<PAGE>
<PAGE>
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
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Subsection 240.14a-11(c) or
Subsection 240.14a-12
THE SOUTHERN BANC COMPANY, INC.
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
THE SOUTHERN BANC COMPANY, INC.
- ----------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Rules 0-11(c)(1)(iii), 14a-6(i)(1), or
14a-6(i)(2).
[ ] $500 per each party to the controversy pursuant to Exchange
Act Rule 14a-6(i)(3).
[ ] 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:
_________________________________________________________________
4. Proposed maximum aggregate value of transaction:
_________________________________________________________________
[ ] 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>
<PAGE>
[LETTERHEAD]
October 10, 1996
Dear Fellow Stockholder:
You are cordially invited to attend the Annual Meeting of
Stockholders of The Southern Banc Company, Inc. to be held at the
main office of First Federal Savings and Loan Association of
Gadsden, 221 S. 6th Street, Gadsden, Alabama, on Wednesday,
November 13, 1996, at 3:00 p.m., local time. The attached Notice
of Annual Meeting of Stockholders and Proxy Statement describe
the formal business to be transacted at the meeting.
The accompanying notice and proxy materials describe the
formal business to be transacted at the meeting. During the
meeting, we will also report on the operations of the Company's
subsidiary, First Federal Savings and Loan Association of
Gadsden. Directors and officers of the Company will be present
to respond to any questions the stockholders may have.
WE URGE YOU TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD
AS SOON AS POSSIBLE, EVEN IF YOU CURRENTLY PLAN TO ATTEND THE
ANNUAL MEETING. Your vote is important, regardless of the number
of shares you own. This will not prevent you from voting in
person but will assure that your vote is counted if you do not
attend the meeting. On behalf of your Board of Directors, I
thank you for your interest and support.
Sincerely,
/s/ James B. Little, Jr.
James B. Little, Jr.
Chairman of the Board
and President<PAGE>
<PAGE>
THE SOUTHERN BANC COMPANY, INC.
221 S. 6th Street
Gadsden, Alabama 35901
(205) 547-4755
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on November 13, 1996
NOTICE IS HEREBY GIVEN that the Annual Meeting of
Stockholders (the "Meeting") of The Southern Banc Company, Inc.
(the "Company"), will be held at the main office of First Federal
Savings and Loan Association of Gadsden, 221 S. 6th Street,
Gadsden, Alabama, at 3:00 p.m. on Wednesday, November 13, 1996.
A Proxy Card and a Proxy Statement for the Meeting are
enclosed.
The Meeting is for the purpose of considering and acting
upon:
1. The election of three directors of the Company; and
2. The transaction of such other business as may properly
come before the Meeting or any adjournments thereof.
The Board of Directors is not aware of any other business to
come before the Meeting.
Any action may be taken on any one of the foregoing pro-
posals at the Meeting on the date specified above or on any date
or dates to which, by original or later adjournment, the Meeting
may be adjourned. Stockholders of record at the close of busi-
ness on September 30, 1996 are the stockholders entitled to
notice of and to vote at the Meeting and any adjournments
thereof.
You are requested to complete and sign the enclosed form of
proxy which is solicited by the Board of Directors and to mail it
promptly in the enclosed envelope. The proxy will not be used if
you attend and vote at the Meeting in person.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Peggy Smith
PEGGY SMITH
SECRETARY
Gadsden, Alabama
October 10, 1996
_________________________________________________________________
IMPORTANT: THE PROMPT RETURN OF PROXIES WILL SAVE YOUR COMPANY
THE EXPENSE OF FURTHER REQUESTS FOR PROXIES IN ORDER TO ENSURE A
QUORUM. A SELF-ADDRESSED ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE. NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED
STATES. PLEASE ACT PROMPTLY.
_________________________________________________________________
<PAGE>
<PAGE>
PROXY STATEMENT
OF
THE SOUTHERN BANC COMPANY, INC.
