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
Bank, 2301 University Boulevard, Tuscaloosa, Alabama at 2:00
p.m., local time, on Monday, April 20, 1998.
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 March 12, 1998 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
March 20, 1998
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
APRIL 20, 1998
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 1998 Annual Meeting of Stockholders of the Company
(hereinafter called the "Annual Meeting") which will be held at
the office of Security Bank ("Security Bank" or the "Bank"),
2301 University Boulevard, Tuscaloosa, Alabama on Monday, April
20, 1998, at 2:00 p.m., local time. The accompanying Notice of
Annual Meeting and form of proxy and this Proxy Statement are
being first mailed to stockholders on or about March 20, 1998.
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 March 12, 1998 (the "Record Date") are
entitled to one vote for each share then held. As of the Record
Date, there were 678,876 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 38,902 5.7%
<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.
</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 37,201 5.5%
John F. Harvard 32,647 4.8
Russell S. Lee 11,828 1.7
Marlin D. Moore, Jr. 42,401 6.2
Catherine J. Randall 0 *
Charles O. Sealy, Jr. 35,401 5.2
W. Ford Simpson, Jr. 21,828 3.2
E. B. Stansell 2,328 *
All directors and executive
officers of the Company as
a group (8 persons) 183,634 27.0
<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 bybusinesses 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 1,368, 1,594, 1,368, 1,368, 0, 1,368, 1,368 and
1,368 shares which Messrs. Fitts, Harvard, Lee and Moore, Ms.
Randall and Messrs. Sealy, Simpson and Stansell,
respectively, were entitled to purchase pursuant to vested
stock options under the Option Plan; excludes shares which
Messrs.Fitts, Harvard, Lee and Moore, Ms. Randall and Messrs.
Sealy, Simpson and Stansell, respectively, were not yet
entitled to purchase pursuant to unvested stock options under
that plan; excludes 692, 806, 692, 692, 0, 692, 692 and 692
unvested shares awarded to Messrs. Fitts, Harvard, Lee and
Moore, Ms. Randall and Messrs. Sealy, Simpson and Stansell,
respectively, under the Company's MRP.
</FN>
</TABLE>
2<PAGE>
<PAGE>
ELECTION OF DIRECTORS
GENERAL
The Company's Board of Directors is composed of eight
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 Catherine J. Randall, Charles O. Sealy, Jr. and W.
Ford Simpson, Jr., 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 all nominees and
continuing directors, their name, age as of the Record Date, the
year they first became a director of the Security Bank, the
Company's principal subsidiary, and the expiration of their
current term as a director of each of the Company and the Bank.
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 2001
Catherine J. Randall 47 1997 1998
Charles O. Sealy, Jr. 49 1990 1998
W. Ford Simpson, Jr. 42 1989 1998
DIRECTORS CONTINUING IN OFFICE
John F. Harvard 53 1986 1999
T. Gary Fitts 64 1987 1999
Russell S. Lee 74 1986 2000
Marlin D. Moore, Jr. 61 1965 2000
E. B. Stansell 87 1965 2000
</TABLE>
3<PAGE>
<PAGE>
The principal occupation of each director of the Company
for the last five years is set forth below.
CATHERINE J. RANDALL is the Director of the Computer-Based
Honors Program at the University of Alabama. She is also a
member of the Chamber of Commerce of West Alabama, the
Tuscaloosa League of Business and Professional Women, and serves
as a member of the Executive Committee of the National
Collegiate Honors Council. Mrs. Randall serves on numerous
committees at the University of Alabama and has been extensively
involved in community service and other volunteer activities.
CHARLES O. SEALY, JR. is a self-employed realtor and
insurance executive for Sealy Real Estate and Insurance 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 director of the DCH Medical Center Foundation's
Board of Directors and a member of the vestry of Christ
Episcopal Church in Tuscaloosa.
JOHN F. HARVARD served as Security 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. 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 has served 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 Security 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 Secretary of
the Bank and the Company.
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 Security Bank from 1965 until
December 1995 when he was elected Chairman of the Board and
Chief Executive Officer. 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 has
served as a director of the of the Federal Reserve Bank of
Atlanta, Birmingham Branch. Mr. Moore is not separately
compensated for his services as Chairman of the Board and Chief
Executive Officer of the Company.
E. B. STANSELL retired as owner of Stansell Pontiac-
Cadillac in 1976.
MEETINGS AND COMMITTEES OF THE BOARD OF DIRECTORS
During fiscal year 1997, the Company's Board of Directors
met seven times and the Board of Directors of Security Bank met
twelve 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
4<PAGE>
<PAGE>
of the boards of directors and committees on which such director
served during such fiscal year, except director Lee, who missed
several meetings due to illness and business conflicts.
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 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 1997.
