U.S. SECURITIES AND EXCHANGE COMMISSION

                               Washington, D.C.  20549

                                     FORM 10-QSB

(Mark One)

  (X) Quarterly report under Section 13 or 15(d) of the Securities Exchange
      Act of 1934

      For the quarterly period ended             June 30, 1997          .
                                     -----------------------------------

  ( ) Transition report under Section 13 or 15(d) of the Exchange Act

      For the transition period from _______________ to ________________

                  Commission file number        0-22553
                                                -------
                         SECURITY BANCORP, INC.
                         ----------------------
         (Exact Name of Small Business Issuer as Specified in Its Charter)

        Tennessee                                  62-1682697
  (State or Other Jurisdiction of                 (I.R.S. Employer
   Incorporation or Organization)                  Identification No.)

             306 West Main Street, McMinnville, TN  37110
             --------------------------------------------
                Address of Principal Executive Offices

                            (615) 473-4483
                            --------------
            (Issuer's Telephone Number, Including Area Code)

(Former Name, Former Address and Former Fiscal Year, If Changed Since Last
Report)

Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

      (X) Yes                  ( ) No

         APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
                      DURING THE PRECEDING FIVE YEARS

Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15 (d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court.

      ( ) Yes                  ( ) No

                     APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date:

                   436,425 shares outstanding on June 30, 1997

Transitional Small Business Disclosure Format (check one):

      ( ) Yes                 (X) No




<PAGE>
<PAGE>
                        SECURITY BANCORP, INC. AND SUBSIDIARY
                               MCMINNVILLE, TENNESSEE

                                        INDEX

PART I.                                                              PAGE(S)
-------                                                              -------
FINANCIAL INFORMATION

ITEM 1.

Financial Statements

Consolidated Balance Sheets - (Unaudited)
  as of December 31, 1996 and June 30, 1997 ............................ 3

Consolidated Statements of Income (Unaudited)
  for the three and six month periods ended June 30, 1996 and 1997...... 4

Consolidated Statements of Stockholders' Equity (Unaudited)............. 5

Consolidated Statements of Cash Flows - (Unaudited)
  for the six months ended June 30, 1996 and 1997....................... 6

Notes to (Unaudited) Consolidated Financial Statements................. 7-9

ITEM 2.

Management's Discussion and Analysis of

  Financial Condition and Results of Operations....................... 10-14

PART II.

OTHER INFORMATION

Item 1. Legal Proceedings.............................................. 15

Item 2. Changes in Securities.......................................... 15

Item 3. Defaults Upon Senior Securities................................ 15

Item 4. Submission of Matters to a Vote of Security Holders............ 15

Item 5. Other Information.............................................. 15

Item 6. Exhibits and Reports on Form 8-K............................... 15

Signatures............................................................. 16


                                     2

<PAGE>
<PAGE>
                        SECURITY BANCORP, INC. AND SUBSIDIARY
                             Consolidated Balance Sheets
                                     (Unaudited)

                       (in thousands except share information)

ASSETS                                                  December 31,   June 30,
                                                             1996        1997
                                                            ------      ------
Cash & Noninterest Earning Deposits                      $   1,098     $   339
Investment Securities:  held to maturity                     2,830       2,761
   Available for sale                                        1,742       1,808
Loans receivable, net                                       36,667      39,512
Real estate owned                                                0           0
Premises and equipment, net                                    954       1,038
Federal Home Loan Bank stock                                   512         531
Accrued interest receivable                                    278         363
Prepaid expenses and other assets                               40         598
                                                            ------      ------
     TOTAL ASSETS                                           44,121      46,950
                                                            ======      ======
        LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits                                                    35,790      35,425
Accounts payable - conversion cost                               0         101
FHLB Borrowings                                              5,500       4,500
Advances from Borrowers for property taxes & insurance          66         200
Accrued interest payable                                        31          31
Accrued expenses and other liabilities                         126          51
Federal income taxes payable                                   158         259
                                                            ------      ------
     Total Liabilities                                      41,671      40,567

        STOCKHOLDERS' EQUITY
Common stock (436,425 shares, $.01 par value)                    0           4
Paid-in capital                                                  0       4,060
Retained earnings                                            2,305       2,483
Unrealized gain on securities available for sale,
  net of income taxes                                          145         185
Unearned compensation: employee stock ownership plan             0        (349)
                                                            ------      ------
     Total stockholders' equity                              2,450       6,383
                                                            ------      ------
     Total Liabilities and stockholders' equity             44,121      46,950
                                                            ======      ======


The accompanying notes are an integral part of these consolidated financial
statements.

                                     3

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<PAGE>
                        SECURITY BANCORP, INC. AND SUBSIDIARY
                          Consolidated Statements of Income
                                     (Unaudited)

                          (in thousands, except per share)

                         For 3 Months Ended June 30  For 6 Months Ended June 30
                               1996         1997          1996        1997
                              ------      ------         ------      ------
INTEREST INCOME:
  Loans                        $ 693       $ 864        $ 1,298     $ 1,687
  Investments                    102          67            221         135
  Interest earning deposits        2           2              4           3
                              ------      ------         ------      ------
     Total interest income       797         933          1,523       1,825

INTEREST EXPENSE:
Deposits                         414         440            824         862
Advances                          42         107             58         207
                              ------      ------         ------      ------
  Interest Expense               456         547            882       1,069
Provision for loan losses         10          15             18          30
Net interest income after     ------      ------         ------      ------
 provision for loan losses       331         371            623         726

NON-INTEREST INCOME:
  Other                           65          90            136         153
                              ------      ------         ------      ------
    Total non-interest income     65          90            136         153

NON-INTEREST EXPENSES
  Compensation                    90         105            165         208
  Other employee benefits         34          35             68          70
  Net occupancy expense           31          40             58          76
  Deposit insurance premiums      18           6             36          11
  Data processing                 22          28             41          57
  Other                           67          96            129         181
                              ------      ------         ------      ------
    Total non-interest expenses  262         310            497         603
                              ------      ------         ------      ------
    Income before income taxes   134         151            262         276
Income tax expense                49          58             98          98
                              ------      ------         ------      ------
     Net income                   85          93            164         178
                              ======      ======         ======      ======
Weighted average common equivalent share outstanding:

  (See Note 3)                   N/A         N/A            N/A         N/A
     Net income per share        N/A         N/A            N/A         N/A

The accompanying notes are an integral part of these consolidated financial
statements.

                                     4

<PAGE>
<PAGE>
                      SECURITY BANCORP, INC. AND SUBSIDIARY
                 Consolidated Statements of Stockholders' Equity
                                   (Unaudited)
                     (in thousands except share information)
<TABLE>
                                                                Unrealized  Unearned
                           Common   Paid-in   Retained  Treasury  Gain on  Compensation
                           Stock    Capital   Earnings   Stock  Securities  for  ESOP           Total
                           -----    -------   --------   -----  ----------  -----------         -----
<S>                        <C>      <C>       <C>        <C>     <C>         <C>        <C>     <C>
Balance at 12/31/96           -         -         -     2,305         -       145         -     2,450

Net income                    -         -         -       178         -         -         -       178

Unrealized gain on securities
  available for sale,
  net of income taxes         -         -         -         -         -        40         -        40

Sale of common stock
(436,425 shares)              -         4     4,060         -         -         -     (349)     3,715
                           -----    -------   --------   -----  ----------  -----------         -----
Balance at 6/30/97            -         4     4,060     2,483         -       185     (349)     6,383


The accompanying notes are an integral part of these consolidated financial statements.

                                                              5
</TABLE>
<PAGE>
<PAGE>
                        SECURITY BANCORP. INC. AND SUBSIDIARY
                        Consolidated Statements of Cash Flows
                                     (Unaudited)
                                   (in thousands)

                                                     SIX MONTHS ENDED JUNE 30
                                                           1996        1997
                                                          ------      ------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income                                                   164         178
Adjustments to reconcile net income to net cash
 provided by operating activities:
  Depreciation and amortization                               22          28
  Dividend on FHLB stock                                     (17)        (18)
  (Gain) loss on sale of investments                           -           -
  Provision for loan losses                                   18          30
  Increase (decrease) in interest receivable                 (67)        (71)
  (Increase) decrease in other assets                        (56)       (577)
  Increase (decrease) in accrued liabilities                  (4)        460
  Increase (decrease) in income taxes payable                 15          67
  Increase (decrease) in deferred taxes payable              (21)         25
  Sale of mortgage loans held for sale                     3,319       2,289
  Originations of mortgage loans held for sale            (3,319)     (2,289)
  Total adjustments                                         (110)        (56)
                                                          ------      ------
Net cash provided by operating activities                     54         122

CASH FLOWS FROM INVESTING ACTIVITIES:
  Loan originations net of principal payments             (5,615)     (2,915)
  Loans purchased                                           (277)          -
  Purchase of:
    Available for sale-investment securities              (1,000)       (250)
  Proceeds from sale of:
    Available for sale - investment securities               999           -
    Available for sale - mortgage-backed securities           90           -
  Proceeds from maturities and repayments of:
    Held to maturity investment securities                 2,000         250
    Held to maturity mortgage-backed securities               69          69
  Cash payments for the purchase of property                 (72)       (113)
  Proceeds from sale of foreclosed real estate                 -           -
                                                          ------      ------
Net cash provided (used) by investing activities          (3,806)     (2,959)

CASH FLOWS FROM FINANCING ACTIVITIES:
  Net increase (decrease) in deposit accounts              1,488        (365)
  Proceeds from FHLB advances                              2,250      (1,000)
  Net increase (decrease) in escrow accounts                  92         134
  Net proceeds from issuance of capital stock                  -       3,715
                                                          ------      ------
Net cash provided (used) by financing activities           3,830       2,484
                                                          ------      ------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS               78        (353)
CASH AND EQUIVALENTS, BEGINNING OF YEAR                      288       1,098
                                                          ------      ------
CASH AND EQUIVALENTS, END OF PERIOD                          366         745
                                                          ======      ======
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
  Interest expense                                           895       1,070
  Income taxes                                                83          51

The accompanying notes are an integral part of these consolidated financial
statements.
                                     6
<PAGE>
<PAGE>
                        SECURITY BANCORP, INC. AND SUBSIDIARY
                     Notes to Consolidated Financial Statements
                                     (Unaudited)

1.  SECURITY BANCORP, INC.

Security Bancorp, Inc. (the "Company") was incorporated under the laws of the
State of Tennessee for the purpose of becoming the savings and loan holding
company of Security Federal Savings Bank of McMinnville, TN (the "Savings
Bank") in connection with the Savings Bank's conversion from a federally
chartered mutual savings bank to a federally chartered stock savings bank (the
"Conversion"), pursuant to its Plan of Conversion. The Company commenced on May
27, 1997, a Subscription Offering of its shares in connection with the
Conversion. On June 30, 1997, the Conversion was completed (see Note 4). The
financial statements of the Savings Bank are presented on a consolidated basis
with those of the Company.

