SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No.)
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( ) Preliminary Proxy Statement ( ) Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2)
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Southern BancShares (N.C.), Inc.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fees. (Check the appropriate box):
(X) No fee required.
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
SOUTHERN BANCSHARES (N.C.), INC.
100 North Center Street
Mount Olive, North Carolina 28365
----------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
----------------------------------------
To Be Held April 21, 1999
NOTICE is hereby given that the Annual Meeting of Shareholders of
Southern BancShares (N.C.), Inc. ("Southern BancShares") will be held as
follows:
Place: Goldsboro Country Club
1500 South Slocumb Street
Goldsboro, North Carolina
Date: Wednesday, April 21, 1999
Time: 3:00 P.M.
The purposes of the meeting are:
1. To elect a 24-member Board of Directors, each member to hold
office for a term of one year or until his or her respective
successor is duly elected and qualified.
2. To consider and vote on a proposal to ratify the appointment of
KPMG LLP as Southern BancShares' independent public accountants
for 1999.
3. To transact any other business that may properly come before the
Annual Meeting.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
HOWEVER, TO ENSURE THE PRESENCE OF A QUORUM, ALL SHAREHOLDERS, EVEN THOUGH THEY
PLAN TO ATTEND, ARE URGED TO COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY AND
PROMPTLY RETURN IT IN THE POSTAGE PREPAID ENVELOPE PROVIDED FOR THAT PURPOSE.
THE GIVING OF SUCH PROXY WILL NOT AFFECT YOUR RIGHT TO REVOKE IT AND VOTE IN
PERSON IF YOU ATTEND THE MEETING.
By Order of the Board of Directors
/s/David A. Bean
David A. Bean, Secretary
March 26, 1999
<PAGE>
SOUTHERN BANCSHARES (N.C.), INC.
100 North Center Street
Mount Olive, North Carolina 28365
---------------
PROXY STATEMENT
---------------
Annual Meeting of Shareholders
To Be Held April 21, 1999
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Southern BancShares (N.C.), Inc. ("Southern
BancShares") of proxies in the form enclosed herewith to be used at the Annual
Meeting of Shareholders of Southern BancShares to be held at the Goldsboro
Country Club, 1500 South Slocumb Street, Goldsboro, North Carolina, at 3:00 P.M.
on April 21, 1999, or any adjournments thereof. In addition to solicitation by
mail, proxies may be solicited personally or by telephone by directors, officers
or employees of Southern BancShares and the Bank. Expenses of such proxy
solicitation will be paid by Southern BancShares. Persons named in the proxy to
represent shareholders at the meeting are R. S. Williams, W. A. Potts and John
N. Walker. This Proxy Statement is first being mailed to Southern BancShares'
shareholders on or about March 26, 1999.
Shares represented by each proxy that is properly executed and
returned, and not revoked, will be voted in accordance with the instructions
contained therein. If no instructions are given, those shares will be voted
"FOR" the election of each of the 24 nominees for director named in Proposal 1
below, and "FOR" ratification of the appointment of KPMG LLP as Southern
BancShares' independent public accountants for 1999. On such other matters as
may properly come before the meeting, the persons named in the form of proxy to
represent shareholders will be authorized to vote all proxies in accordance with
their best judgment on such matters. If, at or before the time of the Annual
Meeting, any nominee named in Proposal 1 has become unable or unwilling to serve
for any reason, all proxies may be voted for a substitute nominee designated by
the Board of Directors. A shareholder who executes a proxy has the right to
revoke it at any time before it is voted by filing with the Secretary either an
instrument revoking the proxy or a duly executed proxy bearing a later date, or
by attending the Annual Meeting and requesting the right to vote in person.
VOTING SECURITIES
At the close of business on March 12, 1999, Southern BancShares had
outstanding voting securities as follows: 119,261 shares of $5 par value common
stock, entitled to one vote per share; 398,653 shares of no par value Series B
non-cumulative preferred stock ("Series B"), entitled to one vote per 38 shares;
and 40,373 shares of no par value Series C non-cumulative preferred stock
("Series C"), entitled to one vote per 38 shares.
RECORD DATE; VOTE REQUIRED FOR APPROVAL
March 12, 1999 has been set as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting. At the
Annual Meeting, shareholders will be entitled to cast the appropriate number of
votes for the shares of Southern BancShares' voting securities standing of
record in their respective names at the close of business on the record date.
In the election of directors, the 24 nominees receiving a plurality of
the votes represented at the meeting in person or by proxy, and entitled to
vote, shall be elected. In the voting on Proposal 2, the affirmative vote of a
majority of the votes represented at the meeting in person or by proxy and
entitled to vote is required for approval. In the voting on Proposal 2,
abstentions will have the same effect as votes against the proposal, but broker
non-votes will have no effect.
PRINCIPAL HOLDERS OF VOTING SECURITIES
At the close of business on March 12, 1999, persons known to management
to own beneficially or of record 5% or more of any class of Southern BancShares'
voting securities were as follows:
<PAGE>
<TABLE>
<CAPTION>
Amount and
Title Nature Percentage Percentage
of Name and Address of Beneficial of of Total
Class of Beneficial Owner Ownership* Class Votes**
----- ------------------- ------------- ----------- ---------
<S> <C> <C> <C>
Common Frank B. Holding 32,294 (1) 27.08% 24.69%
Smithfield, North Carolina
Lewis R. Holding 27,577 (2) 23.12% 21.08%
Lyford Cay, Bahamas
Series B Frank B. Holding 22,171 (3) 5.56% .45%
Preferred Smithfield, North Carolina
Series C Rachel Ann Barnes 2,117 5.24% .04%
Preferred Conway, North Carolina
James R. Hendrix 6,120 15.16% .12%
Tyner, North Carolina
Elmo J. Peele 3,229 8.00% .06%
Lewiston-Woodville, North Carolina
Harry N. and Nell C. Willey 2,200 (4) 5.45% .04%
Enfield, North Carolina
</TABLE>
- ------------
* Except as otherwise stated in the footnotes below, the shares shown as
beneficially owned are, to the best of management's knowledge, owned by the
persons named and such persons exercise sole voting and investment power
with respect to those shares.
