<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 ] 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:
________________________________________________________________
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, 1997
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 12, 1997, 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 12, 1997
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
12, 1997.
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 two directors of the Company;
and
2. 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
proposals 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 business on September 30, 1997 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, 1997
________________________________________________________________
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 12, 1997
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 12, 1997, 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, 1997.
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
Secretary 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, 1997 (the "Record Date")
are entitled to one vote for each share of Common Stock then
held. As of the Record Date, there were 1,230,313 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 93,344 (1) 7.6%
John Hancock Mutual Life Insurance Company
John Hancock Place
Boston, Massachusetts 102,400 (2) 8.3
Jeffrey L. Gendell
Tontine Financial Partners, L.P.
200 Park Avenue, Suite 3900
New York, New York 91,500 (3) 7.4
All directors and executive officers
as a group (11 persons) 130,039 (4) 10.4
<FN>
______________
(1) Consists of unallocated shares held in a suspense account
for future allocation among participating employees as the
loan used to purchase the shares is repaid; does not include
22,378 allocated shares. The ESOP trustees, currently
Directors Dowling, Taylor 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 1997, 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 May 1997, Jeffrey L.
Gendell and Tontine Financial Partners, L.P. have shared
voting and dispositive power over the reported shares.
(4) Does not include unallocated shares held by the ESOP (see
above); does not include 45,686 shares held by the Company's
management recognition plan trust, of which Directors
Dowling, Taylor and Keeling are trustees; does not include
unexercisable stock options for 92,805 shares, including
34,730 shares held by the Company's stock option and
incentive plan trust, of which Directors Dowling, Taylor and
Keeling are trustees.
</FN>
</TABLE>
2<PAGE>
<PAGE>
ELECTION OF DIRECTORS
GENERAL
The Board of Directors has nominated Craig G. Cantrell and
James B. Little, Jr. 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 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 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. During the past year directors Gene B. Rutenberg and
W. R. Moon passed away, reducing the size of the Board of
Directors to its current eight members.
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 1997 Association(1) to Expire Record Date (2) of Class
- --------------------------------------------------------------------------------------
BOARD NOMINEE FOR TERM TO EXPIRE IN 2000
<S> <C> <C> <C> <C> <C>
Craig G. Cantrell 68 1961 1997 8,890 * %
James B. Little, Jr. 67 1957 1997 37,463 2.45
DIRECTORS CONTINUING IN OFFICE
Grady Gilliam 73 1989 1998 8,890 *
W. Roscoe Johnson, III 54 1989 1998 7,030 *
Rex G. Keeling, Jr. 54 1974 1998 11,708 *
Gates Little 27 1994 1998 10,701 *
Thomas F. Dowling, III 60 1972 1999 15,390 *
Fred Taylor 70 1993 1999 11,808 *
<FN>
_____________
(1) All directors were initially appointed as directors of the Company in 1995
in connection with the incorporation of the Company.
(2) Does not include unallocated shares held by the ESOP; does not include
shares held by the Company's management recognition plan trust and stock
option and incentive plan trust; does not include unexercisable stock
options for 3,816, 29,094, 3,816, 5,712, 5,089, 4,364, 5,818, and 5,089
shares, respectively. 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.
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 of the Board. Mr. Little is a member of the Gadsden
Chamber of Commerce.
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.
THOMAS F. DOWLING, III is a dentist in private practice in
Gadsden. He is a deacon of the First Baptist Church of 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.
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, 1997, the respective Boards met
six and 12 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, 1997 and
the total number of meetings held by committees on which he
served during such fiscal year.
The Compensation Committee of the Company's Board of
Directors most recently consisted of Messrs. Taylor, Dowling and
Gillam. 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 1997.
The Company does not have a standing audit committee. The
Company's full Board of Directors acts as an audit committee and
met one time in this capacity to review the results of the audit
for fiscal 1997.
4<PAGE>
<PAGE>
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 1997, the Company's
directors fees totaled $7,200. 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
1997, the Association's directors' fees totaled $79,350.
