SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant |X|
Filed by the Party other than the Registrant | |
Check the appropriate box:
|_| Preliminary Proxy Statement |_| Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
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:
______________________________________________________________
5. 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>
[LETTERHEAD OF THE SOUTHERN BANC COMPANY, INC.]
October 6, 2000
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 The Southern
Bank Company, formerly First Federal Savings and Loan Association of Gadsden,
221 S. 6th Street, Gadsden, Alabama, on Thursday, November 9, 2000, 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, The Southern Bank Company. 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, President
and Chief Executive Officer
<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 9, 2000
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 The Southern Bank Company, 221 S. 6th Street, Gadsden,
Alabama, at 5:00 p.m. on Thursday, November 9, 2000.
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 for terms to
expire in 2003.
2. The approval of a proposal to amend Article III of the
Company's Certificate of Incorporation to clarify that the
purpose for which the Company has been organized is to act
as the holding company for a subsidiary institution or
institutions which may offer a variety of financial
services, as well as to transact all other lawful business
for which corporations may be incorporated pursuant to the
laws of the State of Delaware.
3. 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 15, 2000 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 6, 2000
--------------------------------------------------------------------------------
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>
PROXY STATEMENT
OF
THE SOUTHERN BANC COMPANY, INC.
221 S. 6TH STREET
GADSDEN, ALABAMA 35901
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 9, 2000
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 The Southern Bank Company
(the "Bank"), 221 S. 6th Street, Gadsden, Alabama, on Thursday, November 9,
2000, 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 6, 2000.
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, PROPERLY EXECUTED PROXIES WHICH HAVE NOT BEEN REVOKED WILL BE VOTED
IN FAVOR OF EACH OF THE PROPOSALS SET FORTH IN THIS PROXY STATEMENT TO BE
CONSIDERED AT THE MEETING. If any other matters are properly brought before the
Annual Meeting as to which proxies in the accompanying form confer discretionary
authority, the persons named in the accompanying proxies will vote the shares
represented thereby on such matters as determined by a majority of the Board of
Directors. The proxies solicited by the Board of Directors confer 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, with respect to matters incident to the conduct of the Annual
Meeting and with respect to any other matter presented to the Annual Meeting if
notice of such matter has not been delivered to the Company in accordance with
the Certificate of Incorporation and Bylaws. Proxies marked as abstentions will
not be counted as votes cast. In addition, shares held in street name which have
been designated by brokers on proxy cards as not voted ("broker no votes") will
not be counted as votes cast. Proxies marked as abstentions or as broker no
votes, however, will be treated as shares present for purposes of determining
whether a quorum is present.
The Company has retained Regan & Associates, Inc. to aid in the
solicitation of proxies and to verify certain records related to the
solicitation of proxies at a fee of $800.
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 15, 2000 (the
"Record Date") are entitled to one vote for each share of Common Stock then
held. As of the Record Date, there were 1,006,498 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>
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 35901 51,808 1 5.1%
John Hancock Mutual Life Insurance Company
John Hancock Subsidiaries, Inc.
The Berkeley Financial Group, Inc.
John Hancock Advisers, Inc.
John Hancock Place
P.O. Box 111
Boston, Massachusetts 02117 83,400 2 8.3
Jeffrey L. Gendell
Tontine Financial Partners, L.P.
Tontine Management, L.L.C.
200 Park Avenue, Suite 3900
New York, New York 10166 97,300 3 9.7
Sandler O'Neill Asset Management, LLC
712 Fifth Avenue, 22nd Floor
New York, New York 10019 60,000 4 5.9
All directors and executive officers
as a group (8 persons) 196,872 5 19.6
</TABLE>
------------------
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 64,572 allocated shares. The Employee
Stock Ownership Plan ("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 January 2000, John Hancock Advisers, Inc.,
a subsidiary of The Berkeley Financial Group, Inc., has sole voting and
dispositive power over the reported shares. The Berkeley Financial Group,
Inc. is a wholly-owned subsidiary of John Hancock Subsidiaries, Inc., which
is a wholly-owned subsidiary of John Hancock Mutual Life Insurance Company.
3 Based on a Schedule 13D filed in May 2000, Jeffrey L. Gendell, Tontine
Financial Partners, L.P. and Tontine Management, L.L.C. have shared voting
and dispositive power over the reported shares.
4 Based on a Schedule 13D filed in April 1999, Sandler O'Neill Asset
Management, LLC and certain of its affiliates have shared voting and
dispositive power over the reported shares.