** This column reflects the votes to which these shares are entitled as a
percentage of the aggregate votes that may be cast by the holders of all
shares of Southern BancShares' outstanding voting securities. For further
information as to the number of outstanding shares and voting rights of the
common and preferred stock, see "VOTING SECURITIES."
(1) Includes an aggregate of 26,555 shares held by or in trust for Mr.
Holding's spouse and/or adult children and their spouses, as to which
shares he disclaims beneficial ownership. Also includes an aggregate of
5,726 shares also shown as beneficially owned by Mr. Holding's daughter,
Hope H. Connell. (See "OWNERSHIP OF VOTING SECURITIES BY MANAGEMENT.")
(2) Includes an aggregate of 5,058 shares held by or in trust for his spouse
and/or an adult daughter, as to which shares he disclaims beneficial
ownership.
(3) Includes 17,205 shares of Series B held by a corporation which, for
beneficial ownership purposes, Mr. Holding is deemed to control and, as to
which shares, he may be deemed to exercise shared voting and investment
power. Also includes 4,020 shares of Series B held by his adult children
and their spouses, as to which shares he disclaims beneficial ownership; of
such shares an aggregate of 2,000 shares also are included in the
beneficial ownership shown for his daughter, Hope H. Connell. (See
"OWNERSHIP OF VOTING SECURITIES BY MANAGEMENT.")
<PAGE>
(4) Includes 1,700 shares as to which Harry N. Willey and Nell C. Willey
exercise shared voting and investment power, and 500 shares held
individually by Mr. Willey, as to which shares he exercises sole voting and
investment power.
OWNERSHIP OF VOTING SECURITIES BY MANAGEMENT
As of the close of business on March 12, 1999, the beneficial ownership
of Southern BancShares' voting securities by its directors and certain named
executive officers, and by all directors and executive officers as a group, was
as follows:
<TABLE>
<CAPTION>
Amount and
Title Nature Percentage Percentage
of Name of of Beneficial of of
Class Beneficial Owner Ownership* Class Total Votes**
----- ---------------- ---------- ----- -------------
<S> <C> <C> <C>
Common Paul A. Brewer, Jr. 24(1) .02% .02%
Bynum R. Brown 372 .31% .28%
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
Amount and
Title Nature Percentage Percentage
of Name of of Beneficial of of
Class Beneficial Owner Ownership* Class Total Votes**
----- ---------------- ---------- ----- -------------
<S> <C> <C> <C>
Common William H. Bryan 108 .09% .08%
D. Hugh Carlton 288(2) .24% .22%
Robert J. Carroll 30 .03% .02%
Hope H. Connell 5,726(3) 4.80% 4.38%
J. Edwin Drew 3,714 3.11% 2.84%
Samuel E. Ewell, Jr. 10 .01% .01%
Moses B. Gillam, Jr. 125 .10% .10%
LeRoy C. Hand, Jr. 148(4) .12% .11%
Joseph D. Hines 10 .01% .01%
Frank B. Holding 32,294(5) 27.08% 24.69%
George A. Hux 10 .01% .01%
M. J. McSorley 204(6) .17% .16%
W. B. Midyette, Jr. 150 .13% .11%
W. Hunter Morgan 350(7) .29% .27%
John C. Pegram, Jr. 5 .00% .00%
Charles I. Pierce, Sr. 70 .06% .05%
W. A. Potts 550(8) .46% .42%
Richard D. Ray 1 .00% .00%
Charles L. Revelle, Jr. 1,020 .86% .78%
Watson N. Sherrod, Jr. 10 .01% .01%
Charles O. Sykes 100 .08% .08%
Raymond M. Sykes 10 .01% .01%
John N. Walker 190 .16% .15%
R. S. Williams 225(9) .19% .17%
All directors and executive 40,058 33.59% 30.62%
officers as a group (27 persons)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Amount and
Title Nature Percentage Percentage
of Name of of Beneficial of of
Class Beneficial Owner Ownership* Class Total Votes**
----- ---------------- ---------- ----- -------------
<S> <C> <C> <C>
Series B Pref. Bynum R. Brown 2,358 .59% .05%
Robert J. Carroll 2,687(10) .67% .05%
Hope H. Connell 2,000(3) .50% .04%
LeRoy C. Hand, Jr. 17,522(4) 4.40% .35%
Frank B. Holding 22,171(5) 5.56% .45%
M. J. McSorley 6,565(6) 1.65% .13%
W. Hunter Morgan 7,368(7) 1.85% .15%
Charles I. Pierce, Sr. 336(11) .08% .01%
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
Amount and
Title Nature Percentage Percentage
of Name of of Beneficial of of
Class Beneficial Owner Ownership* Class Total Votes**
----- ---------------- ---------- ----- -------------
<S> <C> <C> <C>
Series B Pref. R. S. Williams 7,109(9) 1.78% .14%
All directors and executive 66,131 16.59% 1.33%
officers as a group (27 persons)
Series C Pref. M. J. McSorley 25(6) .06% .00%
Charles I. Pierce, Sr. 139(11) .34% .00%
All directors and executive 164 .41% .00%
officers as a group (27 persons)
</TABLE>
- -------------
* Except as otherwise stated in the footnotes below, the shares shown above
as beneficially owned are, to the best of management's knowledge, owned by
the persons named and such persons exercise sole voting and investment
power with respect to such shares.
