SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1998 Commission File Number:
1-14203-01
SOUTHERN CAPITAL TRUST I
(Exact name of registrant as specified in its charter)
Delaware 51-0381656
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification number)
121 East Main Street, Mount Olive, North Carolina 28365
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including Area Code: (919) 658-7020
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. [X] Yes [ ] No
The registrant meets the conditions set forth in General Instruction H(1)(a)
and (b) of Form 10-Q and is therefore filing this form with the reduced
disclosure format.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
SOUTHERN CAPITAL TRUST I
BALANCE SHEETS
(Dollars in thousands) September 30, June 9,
1998 1998
ASSETS (Unaudited) (Unaudited)
<S> <C> <C>
Junior Subordinated Debentures of $ 23,711 $ 23,711
Southern BancShares (N.C.), Inc.
Interest Receivable 18 -
Total Assets $ 23,729 $ 23,711
LIABILITIES
8.25% Capital Securities $ 23,000 $ 23,000
Interest Payable - -
Total Liabilities $ 23,000 $ 23,000
EQUITY AND NET ASSETS
Common Securities $ 711 $ 711
Net Assets 18 -
Total Liabilities,
Equity and Net Assets $ 23,729 $ 23,711
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SOUTHERN CAPITAL TRUST I
STATEMENTS OF REVENUE AND EXPENSE AND
CHANGES IN NET ASSETS
(Dollars in thousands) Three Months
and
Three Months 22 days ended
September 30, September 30,
1998 1998
(Unaudited) (Unaudited)
Revenues: <C> <C>
Interest Income $ 445 $ 608
Total Revenues $ 445 $ 608
Expenses:
Interest Expense $ 432 $ 590
Total Expenses $ 432 $ 590
Excess (deficit) of revenues over expenses $ 13 $ 18
Change in net assets $ 13 $ 18
Net assets beginning of period $ 5 $ -
Net assets September 30, 1998 $ 18 $ 18
The accompanying notes are an integral part
of these financial statements.
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SOUTHERN CAPITAL TRUST I
STATEMENT OF CASH FLOWS
(Dollars in thousands) Three Months
and
22 days ended
September 30,
1998
(Unaudited)
<S> <C>
OPERATING CASH FLOWS
Net operating cash flows $ -
FINANCING CASH FLOWS
Net financing cash flows $ -
INVESTING CASH FLOWS
Net investing cash flows $ -
Net change in cash $ -
Cash: Beginning of period -
End of period $ -
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RECONCILIATION OF EXCESS OF REVENUES OVER EXPENSES
TO OPERATING CASH FLOWS
(Dollars in thousands except per share data)
<S> <C>
Excess of Revenues over Expenses $ 18
Changes in: Receivables (18)
Changes in: Payables -
Operating cash flows $ -
The accompanying notes are an integral part
of these financial statements.
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SOUTHERN CAPITAL TRUST I
Notes to financial statements
(Dollars in thousands)
Note 1. DESCRIPTION OF THE TRUST
Southern Capital Trust I (the "Trust"), was created April 29, 1998 and
funded on June 9, 1998. The Trust is a wholly owned subsidiary of Southern
BancShares (N.C.), Inc. ("BancShares") of Mount Olive, North Carolina. The
Trust is a statutory business trust created under Delaware law, the result of
the filing of a certificate of trust with the Delaware Secretary of State. The
Trust is governed by a trust agreement between BancShares, as Depositor;
Bankers Trust (Delaware), as Delaware Trustee; Bankers Trust, as Property
Trustee; the Administrators (as named herein); and the holders, from time to
time of undivided beneficial interests in the assets of the Trust. Two
individuals, who are officers of BancShares, have been selected by BancShares,
as the holders of the Trust's Common Securities, to act as administrators with
respect to The Trust. The Trust exists for the following exclusive purposes:
(i) to issue and sell the Trust Securities;
(ii) to use the proceeds from the sale of the Trust Securities
to acquire Junior Subordinated Debentures (see Note 5); and
(iii) to engage in only those other activities necessary,
convenient or incidental thereto (such as registering the transfer
of Trust Securities).
Accordingly, the Junior Subordinated Debentures are, and will be, the
sole assets of the Issuer Trust, and payments under the Debentures will be the
sole source of revenue of the Trust.
Note 2. BASIS OF PRESENTATION
The financial statements in this report are unaudited. In the opinion of
management, all adjustments (none of which were other than normal accruals)
necessary for fair presentation of the financial position and results of
operations for the periods presented have been included.
