<PAGE>
<PAGE>
SCHEDULE 14A INFORMATION
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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
[ ] Confidential, for Use of the Commission Only (as permitted
by
Rule 14a-6(e)(2))
THE SOUTHERN BANC COMPANY, INC.
- ----------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- -----------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
Payment of Filing Fee (Check the appropriate box):
[x ] No fee required
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction
applies:
________________________________________________________________
_____________
2. Aggregate number of securities to which transaction
applies:
________________________________________________________________
_____________
3. Per unit price or other underlying value of transaction
computed
pursuant to Exchange Act Rule 0-11 (set forth the
amount on which
the filing fee is calculated and state how it was
determined :
________________________________________________________________
_____________
4. Proposed maximum aggregate value of transaction:
________________________________________________________________
4. Total fee paid:
________________________________________________________________
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by
Exchange Act
Rule 0-11(a)(2) and identify the filing for which the
offsetting fee was
paid previously. Identify the previous filing by
registration statement
number, or the Form or Schedule and the date of its
filing.
1. Amount Previously Paid:
____________________________________________
2. Form, Schedule or Registration Statement No.:
____________________________________________
3. Filing Party:
____________________________________________
4. Date Filed:
____________________________________________<PAGE>
<PAGE>
[LETTERHEAD]
October 9, 1998
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 Thursday,
November 12, 1998, at 5:00 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.
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
(256) 543-3860
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 12, 1998
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 5:00 p.m. on Thursday, November 12,
1998.
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 one director of the
Company for a term to expire in 1999 and
three directors of the Company for terms
to expire in 2001; 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 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 25, 1998 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 9, 1998
________________________________________________________________
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, 1998
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 Thursday, November 12, 1998, at
5:00 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 9, 1998.
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 25, 1998 (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, as amended (the "Exchange Act") 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>
Percent of Shares
Name and Address Amount and Nature of of Common Stock
of Beneficial Owner Beneficial Ownership Outstanding
- ------------------- -------------------- -----------------
<S> <C> <C>
The Southern Banc Company, Inc.
Employee Stock Ownership Plan
221 S. 6th Street
Gadsden, Alabama 80,991 (1) 6.6%
John Hancock Mutual Life Insurance Company
John Hancock Place
Boston, Massachusetts 88,400 (2) 7.2
Jeffrey L. Gendell
Tontine Financial Partners, L.P.
200 Park Avenue, Suite 3900
New York, New York 91,500 (3) 7.4
Friedman, Billings, Ramsey Group, Inc.
1001 19th Street, N.
Arlington, VA 22209 68,050 (4) 5.5
All directors and executive officers
as a group (11 persons) 158,036 (5) 12.8
<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 35,389 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 1998, 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 13D filed in February 1997 and amended in May 1997,
Jeffrey L. Gendell and Tontine Financial Partners, L.P. have shared
voting and dispositive power over the reported shares.
(4) Based on a Schedule 13G filed in February 1998 and amended in March 1998,
Friedman, Billings, Ramsey Group, Inc. has sole voting and dispositive
power over the reported shares.
(5) Includes exercisable stock options for 37,843 shares; does not include
unallocated shares held by the ESOP (see above); does not include 37,545
shares held by the Company's management recognition plan trust, of which
Directors Dowling, Taylor and Keeling are trustees; does not include
27,223 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 Grady Gillam, W.
Roscoe Johnson, III and Rex G. Keeling, Jr. to serve as
directors for a three-year period and has nominated Gates Little
to serve as a director for a one-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.
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 1998 Association(1) to Expire Record Date (2) of Class
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BOARD NOMINEE FOR TERM TO EXPIRE IN 1999 (3)
Gates Little 28 1994 1998 12,868 1.04%
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2001
Grady Gillam 74 1989 1998 10,280 *
W. Roscoe Johnson, III 55 1989 1998 8,894 *
Rex G. Keeling, Jr. 55 1974 1998 13,416 1.09
DIRECTORS CONTINUING IN OFFICE
Thomas F. Dowling, III 61 1972 1999 15,189 1.23
Fred Taylor 71 1993 1999 13,516 1.10
Craig G. Cantrell 69 1961 2000 10,280 *
James B. Little, Jr. 70 1957 2000 49,670 4.04
<FN>
_____________
(1) All directors were initially appointed as directors of the Company in
1995 in connection with the incorporation of the Company.
(2) Includes exercisable stock options for 1,908, 2,856, 2,544, 2,182, 2,909,
2,544, 1,908 and 14,547 shares, respectively; 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. See "VOTING SECURITIES AND BENEFICIAL OWNERSHIP"
above.
(3) To transfer Gates Little's directorship term from Class I to Class II,
which will necessitate his standing for election with Class II directors
again in 1999 and keep the classes of directors as nearly equal in number
as possible.
* 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.
GATES LITTLE joined the Association in 1993 and has served
as Executive Vice President since January 1998. Previously, he
served as Vice President 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. Mr.
Little is the son of James B. Little, Jr.
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, Haney, Johnson & McWhorter, 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.
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.
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. Mr. Little is the father of Gates Little.