** This column reflects the votes to which these shares are entitled as a
percentage of the aggregate votes that may be cast by the holders of all
shares of Southern BancShares' outstanding voting securities. For further
information as to the number of outstanding shares and voting rights of the
common and preferred stock, see "VOTING SECURITIES."
(1) Includes 10 shares of common stock held by Mr. Brewer's spouse, as to which
shares he disclaims beneficial ownership.
(2) Includes 149 shares of common stock held by a corporation which, for
beneficial ownership purposes, Mr. Carlton may be deemed to control, and as
to which shares he may be deemed to exercise shared voting and investment
power. Also includes 25 shares of common stock owned by his spouse, as to
which shares he disclaims beneficial ownership.
(3) Includes 220 shares of common stock held in trust for Mrs. Connell's
benefit, as to which shares she exercises shared voting and investment
power. Also includes an aggregate of 1,872 shares of common stock and 2,000
shares of Series B held by her spouse individually and/or as custodian for
their children. All such shares also are shown as beneficially owned by her
father, Frank B. Holding.
(4) Includes 48 shares of common stock and 6,289 shares of Series B owned by
Dr. Hand's spouse, as to which shares he disclaims beneficial ownership.
(5) For an explanation of the nature of the beneficial ownership of the common
and Series B shown above as beneficially owned by Frank B. Holding, see
footnotes (1) and (3) of the section of this Proxy Statement entitled
"PRINCIPAL HOLDERS OF VOTING SECURITIES." Included in the shares shown as
beneficially owned by Mr. Holding are an aggregate of 5,726 shares of
common stock and 2,000 shares of Series B also shown as beneficially owned
by his daughter, Hope H. Connell, as to which shares Mr. Holding disclaims
beneficial ownership.
<PAGE>
(6) Includes an aggregate of 60 shares of common stock, 6,015 shares of Series
B, and 25 shares of Series C held by Mr. McSorley's spouse or adult son, as
to which shares he disclaims beneficial ownership.
(7) Includes 125 shares of common stock and 2,131 shares of Series B held by
Mr. Morgan's spouse, as to which shares he disclaims beneficial ownership.
Also includes 3,442 shares of Series B held by an entity which, for
beneficial ownership purposes, Mr. Morgan may be deemed a control person,
and as to which shares he may be deemed to exercise shared voting and
investment power.
(8) Includes 200 shares of common stock held by Dr. Potts' spouse, as to which
shares he disclaims beneficial ownership.
(9) Includes 50 shares of common stock and 324 shares of Series B held by Mr.
Williams' spouse, as to which shares he disclaims beneficial ownership.
(10) Includes 693 shares of Series B held by Mr. Carroll's spouse, as to which
shares he disclaims beneficial ownership.
(11) Includes 71 shares of Series B and 29 shares of Series C held jointly by
Mr. Pierce with his adult son, as to which shares he exercises shared
voting and investment power.
4
<PAGE>
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Southern BancShares' directors and executive officers are required to
file certain reports with the Securities and Exchange Commission regarding the
amount of and changes in their beneficial ownership of Southern BancShares'
common and preferred stock. Based on its review of copies of those reports,
Southern BancShares' proxy materials are required to disclose failures to report
shares beneficially owned, or changes in such beneficial ownership, or to timely
file required reports during the previous fiscal year. To the best knowledge of
Southern BancShares' management, there were no such failures to file required
reports during 1998.
PROPOSAL 1: ELECTION OF DIRECTORS
The Bylaws of Southern BancShares currently provide for not less than
five nor more than 30 directors. The Board of Directors is authorized to
establish within those limits the number of directors to be elected each year
and has set the number of directors at 24 for election at the Annual Meeting.
The nominees for the Board of Directors set forth below consist of the 24
current directors of Southern BancShares, each of whom has been nominated for
reelection. All directors elected at the Annual Meeting will serve for terms of
one year or until their successors have been duly elected and qualified.
<TABLE>
<CAPTION>
Positions with
Southern Year Principal Occupation
Name, Address BancShares First and Business Experience
and Age and Bank Elected(1) for Past Five Years
------- -------- ---------- -------------------
<S> <C> <C> <C>
Bynum R. Brown Director 1986 President and Owner, Bynum R. Brown Agency, Inc.
Murfreesboro, NC (real estate); Secretary/Treasurer, Roanoke Valley
73 Nursing Home, Inc.; President and Owner, Brown Manor,
Inc. (family care home)
William H. Bryan Director 1992 President, Director and Treasurer, Mount Olive
Mount Olive, NC Pickle Company, Inc. (manufacturer of pickle
41 and pepper products)
D. Hugh Carlton Director 1994 President and Owner, Carlton Insurance
Warsaw, NC Agency, Inc. (general insurance agency)
67
Robert J. Carroll Director 1986 President and Owner, Carroll's Garage, Inc.
Gates, NC (truck and farm equipment sales and service)
74
Hope H. Connell (2) Director 1992 Senior Vice President, First-Citizens Bank & Trust
Raleigh, NC Company; Director, Yadkin Valley Company (holding
36 company for credit life reinsurance company)
J. Edwin Drew Director 1973 Retired physician and former President,
Macclesfield, NC J. Edwin Drew, M.D., P.A.
68
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Samuel E. Ewell, Jr. Director 1998 President and Owner, Ewell Ford Sales, Inc.