Note 3. INCOME TAXES
In the opinion of the Trust's tax counsel, under current law and assuming
compliance with terms of the Trust Agreement, the Trust is classified as a
grantor trust and not as an association, which would be taxable as a
corporation for federal income tax purposes. The preceding not withstanding,
the Trust will file a consolidated federal tax return with its parent company,
BancShares, beginning in 1998. It is BancShares' policy not to allocate income
taxes to the Trust.
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SOUTHERN CAPITAL TRUST I
Notes to financial statements - continued
(Dollars in thousands)
Note 4. CAPITAL SECURITIES
Pursuant to the terms of the Trust Agreement for the Trust, the Trustees
of the Trust have issued the Capital Securities and the Common Securities. The
Capital Securities represent preferred undivided beneficial interests in the
assets of the Trust and holders thereof are entitled to a preference in
certain circumstances with respect to Distributions and amounts payable on
redemption or liquidation over the common securities, as well as other
benefits as described in the Trust Agreement.
Note 5. JUNIOR SUBORDINATED DEBENTURES
The Junior Subordinated Debentures (the "Debentures") were issued under
the Junior Subordinated Indenture, under which Bankers Trust Company is the
Debenture Trustee. Concurrently with the issuance of the Capital Securities,
the Trust invested the proceeds thereof, together with the consideration paid
by BancShares for the Common Securities, in Debentures issued by BancShares.
The Debentures bear interest, and have accrued interest from the date of
original issuance, at a rate of 8.25%, payable in arrears at each calendar
quarter-end, beginning September 30, 1998. It is anticipated that, until the
liquidation, if any, of the Trust, each Debenture will be registered in the
name of the Trust and held by the Property Trustee in trust for the benefit of
the holders of the Trust Securities. The amount of interest payable for any
period less than a full interest period will be computed on the basis of a
360-day year of twelve 30-day months and the actual days elapsed in a partial
month in such period. The amount of interest payable for any full interest
period will be computed by dividing the rate per annum by four. If any date on
which the interest is payable on the Debentures is not a business day, then
payment of the interest payable on such date will be made on the next
succeeding day that is a business day. Accrued interest that is not paid on
the applicable interest date will bear additional interest on the amount
thereof (to the extent permitted by law) at a rate equal to 8.25% per annum,
compounded quarterly and computed on the basis of a 360-day year of twelve
30-day months and actual days elapsed in a partial month in such period. The
amount of additional interest payable for any interest period will be computed
by dividing the rate per annum by four. The Debentures mature June 30, 2028.
The Debentures are unsecured and rank junior and subordinate in right of
payment to all Senior Indebtedness of BancShares. The Debentures are not
subject to a sinking fund and are not eligible as collateral for any loan made
by BancShares.
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SOUTHERN CAPITAL TRUST I
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
MANAGEMENT'S NARRATIVE ANALYSIS OF RESULTS OF OPERATIONS
The excess of revenues over expenses for the period of June 9, 1998
through September 30, 1998 was $18 thousand. During this period the Trust
accrued $608 thousand in interest revenue and $590 thousand in interest
expense. On September 30, 1998, the Trust made its first interest payment to
holders of the Capital Securities. Other than the original funding of the
Trust on June 9, there was no other financial activity.
YEAR 2000
The Year 2000 issue is the result of many existing computer programs and
systems only recognizing two digits to refer to a year. These programs and
systems will not properly distinguish the year 2000 from the year 1900. If not
corrected, many computer applications could fail or create erroneous results
at the turn of the century. This issue confronts BancShares and its suppliers,
customers and competitors. The Trust does not own any computers or equipment
and the Year 2000 issues are being handled by BancShares. Therefore, there are
no assessments of Year 2000 issues, costs or contingency plans for the Trust.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK -
Not required
Part II. OTHER INFORMATION
Item 1 - Legal Proceedings
Not applicable
Item 2 - Changes in Securities and Use of Proceeds
Not required
Item 3 - Defaults Upon Senior Securities
Not required
Item 4 - Submission of Matters to a Vote of Security Holders
Not required
Item 5 - Other Information
Not applicable
Item 6 - Exhibits and Reports on Form 8-K
None
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SOUTHERN CAPITAL TRUST I
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 CAPITAL TRUST I
(SOUTHERN BANCSHARES (N.C.), INC.)
Dated November 15, 1998 /s/John C. Pegram, Jr.
John C. Pegram, Jr.
Administrator
(President)
Dated November 15, 1998 /s/David A. Bean
David A. Bean
Administrator
(Treasurer)