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, 1998, the respective Boards met 5
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, 1998 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
once regarding compensation for fiscal 1998.
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 1998.
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 1998, the Company's
directors fees totaled $9,600. 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
1998, the Association's directors' fees totaled $68,250.
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets
forth cash and non-cash compensation for each of the three
fiscal years ended June 30, 1998 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 Awards
Annual Compensation ------------------------
---------------------------------- Restricted Securities
Name and Fiscal Other Annual Stock Underlying All Other
Principal Position Year Salary(1) Bonus Compensation(2) Awards(3) Options Compensation(4)
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
James B. Little, Jr. 1998 $119,600 $ 6,600 $2,016 $ -- $ -- $45,195
1997 119,600 11,000 2,016 -- -- 18,150
1996 118,400 12,650 2,774 170,018 (3) 36,368 13,750
<FN>
1 Includes directors' fees of $9,600 for fiscal 1998.
2 Consists of excess life insurance.
3 As of June 30, 1998, Mr. Little held 14,547 shares of restricted Common Stock awarded
under the Company's Management Recognition Plan ("MRP"). Such shares had an aggregate
value of $225,478 based on the closing price of the Common Stock on June 30, 1998 ($15.50
per share). Such shares vest at the rate of 20% per year from the date of award, subject
to accelerated vesting upon death or disability. Dividends are paid on such shares to the
extent paid on the Common Stock generally.
4 Consists of contributions to the Association's defined contribution qualified pension
plan, pursuant to which the Association contributes 5% of each employee's annual salary
and bonus to an IRA account, and ESOP share allocations, valued at the respective fiscal
year ends.
</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 1998. No options
were granted or exercised by him 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> <C>
James B. Little, Jr. 14,547 21,820 $55,460 $83,188
<FN>
__________
(1) Based on difference between exercise price ($11.6875) and closing
price on June 30, 1998 ($15.50).
</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, or (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 or constructive termination of
employment in connection with, or within 6 months before or 24
months 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
6<PAGE>
<PAGE>
be made in the event of Mr. Little's voluntary termination of
employment for any reason within 30 days of 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 advance 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, 1998 would have been approximately $425,544. These
provisions may have an antitakeover 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 will establish 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.
7<PAGE>
<PAGE>
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, 1998, the Association's loans to directors and
executive officers totaled approximately $207,147, or less than
0.2% 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, Haney Johnson,
& McWhorter, 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 1998, fees for such
services totaled $22,213.
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, which was the Company's independent
certified public accounting firm for the 1998 fiscal year, has
been retained by the Board of Directors to be the Company's
auditors for the 1999 fiscal year. A representative of Arthur
Andersen LLP is not expected to be present at the Annual
Meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP COMPLIANCE
Pursuant to regulations promulgated under the Exchange
Act, the Company's officers, directors and persons who own more
than ten percent of the outstanding Common Stock are required to
file reports detailing their ownership and changes of ownership
in such Common Stock, and to furnish the Company with copies of
all such reports. Based on the Company's review of such reports
which the Company received during the last fiscal year, or
written representations from such persons that no annual report
of change in beneficial ownership was required, the Company
believes that, during the last fiscal year, all persons subject
to such reporting requirements have complied with the reporting
requirements.
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.
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, 1999, 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, 1999. Any such
proposal shall be subject to applicable legal requirements,
including the proxy rules adopted under the Exchange Act.
Stockholder proposals, other than those submitted pursuant
to the Exchange Act, must be submitted in writing to the
Secretary of the Company at the address given in the preceding
paragraph not less than thirty days nor more than sixty days
prior to the date of any such meeting; provided, however, that
if less than forty days' notice of the meeting is given to
stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Company not later than
the close of business on the tenth day following the day on
which notice of the meeting was mailed to stockholders.
BY ORDER OF THE BOARD OF DIRECTORS
/s/ Peggy Smith
PEGGY SMITH
SECRETARY
Gadsden, Alabama
October 9, 1998
________________________________________________________________
A COPY OF THE COMPANY'S FORM 10-KSB FOR THE FISCAL YEAR
ENDED JUNE 30, 1998 AS FILED WITH THE SECURITIES AND EXCHANGE
COMMISSION WILL BE FURNISHED WITHOUT CHARGE TO STOCKHOLDERS AS
OF THE RECORD DATE UPON WRITTEN REQUEST TO THE SECRETARY, THE
SOUTHERN BANC COMPANY, 221 S. 6TH STREET, GADSDEN, ALABAMA
35901.
________________________________________________________________
9<PAGE>
<PAGE>
[X] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE THE SOUTHERN BANC COMPANY, INC.
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 12, 1998
The undersigned hereby appoints James B. Little, Jr. and Craig
G. Cantrell, 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
Thursday, November 12, 1998 at 5:00 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): [ ] [ ] [ ]
NOMINEE FOR TERM TO EXPIRE IN 1999
Gates Little
NOMINEE FOR TERM TO EXPIRE IN 2001
Grady Gillam
W. Roscoe Johnson, III
Rex G. Keeling, 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
9, 1998 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
