SOUTHERN COMMUNITY BANCSHARES INC
10-Q, 1999-05-17
SAVINGS INSTITUTION, FEDERALLY CHARTERED
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  K:\FIR129\BC\10Q.DOC (Linda Elrod)


                         UNITED STATES
               SECURITIES AND EXCHANGE COMMISSION
                     WASHINGTON D.C.  20549
                                
                           FORM 10-QSB
                                
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                SECURITIES EXCHANGE ACT OF 1934
                                
           For the Quarterly Period Ended March 31, 1999

                                

                Commission File Number: 333-12373
     


                                
               Southern Community Bancshares, Inc.
      (Exact name of registrant as specified in its charter)
                           


          Delaware                            63-1176408
(State or other jurisdiction               (I.R.S. Employer
    of incorporation or                     Identification No.)
       organization)
                                                   
    325 2nd Street, S.E.                           
      Cullman, Alabama                           35055
    (Address of principal                     (Zip Code)
     executive offices)
                                                   

Registrant's telephone number,         (256) 734-4863
including area code:


Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 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.


                Yes    X            No      


Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
                                                 
                                                 
            Class                        Outstanding at March
                                                31, 1999
Common Stock, $.01 par value                1,030,849 shares




                  SOUTHERN COMMUNITY BANCSHARES, INC.
                                   
                                   



                  PART I.    FINANCIAL INFORMATION
                                                                  
                                                                Page
                                                               
ITEM 1.     FINANCIAL STATEMENTS:                                 
                                                                  
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION AS OF   2
   MARCH 31, 1999 (UNAUDITED) AND SEPTEMBER 30, 1998
                                                                  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)          3
  FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND 1998

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
  FOR THE SIX MONTHS ENDED MARCH 31, 1999 AND 1998               4      

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
  FOR THE SIX MONTHS ENDED MARCH 31, 1999 AND 1998               5
                                                               
THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FURNISHED HAVE    
NOT BEEN AUDITED BY INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS,
BUT REFLECT, IN THE OPINION OF MANAGEMENT, ALL ADJUSTMENTS
NECESSARY FOR A FAIR PRESENTATION OF FINANCIAL CONDITION AND
THE RESULTS OF OPERATIONS FOR THE PERIODS PRESENTED
                                                                  
ITEM 2.     MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL    8
  CONDITION AND RESULTS OF OPERATIONS
                                                                  
                                                                  
                                                                  
                PART II.    OTHER INFORMATION                    
                                                                  
OTHER INFORMATION                                               10
                                                                  
SIGNATURES                                                      11
                                   


                  SOUTHERN COMMUNITY BANCSHARES, INC.
                                   
                                   
       CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                                   
                       (DOLLARS IN THOUSANDS)
                                   
                                   
                                   
                                ASSETS
                                   
                                                 March 31,    September 30,
                                                   1999            1998
                                                (unaudited)
                  
CASH AND CASH EQUIVALENTS                         $ 8,976        $  9,591
                                                            
SECURITIES AVAILABLE FOR SALE, at fair value       10,099           8,593
                                                            
SECURITIES HELD TO MATURITY, fair values of          
$954 and $1,858, respectively                         940           1,836
                                                            
LOANS RECEIVABLE, net                              43,932          45,846
                                                            
PREMISES AND EQUIPMENT                                284             298
                                                            
OTHER ASSETS                                          534             656

       Total assets                               $64,765         $66,820
                                                            
                                                            
                                                            
                LIABILITIES AND STOCKHOLDERS' EQUITY
                                                            
DEPOSITS                                          $56,537         $55,557

OTHER LIABILITIES                                     162             163
                                                            
       Total liabilities                           56,699          55,720
                                                            
STOCKHOLDERS' EQUITY:                                       
Preferred stock, par $.01, no shares issued,            0               0
  100,000 authorized
Common stock, par $.01 per share, 1,137,350           
  issued, 3,000,000 authorized                         11              11
Additional paid-in capital                         10,821          10,808
Retained earnings                                   3,006           4,866
Unrealized gain (loss) on securities
  available for sale                                    4              17
Treasury stock                                     (1,397)           (831)
Unearned compensation                              (4,379)         (3,771)

      Total stockholders' equity                    8,066          11,100
      Total liabilities and stockholders' equity  $64,765         $66,820
                                   
                                   
                                   
                                   
  The accompanying notes are an integral part of these balance sheets.