221 S. 6th Street
Gadsden, Alabama 35901
ANNUAL MEETING OF STOCKHOLDERS
November 13, 1996
GENERAL
This Proxy Statement is furnished in connection with the
solicitation of proxies by the Board of Directors of The Southern
Banc Company, Inc. (the "Company") to be used at the Annual
Meeting of Stockholders of the Company (the "Meeting") which will
be held at the main office of First Federal Savings and Loan
Association of Gadsden (the "Association"), 221 S. 6th Street,
Gadsden, Alabama, on Wednesday, November 13, 1996, at 3:00 p.m.,
local time. The accompanying Notice of Annual Meeting of
Stockholders and this Proxy Statement are being first mailed to
stockholders on or about October 10, 1996.
VOTING AND REVOCABILITY OF PROXIES
Stockholders who execute proxies retain the right to revoke
them at any time. Unless so revoked, the shares represented by
such proxies will be voted at the Meeting and all adjournments
thereof. Proxies may be revoked by written notice to the Secre-
tary of the Company, at the address shown above, by filing of a
later dated proxy prior to a vote being taken on a particular
proposal at the Meeting or by attending the Meeting and voting in
person.
Proxies solicited by the Board of Directors of the Company
will be voted in accordance with the directions given therein.
WHERE NO INSTRUCTIONS ARE INDICATED, PROXIES WILL BE VOTED IN
FAVOR OF EACH OF THE PROPOSALS SET FORTH IN THIS PROXY STATEMENT
TO BE CONSIDERED AT THE MEETING. The proxy confers discretionary
authority on the persons named therein to vote with respect to
the election of any person as a director where the nominee is
unable to serve or for good cause will not serve, and matters
incident to the conduct of the Meeting. Proxies marked as
abstentions, and shares held in street name which have been
designated by brokers on proxies as not voted, will not be
counted as votes cast. Proxies marked as abstentions or as
broker non-votes will, however, be treated as shares present for
purposes of determining whether a quorum is present.
VOTING SECURITIES AND BENEFICIAL OWNERSHIP
The securities entitled to notice of and to vote at the
Meeting consist of the Company's common stock, par value $.01 per
share (the "Common Stock"). Stockholders of record as of the
close of business on September 30, 1996 (the "Record Date") are
entitled to one vote for each share of Common Stock then held.
As of the Record Date, there were 1,382,013 shares of Common
Stock issued and outstanding. The presence, in person or by
proxy, of at least one-third of the total number of shares of
Common Stock outstanding and entitled to vote will be necessary
to constitute a quorum at the Meeting.
<PAGE>
<PAGE>
Directors and executive officers of the Company and persons
and groups owning in excess of 5% of the Common Stock are
required to file certain reports regarding their ownership of the
Common Stock pursuant to the Securities Exchange Act of 1934 with
the Company and the Securities and Exchange Commission ("SEC").
Based on such reports (and certain other written information
received by the Company), the following table sets forth, as of
the Record Date, certain information as to those persons who were
believed to be beneficial owners of more than 5% of the Company's
outstanding shares of Common Stock and those shares that were
believed to be beneficially owned by all directors and executive
officers of the Company as a group.
<TABLE>
<CAPTION>
Amount and Percent of
Nature of Shares of
Name and Address Beneficial Common Stock
of Beneficial Owner Ownership Outstanding
- ------------------ --------- ------------
<S> <C> <C>
The Southern Banc Company, Inc.
Employee Stock Ownership Plan
221 S. 6th Street
Gadsden, Alabama 107,583 (1) 7.78
John Hancock Mutual Life
Insurance Company
John Hancock Place
Boston, Massachusetts 114,400 (2) 8.28
Jerome H. and Susan B. Davis
11 Baldwin Farms North
Greenwich, Connecticut 78,200 (3) 5.66
All directors and executive officers
as a group (12 persons) 121,093 (4) 8.76
<FN>
_________________
(1) These are unallocated shares held in a suspense account for
future allocation among participating employees as the loan
used to purchase the shares is repaid; excludes 8,797
allocated shares. The ESOP trustees, currently Directors
Dowling, Johnson and Keeling, vote all allocated shares in
accordance with instructions of the participants;
unallocated shares and shares for which no instructions have
been received generally are voted by the ESOP trustees in
the same ratio as participants direct the voting of
allocated shares or, in the absence of such direction, as
directed by the Company's Board of Directors.