Wendell, NC (automobile dealership); former Director, ESB
52 Bancorp, Inc. and Enfield Savings Bank, Inc., SSB
Moses B. Gillam, Jr. (3) Director 1982 Senior Partner, Gillam and Gillam (attorneys)
Windsor, NC
82
LeRoy C. Hand, Jr. Director 1986 Retired physician and former President,
Camden, NC Albemarle Emergency Associates, P.A.
78
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
Positions with
Southern Year Principal Occupation
Name, Address BancShares First and Business Experience
and Age and Bank Elected(1) for Past Five Years
------- -------- ---------- -------------------
<S> <C> <C> <C>
Joseph D. Hines Director 1998 President and Owner, Enfield Tractor and Equipment
Rocky Mount, NC Company and Hines Equipment Company (retail farm and
69 industrial equipment sales); former Director, ESB
Bancorp, Inc. and Enfield Savings Bank, Inc., SSB
Frank B. Holding (2) Director and 1962 Executive Vice Chairman of the Board, First Citizens
Smithfield, NC Chairman of BancShares, Inc. and First-Citizens Bank & Trust
70 Executive Company; Vice Chairman of the Board, First Citizens
Committee Bancorporation of S.C., Inc. and First-Citizens Bank
and Trust Company of South Carolina
George A. Hux Director 1998 Retired Attorney and former Partner, Hux, Livermon &
Rocky Mount, NC Armstrong, LLP; former Director, ESB Bancorp, Inc.
83 and Enfield Savings Bank, Inc., SSB
M. J. McSorley Director and 1990 Vice Chairman of the Bank since January 1998; Vice
Rocky Mount, NC Vice President of Southern BancShares; retired President
65 Chairman of Bank and former Chief Executive Officer of the Bank
W. B. Midyette, Jr. Director 1982 Retired farmer
Bath, NC
79
W. Hunter Morgan Director 1986 President, Kellogg-Morgan Agency, Inc.
Sunbury, NC (general insurance agency)
68
John C. Pegram, Jr. Director; 1998 President and Chief Executive Officer of Southern
Mount Olive, NC President BancShares and the Bank since January 1998; formerly
54 and Chief Executive Vice President of the Bank and Vice
Executive President of Southern BancShares; previously, Senior
Officer Vice President of the Bank
Charles I. Pierce, Sr. Director 1986 President, Pierce Printing Co., Inc.
Ahoskie, NC (commercial printers)
81
W. A. Potts Vice Chairman 1968 Retired veterinarian and former President, W. A.
Mount Olive, NC of the Board Potts, DVM, P.A.; former Chairman of the Board, Mount
72 Olive Pickle Company, Inc.
Charles L. Revelle, Jr. Director 1986 Chairman of the Board, Revelle Agri-Products, Inc.;
Murfreesboro, NC Vice President, Revelle Builders of NC, Inc.;
72 President, Revelle Equipment Co., Inc. (agribusiness)
Watson N. Sherrod, Jr. Director and 1998 Senior Vice President of the Bank; former President,
Enfield, NC Senior Vice Chief Executive Officer and Director, ESB Bancorp,
70 President Inc. and Enfield Savings Bank, Inc., SSB
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Charles O. Sykes Director 1984 President, Mount Olive Livestock Market, Inc.
Mount Olive, NC (livestock auction market and dealer)
69
Raymond M. Sykes Director 1998 Self-employed in farming operations; former Director,
Whitakers, NC ESB Bancorp, Inc. and Enfield Savings Bank, Inc., SSB
75
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Positions with
Southern Year Principal Occupation
Name, Address BancShares First and Business Experience
and Age and Bank Elected(1) for Past Five Years
------- -------- ---------- -------------------
<S> <C> <C> <C>
John N. Walker Director 1971 President Emeritus (former President, Chief Executive
Mount Olive, NC Officer and Director), Mount Olive Pickle
73 Company, Inc. (manufacturer of pickle and
pepper products)
R. S. Williams Chairman of 1971 Chairman of the Board and Consultant, Southern
Mount Olive, NC the Board BancShares and Bank (retired President of Southern
70 BancShares and Bank)
</TABLE>
- -------------
(1) Refers to the year each director first became a director of Southern
BancShares or its predecessor or, if elected to the Board prior to
December 31, 1982, the year first elected to the Board of the Bank.
(2) Ms. Connell is the daughter of Frank B. Holding.
(3) The firm of Gillam and Gillam performed legal services for the Bank in
1998, and it is expected that such relationship will continue during
1999.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
ELECTION OF THE 24 NOMINEES LISTED ABOVE FOR THE BOARD OF DIRECTORS.
COMPENSATION OF DIRECTORS
Compensation paid to directors includes a quarterly retainer of $400,
plus $200 for attendance at each meeting of the Board, $100 for attendance at
each meeting of a Board committee of which a director is a member, and $40 for
attendance at each monthly local advisory board meeting. Directors R. S.
Williams, Frank B. Holding, M. J. McSorley, and John C. Pegram, Jr. do not
receive directors' fees for serving on the Board of Directors or its committees.
