<PAGE>
<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission File Number: 1-13964
The Southern Banc Company, Inc.
_________________________________________________________________
(Exact name of small business issuer as specified in its charter)
Delaware 63-1146351
- ----------------------- -------------------
(State of incorporation) (I.R.S. Employer
Identification No.)
221 S. 6th Street, Gadsden, Alabama 35901-4102
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (205) 543-3860
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Check whether the issuer (1) filed all reports required
to be filed by Section 13 or 15(d) of the Exchange Act 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 ninety days:
Yes X No _
As of September 30, 1996, there were 1,382,012 shares of
the registrant's Common Stock, par value $0.01 per share, issued
and outstanding.
Transitional small business disclosure format (check
one): Yes_ No X
<PAGE>
<PAGE>
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
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<PAGE>
<PAGE>
THE SOUTHERN BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollar Amounts in Thousands)
ASSETS
------
<TABLE>
<CAPTION>
September 30, June 30,
1996 1996
------------ ------------
(Unaudited)
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 6,523 $ 4,535
SECURITIES AVAILABLE FOR SALE 15,819 13,504
SECURITIES HELD TO MATURITY,
fair values of $4,488,250 and
$4,488,438, respectively 4,525 4,514
LOANS RECEIVABLE, net 33,041 33,145
MORTGAGE-BACKED SECURITIES HELD TO
MATURITY, fair values of
$45,976,201 and $48,369,979,
respectively 46,015 48,308
PREMISES AND EQUIPMENT, net 284 279
OTHER ASSETS 1,667 2,744
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TOTAL ASSETS $107,874 $107,029
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS $ 86,963 $ 85,847
OTHER LIABILITIES 1,257 1,047
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TOTAL LIABILITIES 88,220 86,894
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock, par value, $.01 per share
500,000 shares authorized; shares
issued and outstanding -- none 0 0
Common stock, par value, $.01 per share
1,454,750 shares issued and 1,382,013 shares
outstanding, 3,500,000 authorized 15 15
Treasury Stock at cost, 72,737 shares (958) (958)
Additional paid-in capital 13,581 13,573
Unearned ESOP compensation (2,073) (2,117)
Retained Earnings 9,181 9,702
Unrealized gain (loss) on securities available
for sale, net (92) (80)
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TOTAL SHAREHOLDERS' EQUITY 19,654 20,135
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $107,874 $108,029
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated statements.<PAGE>
<PAGE>
THE SOUTHERN BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTH PERIODS ENDED
September 30, 1996 and 1995
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
---------------------
1996 1995
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(Unaudited) (Unaudited)
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $ 675 $ 563
Interest on mortgage-backed securities
held to maturity 860 861
Interest and dividends on securities 306 334
Other interest income 83 83
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Total interest income 1,924 1,841
INTEREST EXPENSE:
Interest on deposits 1,157 1,222
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Net interest income 767 619
Provision for loan losses 0 0
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Net interest income after provision
for loan losses 767 619
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NON-INTEREST INCOME:
Fees and other non-interest income 16 12
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NON-INTEREST EXPENSE:
Salaries and employee benefits 339 258
Office building and equipment expenses 74 79
Deposit insurance expense 644 52
Loss on sale of securities 0 0
Other operating expense 74 58
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Total non-interest expense 1,131 447
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Income (loss) before income taxes (348) 184
PROVISION (BENEFIT) FOR INCOME TAXES (134) 63
---------- ------
Net income (loss) $ (214) $ 121
========== ======
EARNINGS (LOSS) PER SHARE (Note 4) $ (0.17) N/A
AVERAGE NUMBER OF SHARES OUTSTANDING 1,239,905 N/A
DIVIDENDS DECLARED PER SHARE $ 0.2625 N/A
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated statements.<PAGE>
<PAGE>
THE SOUTHERN BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Three Months Ended
September 30, 1996 and 1995
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
1996 1995
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(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (214) $ 121
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation 11 17
Amortization (accretion), net 12 27
Amortization of unearned compensation 62 0
Provision for loan losses 0 0
Change in assets and liabilities:
(Increase) decrease in other assets 1,077 (157)
Increase (decrease) in other liabilities 208 (83)
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Total adjustments 1,370 (196)
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Net cash provided by (used in) operating
activities 1,156 (75)
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CASH FLOWS FROM OPERATING ACTIVITIES:
Proceeds from maturities of securities
held to maturity 0 500