5 Includes exercisable stock options for 59,089 shares; does not include
unallocated shares held by the ESOP (see above); does not include 21,699
shares held by the Company's management recognition plan trust, of which
Directors Dowling, Taylor and Keeling are trustees; does not include 51,308
shares held by the Company's stock option and incentive plan trust, of
which Directors Dowling, Taylor and Keeling are trustees.
2
<PAGE>
PROPOSAL I -- 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.
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, the expiration of his term as a director, and the
number and percentage of shares of Common Stock beneficially owned.
<TABLE>
<CAPTION>
Shares of
Common Stock
Age at Year First Current Beneficially
June 30, Elected as Term Owned at the Percent
Name 2000 Director 1 to Expire Record Date 2 of Class
---- ----------- ---------- --------- ------------------ --------
BOARD NOMINEES FOR TERMS TO EXPIRE IN 2003
<S> <C> <C> <C> <C> <C>
Craig G. Cantrell 71 1961 2000 13,060 1.3%
James B. Little, Jr. 70 1957 2000 63,269 6.1
DIRECTORS CONTINUING IN OFFICE
Grady Gillam 76 1989 2001 13,060 1.3
Rex G. Keeling, Jr. 57 1974 2001 16,833 1.7
James B. Little, III 39 2000 2001 21,300 2.1
Thomas F. Dowling, III 63 1972 2002 21,062 2.1
Gates Little 30 1994 2002 31,355 3.0
Fred Taylor 73 1993 2002 16,933 1.7
</TABLE>
------------------
1 All directors other than James B. Little, III were initially appointed as
directors of the Company in 1995 in connection with the incorporation of
the Company and also serve as directors of the Bank. James B. Little, III
was appointed to the Board of Directors of the Company in April 2000 to
fill the vacancy created by the resignation of W. Roscoe Johnson, III and
does not serve as a director of the Bank.
2 Includes exercisable stock options for 3,816, 29,094, 3,816, 5,089, 5,818,
6,364 and 5,089 shares held by Messrs. Cantrell, Little, Jr., Gillam,
Keeling, Dowling, Gates Little and Taylor, 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
<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 Bank in 1957 and has served as its Chief
Executive Officer since 1966 and its Chairman of the Board since 1976. Mr.
Little has served as Chairman of the Board, President and Chief Executive
Officer of the Company since 1995. Mr. Little also served as President of the
Bank from 1966 until September 2000. Mr. Little is a member of the Gadsden
Chamber of Commerce. Mr. Little is the father of Gates Little and James B.
Little, III.
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.
REX G. KEELING, JR. is a self-employed relief pharmacist. From 1985 to
1988, Mr. Keeling 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.
JAMES B. LITTLE, III is founder and has been a partner of New Capital
Partners, LLC, a private equity firm which invests in privately held companies
throughout the southeast, since May 2000. Previously, Mr. Little founded and was
President and Chief Executive Officer of Momentum Health Services, Inc.
(1997-1999) and, prior to that, was President and Chief Executive Officer of
Trident Health Systems, L.L.C. (1995-1996). Mr. Little also serves on the boards
of Electronic Healthcare Systems, Inc., Progressive Systems, Inc., Push Design,
Inc., and Le Carte.com. Mr. Little is the son of James B. Little, Jr. and the
brother of Gates Little.
THOMAS F. DOWLING, III is a dentist in private practice in Gadsden. He is a
deacon of the First Baptist Church of Gadsden.
GATES LITTLE joined the Bank in 1993 and served as Executive Vice President
from 1998 until September 2000, when he was elected President. Previously, he
served as Vice President of the Bank. Mr. Little has served as Vice President of
the Company since 1995. Mr. Little is the son of James B. Little, Jr. and the
brother of James B. Little, III.
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 Bank hold regular monthly
meetings and special meetings as needed. During the year ended June 30, 2000,
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, 2000 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, Johnson and Dowling. This committee, which
reviews the performance of the employees of the Company and its subsidiaries and
makes recommendations to the Board of Directors regarding employee compensation,
met once regarding compensation for fiscal 2000.
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 2000.
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
4
<PAGE>
select the nominees for election as directors at the Meeting. While the Board of
Directors will consider nominees recommended by stockholders, it has not
actively solicited recommendations from stockholders for nominees, nor has it
established any procedures for this purpose.
DIRECTOR COMPENSATION
The Company's directors meet on a quarterly basis and receive $300 per
meeting. For fiscal 2000, the Company's directors' fees totaled $9,000. The
Bank'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 2000, the Bank's directors' fees
totaled $66,150.
