PRESS RELEASE


                          F O R  I M M E D I A T E  R E L E A S E
                          For More Information Contact:
                          Marlin D. Moore, Jr., Chairman of the
                          Board and Chief Executive Officer
                          (205) 345-8800


                    SECURITY FEDERAL BANCORP, INC.
       ANNOUNCES DECLARATION OF SPECIAL CASH DISTRIBUTION


     December 10, 1996 -- Security Federal Bancorp, Inc.,
Tuscaloosa, Alabama, announced today that its Board of Directors
has declared a one-time cash distribution in the amount of $3.00
per share to the holders of the Company's common stock, payable
December 27, 1996 to stockholders of record on December 19, 1996,
and that it is expected that substantially all of the
distribution will qualify as a non-taxable return of capital to
stockholders.

     The company has filed a request for a private letter ruling
from the Internal Revenue Service regarding the tax effects of
the distribution.  While the company has not yet received the
requested ruling, based on conferences with the staff of the IRS,
it is expected that a ruling will be issued within the next few
days to the effect that the amount of the distribution
attributable to the company's unconsolidated earnings and profits
will be treated as a dividend generally taxable as ordinary
income but that the full remaining amount of the distribution may
be treated as a return of capital.  The portion of the
distribution which may be treated as a return of capital will be
viewed as a reduction in the cost basis of each share and will
not be subject to income tax as a dividend to stockholders.  The
company will announce the issuance of the requested ruling
promptly following receipt.  It is anticipated that the company
will inform its stockholders regarding the portion of the
distribution attributable to the company's earnings and profits -
- - and therefore subject to taxation -- as soon as practical after
December 31, 1996.

     Marlin D. Moore, Chairman of the Board and Chief Executive
Officer, stated that "The Board has determined that this special
cash distribution represents a wise use of the Company's excess
capital that will benefit all of our stockholders, and the Board
is pleased to declare and pay the distribution before the end of
the calendar year."

     Security Federal Bancorp, Inc. is the holding company for
Security Federal Bank, which conducts business through its main
office at 2301 University Boulevard, Tuscaloosa, Alabama.