The consolidated financial statements included herein are for the Company and
the Savings Bank.

2.  BASIS OF PREPARATION

The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-QSB and, therefore, do not include all
disclosures necessary for a complete presentation of the consolidated balance
sheets, consolidated statements of income, consolidated statements of
stockholders' equity, and consolidated statements of cash flows in conformity
with generally accepted accounting principles. However, all adjustments which
are, in the opinion of management, necessary for the fair presentation of the
interim financial statements have been included. All such adjustments are of a
normal recurring nature. The statements of income for the three and six month
period ended June 30, 1997 are not necessarily indicative of the results which
may be expected for the entire year.

It is suggested that these unaudited consolidated financial statements be read
in conjunction with the audited financial statements and notes thereto for the
Savings Bank for the year ended December 31, 1996.

3.  EARNINGS PER SHARE

Earnings per share amounts for the three and six month periods ended June 30,
1997, are not applicable since the Conversion did not occur until June 30,
1997; therefore, no shares were outstanding until that date.

                                     7

<PAGE>
<PAGE>
4.  STOCKHOLDERS' EQUITY

In connection with the Conversion, which was consummated on June 30, 1997, the
Company issued and sold 436,425 shares of common stock at a price of $10.00 per
share for total net proceeds of approximately $4.1 million after conversion
expenses of approximately $300,000. The Company retained ten percent of the net
proceeds and used the remaining net proceeds to purchase the newly issued
capital stock of the Savings Bank.

The Savings Bank may not declare or pay a cash dividend if the effect thereof
would cause its net worth to be reduced below either the amounts required for
the liquidation account discussed below or the regulatory capital requirements
imposed by federal and state regulations.

As required by the regulations of the Office of Thrift Supervision, at the time
of Conversion, the Savings Bank established a liquidation account in an amount
equal to its retained earnings as reflected in the latest balance sheet used in
the final conversion prospectus. The liquidation account is maintained for the
benefit of eligible account holders who continue to maintain their deposit
accounts in the Savings Bank after conversion. In the event of a complete
liquidation of the Savings Bank (and only in such an event), eligible
depositors who continue to maintain accounts shall be entitled to receive a
distribution from the liquidation account before any liquidation may be made
with respect to the Company's common stock.

5.  EMPLOYEE STOCK OWNERSHIP PLAN (ESOP)

As part of the Conversion discussed in Note 4, an Employee Stock Ownership Plan
(ESOP) was established for all employees who have attained the age of 21 and
have been credited with at least 1000 hours of service during a 12-month
period.  The ESOP borrowed approximately $349,000 from the Company and used the
funds to purchase 34,914 shares of common stock of the Company issued in the
Conversion.  The loan will be repaid principally from the Company's
discretionary contributions to the ESOP over a period of 10 years. On June 30,
1997, the loan had an outstanding balance of approximately $349,000 and an
interest rate of 8.50%. The loan obligation of the ESOP is considered unearned
compensation and, as such, recorded as a reduction of the Company's
stockholders' equity. Both the loan obligation and the unearned compensation
are reduced by an amount of the loan repayments made by the ESOP. Shares
purchased with the loan proceeds are held in a suspense account for allocation
among participants as the loan is repaid. Contributions to the ESOP and shares
released from the suspense account are allocated among participants on the
basis of compensation in the year of allocation. Benefits become fully vested
at the end of six years of service under the terms of the ESOP Plan. Benefits
may be payable upon retirement, death, disability, or separation from service.

                                     8

<PAGE>
<PAGE>
Since the Company's annual contributions are discretionary, benefits payable
under the ESOP cannot be estimated. Compensation expenses are recognized to the
extent of the fair value of shares committed to be released.

For the three and six months ending June 30, 1997, there was no compensation
from the ESOP. Compensation will be recognized at the average fair value of the
ratably released shares during the accounting period as the employees performed
services. At June 30, 1997, the ESOP had 34,914 unallocated shares.

The ESOP administrators will determine whether dividends on allocated and
unallocated shares will be used for debt service. Any allocated dividends used
will be replaced with common stock of equal value. For the purpose of computing
earnings per share, all ESOP shares committed to be released have been
considered outstanding.

6. ASSET QUALITY

At June 30, 1997, the Company had total nonperforming loans (i.e., loans which
are contractually past due 90 days or more) of approximately $68,000. The
Company had no real estate acquired through foreclosure as of June 30, 1997. As
a percentage of net loans at June 30, 1997, nonperforming loans was .17%. Total
nonperforming assets as a percentage of total assets at June 30, 1997 was .14%.

                                     9

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<PAGE>
             MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                              AND RESULTS OF OPERATIONS

GENERAL

The following discussion and analysis is intended to assist in understanding
the financial condition and the results of operations of the Company.
References to the "Company" include Security Bancorp, Inc. and/or Security
Federal Savings Bank, of McMinnville, TN, as appropriate.

COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 1996
   AND JUNE 30, 1997

The Company's total consolidated assets increased by approximately $2.9 million
or 6.5%, from $44.1 million at December 31, 1996 to $47.0 million at June 30,
1997. The increase in assets for the period was primarily attributable to an
increase in loans receivable and an increase in stockholders' equity resulting
from capital raised during the stock conversion.

Loans receivable, net, were $39.5 million at June 30, 1997 compared to $36.7
million at December 31, 1996, a 7.6% increase. This increase was primarily
attributable to an increase in first mortgage residential loans of $1.5
million, an increase in commercial business loans of $1.0 million, and an
increase in commercial real estate loans of $400,000. Residential construction
loans declined by $500,000 during this period. The largest loan originated
during this period was a commercial land development line of credit loan for
$500,000 at 8.5% fixed for 5 years.

Deposits decreased $400,000 or 1.1%, from $35.8 million at December 31, 1996 to
$35.4 million at June 30, 1997. The decrease in deposits was primarily
attributable to customers using their deposits in the Savings Bank to purchase
stock in the conversion.

COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS
ENDED JUNE 30, 1996 AND 1997.

NET INCOME. Net income increased $8,000 or 9.4 % from $85,000 for the three
months ended June 30, 1996 to $93,000 for the three months ended June 30, 1997.
The increase was primarily the result of an increase in net interest income and
noninterest income partially offset by an increase in noninterest expense. The
return on average assets was .80% for the three months ended June 30, 1997.

NET INTEREST INCOME. Net interest income increased $40,000 or 12.1% from
$331,000 for the three months ended June 30, 1996 to $371,000 for the three
months ended June 30, 1997. The interest rate spread increased from 3.26% for
three months ending June 30,1996 to 3.53% for the three months ending June 30,
1997.

                                     10

<PAGE>
<PAGE>
Total interest income increased $136,000 from $797,000 for the three months
ended June 30, 1996 to $933,000 for the three months ended June 30, 1997.
Interest on loans increased $171,000 as a result of a $5.9 million increase in
average loans outstanding or 15.2%.

Interest expense increased $91,000 from $456,000 for the three months ended
June 30, 1996 to $547,000 for the three months ended June 30, 1997. The
increase for the three months ending June 30, 1997 was the result of an
increase in the average balance of deposits and in the average balance of
FHLB-Cincinnati advances, both of which were used to fund loan demand.

PROVISION FOR LOAN LOSSES. The provision for loan losses for three month
periods ended June 30, 1996 and 1997 was $10,000 and $15,000, respectively.
Historically, management has emphasized the Company's loss experience over
other factors in establishing provisions for loan losses. However, management
deemed the increase in the provision for loan losses necessary in light of the
growth of the loan portfolio, particularly in the areas of nonresidential
mortgage loans (i.e., construction, commercial real estate, acquisition and
development, commercial business and consumer loans) that are generally
considered to have a greater risk of loss. Management deemed the allowance for
loan losses adequate at June 30, 1997. The ratio of the allowance for loan
losses to nonperforming loans at June 30, 1997 was 448.5%.

NONINTEREST INCOME. Noninterest income increased 38.5% to $90,000 for the three
months ended June 30, 1997 from $65,000 for the three months ended June 30,
1996. This increase resulted from increased mortgage servicing income on loans
sold and increase service charges on deposit accounts.