(2) Based on a Schedule 13G filed in February 1996, John Hancock
Advisors, Inc., a subsidiary of John Hancock Mutual Life
Insurance Company, has sole voting and dispositive power
over the reported shares.
(3) Based on a Schedule 13G filed in March 1996, Mr. and Mrs.
Davis have shared voting and dispositive power over the
reported shares.
(4) Excludes unallocated shares held by the ESOP (see above);
excludes 58,190 shares held by the Company's management
recognition plan trust, of which Directors Dowling, Johnson
and Keeling are trustees; excludes unexercisable stock
options for 126,376 shares, of which 36,366 shares were held
by the Company's stock option and incentive plan trust, of
which Directors Dowling, Johnson and Keeling are trustees.
</FN>
</TABLE>
ELECTION OF DIRECTORS
General
The Board of Directors has nominated Thomas F. Dowling, III,
Gene B. Rutenberg and Fred Taylor to serve as directors for a
three-year period. All nominees are currently members of the
Board. Under Delaware law, directors are elected by a plurality
of all votes cast at a meeting at which a quorum is present. If
any nominee is
2<PAGE>
<PAGE>
unable to serve, the shares represented by all valid proxies will
be voted for the election of such substitute as the Board of
Directors may recommend or the size of the Board may be reduced
to eliminate the vacancy. At this time, the Board knows of no
reason why any nominee might be unavailable to serve. The
Company's Board of Directors currently consists of ten members.
The Company's Certificate of Incorporation requires that
directors be divided into three classes, as nearly equal in
number as possible, with approximately one-third of the directors
elected each year.
The following table sets forth the names of the nominees for
election as directors and the directors whose terms expire in
future years. Also set forth is certain other information with
respect to each person's age, the year he first became a director
of the Association, the expiration of his term as a director, and
the number and percentage of shares of Common Stock beneficially
owned (each director of the Company is also a member of the Board
of Directors of the Association).
<TABLE>
<CAPTION>
Year First Shares of
Elected as Common Stock
Age at Director Current Beneficially
June 30, of the Term Owned at the Percent
Name 1996 Association(1) to Expire Record Date (2) of Class
- ----------------------------------------------------------------------------------
BOARD NOMINEE FOR TERM TO EXPIRE IN 1999
<S> <C> <C> <C> <C> <C>
Thomas F. Dowling, III 59 1972 1996 13,500 *
Gene B. Rutenberg 69 1963 1996 8,657 *
Fred Taylor 69 1993 1996 10,100 *
DIRECTORS CONTINUING IN OFFICE
Craig G. Cantrell 67 1961 1997 7,500 *
James B. Little, Jr. 66 1957 1997 26,549 1.92
W. R. Moon 86 1959 1997 1,000 *
Grady Gilliam 72 1989 1998 7,500 *
W. Roscoe Johnson, III 53 1989 1998 12,166 *
Rex G. Keeling, Jr. 53 1974 1998 10,000 *
Gates Little 26 1994 1998 7,006 *
<FN>
__________________
(1) All directors were initially appointed as directors of the
Company in 1995 in connection with the incorporation of the
Company.
(2) Excludes unallocated shares held by the ESOP; excludes
shares held by the Company's management recognition plan
trust; excludes unexercisable stock options for 7,273,
5,507, 6,362, 4,771, 36,368, 1,455, 4,771, 7,141, 6,362 and
5,455 shares, respectively, of which 36,366 shares were held
by the Company's stock option and incentive plan trust. See
"VOTING SECURITIES AND BENEFICIAL OWNERSHIP."
* Less than 1%.
</FN>
</TABLE>
3<PAGE>
<PAGE>
Set forth below is information concerning the Company's
nominees for election as directors and continuing directors.
Unless otherwise stated, all directors have held the positions
indicated for at least the past five years.
THOMAS F. DOWLING, III is a dentist in private practice in
Gadsden. He is a deacon of the First Baptist Church of Gadsden.