Principal payments received on mortgage-
backed securities 2,387 2,051
Purchase of available for sale securities (2,450) 0
Purchase of securities held to maturity 0 (1,000)
Purchase of mortgage-backed securities
held to maturity 0 (2,316)
Net loan (originations) repayments 104 (1,170)
Capital expenditures (16) (3)
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Net cash provided by (used in)
investing activities 25 (1,938)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in deposits, net 1,116 7,545
Increase in advance payments by borrowers
for tax purposes 8 17
Dividends paid (307) 0
Contributions to plan trusts (10) 0
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Net cash provided by financing activities 807 7,562
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Net increase (decrease) in cash and cash equivalents 1,988 5,549
CASH AND CASH EQUIVALENTS, beginning of period 4,535 8,991
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CASH AND CASH EQUIVALENTS, end of period $ 6,523 $14,540
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes $ 0 $ 100
======= =======
Interest $ 1,165 $ 1,213
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Non-cash transactions:
Change in unrealized net gain on securities
available for sale, net $ (12) $ 2
======= =======
</TABLE>
<PAGE>
THE SOUTHERN BANC COMPANY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The Southern Banc Company, Inc. (the "Company") was incorporated
in the State of Delaware in May 1995, for the purposes of
becoming a holding company to own all of the outstanding capital
stock of First Federal Savings & Loan Association of Gadsden (the
"Association") upon the Association's conversion from a
federally chartered mutual savings association to a federally
chartered stock association (the "Conversion"). The accounting
for the conversion is in a manner similar to that utilized in a
pooling of interest.
The accompanying unaudited condensed consolidated financial
statements as of September 30, 1996 and June 30, 1996, and for
the three months ended September 30, 1996 and 1995, include the
accounts of the Company, the Association, and the Association's
wholly owned subsidiary, First Service Corporation of Gadsden.
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 months
ended September 30, 1996 and 1995. Results of operations for the
current interim period are not necessarily indicative of results
expected for the entire fiscal year.
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 consolidated financial
statements and notes thereto included in the Company's annual
report on Form 10-K for the year ended June 30, 1996. The
accounting policies followed by the Company are set forth in the
summary of significant accounting policies in the Company's June
30, 1996 consolidated financial statements.
2. STOCK CONVERSION
On October 5, 1995, the Conversion of the Association from a
Federally chartered mutual institution to a Federally chartered
stock savings association through amendment of its charter and
issuance of common stock to the Company was completed. Related
thereto, the Company sold 1,454,750 shares of common stock, par
value $.01 per share, at an initial price of $10 per share in
subscription and community offerings. Costs associated with the
Conversion were approximately $880,000, including underwriting
fees. The conversion costs were deducted from the gross proceeds
of the sale of the common stock.
<PAGE>
<PAGE>
3. RETIREMENT AND SAVINGS PLANS
EMPLOYEE STOCK OWNERSHIP PLAN
In connection with the Conversion, the Association established an
employee stock ownership plan (the "ESOP") for eligible
employees. The ESOP purchased 116,380 shares of the Company's
common stock with the proceeds of a $1,163,800 note payable from
the Association and secured by the Common Stock owned by the
ESOP. Unearned compensation for the ESOP was charged to
stockholders' equity and is reduced ratably in connection with
principal payments under the terms of the plan. Unearned
compensation is amortized into compensation expense based on
employee services rendered in relation to shares which are
committed to be released.
MANAGEMENT RECOGNITION PLAN
During fiscal 1996, the Association established a management
recognition plan (the "MRP") which purchased 58,190 shares of the
Company's common stock on the open market subsequent to the
Conversion. The MRP provides for awards of common stock to
directors and officers of the Association. The aggregate fair
market value of the shares purchased by the MRP is considered
unearned compensation at the time of purchase and compensation is
earned ratably over the stipulated vesting period. Unearned
compensation related to the MRP is shown as a reduction to
shareholders' equity in the accompanying consolidated statements
of condition.
STOCK OPTION AND INCENTIVE PLAN
The Company has a stockholder approved Option and Incentive Plan
(the "Option Plan"). The Option Plan provides for the grant of
incentive stock options (ISO's) to employees and non-incentive
stock options (non-ISO's) to non-employee directors. The
exercise price is based on the market price of the common stock
on the date of grant. At September 30, 1996, a trust formed by
the Company for the purpose of purchasing shares of stock in the
open market for issuance upon future exercises of stock options
under the Option Plan held 126,376 issued and outstanding shares.