The Company's Compensation Committee consists of directors
Lee, Simpson and Stansell. 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
twice in connection with compensation paid for fiscal 1997.
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 Security Bank's
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 third year following the conversion they
would, in the aggregate, be entitled to receive $39,000 per year
for 10 years upon their
5<PAGE>
<PAGE>
retirement under the Director Retirement Plan. The Bank will be
required to expense the remaining liability (approximately
$94,000 on a pre-tax basis) in the third year following the
Conversion to fund the Directors' Plan.
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 has received a one-time grant of stock options in the
form of non-incentive stock options ("Non-ISOs") to purchase
3,421 shares of Common Stock at an exercise price of $11.579 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. In March 1997, Ms. Randall
received such a grant, which has an exercise price of $18.00 per
share. 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 has 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. In March 1997, Ms. Randall
received such an award.
EXECUTIVE COMPENSATION AND OTHER BENEFITS
Summary. The following table sets forth cash and noncash
compensation awarded to or earned by the named executive officer
for each of the last two fiscal years.
<TABLE>
<CAPTION>
Long-Term
Compensation Awards
Annual Compensation ------------------------
Name and ---------------------------------- Restricted Securities
Principal Fiscal Other Annual Stock Underlying All Other
Position Year(1) Salary Bonus Compensation Awards Options Compensation
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Marlin D. Moore, Jr. 1997 $36,000 $5,000 $ -- $ -- -- $16,200
Chairman of the Board 1996* 18,000 -- -- -- 3,421 15,800
and Chief Executive
Officer
<FN>
_____________
* Mr. Moore became chief executive officer in December 1995.
(1) Due to the Company's change of fiscal year, does not include the following compensation for the three
month transition period between the end of fiscal 1996 (9/30/96) and the start of fiscal 1997 (1/1/97):
salary, $4,500, all other compensation, $4,050.
</FN>
</TABLE>
6<PAGE>
<PAGE>
Stock Options. The following table sets forth information
regarding the number and value of options held by the named
executive officer at the end of fiscal 1997. No options were
exercised during the year (or the preceding transition period --
see above).
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised
Underlying Unexercised Options at
Options at Year End Year End ($)(1)
Exercisable/Unexercisable Exercisable/Unexercisable
------------------------- -------------------------
<S> <C> <C>
Marlin D. Moore, Jr. 1,368 / 2,053 $12,204 / $18,315
Chairman of the Board and
Chief Executive Officer
<FN>
____________
(1) Option values based on difference between exercise
price and last known trading price of shares as of
December 31, 1997 ($20.50).
</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.
During the fiscal year ended December 31, 1997, Pritchett-
Moore, Inc. received compensation of $255,423 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.
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 properly 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,
7<PAGE>
<PAGE>
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 1998. 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 December 31, 1997, or written
representations from reporting persons that no annual report of
change in beneficial ownership is required, other than one late
form being filed with respect to a vesting event in 1997 of
awards granted in 1995 under the MRP to each director of the
Company at that time, 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 November
20, 1998. Any such proposals shall be subject to the require-
ments 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
March 20, 1998
ANNUAL REPORT ON FORM 10-KSB
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1997 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>
[ ] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE SECURITY FEDERAL BANCORP, INC.
ANNUAL MEETING OF STOCKHOLDERS
APRIL 20, 1998
The undersigned hereby appoints John F. Harvard, Marlin D.
Moore, Jr. and T. Gary Fitts with full powers of substitution,
to act as 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, to be held at the office of Security Bank, 2301
University Boulevard, Tuscaloosa, Alabama on Monday, April 20,
1998 at 2:00 p.m., and at any and all adjournments
thereof, as follows:
FOR WITHHOLD EXCEPT
--- -------- ------
1. The election as
directors of all [ ] [ ] [ ]
nominees listed
(except as marked
to the contrary
below):
CATHERINE J. RANDALL
CHARLES O. SEALY, JR.
W. FORD SIMPSON, JR.
INSTRUCTION: To withhold authority to vote for any
individual nominee, mark "EXCEPT" and write that
nominee's name in the space provided below.
____________________________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
LISTED PROPOSITION.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO
INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED
FOR THE PROPOSITION STATED. 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 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.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
Please be sure to sign and date
this proxy in the box below Date
- ---Stockholders sign above --- Co-holder (if any) sign above ---
Should the undersigned be present and elect to vote at the
annual meeting or at any adjournment thereof and after
notification 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 acknowledges receipt from the Company prior to
the execution of this proxy of notice of the annual meeting, a
proxy statement dated March 20, 1998 and an annual report to
stockholders.
Please sign exactly as your name appears on this proxy card.
When signing as attorney, executor, administrator, trustee or
guardian, please give your full title. If shares are held
jointly, each holder should sign.
PLEASE ACT PROMPTLY
SIGN, DATE AND MAIL YOUR PROXY TODAY