In lieu of the standard directors' fees stated above, Samuel E. Ewell,
Jr., Joseph D. Hines, George A. Hux, and Raymond M. Sykes, each of whom formerly
was a director of ESB Bancorp, Inc. ("ESB") and its subsidiary, Enfield Savings
Bank, Inc., SSB, Enfield, North Carolina, are paid $600 per month for their
services as directors pursuant to an agreement which provided for Southern
BancShares' acquisition of ESB and that each director of ESB in office at the
time of the acquisition would be appointed to the Boards of Directors of
Southern BancShares and the Bank and be nominated for election by shareholders
at the 1999 and 2000 Annual Meetings of Southern BancShares. Watson N. Sherrod,
Jr., the former President and Chief Executive Officer of ESB, who now serves as
a director of Southern BancShares and the Bank pursuant to the terms of that
agreement, receives compensation in lieu of the standard director's fees or the
special fees described above for former ESB directors, pursuant to a separate
employment agreement with the Bank which provides that Mr. Sherrod will be
employed as a Senior Vice President in the Bank's Enfield, North Carolina
office. The employment agreement includes various noncompetition and
nonsolicitation covenants by Mr. Sherrod, provides for salary and normal
employee benefits, and continues through May 14, 2001.
<PAGE>
Since retirement as the Bank's President in December 1989, Chairman R.
S. Williams has been compensated for his services pursuant to a consulting and
noncompetition agreement with the Bank under which he received monthly payments
of $2,833 during 1998. The agreement has been extended through 1999, but was
amended to provide that Mr. Williams would receive monthly payments of $1,417.
Mr. Williams also receives retirement benefits under the Bank's Pension Plan.
M. J. McSorley, Vice Chairman of the Bank, who formerly served as
President and Chief Executive Officer of the Bank, retired from employment with
the Bank effective June 30, 1998. Since that date, Mr. McSorley has been
compensated for his services pursuant to a consulting and noncompetition
agreement with the Bank under which he receives monthly payments of $1,423. Mr.
McSorley also receives retirement benefits under the Bank's Pension Plan. (For
further information, see "Executive Compensation," "Pension Plan," and
"Employment Contracts, Termination of Employment and Change-in-Control
Arrangements.")
7
<PAGE>
MEETINGS AND COMMITTEES OF THE BOARDS OF DIRECTORS
The Boards of Directors of Southern BancShares and the Bank held five
joint meetings in 1998. All directors attended at least 75% of the aggregate
number of meetings of Southern BancShares' Board and any committees on which
they served during their terms, except D. Hugh Carlton and W. B. Midyette, Jr.,
whose absences were due to business commitments and illness, respectively.
The Boards of Directors have several standing committees, including an
Audit and Compliance Committee and a Compensation Committee; however, there is
no standing nominating committee or other committee performing equivalent
functions.
The Audit and Compliance Committee consists of John N. Walker -
Chairman, William H. Bryan, W. A. Potts, and Charles O. Sykes. The Committee
oversees the scope and detail of the continuous audit program conducted by the
Bank's internal audit staff and periodically reviews reports on the work of the
internal auditors and related matters. Subject to the approval of the Board of
Directors and ratification by the shareholders of Southern BancShares, the
Committee engages a qualified firm of certified public accountants to conduct an
annual audit of Southern BancShares' consolidated financial statements and
receives written reports from, and reviews non-audit services proposed by
management to be provided by, the accounting firm. During 1998, the Audit and
Compliance Committee held four meetings.
The Compensation Committee, whose members are listed below, reviews the
Bank's compensation program, including salary, pension and incentive
compensation plans and such other employee benefit matters as it deems
appropriate. In conjunction with management, the Committee approves salaries and
other forms of compensation. The Compensation Committee held one meeting during
1998.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are: Frank B. Holding -
Chairman, William H. Bryan, W. A. Potts, Charles O. Sykes, John N. Walker and R.
S. Williams. Mr. Holding is Executive Vice Chairman of First Citizens
BancShares, Inc. and its wholly-owned subsidiary, First-Citizens Bank & Trust
Company, Raleigh, N.C. ("First Citizens"). First Citizens provides various
services to the Bank and Southern BancShares, including the management
consulting services of Mr. Holding. (See "Transactions with Management") Mr.
Williams is Chairman of the Board of Southern BancShares and retired from
employment as President of the Bank in December 1989. He serves as a consultant
to the Bank and Southern BancShares. (See footnote (2) to the Summary
Compensation Table below and "Employment Contracts, Termination of Employment
and Change-in-Control Arrangements" below)
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Bank attempts to provide compensation at levels that will enable it
to attract and retain qualified and motivated individuals as officers and
employees. At the present time, annual salary is the only form of compensation
paid to or for the benefit of executive officers (other than benefits under the
Bank's 401(k) salary deferral plan and other customary employee benefit and
welfare plans, including a defined benefit pension plan). The Compensation
Committee (the "Committee") administers the Bank's compensation program and has
the responsibility for matters involving the compensation of executive officers.
<PAGE>
For 1998, the Committee established the salary for each executive
officer, including the chief executive officer of the Bank, based on an
evaluation of that officer's individual level of responsibility and performance.
The performance of individual executive officers and the Bank's financial
performance in general were considered by the Committee in connection with the
setting of salaries for 1998. However, the setting of salaries largely is
subjective and there are no specific formulae, objective criteria or other such
mechanisms by which adjustments to each executive officer's salary are tied
empirically to his individual performance or to the Bank's financial
performance.
Section 162(m) of the Internal Revenue Code of 1986, as amended,
limits the deductibility of annual compensation in excess of $1,000,000 paid to
certain executive officers of public corporations. As none of the executive
8
<PAGE>
officers of Southern BancShares or the Bank receives annual compensation
approaching that amount, Southern BancShares' Board of Directors has not adopted
a policy with respect to Section 162(m).
Compensation Committee: Frank B. Holding, Chairman
William H. Bryan
W. A. Potts
Charles O. Sykes
John N. Walker
R. S. Williams
EXECUTIVE OFFICERS
Certain information regarding the executive officers of Southern
BancShares and the Bank is set forth in the following table. All executive
officers serve at the pleasure of the Board of Directors.