GENE B. RUTENBERG is retired. Prior to his retirement, Mr.
Rutenberg owned and operated a retail women's apparel store
located in Gadsden. He is a member of the Congregation Beth
Israel in Gadsden.
FRED TAYLOR is a realtor and owner of Taylor Realty, located
in Albertville. Mr. Taylor is a member of the First Baptist
Church in Albertville, the National Real Estate Association, the
Alabama Realtors and the Marshall County Board of Realtors.
CRAIG G. CANTRELL is a retired physician. From 1957 to
1992, Dr. Cantrell was in private practice specializing in
internal medicine. Dr. Cantrell is a Deacon of the First Baptist
Church in Gadsden.
JAMES B. LITTLE, JR. joined the Association in 1957 and has
served as its President since 1966. In 1976, he was elected
Chairman. Mr. Little is a member of the Gadsden Chamber of
Commerce.
W. R. MOON is retired. From 1930 to 1972, Mr. Moon owned
and operated a retail grocery store located in Gadsden, and from
1963 until 1990 he performed appraisals on behalf of the
Association.
GRADY GILLAM is retired. Prior to his retirement in 1984,
Mr. Gillam was employed as President of the American National
Bank of Gadsden. Mr. Gillam serves as a Trustee and a member of
the Board of the First Methodist Church in Gadsden.
W. ROSCOE JOHNSON, III is a partner of the law firm of Inzer
Stivender Haney & Johnson, P.A. which is located in Gadsden and
is General Counsel to the Company and the Association. He
attends the Episcopal Church of the Holy Comforter in Gadsden.
REX G. KEELING, JR. is a property/casualty insurance
salesman with Insurance Facilities. From 1988 to 1994, Mr.
Keeling was self-employed as a relief pharmacist and from 1985 to
1988, he served as pharmacy director for Gregerson Food/Pharmacy
located in Gadsden. Mr. Keeling has served as the chairman of
the American Cancer Society Golf Tournament and as a committee
member of the Big Oak Ranch Golf Marathon. He has also served as
a volunteer football coach for several of the local high schools.
GATES LITTLE joined the Association in 1993 and has served
as Assistant Vice President since January 1996. Previously, he
served as Assistant Secretary of the Association. In 1992, Mr.
Little served as Development Assistant for Complete Health, a
health maintenance organization located in Birmingham, Alabama.
Before 1992, he was a student at the University of Alabama.
COMMITTEES OF THE BOARD OF DIRECTORS
The Boards of Directors of the Company and the Association
hold regular monthly meetings and special meetings as needed.
During the year ended June 30, 1996, the respective Boards met 12
and 7 times. No director attended fewer than 75% in the
aggregate of the total number of meetings of the Boards held
while he was a member during the year ended June 30, 1996 and the
total number of meetings held by committees on which he served
during such fiscal year.
The Audit Committee of the Company's Board of Directors
consists of Messrs. Taylor, Dowling, and Gillam. The Audit
Committee met one time following fiscal 1996 to examine and
approve the independent audit report.
4<PAGE>
<PAGE>
The Compensation Committee of the Company's Board of
Directors most recently consisted of Messrs. Keeling, Johnson and
Rutenberg. This committee reviews the performance of the
employees of the Company and its subsidiaries and makes
recommendations to the Board of Directors regarding employee
compensation and met one time regarding compensation for fiscal
1996.
The Company does not have a standing nominating committee.
The Company's full Board of Directors acts as a nominating
committee under the Company's Certificate of Incorporation and
met one time in this capacity to select the nominees for election
as directors at the Meeting.
DIRECTOR COMPENSATION
The Company's directors meet on a quarterly basis and
receive $300 per meeting. For fiscal 1996, the Company's
directors fees totaled $3,000. The Association's directors
receive fees of $700 per monthly meeting attended and $350 per
committee meeting attended. Directors may miss up to two monthly
meetings and still receive the monthly fee. For fiscal 1996, the
Association's directors' fees totaled $84,000.