NONINTEREST EXPENSES. Noninterest expenses increased 18.3% to $310,000 for the
three months ended June 30, 1997 from $262,000 for the three months ended June
30, 1996. This increase resulted primarily from an increase in costs associated
with the opening of the Savings Bank's first branch office in McMinnville in
March 1997. Offsetting the increase in compensation, benefits, occupancy, and
other expenses was a decrease in FDIC deposit insurance premiums, which
decreased from $18,000 for the three months ended June 30, 1996 to $6,000 for
the three months ended June 30, 1997 as a result of the SAIF recapitalization.
As a result of the SAIF recapitalization, the Savings Bank's annual deposit
insurance premiums decreased from 23 basis points to 6.5 basis points of
assessable deposits effective January 1, 1997.

INCOME TAXES. Income tax expense for the three months ending June 30, 1997 was
$58,000 compared to income tax expense of $49,000 for the same period in 1996.
The increase was the result of pretax income increasing by $17,000.

                                     11

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<PAGE>
COMPARISON OF RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED
JUNE 30, 1996 AND 1997

NET INCOME. Net income for the six months ended June 30, 1997 was $178,000
compared to $164,000 for the six months ended June 30, 1996, a 8.5% increase.
The increase resulted primarily from an increase in net interest income offset
by an increase in noninterest expense. The return on average assets was .76%
for the six months ended June 30, 1997 compared to .82% for the six months
ended June 30, 1996.

NET INTEREST INCOME. Net interest income increased 16.5% to $726,000 for the
six months ended June 30, 1997 from $623,000 for the six months ended June 30,
1996, as a result of an increase in total interest income that more than offset
an increase in total interest expense.

Total interest income increased 19.8% to $1,825,000 for the six months ended
June 30, 1997 from $1,523,000 for the same 1996 period primarily as a result of
increases in both the average balance of and average yield on loans receivable,
net. The average balance of loans receivable, net increased to $39.1 million
from $31.4 million, and the average yield increased to 8.78% from 8.55%. Both
increases are attributable to the substantial increase in nonresidential
mortgage loans.

Interest expense increased 21.2% to $1,069,000 for the six months ended June
30, 1997 from $882,000 for the same 1996 period, primarily as a result of an
increase in average balances of interest-bearing deposits and FHLB-Cincinnati
advances, both of which were used to fund loan demand.

PROVISION FOR LOAN LOSSES. Provisions for loan losses are charges to earnings
to bring the total allowance for loan losses to a level considered adequate by
management to provide for estimated loan losses based on management's
evaluation of the collectability of the loan portfolio, including past loan
loss experience, adverse situations that may affect the borrower's ability to
repay, the estimated value of any underlying collateral, and current economic
conditions. The provision for loan losses was $30,000 for the six months ended
June 30, 1997 compared to $18,000 for the six months ended June 30, 1996.
Management deemed the increase in the provision for loan losses necessary in
light of the growth of the loan portfolio, particularly in the areas of
nonresidential mortgage loans (i.e., construction, commercial real estate,
acquisition and development, commercial business and consumer loans) that are
generally considered to have a greater risk of loss. Management deemed the
allowance for loan losses adequate at June 30, 1997.

                                     12

<PAGE>
<PAGE>
NONINTEREST INCOME. Noninterest income increased 12.5% to $153,000 for the six
months ended June 30, 1997 from $136,000 for the same 1996 period. This
increase resulted from increased mortgage servicing income on loans sold and
increased service charges on deposit accounts.

NONINTEREST EXPENSE. Noninterest expenses increased 21.3% to $603,000 for the
six months ended June 30, 1997 from $497,000 for the same period in 1996. The
increase is a result of an increase in compensation and benefits associated
with hiring of additional personnel, a commercial loan officer in February,
1996 and employees for the savings bank first branch office opened in March,
1997. Offsetting these expense increases was a decrease in FDIC deposit
insurance premiums, which decreased from $36,000 to $11,000 for the six months
ended June 30, 1997 and 1996, respectively, as a result of the SAIF
recapitalization.

INCOME TAX EXPENSE. Income tax expense was $98,000 for both the six months
ended June 30, 1997 and 1996, primarily as a result of a change in methodology
for calculating income taxes. Income tax expense for the six months ended June
30, 1997 was calculated based on the Savings Bank's effective tax rate, while
income tax expense for the six months ended June 30, 1996 was calculated based
on the Savings Bank's marginal or statutory tax rate, which is higher than its
effective tax rate.

LIQUIDITY AND CAPITAL RESOURCES. The company's primary sources of funds are
deposits and proceeds from principal and interest payments on loans. While
maturities and scheduled amortization of loans are a predictable source of
funds, deposit flows and mortgage prepayments are greatly influenced by general
interest rates, economic conditions and competition. The Company's primary
investing activity is loan originations. The Company maintains liquidity levels
adequate to fund loan commitments, investment opportunities, deposit
withdrawals and other financial commitments. At June 30, 1997, there were no
material commitments for capital expenditures and the Company had unfunded loan
commitments of approximately $1,620,000. At June 30, 1997, management had no
knowledge of any trends, events or uncertainties that will have or are
reasonably likely to have material effects on the liquidity, capital resources
or operations of the Company. Further at June 30, 1997, management was not
aware of any current recommendations by the regulatory authorities which, if
implemented, would have such an effect.

The Savings Bank exceeded all of its capital requirements at June 30, 1997. The
Savings Bank had the following capital ratios at June 30, 1997:

                                     13

<PAGE>
<PAGE>
                      SECURITY BANCORP, INC. AND SUBSIDIARY
                                   (Unaudited)
                               AS OF JUNE 30, 1997
<TABLE>
                                         ACTUAL                FOR CAPITAL           CATEGORIZED AS
                                                           ADEQUACY PURPOSES     "WELL CAPITALIZED"(1)

                                    AMOUNT    RATIO         AMOUNT     RATIO        AMOUNT    RATIO
                                    ------    -----         ------     -----        ------    -----
<S>                                 <C>       <C>           <C>        <C>          <C>       <C>
Total Capital
(to risk weighted assets)          $ 6,097    21.07%       $ 2,315      8.00%      $ 2,893    10.00%

Tier I Capital
(to risk weighted assets)            5,792    20.02%         1,157      4.00%        1,736     6.00%

Tier 1 Capital
(to total assets)                    5,792    12.34%         1,409      3.00%        2,348     5.00%

Tangible Capital
(to total assets)                    5,792    12.34%           704      1.50%          N/A       -



(1) As categorized under the Prompt Corrective Action Provisions.

                                                                     14
</TABLE>
<PAGE>
<PAGE>
PART II.                          OTHER INFORMATION

Item 1.  Legal Proceedings

From time to time, the Company and any subsidiaries may be a party to various
legal proceedings incident to its or their business. At June 30, 1997, there
were no legal proceedings to which the Company or any subsidiary was a party,
or to which of any of their property was subject, which were expected my
management to result in a material loss.

Item 2.  Changes in Securities

None

Item 3.  Defaults Upon Senior Securities

None

Item 4.  Submission of Matters to a Vote of Security Holders

None

Item 5.  Other Information

None

Item 6.  Exhibits and Reports on Form 8-K.

         Exhibits

            3(a)  Charter of Security Bancorp, Inc.*
            3(b)  Bylaws of Security Bancorp, Inc.*

           10(a)  Employment Agreement with Joe H. Pugh
           10(b)  Severance Agreement with John W. Duncan
           10(c)  Severance Agreement with Ray Talbert
           27     Financial Data Schedule

         No reports on Form 8-K were filed during the quarter ended June 30,
         1997.

         ---------------------
         *Incorporated by reference to Registrant's Registration Statement on
          Form SB-2, as amended (File No. 333-6670)

                                     15

<PAGE>
<PAGE>
                               SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                               SECURITY BANCORP, INC.

Date: August 11, 1997   By /s/ Joe H. Pugh                                      
                              ------------------------------------------
                               President and Chief Executive Officer


                               SECURITY BANCORP, INC.

Date: August 11, 1997   By /s/ John W. Duncan
                              -----------------------------------------
                               Chief Financial Officer





                                     16

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<PAGE>
                                EXHIBIT 10(a)
                      Employment Agreement with Joe H. Pugh


<PAGE>
<PAGE>
                              Employment Agreement


THIS AGREEMENT is made effective as of June 30, 1997, by and between SECURITY
FEDERAL SAVINGS BANK OF MCMINNVILLE, TN (the "Savings Bank"), SECURITY BANCORP,
INC., a Tennessee corporation (the "Company"); and JOE H. PUGH (the
"Executive").

WHEREAS, the Savings Bank wishes to assure itself of the services of Executive
for the period provided in this Agreement; and

WHEREAS, Executive is willing to serve in the employ of the Savings Bank on a
full-time basis for said period.

NOW, THEREFORE, in consideration of the mutual covenants herein contained, and
upon the other terms and conditions hereinafter provided, the parties hereby
agree as follows:

1.POSITION AND RESPONSIBILITIES.

During the period of his employment hereunder, Executive agrees to serve as
President and Chief Executive Officer of the Savings Bank.  During said period,
Executive also agrees to serve, if elected, as an officer and director of the
Company or any subsidiary or affiliate of the Company or the Savings Bank. 
Executive shall have primary responsibility for the administration and
operation of the Savings Bank.  Executive shall render administrative and
management duties to the Savings Bank such as are customarily performed by
persons situated in a similar executive capacity.  Executive shall report
directly to the Board of Directors.

2.TERMS AND DUTIES.

(a)The term of this Agreement shall be deemed to have commenced as of the date
first above written and shall continue for a period of thirty-six (36) full
calendar months thereafter.  Commencing on the first anniversary date, and
continuing at each anniversary date thereafter, the Board of Directors of the
Savings Bank (the "Board") may extend the Agreement for an additional year. 
Prior to the extension of the Agreement as provided herein, the Board of
Directors of the Savings Bank will conduct a formal performance evaluation of
Executive for purposes of determining whether to extend the Agreement, and the
results thereof shall be included in the minutes of the Board's meeting.

