<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 December 31, 1997
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
- --------------------------------------- -----------
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (205) 543-3860
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 December 31, 1997, there were 1,230,313 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
Item 1. Financial Statements
<PAGE>
<PAGE>
THE SOUTHERN BANC COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1997 1997
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
CASH AND CASH EQUIVALENTS $ 2,788 $ 5,807
SECURITIES AVAILABLE FOR SALE 20,161 17,621
SECURITIES HELD TO MATURITY,
fair values of $42,006 and $44,250,
respectively 41,288 44,157
LOANS RECEIVABLE, net 39,193 36,181
PREMISES AND EQUIPMENT, net 269 267
ACCRUED INTEREST AND DIVIDENDS RECEIVABLE 719 747
PREPAID EXPENSES AND OTHER ASSETS 698 654
-------- --------
TOTAL ASSETS $105,116 $105,434
======== ========
DEPOSITS $ 85,967 $ 86,759
OTHER LIABILITIES 892 743
-------- --------
TOTAL LIABILITIES 86,859 87,502
======== ========
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 $.01 per share,
1,454,750 shares issued and 3,500,000
shares authorized 15 15
Treasury stock at cost, 224,437 shares (3,000) (3,000)
Additional paid-in capital 13,686 13,643
Unearned compensation (1,779) (1,917)
Retained earnings 9,320 9,253
Unrealized gain on securities available
for sale, net 15 (62)
-------- --------
TOTAL STOCKHOLDERS' EQUITY $ 18,257 $ 17,932
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $105,116 $105,434
======== ========
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated statements.
<PAGE>
<PAGE>
THE SOUTHERN BANC COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three and Six Month Periods Ended
December 31, 1997 and 1996
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
--------------------- --------------------
1997 1996 1997 1996
---------- --------- -------- --------
(Unaudited) (Unaudited) (Unaudited)(Unaudited)
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 773 $ 674 $ 1,513 $ 1,349
Interest and dividends on
securities available for sale 320 383 612 613
Interest and dividends on securities
held to maturity 718 768 1,487 1,704
Other interest income 63 70 132 152
------- ------- ------- -------
Total interest income 1,874 1,895 3,744 3,818
INTEREST EXPENSE:
Interest on deposits 1,146 1,132 2,300 2,289
------- ------- ------- -------
Net interest income 728 763 1,444 1,529
Provision for loan losses 0 0 0 0
------- ------- ------- -------
Net interest income after
provision for loan losses 728 763 1,444 1,529
------- ------- ------- -------
NON-INTEREST INCOME:
Fees and other non-interest income 20 16 41 32
------- ------- ------- -------
NON-INTEREST EXPENSE:
Salaries and employee benefits 406 363 760 702
Office building and equipment
expenses 65 66 131 141
Deposit insurance expense 14 52 28 695
Other operating expense 101 124 180 197
------- ------- ------- -------
Total non-interest expense 586 605 1,099 1,735
------- ------- ------- -------
Income (loss) before income taxes 162 174 386 (174)
PROVISION (BENEFIT) FOR INCOME TAXES 59 65 139 (69)
------- ------- ------- -------
Net income (loss) $ 103 $ 109 $ 247 $ (105)
======= ======= ======= =======
EARNING (LOSS) PER SHARE - BASIC $ 0.10 $ 0.10 $ 0.23 $ (0.09)
EARNINGS(LOSS) PER SHARE - DILUTED $ 0.09 $ 0.09 $ 0.22 $ (0.09)
DIVIDENDS DECLARED PER SHARE $0.0875 $0.2625 $0.1750 $0.3500
</TABLE>
The accompanying notes are an integral part of these condensed
consolidated statements.