EXECUTIVE COMPENSATION
Summary. The following table sets forth cash and non-cash
compensation for each of the three fiscal years ended June 30,
1996 awarded to or earned by the Company's Chief Executive
Officer, James B. Little, Jr., for services rendered in all
capacities to the Company and its subsidiaries.
<TABLE>
<CAPTION>
Long-Term Compensation
--------------------------
Annual Compensation Restricted Securities
--------------------------------------- Stock Underlying All Other
Year Salary($)(1) Bonus($) Other($)(2) Awards($)(3) Options(#)(3) Compensation
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1994 101,953 9,500 2,106 (3) -- -- 15,988
1995 110,759 5,000 2,943 -- -- 16,497
1996 118,400 12,650 2,774 170,018 36,368 13,750
<FN
<FN>
____________
(1) Includes directors' fees of 4,920, 5,780 and 8,400,
respectively.
(2) Consists of excess life insurance.
(3) Subject to vesting over five years; value based on closing
price of shares on award date.
(4) Consists of contributions to the Association's defined
contribution qualified pension plan, pursuant to which the
Association contributes 15% of each employee's annual salary
and bonus to an IRA account.
</FN>
</TABLE>
Stock Options. The following table sets forth information
regarding stock options granted under the Company's stock option
and incentive plan to the Company's Chief Executive Officer
during fiscal 1996.
<TABLE>
<CAPTION>
Number of Percent of
Securities Total Options
Underlying Granted to
Options Participants Exercise Expiration
Granted(#) in Year Price ($)(1) Date
- ---------- -------------- ----------- ----------
<S> <C> <C> <C>
36,368 28.8 11.6875 4/10/06
___________
<FN>
(1) Equal to closing price of shares on award date.
</FN>
</TABLE>
5<PAGE>
<PAGE>
The following table sets forth information regarding the
number and value of options held by the Company's Chief Executive
Officer at the end of fiscal 1996. All options were
unexercisable, and no options were exercised during the year.
Number of Value of
Securities Unexercised
Underlying Unexercised Options at
Options at Year End Year End ($)(1)
---------------------- ---------------
36,368 $38,641
-------------
(1) Based on difference between closing and exercise
prices.
Employment Agreements. The Company and the Association have
entered into employment agreements with James B. Little, Jr.,
Chairman of the Board and President of the Association and the
Company. In such capacities, Mr. Little is responsible for
overseeing all operations of the Association and the Company and
for implementing the policies adopted by the Boards of Directors.
Such Boards believe that the agreements assure fair treatment of
Mr. Little in relation to his career with the Company and the
Association by assuring him of some financial security. The
agreements have been approved by the Office of Thrift Supervision
("OTS").
The agreements provide for terms of three years, with a
minimum annual base salary of $110,000 per year. On each
anniversary date from the date of commencement of the agreements,
the terms of employment will be extended to a date up to 36
months thereafter, upon a determination by the Boards of
Directors that the performance of Mr. Little has met the required
performance standards and that such agreements should be
extended. Additionally, the agreements provide for an automatic
36 month extension of the term upon the occurrence of a "Change
in Control" (as defined below). The agreements provide Mr. Little
with a salary review by the Boards of Directors not less often
than annually, as well as inclusion in any discretionary bonus
plans, retirement and medical plans, customary fringe benefits
and vacation and sick leave. The agreements will terminate upon
Mr. Little's death or disability and are terminable for "just
cause" as defined in the agreements (for example, personal
dishonesty, willful misconduct or material breach of the
agreements). In the event of termination for just cause, no
severance benefits are available. In addition, Mr. Little will
be entitled to employer-paid family medical insurance until he
reaches age 72, regardless of his employment status. If the
Company or the Association terminates Mr. Little without just
cause, he will be entitled to a continuation of his salary and
benefits from the date of termination through the remaining terms
of the agreements plus his salary only for an additional 12-month
period (but not in an aggregate amount in excess of three times
his five years' average annual compensation). If the agreements
are terminated due to Mr. Little's disability (as defined in the
employment agreements), his salary and benefits will immediately
terminate. In the event of Mr. Little's death during the terms
of the agreements, his estate will be entitled to receive his
salary through the end of the month in which his death occurs.