<TABLE>
<CAPTION>
Positions with Southern BancShares and
Name Age the Bank and Prior Positions for Past Five Years
---- --- ------------------------------------------------
<S> <C> <C>
R. S. Williams 70 Chairman of the Board of Southern BancShares and the Bank;
formerly President and Chief Executive Officer of Southern
BancShares until January 1998; President of the Bank prior to
July 1989
M. J. McSorley 65 Vice Chairman of the Bank since January 1998; Vice President and
Director of Southern BancShares and Director of the Bank since
1990; formerly President and Chief Executive Officer of the Bank
from July 1989 to January 1998
John C. Pegram, Jr. 54 President and Chief Executive Officer of Southern BancShares and
the Bank since January 1998; formerly, Executive Vice President of
the Bank and Vice President of Southern BancShares; previously
Senior Vice President of the Bank
Paul A. Brewer 56 Executive Vice President of the Bank since December 1998; formerly
Senior Vice President and Regional Vice President of the Bank;
Assistant Secretary of Southern BancShares since 1986
Richard D. Ray 52 Executive Vice President of the Bank since December 1998; formerly
Senior Vice President and Regional Vice President of the Bank;
Assistant Treasurer of Southern BancShares since 1991
David A. Bean 50 Senior Vice President of the Bank since June 1998; Secretary of
Southern BancShares and the Bank since January 1992; Treasurer of
Southern BancShares since 1986; Controller of the Bank since 1984
</TABLE>
9
<PAGE>
EXECUTIVE COMPENSATION
The following table shows for 1998, 1997 and 1996 the cash and certain
other compensation paid to or deferred by certain executive officers of Southern
BancShares and the Bank, respectively, in all capacities in which they served.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-------------------------------------
Other All
Annual Other
Compen- Compen-
Salary Bonus sation sation
Name and Principal Position Year ($)(1) ($) ($) ($)
--------------------------- ---- ------ ----- ------- -------
<S> <C> <C> <C> <C> <C>
R. S. Williams, 1998 -0- -0- -0- 80,900 (3)
Chairman of the Board of
Southern BancShares (2) 1997 -0- -0- -0- 80,900 (3)
1996 -0- -0- -0- 80,900 (3)
M. J. McSorley, 1998 82,350 -0- -0- 43,250 (5)
Vice Chairman of the Bank and
Vice President of Southern 1997 134,640 -0- -0- 6,083 (6)
BancShares (4)
1996 128,055 -0- -0- 5,286 (6)
John C. Pegram, Jr., 1998 102,902 -0- -0- 4,631 (6)
President and Chief Executive
Officer of Southern BancShares 1997 89,458 -0- -0- 4,026 (6)
and the Bank
1996 81,736 -0- -0- 4,183 (6)
Paul A. Brewer, 1998 101,511 -0- -0- 4,568 (6)
Executive Vice President
of the Bank 1997 95,776 -0- -0- 4,310 (6)
1996 90,479 -0- -0- 3,715 (6)
Richard D. Ray, 1998 99,842 -0- -0- 4,493 (6)
Executive Vice President
of the Bank 1997 94,228 -0- -0- 4,240 (6)
1996 88,797 -0- -0- 3,662 (6)
</TABLE>
- ------------
(1) Includes amounts deferred at the election of each officer pursuant to
the Bank's Section 401(k) salary deferral plan.
(2) Mr. Williams retired from active employment with the Bank in December
1989, but served without salary as President and Chief Executive
Officer of Southern BancShares until January 21, 1998, when John C.
Pegram was elected as President and Chief Executive Officer of
Southern BancShares. Mr. Williams continues to serve as Chairman of
the Board of Southern BancShares and the Bank and provides consulting
services to such entities.
<PAGE>
(3) Consists of $46,900 in benefits from the Bank's pension plan and
$34,000 received pursuant to a noncompetition and consulting agreement
with the Bank. (See "Pension Plan" and "Employment Contracts,
Termination of Employment and Change-in-Control Arrangements" below.)
(4) Mr. McSorley served as President and Chief Executive Officer of the
Bank until January 21, 1998, when he was elected as Vice Chairman of
the Bank's Board, and John C. Pegram, Jr. was elected as President and
Chief Executive Officer of the Bank. Mr. McSorley retired from active
employment with the Bank on June 30, 1998, but continues to serve as
Vice Chairman of the Bank's Board and Vice President of Southern
BancShares, and provides consulting services to such entities.
(5) Consists of $31,499 in benefits from the Bank's pension plan, $8,539
received pursuant to a noncompetition and consulting agreement with
the Bank, and $3,212 for the Bank's contributions on Mr. McSorley's
behalf to the Bank's Section 401(k) salary deferral plan. (See
"Pension Plan" and "Employment Contracts, Termination of Employment
and Change-in-Control Arrangements.")
(6) Consists entirely of the Bank's contributions on behalf of each named
officer to the Bank's Section 401(k) salary deferral plan.
10
<PAGE>
PENSION PLAN
The following table shows the estimated annual benefits payable to a
participant at normal retirement age under the Bank's qualified defined benefit
pension plan (the "Pension Plan") based on various numbers of years of service
and levels of compensation.