(b)During the period of his employment hereunder, except for periods of absence
occasioned by illness, reasonable vacation periods, and reasonable leaves of
absence, Executive shall devote substantially all his business time, attention,
skill, and efforts to the faithful performance of his duties hereunder
including activities and services related to the organization, operation and
management of the Savings Bank; provided, however, that, with the approval of
the Board, as evidenced by a resolution of such Board, from time to time,
Executive may serve, or continue to serve, on the boards of directors of, and
hold any other offices or positions in, companies or organizations, which, in
such Board's judgment, will not present any conflict of interest with the
Savings Bank, or materially affect the performance of Executive's duties
pursuant to this Agreement.

3.COMPENSATION AND REIMBURSEMENT.

(a)The compensation specified under this Agreement shall constitute the salary
and benefits paid for the duties described in Sections 1 and 2.  The Savings
Bank shall pay Executive as compensation a salary of $67,500 per year ("Base
Salary").  Such Base Salary shall be payable in accordance with the customary
payroll practices of the Savings Bank.  During the period of this Agreement,
Executive's Base Salary shall be reviewed at least annually; the first such
review will be made no later than one year from the date of this Agreement. 
Such review shall be conducted by a Committee designated by the Board.  In
addition to the Base Salary provided in this Section 3(a), the Savings Bank
shall provide Executive at no cost to Executive with all such other benefits as
are provided uniformly to full-time employees of the Savings Bank.

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(b)The Savings Bank will provide Executive with employee benefit plans,
arrangements and perquisites substantially equivalent to those in which
Executive was participating or otherwise deriving benefit from immediately
prior to the beginning of the term of this Agreement, and the Savings Bank will
not, without Executive's prior written consent, make any changes in such plans,
arrangements or perquisites which would adversely affect Executive's rights or
benefits thereunder.  Without limiting the generality of the foregoing
provisions of this Subsection (b), Executive will be entitled to participate in
or receive benefits under any employee benefit plans including, but not limited
to, retirement plans, supplemental retirement plans, pension plans, profit-
sharing plans, health-and-accident plan, medical coverage or any other employee
benefit plan or arrangement made available by the Savings Bank in the future to
its senior executives and key management employees, subject to, and on a basis
consistent with, the terms, conditions and overall administration of such plans
and arrangements.  Executive will be entitled to incentive compensation and
bonuses as provided in any plan, or pursuant to any arrangement of the Savings
Bank, in which Executive is eligible to participate.  Nothing paid to Executive
under any such plan or arrangement will be deemed to be in lieu of other
compensation to which Executive is entitled under this Agreement, except as
provided under Section 5(e).

(c)In addition to the Base Salary provided for by paragraph (a) of this Section
3, the Savings Bank shall pay or reimburse Executive for all reasonable travel
and other obligations under this Agreement and may provide such additional
compensation in such form and such amounts as the Board may from time to time
determine.

4.PAYMENTS TO EXECUTIVE UPON AN EVENT OF TERMINATION.

(a)Upon the occurrence of an Event of Termination (as herein defined) during
Executive's term of employment under this Agreement, the provisions of this
Section shall apply.  As used in this Agreement, an "Event of Termination"
shall mean and include any one or more of the following:  (i) the termination
by the Savings Bank of Executive's full-time employment hereunder for any
reason other than a Change in Control, as defined in Section 5(a) hereof;
disability, as defined in Section 6(a) hereof; death; retirement, as defined in
Section 7 hereof; or Termination for Cause, as defined in Section 8 hereof;
(ii) Executive's resignation from the Savings Bank's employ, upon (A) unless
consented to by Executive, a material change in Executive's function, duties,
or responsibilities, which change would cause Executive's position to become
one of lesser responsibility, importance, or scope from the position and
attributes thereof described in Sections 1 and 2, above (any such material
change shall be deemed a continuing breach of this Agreement), (B) a relocation
of Executive's principal place of employment by more than 35 miles from its
location at the effective date of this Agreement, or a material reduction in
the benefits and perquisites to Executive from those being provided as of the
effective date of this Agreement, (C) the liquidation or dissolution of the
Savings Bank, or (D) any breach of this Agreement by the Savings Bank.  Upon
the occurrence of any event described in clauses (A), (B), (C) or (D), above,
Executive shall have the right to elect to terminate his employment under this
Agreement by resignation upon not less than sixty (60) days prior written
notice given within a reasonable period of time not to exceed, except in case
of a continuing breach, four (4) calendar months after the event giving rise to
said right to elect.

(b)Upon the occurrence of an Event of Termination, the Savings Bank shall pay
Executive, or, in the event of his subsequent death, his beneficiary or
beneficiaries, or his estate, as the case may be, as severance pay or
liquidated damages, or both, a sum equal to the payments due to Executive for
the remaining term of the Agreement, including Base Salary, bonuses, and any
other cash or deferred compensation paid or to be paid (including the value of
employer contributions that would have been made on Executive's behalf over the
remaining term of the agreement to any tax-qualified retirement plan sponsored
by the Savings Bank as of the Date of Termination), to Executive for the term
of the Agreement provided, however, that if the Savings Bank is not in
compliance with its minimum capital requirements or if such payments would
cause the Savings Bank's capital to be reduced below its minimum capital
requirements, such payments shall be deferred until such time as the Savings
Bank is in capital compliance.  All payments made pursuant to this Section 4(b)
shall be paid in substantially equal monthly installments over the remaining
term of this Agreement following Executive's termination; provided, however,
that if the remaining term of the Agreement is less than one (1) year
(determined as of Executive's Date of Termination), such payments and benefits
shall be paid to Executive in a lump sum within thirty (30) days of the Date of
Termination.
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<PAGE>
(c)Upon the occurrence of an Event of Termination, the Savings Bank will cause
to be continued life, medical and disability coverage substantially identical
to the coverage maintained by the Savings Bank for Executive prior to his
termination.  Such coverage shall cease upon the expiration of the remaining
term of this Agreement.

5.CHANGE IN CONTROL.  

(a)No benefit shall be paid under this Section 5 unless there shall have
occurred a Change in Control of the Company or the Savings Bank.  For purposes
of this Agreement, a "Change in Control" of the Company or the Savings Bank
shall be deemed to occur if and when (a) an offeror other than the Company
purchases shares of the common stock of the Company or the Savings Bank
pursuant to a tender or exchange offer for such shares, (b) any person (as such
term is used in Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934) is or becomes the beneficial owner, directly or indirectly, of securities
of the Company or the Savings Bank representing 25% or more of the combined
voting power of the Company's then outstanding securities, (c) the membership
of the board of directors of the Company or the Savings Bank changes as the
result of a contested election, such that individuals who were directors at the
beginning of any twenty-four (24) month period (whether commencing before or
after the date of adoption of this Agreement) do not constitute a majority of
the Board at the end of such period, or (d) shareholders of the Company or the
Savings Bank approve a merger, consolidation, sale or disposition of all or
substantially all of the Company's or the Savings Bank's assets, or a plan of
partial or complete liquidation.

(b)If any of the events described in Section 5(a) hereof constituting a Change
in Control have occurred or the Board of the Savings Bank or the Company has
reasonably determined that a Change in Control has occurred, Executive shall be
entitled to the benefits provided in paragraphs (c), (d) and (e) of this
Section 5 upon his subsequent involuntary termination (within twelve (12)
months following the effective date of a Change in Control (or voluntary
termination within twelve (12) months) following the effective date of a Change
in Control following any material demotion, loss of title, office or authority,
material reduction in his annual compensation or benefits (other than a
reduction affecting the Savings Bank's personnel generally), or relocation of
his principal place of employment by more than thirty-five (35) miles from its
location immediately prior to the Change in Control), unless such termination
is because of his death, retirement as provided in Section 7, termination for
Cause, or termination for Disability.

(c)Upon the occurrence of a Change in Control followed by Executive's
termination of employment, the Savings Bank shall pay Executive, or in the
event of his subsequent death, his beneficiary or beneficiaries, or his estate,
as the case may be, as severance pay or liquidated damages, or both, a sum
equal to 2.99 times Executive's "base amount,"  within the meaning of Section
280G(b)(3) of the Internal Revenue Code of 1986 ("Code"), as amended.  Such
payment shall be made in a lump sum paid within ten (10) days of Executive's
Date of Termination.

(d)Upon the occurrence of a Change in Control followed by Executive's
termination of employment, the Savings Bank will cause to be continued life,
medical and disability coverage substantially identical to the coverage
maintained by the Savings Bank for Executive prior to his severance.  In
addition, Executive shall be entitled to receive the value of employer
contributions that would have been made on Executive's behalf over the
remaining term of the agreement to any tax-qualified retirement plan sponsored
by the Savings Bank as of the Date of Termination.  Such coverage and payments
shall cease upon the expiration of thirty-six (36) months.

(e)Upon the occurrence of a Change in Control, Executive shall be entitled to
receive benefits due him under, or contributed by the Company or the Savings
Bank on his behalf, pursuant to any retirement, incentive, profit sharing,
bonus, performance, disability or other employee benefit plan maintained by the
Savings Bank or the Company on Executive's behalf to the extent that such
benefits are not otherwise paid to Executive upon a Change in Control.

<PAGE>
<PAGE>
(f)Notwithstanding the preceding paragraphs of this Section 5, in the event
that the aggregate payments or benefits to be made or afforded to Executive
under this Section would be deemed to include an "excess parachute payment"
under Section 280G of the Code, then, at the election of Executive, (i) such
payments or benefits shall be payable or provided to Executive over the minimum
period necessary to reduce the present value of such payments or benefits to an
amount which is one dollar ($1.00) less than three (3) times Executive's "base
amount" under Section 280G(b)(3) of the Code or (ii) Executive shall receive
the amount payable under Section 5(c) as the sole benefit payable under this
Section 5.