Severance benefits payable to Mr. Little will be paid in a lump
sum or in installments, as he elects. Mr. Little is able to
terminate the agreements voluntarily by providing 90 days'
written notice to the Boards of Directors of the Association and
the Company, in which case he is entitled to receive only his
compensation, vested rights and benefits up to the date of
termination. However, in the event Mr. Little voluntarily
terminates his employment within 90 days following the occurrence
of one of the following events (other than in connection with a
"Change in Control") (i) a material reduction in his base
compensation, (ii) the failure to continue to provide him with
the compensation and benefits provided for under the agreements
or with benefits substantially similar to those provided to him
under an employee benefit plan of the Association in which he is
a participant, or the taking of any action that would directly or
indirectly reduce any of such benefits or deprive him of any
material fringe benefit enjoyed by him, (iii) the assignment to
him of duties and responsibilities materially different from
those normally associated with his position, (iv) a material
diminution or reduction in his responsibilities or authority, he
will be entitled to those benefits and payments he would be
entitled to receive if he had been involuntarily terminated
without just cause.
The agreements contain provisions stating that in the event
of Mr. Little's involuntary termination of employment in
connection with, or within one year after, any "Change in
Control" of the Association or the Company, other than for just
cause, he will be paid within 10 days of such termination an
amount equal to the difference between (i) 2.99 times his base
amount (as defined in Section 280G(b)(3) of the Internal Revenue
Code)
6<PAGE>
<PAGE>
and (ii) the sum of any other parachute payments (as defined
under Section 280G(b)(2) of the Internal Revenue Code) that he
receives on account of the change in control. Under the
agreements, a "Change in Control" is defined as (i) the
acquisition, by any person or entity, of the ownership or power
to vote more than 25% of the Association's or Company's voting
stock, (ii) the control of the election of a majority of the
Association's or the Company's directors, (iii) the exercise of a
controlling influence over the management or policies of the
Association or the Company, or (iv) during any consecutive two-
year period, directors of the Company or the Association at the
beginning of such period cease to constitute two-thirds of the
Board of Directors of the Company or the Association, unless the
election of replacement directors was approved by a two-thirds
vote of the initial directors then in office. The agreements
provide that the amount to be paid to Mr. Little in the event of
such an involuntary termination will be paid in one lump sum
within ten days of such termination. The agreements also provide
for a similar lump sum payment to be made in the event of Mr.
Little's voluntary termination of employment within one year
following a Change in Control upon the occurrence, or within 90
days thereafter, of certain specified events following the change
in control which have not been consented to in writing by him,
including (i) the requirement that he move his personal residence
or perform his principal executive functions more than 30 miles
from the Association's primary office as of the date of the
Change in Control, (ii) a material reduction in his base
compensation as then in effect, (iii) the failure of the Company
and the Association to continue to provide him with compensation
and benefits substantially similar to those provided to him under
any of the employee benefit plans in which he is or becomes a
participant or under his employment agreements, or the taking of
any action by the Company or the Association which would directly
or indirectly deprive him of any material fringe benefit enjoyed
by him as of the date of the Change in Control, (iv) the
assignment to him of duties and responsibilities which are other
than those normally associated with his position with the
Association, (v) a material reduction in his authority and
responsibility, (vi) the failure to re-elect him to the Company's
or the Association's Board of Directors, or (vii) a material
reduction in his secretarial or administrative support. The
aggregate payments that would be made to Mr. Little assuming his
termination of employment under the foregoing circumstances at
June 30, 1996 would have been approximately $323,575. These
provisions may have an anti-takeover effect by making it more
expensive for a potential acquiror to obtain control of the
Company. If Mr. Little were to prevail over the Company and the
Association in a legal dispute with respect to the agreements, he
would be reimbursed for his legal and other expenses.