<PAGE>
THE SOUTHERN BANC COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Six Months Ended
December 31, 1997 and 1996
(Dollar Amounts in Thousands)
<TABLE>
<CAPTION>
1997 1996
------- -------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 247 $ (105)
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation 24 24
Amortization (accretion), net 65 5
Amortization of unearned compensation 180 141
Provision for loan losses 0 0
Change in assets and liabilities:
(Increase) decrease in other assets (16) 989
Increase (decrease) in other liabilities 66 (565)
------- -------
Total adjustments 319 594
------- -------
Net cash provided by (used in) operating
activities 566 489
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available for sale (5,237) (4,283)
Proceeds from maturities and principal payments on
securities available for sale 2,759 1,000
Purchases of securities held to maturity (3,500) 0
Proceeds from maturities and principal payments on
securities held to maturity 6,369 5,059
Net loan (originations) repayments (3,012) (768)
Capital expenditures (26) (22)
------- -------
Net cash provided by (used in) investing
activities (2,647) 986
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in deposits, net (792) 1,159
Increase (decrease) in advance payments by
borrowers for taxes and insurance 33 47
Dividends paid (180) (401)
Contributions to plan trusts (34) (43)
Proceeds from exercise of stock options 35 0
Purchase of treasury stock 0 (2,042)
------- -------
Net cash provided by financing activities (938) (1,280)
------- -------
Net increase (decrease) in cash and cash equivalents (3,019) 195
CASH AND CASH EQUIVALENTS, beginning of period 5,807 4,535
------- -------
CASH AND CASH EQUIVALENTS, end of period $ 2,788 $ 4,730
======= =======
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes $ 75 $ 0
======= =======
Interest $ 2,300 $ 2,299
======= =======
Non-cash transactions:
Change in unrealized net gain on securities
available for sale, net $ 127 $ 35
======= =======
</TABLE>
<PAGE>
<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 December 31, 1997 and June 30, 1997, and for
the three and six month periods ended December 31, 1997 and
1996, 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 and
six month periods ended December 31, 1997 and 1996. 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-KSB for the year ended
June 30, 1997. The accounting policies followed by the Company
are set forth in the summary of significant accounting policies
in the Company's June 30, 1997 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. A trust was formed
for the purpose of purchasing shares of stock in the open market
for future awards of stock options under the MRP Plan. 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. The Plan held 56,008
issued and outstanding shares at December 31, 1997.
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. A trust was formed for the purpose of
purchasing shares of stock in the open market for issuance upon
future exercises of stock options under the Option Plan. The
Plan held 33,235 issued and outstanding shares at December 31,
1997.
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
Basic earnings per share were computed by dividing net income by
the weighted average number of shares of common stock
outstanding during the three and six month periods ended
December 31, 1997 and 1996. Common stock outstanding consists
of issued shares less treasury stock, unallocated ESOP shares,
and shares owned by the MRP and Stock Option plan trusts.
Diluted earnings per share for the three and six month periods
ended December 31, 1997 and 1996, were computed by dividing net
income by the weighted average number of shares of common stock
and the dilutive effects of the shares awarded under the MRP and
the Stock Option plans, based on the treasury stock method using
an average fair market value of the stock during the respective
periods.