                  SOUTHERN COMMUNITY BANCSHARES, INC.
                                   
                                   
              CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                                   
           (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


                                               Three Months Ended             
                                                    March 31,      
                                                 1999     1998
                                                  (unaudited)
               
INTEREST INCOME:                                                
  Interest and fees on loans                    $ 963     $ 990
  Interest and dividends on   
    securities                                     132      242
  Other interest income                            104      115      
     
     Total interest income                       1,199    1,347
                  
INTEREST EXPENSE:                                               
  Interest on deposits                             560      613      
     Total interest expense                        560      613  
     Net interest income                           639      734        
                                                                
PROVISION FOR LOAN LOSSES                            0        0 
     Net interest income after 
       provision for loan losses                   639      734 
                                                         
NONINTEREST INCOME:                                             
  Customer service fees                             32       45   
     Total noninterest income                       32       45      
                                                                
NONINTEREST EXPENSE:                                            
  Compensation and benefits                         266     261
  Occupancy and equipment                            37      44                
  Deposit insurance expense                           8       9               
  Other operating expense                           122     195     
     Total noninterest expense                      433     509              
     Income before income taxes                     238     270     

PROVISION FOR INCOME TAXES                           95     116
NET INCOME                                          143     154       
                                                                              
BASIC EARNINGS PER SHARE                           $.18    $.17               

DILUTED EARNINGS PER SHARE                         $.17    $.16

DIVIDEND DECLARED PER SHARE                     $ .0825   $2.50                
                                   
                                   
   The accompanying notes are an integral part of these statements.
                          


                    SOUTHERN COMMUNITY BANCSHARES, INC.


                CONDENSED CONSOLIDATED STATEMENTS OF INCOME

              (Dollars in Thousands, except per share amounts)

                                                     Six Months Ended 
                                                         March 31,
                                                     1999        1998 
                                                        (Unaudited)

INTEREST INCOME:
   Interest and fees on loans                      $1,973      $1,959
   Interest and dividends on securities               275         481
   Other interest income                              213         223
           Total interest income                    2,461       2,663

INTEREST EXPENSE:
   Interest on deposits                             1,139       1,220
           Total interest expense                   1,139       1,220
           Net interest income                      1,322       1,443

PROVISION FOR LOAN LOSSES                               0           0
           Net interest income after provision
               for loan losses                      1,322       1,443

NONINTEREST INCOME:
   Customer service fees                               74          95
           Total noninterest income                    74          95

NONINTEREST EXPENSE:
   Compensation and benefits                          526         484
   Occupancy and equipment                             73          89
   Deposit insurance expense                           16          17
   Other operating expense                            255         341
           Total noninterest expense                  870         931
           Income before income taxes                 526         607

PROVISION FOR INCOME TAXES                            223         237
NET INCOME                                         $  303      $  370

BASIC EARNINGS PER SHARE                             $.38        $.39

DILUTED EARNINGS PER SHARE                           $.36        $.38

DIVIDEND DECLARED PER SHARE                        $2.5825     $2.575

  
   The accompanying notes are an integral part of these statements.




   
                SOUTHERN COMMUNITY BANCSHARES, INC.
                                   
                                   
          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   
                     (DOLLARS IN THOUSANDS)
                                                         


<TABLE>
                                                    Six Months Ended
                                                       March 31,
                                                     1999    1998
                                                      (Unaudited)
<S>                                                    <C>     <C>
                                                                
CASH FLOWS FROM OPERATING ACTIVITIES:                           
  Net income                                          $  303  $  370                                          
                                                   
  Adjustments to reconcile net income to net cash        
    provided by operating activities:
     Depreciation                                         24      40
     Amortization and accretion on securities              1      22
     Amortization of unearned compensation               160     100
     Provision for loan losses                             0       0
     Gain on sale of securities, net                       0       0
     Change in assets and liabilities:                              
        Other assets                                     122     265     
        Other liabilities                                (82)    426
         Total adjustments                               225     853
         Net cash provided by operating activities       528   1,223     
         