Supplemental Executive Retirement Agreement. In order to
provide James B. Little, Jr. with supplemental retirement
benefits and thereby encourage his continuing service as Chairman
of the Board and President of the Association, the Association
has entered into the SERA with Mr. Little. Pursuant to the terms
of the SERA, the Association has established an account in the
name of Mr. Little to which the Association will credit (at the
close of each calendar year) an amount equal to the difference
between 25% of his annual compensation for the calendar year and
the annual additions credited to him under any tax-qualified
plans sponsored by the Company or the Association (including the
ESOP and the SEP). For each calendar year, the amount credited
to this account will earn interest at a rate equal to the highest
rate paid by the Association on certificates of deposit,
regardless of term. Upon his retirement from the Association,
the balance in his account will be paid to Mr. Little in five
substantially equal installments, with the first installment due
on the first day of the second month after he leaves employment.
Should Mr. Little retire before the Association fully repays the
loan by which the ESOP purchased Common Stock in the
Association's mutual to stock conversion, Mr. Little will be
entitled to receive an additional payment equal to the fair
market value of (i) the benefits he would have accrued under the
ESOP if the loan had been fully repaid on the date of his
retirement and all assets of the ESOP were thereupon allocated to
the accounts of the participants, and (ii) a tax bonus equal to
40% of the amount he recognizes as ordinary income pursuant to
clause (i). Notwithstanding the foregoing, the amount payable to
Mr. Little pursuant to the SERA will be reduced to the extent
that, on his date of termination of employment, either (i) the
fair market value of his benefits to be paid exceeds the
limitations established by the OTS as in effect on the effective
date of the SERA, or (ii) such reduction is necessary to avoid
subjecting the Association to liability under Section 280G of the
Internal Revenue Code of 1986, as amended.
In the event of Mr. Little's death before he has received
all benefits payable to him pursuant to the SERA, the Association
shall pay to his beneficiary a lump sum payment equal to the
balance of the above-described account and any additional payment
to which he would be entitled due to the ESOP loan still being
outstanding. If his employment with the Association is
terminated for "Just Cause" (as defined in Mr. Little's
employment agreement),
7<PAGE>
<PAGE>
he will forfeit the right to receive any payments pursuant to the
SERA. In the event of a "Change in Control" (as defined in his
employment agreement), the present value of the benefits to which
he is entitled shall be payable to him in one lump sum payment.
TRANSACTIONS WITH MANAGEMENT
The Association offers loans to its directors, officers and
employees. These loans currently are made in the ordinary course
of business with the same collateral, interest rates and
underwriting criteria as those of comparable transactions
prevailing at the time and do not involve more than the normal
risk of collectibility or present other unfavorable features.
Under current federal law, the Association's loans to directors
and executive officers are required to be made on substantially
the same terms, including interest rates, as those prevailing for
comparable transactions and must not involve more than the normal
risk of repayment or present other unfavorable features. At June
30, 1996, the Association's loans to directors and executive
officers totalled approximately $117,222, or less than .11% of
the Association's total assets at that date.
Mr. Johnson, a member of the Association's Board of
Directors, is a partner in the law firm of Inzer Stivender Haney
& Johnson, P.A. Such firm performs routine legal services on
behalf of the Association, primarily in connection with the
closing of mortgage loans. In fiscal year 1996, fees for such
services totaled $22,740.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, which was the Company's independent
certified public accounting firm for the 1996 fiscal year, has
been retained by the Board of Directors to be the Company's
auditors for the 1997 fiscal year. A representative of Arthur
Andersen LLP is expected to be present at the Annual Meeting and
will have the opportunity to make a statement if he or she so
desires.
OTHER MATTERS
The Board of Directors is not aware of any business to come
before the Meeting other than those matters described above in
this Proxy Statement. However, if any other matters should pro-
perly come before the Meeting, it is intended that proxies in the
accompanying form will be voted in respect thereof in accordance
with the determination of the Board of Directors.
MISCELLANEOUS
The cost of soliciting proxies will be borne by the Company.
The Company will reimburse brokerage firms and other custodians,
nominees and fiduciaries for reasonable expenses incurred by them
in sending proxy materials to the beneficial owners of Common
Stock. In addition to solicitations by mail, directors, officers
and regular employees of the Company may solicit proxies
personally or by telegraph or telephone without additional
compensation. In addition, the Company may engage a proxy
solicitor in connection with the Meeting and may pay the
solicitor a reasonable fee plus out-of-pocket expenses for
soliciting proxies on behalf of the Board of Directors.