SIMPLIFIED EMPLOYEE PENSION PLAN
The Company established a Simplified Employee Pension Plan
("SEP") for all employees who have completed one year of service,
pursuant to Section 408(k) of the Internal Revenue Code of 1986.
The Company makes a discretionary contribution to the SEP on an
annual basis.
4. EARNINGS PER SHARE
Earnings per share has been computed based on the earnings during
the three month period ended September 30, 1996 and on the
weighted average number of shares of common stock and common
stock equivalents outstanding during that period. Common stock
outstanding is comprised of issued shares less treasury stock,
unallocated ESOP shares, and shares repurchased for the MRP and
Option Plan. Common stock equivalents include the number of
shares issuable on exercise of the outstanding stock options and
MRP options less the number of shares that could have been
purchased with the proceeds from the exercise of the options
based on the average price of the common stock during the period.
5. FDIC ASSESSMENT
The Association's deposits are insured by the Savings Association
Insurance Fund ("SAIF"), which is administered by the Federal
Deposit Insurance Corporation ("FDIC"). Congress recently passed
legislation requiring a one-time special assessment of 65.7 basis
points to be applied against SAIF-assessable deposits as of March
31, 1995. The Association recognized an expense at September
30, 1996 in the amount of $591,000 to record the one-time special
assessment.<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30 AND JUNE 30,
1996.
Total assets increased approximately $845,000 or 0.79% from
$107.0 million at June 30, 1996 to $107.9 million at September
30, 1996. During the period ended September 30, 1996, net loans
decreased approximately $104,000 or 0.31% and mortgage-backed
securities held to maturity decreased approximately $2.3 million
or 4.75%. The decrease in mortgage-backed securities was
attributable to principal payments received during the period
ended September 30, 1996.
Cash and cash equivalents increased $2.0 million or 43.84% from
$4.5 million to $6.5 million at September 30, 1996. The increase
in cash was primarily attributable to the maturity of investment
securities. During the period ended September 30, 1996
securities available for sale increased by $2.3 million or 17.15%
from $13.5 million to $15.8 million.
Other assets decreased $1.1 million or 39.25% from $2.7 million
at June 30, 1996 to $1.7 million at September 30, 1996. Other
assets at June 30, 1996 included a receivable of approximately
$1.5 million which represented two securities that matured on
June 30, 1996.
Total deposits increased $1.1 million or 1.30% from $85.8 million
at June 30, 1996 to $86.9 million at September 30, 1996. Other
liabilities during the period ended September 30, 1996 increased
approximately $210,000 or 20.06% from $1.0 million to $1.2
million. This increase was primarily attributable to an accrual
of approximately $591,000 which represented the anticipated
one-time special assessment by the Federal Deposit Insurance
Corporation ("FDIC") for purposes of recapitalizing the Savings
Association Insurance Fund ("SAIF").
Total equity decreased $481,000 or 2.39% from $20.1 million at
June 30, 1996 to $19.7 million at September 30, 1996. This
increase was attributable to the payment of stock dividends and
the quarterly loss which resulted from the one-time special
assessment by the FDIC.
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1996 AND 1995.
The Association reported a net loss for the three months ended
September 30, 1996 of ($214,000) compared with net income of
$121,000 for the three months ended September 30, 1995. The net
loss during the period was primarily attributable to the
recognition of the one-time special assessment of approximately
$591,000 by the FDIC, offset in part by a $196,000 reduction in
income tax expense.
NET INTEREST INCOME. Net interest income for the three months
ended September 30, 1996 was $767,000 as compared to $619,000 for
the three months period ended September 30, 1995. Total interest
income increased $83,000 or 4.5% from $1.8 million to $1.9
million for the three months ended September 30, 1995 and 1996,
respectively. Total interest expense decreased $65,000 or 5.3%
from $1.2 million to $1.1 million for the three months ended
September 30, 1995 and 1996, respectively. The increase in net
interest income was primarily attributable to additional funds
received during the initial public offering.
<PAGE>
<PAGE>
PROVISION FOR LOAN LOSSES. No provision for loan losses was
deemed necessary in either of the three month periods ended
September 30, 1996 or 1995. The allowance for loan losses is
based on management's evaluation of possible loan losses inherent
in the Association's loan portfolio. Management considers, among
other factors, past loss experience, current economic conditions,
volume, growth and composition of the loan portfolio, and other
relevant factors.