CASH FLOWS FROM INVESTING ACTIVITIES:                           
  Proceeds from maturities/calls of securities,          
    available for sale                                   886   3,528
  Proceeds from maturities/calls of securities,            
    held to maturity                                     895     406
  Purchases of securities, available for sale         (2,409)      0
  Purchases of securities, held to maturity                0       0
  Net loan (originations) repayments                   1,914  (3,378)
  Capital expenditures                                   (10)    (25)
        Net cash provided by investing activities      1,276     531  

CASH FLOWS FROM FINANCING ACTIVITIES:                           
  Increase (decrease) in deposits                        980   1,889         
  Contributions to Plan trusts                          (755)   (645)
  Purchase of stock for stock plan trusts                  0    (563)
  Purchase of treasury stock                            (566)      0  
  Dividends paid                                      (2,078)    (69)
        Net cash (used in) provided by          
              financing activities                    (2,419)    612                                                  
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS    (615)  2,366 
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD       9,591   9,887
CASH AND CASH EQUIVALENTS AT END OF PERIOD            $8,976 $12,253
                                                    
         
                                   
                                   
   The accompanying notes are an integral part of these statements.


                  SOUTHERN COMMUNITY BANCSHARES, INC.
                                   
                                   
         NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   
                                   

  1.BASIS OF PRESENTATION
   
   Southern Community Bancshares, Inc. (the "Company") was
   incorporated in the State of Delaware at the direction of
   management of First Federal Savings and Loan Association of
   Cullman (the "Association") for the purpose of serving as a
   savings institution holding company of the Association upon the
   acquisition of all of the capital stock issued by the Association
   upon the conversion from a federally chartered mutual savings
   association form of organization to a federally chartered stock
   savings association (the "Conversion").
   
   The accompanying unaudited condensed consolidated financial
   statements as of March 31, 1999 and 1998, and for the three-month
   and six-month periods then ended, include the accounts of the Company
   and the Association.  All significant intercompany transactions and
   accounts have been eliminated in consolidation.
   
   The condensed consolidated financial statements were prepared by
   the Company without an audit, but in the opinion of management,
   reflect all adjustments necessary for the fair presentation of
   financial position and results of operations for the three-month
   and six month periods ended March 31, 1999 and 1998.  Results of
   operations for the current interim period are not necessarily
   indicative of results expected for the fiscal year ended
   September 30, 1999.  While certain information and footnote
   disclosures normally included in financial statements prepared in
   accordance with generally accepted accounting principles have been
   condensed or omitted pursuant to the rules and regulations of the
   Securities and Exchange Commission, management believes that the
   disclosures herein are adequate to make the information presented not
   misleading.  These condensed consolidated financial statements
   should be read in conjunction with the financial statements and
   notes thereto for the year ended September 30, 1998.  The
   accounting policies followed by the Company are set forth in
   the summary of significant accounting policies in the
   Company's September 30, 1998 financial statements.
 
  
  2.EARNINGS PER SHARE
   
   Basic earnings per share were computed by dividing net income by
   the weighted average number of shares of common stock outstanding during
   the three-month and six-month periods ended March 31, 1999 and 1998.
   Common Stock outstanding consists of issued shares less unallocated
   ESOP shares, and shares owned by the MRP and SOP plan trust.
   
   In 1997, the Company adopted SFAS No. 128, "Earnings Per Share,"
   effective December 15, 1997.  The following table represents
   the earnings per share calculations for the three and six months ended
   March 31, 1999 and 1998:

                                                           Per Share
     For the Three Months Ended      Income     Shares       Amount    

   March 31, 1999:
     Net income                    $143,000
     Basic earnings per share:
       Income available to common
         shareholders               143,000     800,898        $.18
     Dilutive securities                  0      43,797           0
     Diluted earnings per share    $143,000     844,695        $.17

   March 31, 1998:
     Net income                    $154,000 
     Basic earnings per share:
       Income available to common
         shareholders               154,000     894,598        $.17
     Dilutive securities                  0      47,820           0
     Diluted earnings per share    $154,000     942,418        $.16


     For the Six Months Ended

   March 31, 1999:
     Net income                   $303,000
     Basic earnings per share:
       Income available to common
         shareholders              303,000      808,633        $.38
     Dilutive securities                 0       45,520           0
     Diluted earnings per share   $303,000      854,153        $.36

