MONTGOMERY, Ala. - First Alabama Bancshares Inc. said it has reached an agreement to acquire Security Federal Savings and Loan Association, a $400 million-asset thrift in Nashville.

Security Federal would convert from a mutual to a Tennessee-chartered commercial bank owned by First Alabama, which ranked second among Alabama banking companies at yearend 1991, with $6.4 billion in assets.

First Alabama said it would sell about $10 million of common stock and contribute the proceeds to Security's capital as it converts to a bank. The transaction, subject to numerous regulatory approvals, is expected to take six months.

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