<PAGE>
<PAGE>
In 1997, the Company adopted SFAS No 128, "Earnings Per Share,"
effective December 15, 1997. As a result, the Company's
reported earnings per share for 1996 were restated. The
following table represents the earnings per share calculations
for the three and six months ended December 31, 1997 and 1996,
accompanied by the effect of this accounting change on
previously reported earnings per share:
<TABLE>
<CAPTION>
Per Share
Income Shares Amount
------ ------ ---------
<S> <C> <C> <C>
For the Three Months Ended:
- --------------------------
December 31, 1997
Net income $103,000
--------
Basic earnings per share:
Income available to common shareholders 103,000 1,055,896 $ 0.10
--------
Dilutive Securities:
Management recognition plan shares 32,590
Stock option plan shares 37,432
-------- ---------
Dilutive earnings per share:
Income available to common shareholders
plus assumed conversions $103,000 1,125,918 $ 0.09
-------- --------- --------
December 31, 1996
Net income $109,000
--------
Basic earnings per share:
Income available to common
shareholders 109,000 1,125,407 $ 0.10
Dilutive Securities: --------
Management recognition plan shares 32,590
Stock option plan shares 10,984
-------- ---------
Dilutive earnings per share:
Income available to common
shareholders plus assumed
conversions $109,000 1,168,981 $ 0.09
-------- --------- --------
For the Six Months Ended:
- --------------------------
December 31, 1997
Net income $247,000
--------
Basic earnings per share:
Income available to common
shareholders 247,000 1,054,858 $ 0.23
Dilutive Securities: --------
Management recognition plan shares 32,590
Stock option plan shares 33,981
Dilutive earnings per share: -------- ---------
Income available to common
shareholders plus assumed
conversions $247,000 1,121,429 $ 0.22
-------- --------- --------
December 31, 1996
Net income $(105,000)
---------
Basic earnings per share:
Income available to common
shareholders (105,000) 1,137,391 $ (0.09)
--------
Dilutive Securities:
Management recognition plan shares 32,590
Stock option plan shares 12,543
---------- ---------
Dilutive earnings per share:
Income available to common
shareholders plus assumed
conversions $(105,000) 1,182,524 $ (0.09)
--------- --------- --------
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Changes in previously reported EPS: For the period ended December 31, 1996
--------------------------------------
Three Months Six Months
------------ ----------
<S> <C> <C>
Earnings (loss) per share, as reported $ 0.09 $ (0.09)
Earnings (loss) per share, as restated:
Basic $ 0.10 $ (0.09)
Diluted $ 0.09 $ (0.09)
</TABLE>
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.
6. PENDING ACCOUNTING PRONOUNCEMENTS
In February 1997, Financial Accounting Standards Board ("FASB")
issued SFAS No.129, "Disclosure of Information About Capital
Structure". This Statement establishes standards for disclosing
information about an entity's capital structure. It applies to
all entities. This Statement continues the previous
requirements to disclose certain information about an entity's
capital structure found in Accounting Principles Board ("APB")
Opinions No. 10, Omnibus Opinion - 1996, and APB No. 15,
"Earnings Per Share", and SFAS No. 47, "Disclosure of Long-Term
Obligations", for entities that were subject to the requirements
of those standards. SFAS No. 129 eliminates the exemption of
nonpublic entities from certain disclosure requirements of APB
No. 15 as provided by SFAS No.21, "Suspension of the Reporting
of Earnings Per Share and Segment Information by Nonpublic
Enterprises". It supersedes specific disclosure requirements of
APB Nos. 10 and 15 and SFAS No. 47 and consolidates them in this
Statement for ease of retrieval and for greater visibility to
nonpublic entities. SFAS No. 129 is effective for financial
statements for periods ending after December 15, 1997. It
contains no change in disclosure requirements for entities that
were previously subject to the requirements of APB Nos. 10 and
15 and SFAS No. 47.
In June 1997, FASB issued SFAS No. 130, "Reporting of
Comprehensive Income." This statement established standards for
reporting and display of comprehensive income and its components
(revenues, expenses, gains and losses) in a full set of
financial statements. This Statement also requires that all
items that are required to be recognized under accounting
standards as components of comprehensive income, be reported in
financial statements and are displayed with the same prominence
as other financial statements. This Statement is effective for
fiscal years beginning after December 15, 1997. Earlier
application is permitted. Reclassification of financial
statements for earlier periods provided for comparative purposes
is required.
In June 1997, FASB issued SFAS No. 131, "Disclosure about
Segments of an Enterprise and Related Information". This
Statement establishes standards for the way that public business
enterprises report information about operating segments in
annual financial statements and requires that those enterprises
report selected information about operating segments in interim
financial reports issued to stockholders. This Statement also
establishes standards for related disclosures about products and
services, geographic areas, and major customers. This Statement
requires the reporting of financial and descriptive information
about an enterprise's reportable operating segments. This
Statement is effective for financial statements for periods
beginning after December 15, 1997. In the initial year of
application comparative information for earlier years is to be
restated.