6.TERMINATION FOR DISABILITY.

(a)If Executive shall become disabled as defined in the Savings Bank's then
current disability plan (or, if no such plan is then in effect, if Executive is
permanently and totally disabled within the meaning of Section 22(e)(3) of the
Code as determined by a physician designated by the Board), the Savings Bank
may terminate Executive's employment for "Disability."

(b)Upon Executive's termination of employment for Disability, the Savings Bank
will pay Executive, as disability pay, a bi-weekly payment equal to three-
quarters (3/4) of Executive's bi-weekly rate of Base Salary on the effective
date of such termination.   These disability payments shall commence on the
effective date of Executive's termination and will end on the earlier of (i)
the date Executive returns to the full-time employment of the Savings Bank in
the same capacity as he was employed prior to his termination for Disability
and pursuant to an employment agreement between Executive and the Savings Bank;
(ii) Executive's full-time employment by another employer; (iii) Executive
attaining the age of sixty-five (65); or (iv) Executive's death; or (v) the
expiration of the term of this Agreement.  The disability pay shall be reduced
by the amount, if any, paid to Executive under any plan of the Savings Bank
providing disability benefits to Executive.

(c)The Savings Bank will cause to be continued life, medical and disability
coverage substantially identical to the coverage maintained by the Savings Bank
for Executive prior to his termination for Disability.  This coverage and
payments shall cease upon the earlier of (i) the date Executive returns to the
full-time employment of the Savings Bank, in the same capacity as he was
employed prior to his termination for Disability and pursuant to an employment
agreement between Executive and the Savings Bank; (ii) Executive's full-time
employment by another employer; (iii) Executive's attaining the age of sixty-
five (65); (iv) Executive's death; or (v) the expiration of the term of this
Agreement.

(d)Notwithstanding the foregoing, there will be no reduction in the
compensation otherwise payable to Executive during any period during which
Executive is incapable of performing his duties hereunder by reason of
temporary disability.

7.TERMINATION UPON RETIREMENT; DEATH OF EXECUTIVE.

Termination by the Savings Bank of Executive based on "Retirement" shall mean
retirement at or after attaining age sixty-five (65) or in accordance with any
retirement arrangement established with Executive's consent with respect to
him.  Upon termination of Executive upon Retirement, Executive shall be
entitled to all benefits under any retirement plan of the Savings Bank or the
Company and other plans to which Executive is a party.  Upon the death of
Executive during the term of this Agreement,  the Savings Bank shall pay to
Executive's estate the compensation due to Executive through the last day of
the calendar month in which his death occurred.

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<PAGE>
8.TERMINATION FOR CAUSE.

For purposes of this Agreement, "Termination for Cause" shall include
termination because of Executive's personal dishonesty, incompetence, willful
misconduct, breach of fiduciary duty involving personal profit, intentional
failure to perform stated duties, willful violation of any law, rule, or
regulation (other than traffic violations or similar offenses) or final cease-
and-desist order, or material breach of any provision of this Agreement.  For
purposes of this Section, no act, or the failure to act, on Executive's part
shall be "willful" unless done, or omitted to be done, not in good faith and
without reasonable belief that the action or omission was in the best interest
of the Savings Bank or its affiliates.  Notwithstanding the foregoing,
Executive shall not be deemed to have been terminated for Cause unless and
until there shall have been delivered to him a copy of a resolution duly
adopted by the affirmative vote of not less than three-fourths (3/4) of the
members of the Board at a meeting of the Board called and held for that purpose
(after reasonable notice to Executive and an opportunity for him, together with
counsel, to be heard before the Board), finding that in the good faith opinion
of the Board, Executive was guilty of conduct justifying termination for Cause
and specifying the reasons thereof.  Executive shall not have the right to
receive compensation or other benefits for any period after termination for
Cause.  Any stock options granted to Executive under any stock option plan or
any unvested awards granted under any other stock benefit plan of the Savings
Bank, the Company, or any subsidiary or affiliate thereof, shall become null
and void effective upon Executive's receipt of Notice of Termination for Cause
pursuant to Section 9 hereof, and shall not be exercisable by Executive at any
time subsequent to such Termination for Cause.

9.   REQUIRED PROVISIONS.

(a)The Savings Bank may terminate Executive's employment at any time, but any
termination by the Savings Bank, other than Termination for Cause, shall not
prejudice Executive's right to compensation or other benefits under this
Agreement.  Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause as defined in Section 8
herein.

(b)If Executive is suspended and/or temporarily prohibited from participating
in the conduct of the Savings Bank's affairs by a notice served under Section
8(e)(3) or (g)(1) of the Federal Deposit Insurance Act ("FDIA") (12 U.S.C.
1818(e)(3) and (g)(1)), the Savings Bank's obligations under the Agreement
shall be suspended as of the date of service, unless stayed by appropriate
proceedings.  If the charges in the notice are dismissed, the Savings Bank may,
in its discretion, (i) pay Executive all or part of the compensation withheld
while its contract obligations were suspended and (ii) reinstate (in whole or
in part) any of its obligations that were suspended.

(c)If Executive is removed and/or permanently prohibited from participating in
the conduct of the Savings Bank's affairs by an order issued under Section
8(e)(4) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(4) or (g)(1)), all obligations
of the Savings Bank under the Agreement shall terminate as of the effective
date of the order, but vested rights of the contracting parties shall not be
affected.

(d)If the Savings Bank is in default (as defined in Section 3(x)(1) of the
FDIA), all obligations under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the parties.

(e)All obligations under this Agreement shall be terminated (except to the
extent determined that continuation of the Agreement is necessary for the
continued operation of the Savings Bank):  (i) by the Director of the Office of
Thrift Supervision (the "Director") or his designee at the time the Federal
Deposit Insurance Corporation or the Resolution Trust Corporation enters into
an agreement to provide assistance to or on behalf of the Savings Bank under
the authority contained in Section 13(c) of the FDIA or (ii) by the Director,
or his designee at the time the Director or such designee approves a
supervisory merger to resolve problems related to operation of the Savings Bank
or when the Savings Bank is determined by the Director to be in an unsafe or
unsound condition.  Any rights of the parties that have already vested,
however, shall not be affected by such action.

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(f)Any payments made to Executive pursuant to this Agreement, or otherwise, are
subject to and conditioned upon compliance with 12 U.S.C. Section 1828(k) and
any regulations promulgated thereunder.

10.NOTICE.

(a)Any purported termination by the Savings Bank or by Executive shall be
communicated by Notice of Termination to the other party hereto.  For purposes
of this Agreement, a "Notice of Termination" shall mean a written notice which
shall indicate the specific termination provision in this Agreement relied upon
and shall set forth in reasonable detail the facts and circumstances claimed to
provide a basis for termination of Executive's employment under the provision
so indicated.

(b)"Date of Termination" shall mean (A) if Executive's employment is terminated
for Disability, thirty (30) days after a Notice of Termination is given
(provided that he shall not have returned to the performance of his duties on a
full-time basis during such thirty (30) day period), and (B) if his employment
is terminated for any other reason,  the date specified in the Notice of
Termination (which, in the case of a Termination for Cause, shall not be less
than thirty (30) days from the date such Notice of Termination is given).

(c)If, within thirty (30) days after any Notice of Termination is given, the
party receiving such Notice of Termination notifies the other party that a
dispute exists concerning the termination, except upon the occurrence of a
Change in Control and voluntary termination by Executive in which case the Date
of Termination shall be the date specified in the Notice, the Date of
Termination shall be the date on which the dispute is finally determined,
either by mutual written agreement of the parties, or by a final judgment,
order or decree of a court of competent jurisdiction (the time for appeal there
from having expired and no appeal having been perfected) and provided further
that the Date of Termination shall be extended by a notice of dispute only if
such notice is given in good faith and the party giving such notice pursues the
resolution of such dispute with reasonable diligence.  Notwithstanding the
pendency of any such dispute, the Savings Bank will continue to pay Executive
his full compensation in effect when the notice giving rise to the dispute was
given (including, but not limited to, Base Salary) and continue him as a
participant in all compensation, benefit and insurance plans in which he was
participating when the notice of dispute was given, until the dispute is
finally resolved in accordance with this Agreement.  Amounts paid under this
Section are in addition to all other amounts due under this Agreement and shall
not be offset against or reduce any other amounts due under this Agreement.

11.NON-COMPETITION.

(a)Upon any termination of Executive's employment hereunder pursuant to an
Event of Termination as provided in Section 4 hereof, Executive agrees not to
compete with the Savings Bank and/or the Company for a period of one (1) year
following such termination in any city, town or county in which the Savings
Bank and/or the Company has an office or has filed an application for
regulatory approval to establish an office, determined as of the effective date
of such termination.  Executive agrees that during such period and within said
cities, towns and counties, Executive shall not work for or advise, consult or
otherwise serve with, directly or indirectly, any entity whose business
materially competes with the depository, lending or other business activities
of the Savings Bank and/or the Company.  The parties hereto, recognizing that
irreparable injury will result to the Savings Bank and/or the Company, its
business and property in the event of Executive's breach of this Subsection
11(a) agree that in the event of any such breach by Executive, the Savings Bank
and/or the Company will be entitled, in addition to any other remedies and
damages available, to an injunction to restrain the violation hereof by
Executive, Executive's partners, agents, servants, employers, employees and all
persons acting for or with Executive.  Executive represents and admits that in
the event of the termination of his employment pursuant to Section 8 hereof,
Executive's experience and capabilities are such that Executive can obtain
employment in a business engaged in other lines and/or of a different nature
than the Savings Bank and/or the Company, and that the enforcement of a remedy
by way of injunction will not prevent Executive from earning a livelihood. 
Nothing herein will be construed as prohibiting the Savings Bank and/or the
Company from pursuing any other remedies available to the Savings Bank and/or
the Company for such breach or threatened breach, including the recovery of
damages from Executive.