   March 31, 1998:
     Net income                   $370,000
     Basic earnings per share:
       Income available to common
         shareholders              370,000      944,083        $.39
     Dilutive securities                 0       24,042           0
     Diluted earnings per share   $370,000      968,125        $.38

Item 2.Management's Discussion and Analysis or Plan of Operations

      On December 23, 1996, the Company completed the sale of
1,137,350 shares of its common stock in an initial public offering at
a price of $10.00 per share and simultaneously acquired the shares of
common stock of the Association in connection with the mutual to stock
conversion.  Costs associated with the offering were approximately
$750,000.  Prior to December 23, 1996, the Company had not issued any
stock, had no assets or liabilities and had not engaged in any
business activities other than of an organizational nature.

      Comparison of Financial Condition at March 31, 1999 and
September 30, 1998.  Total assets decreased by $2.1 million or 3.13%,
due primarily to the payment of a $2.1 million special dividend.
Liabilities increased by $1.0 milion or 1.8%, primarily due to an
increase in deposits.  Loans receivable decreased by $1,914,000 primarily
due to loan payoffs.  These funds along with the increase in deposits were
used to fund a $1.5 million, or 17.5%, increase in securities available
for sale and to pay the $2.1 million special dividend.

      Stockholders' equity decreased by $3.0 million due primarily to 
the payment of a $2.1 million special dividend.
    
      Comparison of Results of Operations for the Three Months Ended
March 31, 1999 and 1998.  The Company reported net income for the
three months ended March 31, 1999 of $143,000 as compared to $154,000
for the three months ended March 31, 1998.

      Net Interest Income.  Net interest income for the three months
ended March 31, 1999 amounted to $639,000 as compared to $734,000
for the three months ended March 31, 1998.  Net interest income
after provision for loan losses decreased $95,000 or 12.8%, during the
three months ended March 31, 1999 as compared to the prior year period.
This decrease resulted primarily from a decrease in the average balance
of securities during the three months ended March 31, 1999 as compared
to the prior year period.

      Provision for Loan Losses.  Provisions for loan losses are made
to maintain the allowance for loan losses at an adequate level.  The
allowance for loan losses reflects management's estimates which took
into account historical experience, the amount of non-performing assets,
and general economic conditions.  No provision for loan losses was made
for either of the quarters ended March 31, 1999 of 1998.

      Noninterest Expense.  Noninterest expense for the three months ended
March 31, 1999 amounted to $433,000 as compared to $509,000 for the
three months ended March 31, 1998.  The $76,000, or 14.8% decrease
is primarily due to recurring cost savings from operations.

      Capital Resources.  The Association's primary sources of funds
are customer deposits, repayments of loan principal, and interest from
loans and investments.  While scheduled principal repayments on loans
and mortgage-backed securities are a relatively predictable source of
funds, deposit flows, and loan prepayments are greatly influenced by
general interest rates, economic conditions, and competition.  The
Association manages the pricing of its deposits to maintain a desired
deposit balance.  In addition, the Association invests in short-term
interest-earning assets which provide liquidity to meet lending
requirements.

     The Association is required to maintain certain levels of
regulatory capital.  At March 31, 1999 and September 30, 1998, the
Company and the Association were in compliance with all regulatory
capital requirements.

     Comparison of Results of Operations for the Six Months Ended
March 31, 1999 and 1998.  The Company reported net income for the six
months ended March 31, 1999 of $303,000 as compared to $370,000 for the
six months ended March 31, 1998.

     Net Interest Income.  Net interest income for the six months ended
March 31, 1999 amounted to $1,322,000 as compared to $1,443,000 for the
six months ended March 31, 1998.  Total interest income decreased $202,000
or 7.6% during the six months ended March 31, 1999 as compared to the 
prior year period.  This decrease resulted primarily from a decrease in
the average balance of total interest bearing assets during the six months
ended March 31, 1999 as compared to the prior period.  Total interest 
expense decreased during the six months ended March 31, 1999.  This 
decrease resulted primarily from a decrease in average deposits between
the periods.