Management believes there will be no material effect on the
consolidated financial statements from the adoption of these
pronouncements.
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Comparison of Financial Condition at December 31 and June 30,
1997.
Total assets decreased approximately $318,000 or 0.30% from
$105.4 million at June 30, 1997 to $105.1 million at December
31, 1997. During the period ended December 31, 1997, net loans
increased approximately $3.0 million or 8.32%, securities
available for sale increased approximately $2.5 million or
14.41% and securities held to maturity decreased approximately
$2.9 million or 6.50%. The decrease in securities held to
maturity was primarily attributable to principal payments
received during the period ended December 31, 1997.
Cash and cash equivalents decreased approximately $3.0 million
or 51.99% from $5.8 million to $2.8 million at December 31,
1997. The decrease in cash and cash equivalents was primarily
attributable to the purchase of investment securities and loan
originations.
Accrued interest and dividends receivable decreased
approximately $28,000 or 3.75% from $747,000 at June 30, 1997 to
$719,000 at December 31, 1997. Prepaid expenses and other
assets increased approximately $44,000 or 6.73% from $654,000 at
June 30, 1997 to $698,000 at December 31, 1997.
Total deposits decreased approximately $792,000 or 0.91% from
$86.8 million at June 30, 1997 to $86.0 million at December 31,
1997. Other liabilities during the period ended December 31,
1997 increased approximately $149,000 or 20.05% from $743,000 at
June 30, 1997 to $892,000 at December 31, 1997. This increase
was primarily attributable to an increase in accrued federal and
state income taxes.
Total equity increased approximately $325,000 or 1.81% from
$17.9 million at June 30, 1997 to $18.3 million at December 31,
1997. This change was primarily attributable to an increase in
retained earnings, additional paid-in capital, and amortization
of unearned compensation, offset in part by the payment of
common stock dividends. Treasury stock at December 31, 1997 was
$3.0 million.
Comparison of Results of Operations for the Three and Six Months
Ended December 31, 1997 and 1996.
The Company reported net income for the three and six month
periods ended December 31, 1997 of $103,000 and $247,000,
respectively. Net income for the three month period decreased
approximately $6,000 or 5.50% from $109,000 at December 31, 1996
to $103,000 at December 31, 1997. For the six month period, net
income increased approximately $352,000 or 335.24% from a net
loss of $105,000 at December 31, 1996 to net income of $247,000
at December 31, 1997. The increase in net income for the six
month period ended December 31, 1997 was primarily attributable
to a reduction in deposit insurance expense, offset in part by
an increase in income tax expense. The net loss during the six
month period ended December 31, 1996 was primarily attributable
to the recognition of the one-time special assessment of
approximately $591,000 by the FDIC, offset in part by a $69,000
reduction in income tax expense.
Net Interest Income. Net interest income for the three and six
months ended December 31, 1997 was $728,000 and $1.4 million,
respectively. Net interest income for the three and six months
ended December 31, 1996 was $763,000 and $1.5 million,
respectively. Total interest income decreased approximately
$21,000 or 1.11% for the three months ended December 31, 1997.
Total interest income decreased approximately $74,000 or 1.94%
for the six month period ended December 31, 1997. Total
interest expense increased approximately $14,000 or 1.24% for
the three months ended December 31, 1997 compared with the three
month period ended December 31, 1996. Total interest expense
increased approximately $11,000 or 0.48% for the six months
ended December 31, 1997 compared with the six months ended
December 31, 1996.