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(b)Executive recognizes and acknowledges that the knowledge of the business
activities and plans for business activities of the Savings Bank and affiliates
thereof, as it may exist from time to time, is a valuable, special and unique
asset of the business of the Savings Bank.  Executive will not, during or after
the term of his employment, disclose any knowledge of the past, present,
planned or considered business activities of the Savings Bank or affiliates
thereof to any person, firm, corporation, or other entity for any reason or
purpose whatsoever.  Notwithstanding the foregoing, Executive may disclose any
knowledge of banking, financial and/or economic principles, concepts or ideas
which are not solely and exclusively derived from the business plans and
activities of the Savings Bank.  In the event of a breach or threatened breach
by Executive of the provisions of this Section, the Savings Bank will be
entitled to an injunction restraining Executive from disclosing, in whole or in
part, the knowledge of the past, present, planned or considered business
activities of the Savings Bank or affiliates thereof, or from rendering any
services to any person, firm, corporation, other entity to whom such knowledge,
in whole or in part, has been disclosed or is threatened to be disclosed. 
Nothing herein will be construed as prohibiting the Savings Bank from pursuing
any other remedies available to the Savings Bank for such breach or threatened
breach, including the recovery of damages from Executive.

12.SOURCE OF PAYMENTS.

All payments provided in this Agreement shall be timely paid in cash or check
from the general funds of the Savings Bank.  The Company, however, guarantees
all payments and the provision of all amounts and benefits due hereunder to
Executive and, if such payments are not timely paid or provided by the Savings
Bank, such amounts and benefits shall be paid or provided by the Company. 

13.EFFECT ON PRIOR AGREEMENTS AND EXISTING BENEFITS PLANS.

This Agreement contains the entire understanding between the parties hereto and
supersedes any prior employment agreement between the Savings Bank or any
predecessor of the Savings Bank and Executive, except that this Agreement shall
not affect or operate to reduce any benefit or compensation inuring to
Executive of a kind elsewhere provided.  No provision of this Agreement shall
be interpreted to mean that Executive is subject to receiving fewer benefits
than those available to him without reference to this Agreement.

14.NO ATTACHMENT.

(a)Except as required by law, no right to receive payments under this Agreement
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation, or to execution, attachment,
levy, or similar process or assignment by operation of law, and any attempt,
voluntary or involuntary, to affect any such action shall be null, void, and of
no effect.

(b)This Agreement shall be binding upon, and inure to the benefit of,
Executive, the Savings Bank, the Company and their respective successors and
assigns.

15.MODIFICATION AND WAIVER.

(a)This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto.

(b)No term or condition of this Agreement shall be deemed to have been waived,
nor shall there by any estoppel against the enforcement of any provision of
this Agreement, except by written instrument of the party charged with such
waiver or estoppel.  No such written waiver shall be deemed a continuing waiver
unless specifically stated therein, and each such waiver shall operate only as
to the specific term or condition waived and shall not constitute a waiver of
such term or condition for the future as to any act other than that
specifically waived.

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16.SEVERABILITY.

If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other
provision of this Agreement or any part of such provision not held so invalid,
and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.

17.HEADINGS FOR REFERENCE ONLY.

The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

18.GOVERNING LAW.

This Agreement shall be governed by the laws of the State of Tennessee, unless
otherwise specified herein; provided, however, that in the event of a conflict
between the terms of this Agreement and any applicable federal or state law or
regulation, the provisions of such law or regulation shall prevail.  In the
event of a conflict between any provision of this Agreement and 12 C.F.R.
Section 563.39(b), the latter shall prevail.

19.PAYMENT OF LEGAL FEES.

All reasonable legal fees paid or incurred by Executive pursuant to any dispute
or question of interpretation relating to Section 5 of this Agreement shall be
paid or reimbursed by the Savings Bank, if successful pursuant to a legal
judgment or settlement.

20.INDEMNIFICATION.

The Savings Bank shall provide Executive (including his heirs, executors and
administrators) with coverage under a standard directors' and officers'
liability insurance policy at its expense, or in lieu thereof, shall indemnify
Executive (and his heirs, executors and administrators) to the fullest extent
permitted under law against all expenses and liabilities reasonably incurred by
him in connection with or arising out of any action, suit or proceeding in
which he may be involved by reason of his having been a director or officer of
the Savings Bank (whether or not he continues to be a directors or officer at
the time of incurring such expenses or liabilities), such expenses and
liabilities to include, but not be limited to, judgment, court costs and
attorneys' fees and the cost of reasonable settlements.

21.SUCCESSOR TO THE SAVINGS BANK OR THE COMPANY.

The Savings Bank and the Company shall require any successor or assignee,
whether direct or indirect, by purchase, merger, consolidation or otherwise, to
all or substantially all the business or assets of the Savings Bank or the
Company, expressly and unconditionally to assume and agree to perform the
Savings Bank's or the Company's obligations under this Agreement, in the same
manner and to the same extent that the Savings Bank or the Company would be
required to perform if no such succession or assignment had taken place.

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<PAGE>
IN WITNESS WHEREOF, the Savings Bank and the Company hereto have caused this
Agreement to be executed and their seal to be affixed hereunto by a duly
authorized officer or director, and Executive has signed this Agreement, all on
the 30th day of June, 1997.



ATTEST:                         SECURITY FEDERAL SAVINGS BANK 
                                      OF MCMINNVILLE, TN



/s/D.R. Collette                BY:/s/Earl H. Barr                           
----------------                   ---------------

[SEAL]


ATTEST:                         SECURITY BANCORP, INC.



/s/D.R. Collettte             BY:/s/Earl H. Barr                           
-----------------                ---------------

[SEAL]


WITNESS:


/s/John Duncan                /s/Joe H. Pugh      
--------------                --------------
                                 Joe H. Pugh


<PAGE>
<PAGE>
                             EXHIBIT 10(b)
                Severance Agreement with John W. Duncan



<PAGE>
<PAGE>
                                  AGREEMENT


     THIS AGREEMENT is made effective as of June 30, 1997 by and between
SECURITY FEDERAL SAVINGS BANK OF MCMINNVILLE, TN (the "Savings Bank"); SECURITY
BANCORP, INC. (the "Company"), a Tennessee corporation; and JOHN W. DUNCAN
("Executive").

     WHEREAS, Executive serves in the position of Vice President (Operations)
of the Savings Bank, with responsibility for the day-to-day operations of the
Savings Bank;

     NOW, THEREFORE, in consideration of the foregoing and upon the other terms
and conditions hereinafter provided, the parties hereto agree as follows:

1.Term Of Agreement

The term of this Agreement shall be deemed to have commenced as of the date
first above written and shall continue for a period of twelve (12) full
calendar months thereafter.  Commencing on the first anniversary date of this
Agreement and continuing at each anniversary date thereafter, the Board of
Directors of the Savings Bank ("Board") may extend the Agreement for an
additional year.  The Chief Executive Officer of the Savings Bank will conduct
a performance evaluation of Executive for purposes of determining whether to
extend the Agreement.

2.Payments To Executive Upon Change In Control.

(a)Upon the occurrence of a Change in Control (as herein defined) of the
Savings Bank followed within twelve (12) months of the effective date of a
Change in Control by the voluntary or involuntary termination of Executive's
employment, other than Termination for Cause, as defined in Section 2(c)
hereof, the provisions of Section 3 shall apply.  For purposes of this
Agreement, "voluntary termination" shall be limited to the circumstances in
which, during the term of this Agreement, Executive elects to voluntarily
terminate his employment within twelve (12) months of the effective date of a
Change in Control following any material demotion, loss of title, office or
authority, material reduction in his annual compensation or benefits (other
than a reduction affecting the Savings Bank's personnel generally), or
relocation of his principal place of employment by more than 35 miles from its
location immediately prior to the Change in Control.

(b)A "Change in Control" of the Company or the Savings Bank shall be deemed to
occur if and when (a) an offeror other than the Company purchases shares of the
common stock of the Company or the Savings Bank pursuant to a tender or
exchange offer for such shares, (b) any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company or the Savings Bank representing 25% or more of the combined voting
power of the Company's then outstanding securities, (c) the membership of the
board of directors of the Company or the Savings Bank changes as the result of
a contested election, such that individuals who were directors at the beginning
of any twenty-four month period (whether commencing before or after the date of
adoption of this Agreement) do not constitute a majority of the Board at the
end of such period, or (d) shareholders of the Company or the Savings Bank
approve a merger, consolidation, sale or disposition of all or substantially
all of the Company's or the Savings Bank's assets, or a plan of partial or
complete liquidation.

(c)Executive shall not have the right to receive termination benefits pursuant
to Section 3 hereof upon Termination for Cause.  The term "Termination for
Cause" shall mean termination because of Executive's intentional failure to
perform stated duties, personal dishonesty, incompetence, willful misconduct,
any breach of fiduciary duty involving personal profit, willful violation of
any law, rule, regulation (other than traffic violations or similar offenses)
or final cease and desist order, or any material breach of any material
provision of this Agreement.  