8<PAGE>
<PAGE>
STOCKHOLDER PROPOSALS
In order to be eligible to be considered for inclusion in
the proxy materials of the Company for the Annual Meeting of
Stockholders for the fiscal year ending June 30, 1997, any
stockholder proposal to take action at such meeting must be
received at the Company's executive office at 221 S. 6th Street,
Gadsden, Alabama 35901, no later than June 12, 1997. Any such
proposal shall be subject to the requirements of the proxy rules
adopted under the Exchange Act.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Peggy Smith
PEGGY SMITH
SECRETARY
Gadsden, Alabama
October 10, 1996
9<PAGE>
<PAGE>
REVOCABLE PROXY
THE SOUTHERN BANC COMPANY, INC.
GADSDEN, ALABAMA
_________________________________________________________________
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 13, 1996
_________________________________________________________________
The undersigned hereby appoints James B. Little, Jr., Gates
Little and W. Roscoe Johnson, III, with full powers of
substitution, to act as proxies for the undersigned, to vote all
shares of common stock of The Southern Banc Company, Inc. (the
"Company") which the undersigned is entitled to vote at the
Annual Meeting of Stockholders (the "Meeting"), to be held at the
main office of First Federal Savings and Loan Association of
Gadsden, 221 S. 6th Street, Gadsden, Alabama on Wednesday,
November 13, 1996 at 3:00 p.m., local time, and at any and all
adjournments thereof, as follows:
VOTE
FOR WITHHELD
--- --------
1. The election as directors of all
nominees listed below (except as
marked to the contrary below). [ ] [ ]
Thomas F. Dowling, III
Gene B. Rutenberg
Fred Taylor
INSTRUCTION: TO WITHHOLD YOUR VOTE
FOR ANY NOMINEE, INSERT THAT NOMINEE'S
NAME ON THE LINE BELOW.
___________________________________
The Board of Directors recommends a vote "FOR" the proposition
listed above.
_________________________________________________________________
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED THIS PROXY WILL BE VOTED FOR THE PROPOSAL LISTED ABOVE.
IF ANY OTHER BUSINESS IS PRESENTED AT THE MEETING, THIS PROXY
WILL BE VOTED BY THOSE NAMED IN THIS PROXY IN ACCORDANCE WITH THE
DETERMINATION OF THE BOARD OF DIRECTORS. AT THE PRESENT TIME,
THE BOARD OF DIRECTORS KNOWS OF NO OTHER BUSINESS TO BE PRESENTED
AT THE MEETING. THIS PROXY CONFERS DISCRETIONARY AUTHORITY ON
THE HOLDERS THEREOF TO VOTE WITH RESPECT TO MATTERS INCIDENT TO
THE CONDUCT OF THE MEETING.
_________________________________________________________________<PAGE>
<PAGE>
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
Should the undersigned be present and elect to vote at the
Meeting or at any adjournment thereof, and after notification to
the Secretary of the Company at the Meeting of the stockholder's
decision to terminate this proxy, then the power of said
attorneys and proxies shall be deemed terminated and of no
further force and effect.
The undersigned acknowledges receipt from the Company prior
to the execution of this proxy of a Notice of Annual Meeting of
Stockholders, a Proxy Statement dated October 10, 1996 and an
Annual Report to Stockholders for the fiscal year ended June 30,
1996.
Dated: _______________________, 1996
__________________________ __________________________
PRINT NAME OF STOCKHOLDER PRINT NAME OF STOCKHOLDER
__________________________ __________________________
SIGNATURE OF STOCKHOLDER SIGNATURE OF STOCKHOLDER
Please sign exactly as your name appears on the envelope in which
this card was mailed. When signing as attorney, executor, admin-
istrator, trustee or guardian, please give your full title. If
shares are held jointly, each holder should sign.
_________________________________________________________________
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY PROMPTLY IN THE
ENCLOSED POSTAGE PRE-PREPAID ENVELOPE.
_________________________________________________________________