     Provision for Loan Losses.  Provisions for loan losses are made to
maintain the allowance for loan losses at an adequate level. The allowance
for loan losses reflects management's estimates which took into account
historical experience, the amount of nonperforming assets, and general
economic conditions.

     Provision for Income Taxes.  Income tax expense for the six months
ended March 31, 1999 decreased by $14,000 to $223,000 as compared to income
tax expense of $237,000 for the six months ended March 31, 1998.  This 
decrease is due to decreased income before income taxes.

     Noninterest Expense.  Noninterest expense for the six months ended
March 31, 1999 amounted to $870,000 as compared to $931,000 for the six
months ended March 31, 1998.  The $61,000 or 6.5% decrease is primarily
due to recurring cost savings from operations.  These decreases were 
particially offset by increased compensation expense due to the ESOP and
MRP plans.

     Year 2000 Problem.  A great deal of information has been disseminated
about the global computer crash that may occur in the year 2000.  Many
computer programs that can only distinguish the final two digits of the
year entered (a common programming practice in earlier years) are expected
to read entries for the year 2000 as the year 1900.  All of the significant
data processing of the Association that could be affected by this problem
is provided by a third party service bureau.  The service bureau of the
Association has advised the Association that it has resolved any potential
problem.   



                     PART II.    OTHER INFORMATION




Item 1.  Legal Proceedings

From time to time, the Company and subsidiary may be a party to
various legal proceedings incident to its or their business.  At
March 31, 1999, there were no legal proceedings to which the
Company or subsidiary was a party, or to which any of their
property was subject, which were expected by 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

     Not applicable


Item 6.  Exhibits and Reports on Form 8-K

     Not applicable



                              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.


                                 SOUTHERN COMMUNITY BANCSHARES, INC.





Date:      May 15, 1999         _____________________________________
                                William R. Faulk
                                President and Chief Executive Officer



Date:     May 15, 1999          _____________________________________
                                Beth B. Knight
                                Secretary and Treasurer




</TABLE>

<TABLE> <S> <C>

<ARTICLE> 9
<MULTIPLIER> 1,000
       
<S>                             <C>
<PERIOD-TYPE>                   6-MOS
<FISCAL-YEAR-END>                          SEP-30-1999
<PERIOD-END>                               MAR-31-1999
<CASH>                                             460
<INT-BEARING-DEPOSITS>                           8,516
<FED-FUNDS-SOLD>                                     0
<TRADING-ASSETS>                                     0
<INVESTMENTS-HELD-FOR-SALE>                     10,099
<INVESTMENTS-CARRYING>                             940
<INVESTMENTS-MARKET>                               954
<LOANS>                                         44,716
<ALLOWANCE>                                        784
<TOTAL-ASSETS>                                  64,765
<DEPOSITS>                                      56,537
<SHORT-TERM>                                         0
<LIABILITIES-OTHER>                                162
<LONG-TERM>                                          0
                                0
                                          0
<COMMON>                                            11
<OTHER-SE>                                       8,055
<TOTAL-LIABILITIES-AND-EQUITY>                  64,765
<INTEREST-LOAN>                                  1,973
<INTEREST-INVEST>                                  275
<INTEREST-OTHER>                                   213
<INTEREST-TOTAL>                                 2,461
<INTEREST-DEPOSIT>                               1,139
<INTEREST-EXPENSE>                               1,139
<INTEREST-INCOME-NET>                            1,322
<LOAN-LOSSES>                                        0
<SECURITIES-GAINS>                                   0
<EXPENSE-OTHER>                                    870
<INCOME-PRETAX>                                    526
<INCOME-PRE-EXTRAORDINARY>                         526
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                       303
<EPS-PRIMARY>                                      .38
<EPS-DILUTED>                                      .36
<YIELD-ACTUAL>                                    3.92
<LOANS-NON>                                         59
<LOANS-PAST>                                         0
<LOANS-TROUBLED>                                    84
<LOANS-PROBLEM>                                      0
<ALLOWANCE-OPEN>                                   792
<CHARGE-OFFS>                                       10
<RECOVERIES>                                         2
<ALLOWANCE-CLOSE>                                  784
<ALLOWANCE-DOMESTIC>                               103
<ALLOWANCE-FOREIGN>                                  0
<ALLOWANCE-UNALLOCATED>                            691
        

</TABLE>


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