<PAGE>
<PAGE>
In determining incompetence, the acts or omissions shall be measured against
standards generally prevailing in the savings institution industry. 
Notwithstanding the foregoing, Executive shall not be deemed to have been
Terminated for Cause unless and until there shall have been delivered to him a
copy of a resolution duly adopted by the affirmative vote of not less than
three-fourths of the members of the Board at a meeting of the Board called and
held for that purpose (after reasonable notice to Executive and an opportunity
for him, together with counsel, to be heard before the Board), finding that in
the good faith opinion of the Board, Executive was guilty of conduct justifying
Termination for Cause and specifying the particulars thereof in detail. 
Executive shall not have the right to receive compensation or other benefits
for any period after Termination for Cause.

3.Termination

(a)Upon the occurrence of a Change in Control, followed within twelve (12)
months of the effective date of a Change in Control by the voluntary or
involuntary termination of Executive's employment other than for Termination
for Cause, the Savings Bank shall be obligated to pay Executive, or in the
event of his subsequent death, his beneficiary or beneficiaries, or his estate,
as the case may be, as severance pay, a sum equal to two (2) times Executive's
annual base salary as in effect on the effective date of a Change in Control. 
Such amount shall be paid to Executive in a lump sum no later than thirty (30)
days after the date of his termination.

(b)Upon the occurrence of a Change in Control of the Savings Bank followed
within twelve (12) months of the effective date of a Change in Control by
Executive's voluntary or involuntary termination of employment, other than for
Termination for Cause, the Savings Bank shall cause to be continued life,
medical, dental and disability coverage substantially identical to the coverage
maintained by the Savings Bank for Executive prior to his severance.  Such
coverage and payments shall cease upon expiration of twelve (12) months from
the date of Executive's termination.

(c)Notwithstanding the preceding paragraphs of this Section 3, in the event
that the aggregate payments or benefits to be made or afforded to Executive
under this Section would be deemed to include an "excess parachute payment"
under Section 280G of the Code, then, at the election of Executive, (i) such
payments or benefits shall be payable or provided to Executive over the minimum
period necessary to reduce the present value of such payments or benefits to an
amount which is one dollar ($1.00) less than three (3) times Executive's "base
amount" under Section 280G(b)(3) of the Code or (ii) Executive shall receive the
amount payable under Section 3(a) as the sole benefit payable under this Section
 3.

(d) Any payments made to Executive pursuant to this Agreement, or otherwise,
are subject to and conditioned upon compliance with 12 U.S.C. Section 1828(k)
and any regulations promulgated thereunder.

4.Effect On Prior Agreements And Existing Benefit Plans

This Agreement contains the entire understanding between the parties hereto and
supersedes any prior agreement between the Savings Bank and Executive, except
that this Agreement shall not affect or operate to reduce any benefit or
compensation inuring to Executive of a kind elsewhere provided.  No provision
of this Agreement shall be interpreted to mean that Executive is subject to
receiving fewer benefits than those available to him without reference to this
Agreement.

5.No Attachment

(a)Except as required by law, no right to receive payments under this Agreement
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation, or to execution, attachment,
levy, or similar process or assignment by operation of law, and any attempt,
voluntary or involuntary, to affect any such action shall be null, void, and of
no effect.

(b)This Agreement shall be binding upon, and inure to the benefit of,
Executive, the Company, the Savings Bank and their respective successors and
assigns.

<PAGE>
<PAGE>
6.Modification And Waiver

(a)This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto.

(b)No term or condition of this Agreement shall be deemed to have been waived,
nor shall there by an estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver
or estoppel.  No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such
term or condition for the future or as to any act other than that specifically
waived.

7.Required Provisions

(a) The Savings Bank may terminate Executive's employment at any time, but any
termination by the Savings Bank, other than Termination for Cause, shall not
prejudice Executive's right to compensation or other benefits under this
Agreement.  Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause as defined in Section 2(c)
herein.

(b) If Executive is suspended and/or temporarily prohibited from participating
in the conduct of the Savings Bank's affairs by a notice served under Section
8(e)(3) or (g)(1) of the Federal Deposit Insurance Act ("FDIA") (12 U.S.C.
1818(e)(3) and (g)(1)), the Savings Bank's obligations under the Agreement
shall be suspended as of the date of service, unless stayed by appropriate
proceedings.  If the charges in the notice are dismissed, the Savings Bank may,
in its discretion, (i) pay Executive all or part of the compensation withheld
while its contract obligations were suspended and (ii) reinstate (in whole or
in part) any of its obligations that were suspended.

  (c)If Executive is removed and/or permanently prohibited from participating
in the conduct of the Savings Bank's affairs by an order issued under Section
8(e)(4) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(4) or (g)(1)), all obligations
of the Savings Bank under the Agreement shall terminate as of the effective
date of the order, but vested rights of the contracting parties shall not be
affected.

  (d)  If the Savings Bank is in default (as defined in Section 3(x)(1) of the
FDIA), all obligations under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the parties.

  (e) All obligations under this Agreement may be terminated:  (i) by the
Director of the Office of Thrift Supervision (the "Director") or his or her
designee at the time the Federal Deposit Insurance Corporation or the
Resolution Trust Corporation enters into an agreement to provide assistance to
or on behalf of the Savings Bank under the authority contained in Section 13(c)
of the FDIA and (ii) by the Director, or his or her designee at the time the
Director or such designee approves a supervisory merger to resolve problems
related to operation of the Savings Bank or when the Savings Bank is determined
by the Director to be in an unsafe or unsound condition.  Any rights of the
parties that have already vested, however, shall not be affected by such
action.

8.Severability

If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other
provision of this Agreement or any part of such provision not held so invalid,
and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.

<PAGE>
<PAGE>
9.Headings For Reference Only

The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

10.Governing Law

The validity, interpretation, performance, and enforcement of this Agreement
shall be governed by the laws of the State of Tennessee, unless preempted by
Federal law as now or hereafter in effect.

11.Source of Payments

All payments provided in this Agreement shall be timely paid in cash or check
from the general funds of the Savings Bank.  The Company, however, guarantees
all payments and the provision of all amounts and benefits due hereunder to
Executive and, if such payments are not timely paid or provided by the Savings
Bank, such amounts and benefits shall be paid or provided by the Company. 

12.Payment Of Legal Fees

All reasonable legal fees paid or incurred by Executive pursuant to any dispute
or question of interpretation relating to this Agreement shall be paid or
reimbursed by the Savings Bank if Executive is successful on the merits
pursuant to a legal judgment or settlement.

13.Successor To The Savings Bank or the Company 

The Savings Bank and the Company shall require any successor or assignee,
whether direct or indirect, by purchase, merger, consolidation or otherwise, to
all or substantially all the business or assets of the Savings Bank or the
Company, expressly and unconditionally to assume and agree to perform the
Savings Bank's or the Company's obligations under this Agreement, in the same
manner and to the same extent that the Savings Bank or the Company would be
required to perform if no such succession or assignment had taken place.

<PAGE>
<PAGE>
14.Signatures

IN WITNESS WHEREOF, the Savings Bank and the Company have caused this Agreement
to be executed by a duly authorized officer, and Executive has signed this
Agreement, all on the day and date first above written.



ATTEST:                             SECURITY FEDERAL SAVINGS BANK 
                                         OF MCMINNVILLE, TN


/s/D.R. Collette                    By: /s/Joe H. Pugh                          
----------------                        -------------- 


ATTEST:                             SECURITY BANCORP, INC.



/s/D.R. Collette                    By: /s/Joe H. Pugh                          
----------------                        ---------------



WITNESS:



/s/D.R. Collette                  By:  /s/John W. Duncan                        
----------------                       -----------------
                                          John W. Duncan
<PAGE>
                             EXHIBIT 10(c)
                Severance Agreement with Ray Talbert

<PAGE>
                                 AGREEMENT


     THIS AGREEMENT is made effective as of June 30, 1997 by and between
SECURITY FEDERAL SAVINGS BANK OF MCMINNVILLE, TN (the "Savings Bank"); SECURITY
BANCORP, INC. (the "Company"), a Tennessee corporation; and RAY TALBERT
("Executive").

     WHEREAS, Executive serves in the position of Executive Vice President of
the Savings Bank, a with primary responsibility for commercial lending;

     NOW, THEREFORE, in consideration of the foregoing and upon the other terms
and conditions hereinafter provided, the parties hereto agree as follows:

1.Term Of Agreement

The term of this Agreement shall be deemed to have commenced as of the date
first above written and shall continue for a period of twenty-four (24) full
calendar months thereafter.  Commencing on the first anniversary date of this
Agreement and continuing at each anniversary date thereafter, the Board of
Directors of the Savings Bank ("Board") may extend the Agreement for an
additional year.  The Chief Executive Officer of the Savings Bank will conduct
a performance evaluation of Executive for purposes of determining whether to
extend the Agreement.

2.Payments To Executive Upon Change In Control.

(a)Upon the occurrence of a Change in Control (as herein defined) of the
Savings Bank followed within twelve (12) months of the effective date of a
Change in Control by the voluntary or involuntary termination of Executive's
employment, other than Termination for Cause, as defined in Section 2(c)
hereof, the provisions of Section 3 shall apply.  For purposes of this
Agreement, "voluntary termination" shall be limited to the circumstances in
which, during the term of this Agreement, Executive elects to voluntarily
terminate his employment within twelve (12) months of the effective date of a
Change in Control following any material demotion, loss of title, office or
authority, material reduction in his annual compensation or benefits (other
than a reduction affecting the Savings Bank's personnel generally), or
relocation of his principal place of employment by more than 35 miles from its
location immediately prior to the Change in Control.