<PAGE>
<PAGE>
Provision for Loan Losses. No provision for loan losses was
deemed necessary in either of the three month or six month
periods ended December 31, 1997 or 1996. 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 increased
approximately $4,000 or 25.00% from $16,000 to $20,000 for the
three month period ended December 31, 1997 compared to the three
month period ended December 31, 1996. For the six month period
ended December 31, 1997 non-interest income increased
approximately $9,000 or 28.13% from $32,000 to $41,000.
Non-interest Expense. Non-interest expense decreased
approximately $19,000 or 3.14% for the three month period ended
December 31, 1997 from $605,000 to $586,000. For the six month
period ended December 31, 1997, non-interest expense decreased
approximately $636,000 or 36.66% from $1.7 million to $1.1
million. This decrease was primarily attributable to the
reduction in deposit insurance expense related to the
recognition of the one-time special assessment by the FDIC in
the amount of $591,000 during the six month period ended
December 31, 1996. Salaries and employee benefits increased
approximately $43,000 or 11.85% for the three month period ended
December 31, 1997 compared with the three month period ended
December 31, 1996. For the six month period ended December 31,
1997, salaries and benefits increased $58,000 or 8.26% compared
with the six month period ended December 31, 1996. This
increase was primarily attributable to salary and benefit
expenses related to the establishment of certain employee
benefit plans, subsequent to the conversion. Other operating
expenses decreased by $23,000 or 18.55% and $17,000 or 8.63% for
the three and six month periods ended December 31, 1997 and
1996, respectively. This decrease was primarily attributable to
reduced operating expenses relating to the operation of the
holding company and professional fees associated with
back-office operational improvements.
Provision for Income Taxes. For the three month period ended
December 31, 1997, provision for income tax expense decreased
approximately $6,000 or 9.23%. For the six month period ended
December 31, 1997, provision for income tax expense increased
approximately $208,000 or 301.45%. This increase was primarily
attributable to a reduction in deposit insurance expense related
to the recognition of the one-time special assessment by the
FDIC in the amount of $591,000 during the six month period ended
December 31, 1996. For the three month period ended December
31, 1997, income before income taxes decreased approximately
$12,000 or 6.90% as compared to the three month period ended
December 31, 1996. For the six month period ended December 31,
1997, income before income taxes increased approximately
$560,000 or 321.84% compared to the six month period ended
December 31, 1996.
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 4.0%. The Association's average
liquidity ratio well exceeded the required maximums at and
during the three and six month periods ended December 31, 1997.
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 December 31, 1997, 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 December 31, 1997, 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 January 15, 1998, The Southern Banc Company, Inc.
announced a dividend in the amount of $.0875 per share on or
about March 16, 1998 to stockholders of record at the close of
business on February 20, 1998.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 - Financial Data Schedule
(b) Reports on Form 8-K
None
<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: January 29, 1998 By: /s/ James B. Little, Jr.
----------------------------
James B. Little, Jr.
(Principal Executive and
Financial Officer)
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 220
<INT-BEARING-DEPOSITS> 2,568
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 20,161
<INVESTMENTS-CARRYING> 41,288
<INVESTMENTS-MARKET> 42,006
<LOANS> 39,269
<ALLOWANCE> 76
<TOTAL-ASSETS> 105,116
<DEPOSITS> 85,967
<SHORT-TERM> 0
<LIABILITIES-OTHER> 892
<LONG-TERM> 0
<COMMON> 15
0
0
<OTHER-SE> 18,242
<TOTAL-LIABILITIES-AND-EQUITY> 105,116
<INTEREST-LOAN> 1,513
<INTEREST-INVEST> 2,099
<INTEREST-OTHER> 132
<INTEREST-TOTAL> 3,744
<INTEREST-DEPOSIT> 2,300
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 1,444
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,099
<INCOME-PRETAX> 386
<INCOME-PRE-EXTRAORDINARY> 386
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 247
<EPS-PRIMARY> 0.23
<EPS-DILUTED> 0.22
<YIELD-ACTUAL> 7.44
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 76
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 76
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