<TABLE>
<CAPTION>
Years of Service
Final Average --------------------------------------------------------------------------------------------
Compensation 10 Years 15 Years 20 Years 25 Years 30 Years 35 Years 40 Years
------------- -------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$175,000 $30,352 $45,528 $60,703 $75,879 $91,055 $106,231 $116,731
150,000 25,727 38,590 51,453 64,317 77,180 90,043 99,043
125,000 21,102 31,653 42,203 52,754 63,305 73,856 81,356
100,000 16,477 24,715 32,953 41,192 49,430 57,668 63,668
75,000 11,852 17,778 23,703 29,629 35,555 41,481 45,981
50,000 7,227 10,840 14,453 18,067 21,680 25,293 28,293
</TABLE>
Benefits shown in the table are computed as straight life annuities
beginning at age 65 and are not subject to a deduction for Social Security
benefits or any other offset amount. To determine benefits under the Pension
Plan, a participant's compensation includes base salary (including amounts
deferred pursuant to the Bank's Section 401(k) salary deferral plan), and a
participant's benefits are based on "final average compensation" which is the
participant's average annual compensation for any five consecutive years of the
last ten complete calendar years as a participant. The credited years of service
and "final average compensation," respectively, for each of the named executive
officers who were actively employed by the Bank on January 1, 1999, are as
follows: Mr. Pegram - 24 years and $76,273; Mr. Brewer - 34 years and $90.272;
and Mr. Ray - 28 years and $88,537. Mr. McSorley retired from employment with
the Bank on June 30, 1998 and receives benefits of $62,997 per year from the
Pension Plan. Mr. R. S. Williams retired from employment with the Bank in
December 1989 and receives benefits of $46,900 per year from the Pension Plan.
EMPLOYMENT CONTRACTS, TERMINATION OF EMPLOYMENT
AND CHANGE-IN-CONTROL ARRANGEMENTS
Effective upon his retirement from employment with the Bank in December
1989, Chairman R. S. Williams entered into a noncompetition and consulting
agreement with the Bank pursuant to which he provides advisory and consulting
services to the Bank, agreed not to compete with the Bank in North Carolina, and
received monthly payments of $2,833 during 1998. The agreement, which was
amended and extended through December 31, 1999, now provides monthly payments of
$1,417.
Pursuant to the terms of a similar agreement with the Bank, M. J.
McSorley, Vice Chairman and former President of the Bank, receives monthly
payments of $1,423 that will continue during the ten year period following his
June 30, 1998 retirement from employment with the Bank.
11
<PAGE>
PERFORMANCE GRAPH
The following graph compares the cumulative total shareholder return
(the "CTSR") on Southern BancShares' common stock during the previous five
fiscal years with the CTSR over the same measurement period of the Nasdaq-U.S.
index and the Nasdaq Banks index. The graph assumes $100 invested on January 1,
1993, and that dividends were reinvested in additional shares.
Comparison of Five-Year Cumulative Total Shareholder Return among
Southern BancShares (N.C.), Inc., Nasdaq Banks and
Nasdaq-US Indices
[GRAPHIC-GRAPH PLOTTED TO POINTS LISTED BELOW]
Southern Nasdaq
Year BancShares Banks Nasdaq-US
---- ---------- ----- ---------
1993 $100 $100 $100
1994 130 98 100
1995 130 138 148
1996 136 170 196
1997 200 209 328
1998 201 293 325
TRANSACTIONS WITH MANAGEMENT
The Bank has had, and expects to have in the future, banking
transactions in the ordinary course of business with several of the directors,
executive officers, and principal shareholders of Southern BancShares and the
Bank and their associates. Loans included in those transactions were made on the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with others, and did not involve more than the
normal risk of collectibility or present other unfavorable features. Each such
transaction was approved by the Bank's Board of Directors.
Frank B. Holding, a director and principal shareholder of Southern
BancShares, and Lewis R. Holding, a principal shareholder of Southern
BancShares, are directors, executive officers and principal shareholders of
First Citizens BancShares, Inc., the bank holding company for First-Citizens
Bank & Trust Company, Raleigh, N.C. ("First Citizens"). During 1998, the Bank
paid fees to First Citizens in an aggregate amount of $2,867,987 for data and
item processing services, securities portfolio management services, the
management consulting services of Frank B. Holding, and services as trustee for
the Bank's pension plan and Section 401(k) salary deferral plan. During 1999,
the Bank projects that its payments to First Citizens for similar services will
be approximately $3,200,000, of which total the salary reimbursement payments to
First Citizens for the management consulting services of Frank B. Holding are
projected to amount to approximately $79,875.
12
<PAGE>
Hope H. Connell, a director of Southern BancShares and the Bank, is a
principal shareholder and director of Yadkin Valley Company and its subsidiary,
Yadkin Valley Life Insurance Company ("Yadkin Valley Life"). Lewis R. Holding, a
principal shareholder of Southern BancShares, also is a principal shareholder of
Yadkin Valley Company. Yadkin Valley Life's business consists of reinsuring
credit life insurance policies issued by Triangle Life Insurance Company
("Triangle Life"), a subsidiary of First Citizens, which policies are sold
through the Bank pursuant to an arrangement with Triangle Life, whereby the Bank
receives commissions on credit life insurance policies sold to its loan
customers that are issued by Triangle Life (and which commissions are paid from
the premiums received on such policies). The dollar amount of commissions
received by the Bank in connection with those policies during 1998 was $36,742.
During 1998, the Bank paid $130,447 in premiums for the Bank's general
liability and comprehensive insurance policies on property and vehicles, and
workers' compensation coverage and umbrella policies, all of which were
purchased through Carlton Insurance Agency, Inc., of which D. Hugh Carlton, a
director of Southern BancShares and the Bank, is President and owner. It is
expected that such relationship will continue during 1999.