NON-INTEREST INCOME. Non-interest income for the three month
period ended September 30, 1996 was $16,000 as compared to
$12,000 for the three month period ended September 30, 1995.
NON-INTEREST EXPENSE. Non-interest expense increased $684,000 or
153.00% for the three month period ended September 30, 1996 from
$447,000 at September 30, 1995 to $1.1 million at September 30,
1996. This increase was primarily attributable to the
recognition of the one-time special assessment by the FDIC in the
amount of $591,000. Salaries and employee benefits increased
$81,000 or 31.40% for the three month period ended September 30,
1996 as compared to the three month period ended September 30,
1995. This increase was primarily attributable to salary and
benefit expenses related to the establishment of certain employee
benefit plans, subsequent to the conversion. Other expenses for
the three month period ended September 30, 1996 were $74,000 as
compared to $58,000 for the three month period ended September
30, 1995.
PROVISION FOR INCOME TAXES. For the three month period ended
September 30, 1996, provision for income tax expense decreased
$197,000 as compared to the three month period ended September
30, 1995. This decrease was primarily attributable to reduced
income related to the recognition of the one-time special
assessment by the FDIC in the amount of $591,000. As a result,
income before income taxes decreased $532,000 for the three month
period ended September 30, 1996 as compared to the three month
period ended September 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES. As a holding company, the
Company conducts its business through its subsidiary, the
Association. The Association is required to maintain minimum
levels of liquid assets as defined by regulations of the Office
of Thrift Supervision. This requirement, which varies from time
to time depending upon economic conditions and deposit flows, is
based upon a percentage of deposits and short-term borrowings.
The required ratio currently is 5.0%. The Association's average
liquidity ratio well exceeded the required maximums at and during
the three month period ended September 30, 1996. The Association
adjusts its liquidity levels in order to meet funding needs of
deposit outflows, repayment of borrowings and loan commitments.
The Association also adjusts liquidity as appropriate to meet its
asset and liability management objectives.
The Association's primary sources of funds are deposits, payment
of loans and mortgage-backed securities, maturities of investment
securities and other 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 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 September 30, 1996, the Association
exceeded all minimum regulatory capital requirements.
<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 September 30, 1996, there were no
legal proceedings to which the Company or any 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
On October 17, 1996, The Southern Banc Company, Inc.
announced a dividend in the amount of $.0875 per share
on or about December 16, 1996 to stockholders of record
at the close of business on November 29, 1996.
On November 1, 1996, The Southern Banc Company, Inc.
announced that it was commencing a stock repurchase
program to acquire up to fifteen percent of its
currently outstanding common stock, or 207,301 shares.
These stock repurchases are independent from, and would
be in addition to, stock repurchases on behalf of the
company's stock benefit plans, if any. This program
will be dependent upon market conditions, and there is
no guarantee as to the exact number of shares to be
repurchased by the company.
Item 6. Exhibits and Reports on Form 8-K
Form 8-K
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None
Exhibits
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Exhibit 27 Financial Data Schedule
<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.
THE SOUTHERN BANC COMPANY
Date: November 11, 1996 By: /s/ James B. Little, Jr.
-----------------------------------
James B. Little, Jr.
(Principal Executive and Financial
Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 23,590
<INT-BEARING-DEPOSITS> 6,499,641
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 15,819,474
<INVESTMENTS-CARRYING> 50,540,584
<INVESTMENTS-MARKET> 50,464,451
<LOANS> 33,118,839
<ALLOWANCE> 77,800
<TOTAL-ASSETS> 107,873,957
<DEPOSITS> 86,963,487
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,256,842
<LONG-TERM> 0
<COMMON> 14,547
0
0
<OTHER-SE> 19,640,079
<TOTAL-LIABILITIES-AND-EQUITY> 107,873,957
<INTEREST-LOAN> 675,170
<INTEREST-INVEST> 1,166,164
<INTEREST-OTHER> 82,447
<INTEREST-TOTAL> 1,923,781
<INTEREST-DEPOSIT> 1,156,664
<INTEREST-EXPENSE> 1,156,664
<INTEREST-INCOME-NET> 767,117
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,130,912
<INCOME-PRETAX> (347,413)
<INCOME-PRE-EXTRAORDINARY> (347,413)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (215,342)
<EPS-PRIMARY> (.17)
<EPS-DILUTED> (.17)
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