(b)A "Change in Control" of the Company or the Savings Bank shall be deemed to
occur if and when (a) an offeror other than the Company purchases shares of the
common stock of the Company or the Savings Bank pursuant to a tender or
exchange offer for such shares, (b) any person (as such term is used in
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of 1934) is or
becomes the beneficial owner, directly or indirectly, of securities of the
Company or the Savings Bank representing 25% or more of the combined voting
power of the Company's then outstanding securities, (c) the membership of the
board of directors of the Company or the Savings Bank changes as the result of
a contested election, such that individuals who were directors at the beginning
of any twenty-four month period (whether commencing before or after the date of
adoption of this Agreement) do not constitute a majority of the Board at the
end of such period, or (d) shareholders of the Company or the Savings Bank
approve a merger, consolidation, sale or disposition of all or substantially
all of the Company's or the Savings Bank's assets, or a plan of partial or
complete liquidation.

<PAGE>
<PAGE>
(c)Executive shall not have the right to receive termination benefits pursuant
to Section 3 hereof upon Termination for Cause.  The term "Termination for
Cause" shall mean termination because of Executive's intentional failure to
perform stated duties, personal dishonesty, incompetence, willful misconduct,
any breach of fiduciary duty involving personal profit, willful violation of
any law, rule, regulation (other than traffic violations or similar offenses)
or final cease and desist order, or any material breach of any material
provision of this Agreement.  In determining incompetence, the acts or
omissions shall be measured against standards generally prevailing in the
savings institution industry.  Notwithstanding the foregoing, Executive shall
not be deemed to have been Terminated for Cause unless and until there shall
have been delivered to him a copy of a resolution duly adopted by the
affirmative vote of not less than three-fourths of the members of the Board at
a meeting of the Board called and held for that purpose (after reasonable
notice to Executive and an opportunity for him, together with counsel, to be
heard before the Board), finding that in the good faith opinion of the Board,
Executive was guilty of conduct justifying Termination for Cause and specifying
the particulars thereof in detail.  Executive shall not have the right to
receive compensation or other benefits for any period after Termination for
Cause.

3.Termination

(a)Upon the occurrence of a Change in Control, followed within twelve (12)
months of the effective date of a Change in Control by the voluntary or
involuntary termination of Executive's employment other than for Termination
for Cause, the Savings Bank shall be obligated to pay Executive, or in the
event of his subsequent death, his beneficiary or beneficiaries, or his estate,
as the case may be, as severance pay, a sum equal to three (3) times
Executive's annual base salary as in effect on the effective date of a Change
in Control.  Such amount shall be paid to Executive in a lump sum no later than
thirty (30) days after the date of his termination.

(b)Upon the occurrence of a Change in Control of the Savings Bank followed
within twelve (12) months of the effective date of a Change in Control by
Executive's voluntary or involuntary termination of employment, other than for
Termination for Cause, the Savings Bank shall cause to be continued life,
medical, dental and disability coverage substantially identical to the coverage
maintained by the Savings Bank for Executive prior to his severance.  Such
coverage and payments shall cease upon expiration of thirty-six (36) months
from the date of Executive's termination.

(c)Notwithstanding the preceding paragraphs of this Section 3, in the event
that the aggregate payments or benefits to be made or afforded to Executive
under this Section would be deemed to include an "excess parachute payment"
under Section 280G of the Code, then, at the election of Executive, (i) such 
payments or benefits shall be payable or provided to Executive over the minimum
period necessary to reduce the present value of such payments or benefits to an
amount which is one dollar ($1.00) less than three (3) times Executive's "base
amount" under Section 280G(b)(3) of the Code or (ii) Executive shall receive the
amount payable under Section 3(a) as the sole benefit payable under this Section
 3.

(d) Any payments made to Executive pursuant to this Agreement, or otherwise,
are subject to and conditioned upon compliance with 12 U.S.C. Section 1828(k)
and any regulations promulgated thereunder.

4.Effect On Prior Agreements And Existing Benefit Plans

This Agreement contains the entire understanding between the parties hereto and
supersedes any prior agreement between the Savings Bank and Executive, except
that this Agreement shall not affect or operate to reduce any benefit or
compensation inuring to Executive of a kind elsewhere provided.  No provision
of this Agreement shall be interpreted to mean that Executive is subject to
receiving fewer benefits than those available to him without reference to this
Agreement.

<PAGE>
<PAGE>
5.No Attachment

(a)Except as required by law, no right to receive payments under this Agreement
shall be subject to anticipation, commutation, alienation, sale, assignment,
encumbrance, charge, pledge, or hypothecation, or to execution, attachment,
levy, or similar process or assignment by operation of law, and any attempt,
voluntary or involuntary, to affect any such action shall be null, void, and of
no effect.

(b)This Agreement shall be binding upon, and inure to the benefit of,
Executive, the Company, the Savings Bank and their respective successors and
assigns.

6.Modification And Waiver

(a)This Agreement may not be modified or amended except by an instrument in
writing signed by the parties hereto.

(b)No term or condition of this Agreement shall be deemed to have been waived,
nor shall there by an estoppel against the enforcement of any provision of this
Agreement, except by written instrument of the party charged with such waiver
or estoppel.  No such written waiver shall be deemed a continuing waiver unless
specifically stated therein, and each such waiver shall operate only as to the
specific term or condition waived and shall not constitute a waiver of such
term or condition for the future or as to any act other than that specifically
waived.

7.Required Provisions

(a)  The Savings Bank may terminate Executive's employment at any time, but any
termination by the Savings Bank, other than Termination for Cause, shall not
prejudice Executive's right to compensation or other benefits under this
Agreement.  Executive shall not have the right to receive compensation or other
benefits for any period after Termination for Cause as defined in Section 2(c)
herein.

(b)  If Executive is suspended and/or temporarily prohibited from participating
in the conduct of the Savings Bank's affairs by a notice served under Section
8(e)(3) or (g)(1) of the Federal Deposit Insurance Act ("FDIA") (12 U.S.C.
1818(e)(3) and (g)(1)), the Savings Bank's obligations under the Agreement
shall be suspended as of the date of service, unless stayed by appropriate
proceedings.  If the charges in the notice are dismissed, the Savings Bank may,
in its discretion, (i) pay Executive all or part of the compensation withheld
while its contract obligations were suspended and (ii) reinstate (in whole or
in part) any of its obligations that were suspended.

  (c)  If Executive is removed and/or permanently prohibited from participating
in the conduct of the Savings Bank's affairs by an order issued under Section
8(e)(4) or (g)(1) of the FDIA (12 U.S.C. 1818(e)(4) or (g)(1)), all obligations
of the Savings Bank under the Agreement shall terminate as of the effective
date of the order, but vested rights of the contracting parties shall not be
affected.

  (d)  If the Savings Bank is in default (as defined in Section 3(x)(1) of the
FDIA), all obligations under this Agreement shall terminate as of the date of
default, but this paragraph shall not affect any vested rights of the parties.

  (e) All obligations under this Agreement may be terminated:  (i) by the
Director of the Office of Thrift Supervision (the "Director") or his or her
designee at the time the Federal Deposit Insurance Corporation or the
Resolution Trust Corporation enters into an agreement to provide assistance to
or on behalf of the Savings Bank under the authority contained in Section 13(c)
of the FDIA and (ii) by the Director, or his or her designee at the time the
Director or such designee approves a supervisory merger to resolve problems
related to operation of the Savings Bank or when the Savings Bank is determined
by the Director to be in an unsafe or unsound condition.  Any rights of the
parties that have already vested, however, shall not be affected by such
action.

<PAGE>
<PAGE>
8.Severability

If, for any reason, any provision of this Agreement, or any part of any
provision, is held invalid, such invalidity shall not affect any other
provision of this Agreement or any part of such provision not held so invalid,
and each such other provision and part thereof shall to the full extent
consistent with law continue in full force and effect.

9.Headings For Reference Only

The headings of sections and paragraphs herein are included solely for
convenience of reference and shall not control the meaning or interpretation of
any of the provisions of this Agreement.

10.Governing Law

The validity, interpretation, performance, and enforcement of this Agreement
shall be governed by the laws of the State of Tennessee, unless preempted by
Federal law as now or hereafter in effect.

11.Source of Payments

All payments provided in this Agreement shall be timely paid in cash or check
from the general funds of the Savings Bank.  The Company, however, guarantees
all payments and the provision of all amounts and benefits due hereunder to
Executive and, if such payments are not timely paid or provided by the Savings
Bank, such amounts and benefits shall be paid or provided by the Company. 

12.Payment Of Legal Fees

All reasonable legal fees paid or incurred by Executive pursuant to any dispute
or question of interpretation relating to this Agreement shall be paid or
reimbursed by the Savings Bank if Executive is successful on the merits
pursuant to a legal judgment or settlement.

13.Successor To The Savings Bank or the Company 

The Savings Bank and the Company shall require any successor or assignee,
whether direct or indirect, by purchase, merger, consolidation or otherwise, to
all or substantially all the business or assets of the Savings Bank or the
Company, expressly and unconditionally to assume and agree to perform the
Savings Bank's or the Company's obligations under this Agreement, in the same
manner and to the same extent that the Savings Bank or the Company would be
required to perform if no such succession or assignment had taken place.

<PAGE>
<PAGE>
14.Signatures

     IN WITNESS WHEREOF, the Savings Bank and the Company have caused this
Agreement to be executed by a duly authorized officer, and Executive has signed
this Agreement, all on the day and date first above written.



ATTEST:                             SECURITY FEDERAL SAVINGS BANK 
                                    OF MCMINNVILLE, TN


/s/John Duncan                      By: /s/Joe H. Pugh                          
--------------                          --------------                 


ATTEST:                             SECURITY BANCORP, INC.



/s/John Duncan                      By: /s/Joe H. Pugh
--------------                          --------------


WITNESS:



/s/John Duncan                     By:  /s/Ray Talbert                          
--------------                          --------------
                                           Ray Talbert

<PAGE>
<PAGE>