EXECUTIVE COMPENSATION
Summary. The following table sets forth cash and non-cash
compensation for each of the three fiscal years ended June 30,
1997 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 Options Compensation(4)
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
1997 $119,600 $11,000 $2,016 $ -- $ -- $18,150
1996 118,400 12,650 2,774 170,018 (3) 36,368 (3) 13,750
1995 110,759 5,000 2,943 -- -- 16,497
<FN>
_______
(1) Includes directors' fees of $9,600 for fiscal 1997.
(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 the number and value of options held by the Company's
Chief Executive Officer at the end of fiscal 1997. No options
were granted or exercised during the year.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Underlying Unexercised In-the-money Options
Options at Fiscal Year-end At Fiscal Year-end (1)
---------------------------- -----------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C>
7,273 29,094 $26,365 $105,466
<FN>
__________
(1) Based on difference between exercise price ($11.6875) and
closing price on June 30, 1997 ($15.3125).
</FN>
</TABLE>
5<PAGE>
<PAGE>
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) 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
6
<PAGE>
<PAGE>
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, 1997 would have been approximately $337,364. 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), 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, 1997, the Association's loans to directors and
executive officers totalled approximately $260,405, or less than
.25% of the Association's total assets at that date.
7<PAGE>
<PAGE>
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 1997, fees for such
services totaled $23,229.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, which was the Company's independent
certified public accounting firm for the 1997 fiscal year, has
been retained by the Board of Directors to be the Company's
auditors for the 1998 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
properly 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.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to the Rules and Regulations of the Securities and
Exchange Commission under Section 16(a) of the Securities
Exchange Act of 1934, as amended, the Company's directors and
executive officers, and certain other persons, are required to
report their ownership and changes of ownership in the common
stock; based solely on the Company's review of ownership reports
received for the fiscal years ended June 30, 1995 and 1996, or
written representations from reporting persons that no annual
reports of changes in beneficial ownership were required, other
than James B. Little, Jr., Gates B. Little, Rodney Rich and
Margaret Stewart, who inadvertently filed late annual statements
of beneficial ownership regarding their allocations of shares
under the Company's ESOP for 1995, management of the Company is
not aware that any current director or executive officer did not
comply with the reporting requirements for those fiscal years.
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, 1998, 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, 1998. Any such
proposal shall be subject to applicable legal requirements,
including 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, 1997
8
<PAGE>
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE THE SOUTHERN BANC COMPANY, INC.
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 12, 1997
The undersigned hereby appoints W. Roscoe Johnson, III and Gates
B. Little, 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. which the undersigned is
entitled to vote at the annual meeting of stockholders, 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 12, 1997 at 3:00 p.m., and at any and all
adjournments thereof, as follows:
<TABLE>
<CAPTION>
WITH-
FOR HOLD EXCEPT
<S> <C> <C> <C>
1. The election as directors of all
nominees listed (except as marked
to the contrary below): [ ] [ ] [ ]
Craig G. Cantrell
James B. Little, Jr.
</TABLE>
INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
INDIVIDUAL NOMINEE, MARK "EXCEPT" AND WRITE THAT
NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
___________________________________________
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED
PROPOSITION.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS PROXY WILL BE VOTED FOR THE PROPOSITION STATED.
IF ANY OTHER BUSINESS IS PRESENTED AT THE ANNUAL 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 ANNUAL MEETING. THIS PROXY CONFERS
DISCRETIONARY AUTHORITY ON THE HOLDERS THEREOF TO VOTE WITH
RESPECT TO THE ELECTION OF ANY PERSON AS DIRECTOR WHERE THE
NOMINEE IS UNABLE TO SERVE OR FOR GOOD CAUSE WILL NOT SERVE AND
MATTERS INCIDENT TO THE CONDUCT OF THE ANNUAL MEETING.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
Please be sure to sign and date
this proxy in the box below Date
- ---Stockholders sign above------Co-holder (if any) sign above---
Should the undersigned be present and elect to vote at the
annual meeting or at any adjournment thereof and after
notification to the Secretary of the Company at the annual
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 notice of the annual meeting, a
proxy statement dated October 10, 1997 and an annual report to
stockholders.
Please sign exactly as your name appears on this proxy card.
When signing as attorney, executor, administrator,
trustee or guardian, please give your full title. If shares are
held jointly, each holder should sign.
PLEASE ACT PROMPTLY
SIGN, DATE AND MAIL YOUR PROXY TODAY