PROPOSAL 2: RATIFICATION OF INDEPENDENT ACCOUNTANTS
Subject to ratification by the shareholders, the Board of Directors has
approved the appointment of KPMG LLP, certified public accountants, as Southern
BancShares' independent accountants for fiscal 1999. Representatives of KPMG LLP
are expected to be present at the Annual Meeting and available to respond to
appropriate questions from shareholders, and they will have the opportunity to
make a statement if they so desire.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS THE INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS OF SOUTHERN BANCSHARES FOR 1999.
PROPOSALS OF SHAREHOLDERS
Any proposal of a shareholder which is intended to be presented for
action at the 2000 Annual Meeting must be received by Southern BancShares at its
main office in Mount Olive, North Carolina, no later than November 25, 1999, to
be considered timely received for inclusion in the proxy statement and form of
proxy issued in connection with that meeting. In order for such a proposal to be
included in Southern BancShares' proxy statement and form of proxy, the person
submitting it must own, beneficially or of record, at least 1% or $1,000 in
market value of shares of Southern BancShares' stock entitled to be voted on
that proposal at the meeting and must have held those shares for a period of at
least one year and continue to hold them through the date of the meeting.
ANNUAL REPORT ON FORM 10-K
Southern BancShares is required to file with the Securities and
Exchange Commission an Annual Report on Form 10-K within 90 days after the end
of each fiscal year. ON OR AFTER MARCH 31, 1999, UPON WRITTEN REQUEST TO DAVID
A. BEAN, TREASURER AND SECRETARY, SOUTHERN BANCSHARES (N.C.), INC., POST OFFICE
BOX 729, MOUNT OLIVE, NORTH CAROLINA 28365, BY A SHAREHOLDER OF SOUTHERN
BANCSHARES ENTITLED TO VOTE AT THE ANNUAL MEETING, A COPY OF SOUTHERN
BANCSHARES' 1998 ANNUAL REPORT ON FORM 10-K, INCLUDING FINANCIAL STATEMENTS AND
SCHEDULES THERETO, WILL BE PROVIDED WITHOUT CHARGE TO THE SHAREHOLDER MAKING
SUCH REQUEST.
<PAGE>
OTHER MATTERS
The Board of Directors knows of no other business to be brought before
the meeting or any adjournment thereof. Should other matters properly come
before the meeting, the persons named in the proxy to represent the shareholders
will be authorized to vote according to their best judgment on such matters.
By Order of the Board of Directors
/s/David A. Bean
David A. Bean, Secretary
March 26, 1999
13
<PAGE>
SOUTHERN BANCSHARES (N.C.), INC.
100 North Center Street
Mount Olive, North Carolina 28365
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints R. S. Williams, W. A. Potts and John N. Walker,
or any of them, as attorneys and proxies, with full power of substitution, to
vote all outstanding stock of Southern BancShares (N.C.), Inc. held of record by
the undersigned on March 12, 1999, at the Annual Meeting of Shareholders of
Southern BancShares (N.C.), Inc. to be held at the Goldsboro Country Club, 1500
South Slocumb Street, Goldsboro, North Carolina, at 3:00 P.M. on April 21, 1999,
and any adjournments thereof, on the matters listed below:
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as indicated otherwise) to vote for all nominees listed below
Nominees: Bynum R. Brown; William H. Bryan; D. Hugh Carlton; Robert J. Carroll;
Hope H. Connell; J. Edwin Drew; Samuel E. Ewell, Jr.; Moses B. Gillam, Jr.;
LeRoy C. Hand, Jr.; J. D. Hines; Frank B. Holding; George A. Hux; M. J.
McSorley; W. B. Midyette, Jr.; W. Hunter Morgan; John C. Pegram, Jr.; Charles I.
Pierce, Sr.; W. A. Potts; Charles L. Revelle, Jr.; Watson N. Sherrod, Jr.;
Charles O. Sykes; Raymond M. Sykes; John N. Walker; R. S. Williams.
(Instruction: To withhold authority to vote for any individual nominee, write
that nominee's name on the line below.)
- --------------------------------------------------------------------------------
2. RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS: Proposal to ratify
the appointment of KPMG LLP as independent accountants for 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. OTHER BUSINESS: Should other matters properly come before the Annual
Meeting, the persons named herein as attorneys and proxies are authorized
to vote the shares represented by this proxy in accordance with their best
judgment.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED ABOVE. IN THE
ABSENCE OF ANY DIRECTION TO THE CONTRARY, THE PROXYHOLDERS WILL VOTE THIS PROXY
"FOR" THE ELECTION OF EACH OF THE NOMINEES FOR DIRECTOR LISTED IN PROPOSAL 1 AND
"FOR" PROPOSAL 2. IF, AT OR BEFORE THE TIME OF THE MEETING, ANY NOMINEE LISTED
IN PROPOSAL 1 HAS BECOME UNABLE OR UNWILLING TO SERVE FOR ANY REASON, THE
PROXYHOLDERS ARE AUTHORIZED TO VOTE FOR A SUBSTITUTE NOMINEE. THIS PROXY MAY BE
REVOKED AT ANY TIME BEFORE IT IS EXERCISED BY FILING WITH THE SECRETARY AN
INSTRUMENT REVOKING THE PROXY OR A DULY EXECUTED PROXY BEARING A LATER DATE OR
BY ATTENDING THE ANNUAL MEETING AND REQUESTING THE RIGHT TO VOTE IN PERSON.
<PAGE>
Please date and sign exactly as name appears below. When shares are held jointly
by more than one person, all should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign full corporate name by president or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Dated: , 1999
_________________
______________________________(SEAL)
Signature
______________________________(SEAL)
Signature if held jointly
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY CARD USING THE ENCLOSED
ENVELOPE