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, 2000
awarded to or earned by the Company's President and Chief Executive Officer,
James B. Little, Jr., for services rendered in all capacities to the Company and
its subsidiaries.
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
----------------------------------- -------------------------
Restricted Securities
Name and Fiscal Other Annual Stock Underlying All Other
Principal Position Year Salary1 Bonus Compensation2 Awards3 Options Compensation4
------------------ ------ ------- ----- ------------- ------- ---------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
James B. Little, Jr. 2000 $ 114,600 $10,000 $ 2,016 $ -- -- $ 23,281
President and 1999 119,600 5,000 2,016 -- -- 39,150
Chief Executive 1998 119,600 6,600 2,016 -- -- 45,195
Officer
</TABLE>
------------------
1 Includes directors' fees of $9,600 for fiscal 2000.
2 Consists of excess life insurance.
3 As of June 30, 2000, 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 $136,378 based on the closing price of the
Common Stock on June 30, 2000 ($9.375 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 Bank's defined contribution qualified
pension plan, pursuant to which the Bank 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.
5
<PAGE>
Stock Options. The following table sets forth information regarding the
number and value of options held by the Company's President and Chief Executive
Officer at the end of fiscal 2000. No options were granted to 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. 29,094 7,274 $ -- $ --
</TABLE>
------------------
1 Based on difference between exercise price ($11.6875) and closing price on
June 30, 2000 ($9.375).
Employment Agreements. The Company and the Bank have entered into
employment agreements with James B. Little, Jr., Chairman of the Board,
President and Chief Executive Officer of the Company and Chairman of the Board
and Chief Executive Officer of the Bank. In such capacities, Mr. Little is
responsible for overseeing all operations of the Company and the Bank 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 Bank 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 Bank 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 Company and the Bank, 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 Bank 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
Company or the Bank, 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
6
<PAGE>
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
Company's or the Bank's voting stock, (ii) the control of the election of a
majority of the Company's or the Bank's directors, (iii) the exercise of a
controlling influence over the management or policies of the Company or the
Bank, or (iv) during any consecutive two-year period, directors of the Company
or the Bank at the beginning of such period cease to constitute two-thirds of
the Board of Directors of the Company or the Bank, 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 10 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 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 Bank'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 Bank 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 Bank 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 Bank, (v) a material reduction in his authority and
responsibility, (vi) the failure to re-elect him to the Company's or the Bank'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, 2000 would have been approximately $470,000. 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 Bank in a legal dispute with respect to the agreements, he would be
reimbursed for his legal and other expenses.
Supplemental Executive Retirement Agreement ("SERA"). 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 Bank, the
Bank has entered into the SERA with Mr. Little. Pursuant to the terms of the
SERA, the Bank will establish an account in the name of Mr. Little to which the
Bank 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 Bank. For each calendar year, the amount credited to this account
will earn interest at a rate equal to the highest rate paid by the Bank on
certificates of deposit, regardless of term. Upon his retirement from the Bank,
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
Bank fully repays the loan by which the ESOP purchased Common Stock in the
Bank'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 Bank to liability under Section
280G of the Internal Revenue Code of 1986.
In the event of Mr. Little's death before he has received all benefits
payable to him pursuant to the SERA, the Bank 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 Bank 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>
TRANSACTIONS WITH MANAGEMENT
The Bank 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 Bank'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, 2000, the Bank's
loans to directors and executive officers totaled approximately $137,000.
W. Roscoe Johnson, III, who resigned as a member of the Board of Directors
in April 2000, was a partner in the law firm of Inzer, Haney, Johnson &
McWhorter, P.A. from which he also resigned. Such firm performs routine legal
services on behalf of the Bank, primarily in connection with the closing of
mortgage loans. In fiscal year 2000, fees for such services prior to the date of
Mr. Johnson's resignation as a member of the law firm totaled $2,000.
PROPOSAL II -- AMENDMENT OF
CERTIFICATE OF INCORPORATION
In August 1999, the Bank adopted its current corporate title, "The Southern
Bank Company", to increase public awareness of the expanded banking services
which the Bank, as a federal thrift institution, is authorized to offer.
The Bank is currently reviewing its business plan to consider an expansion
of its banking and other services. In connection with this review, management
will also consider whether any additional services should be conducted under a
federal thrift charter or a commercial bank charter. In addition, the Company
may also consider the formation of additional subsidiaries to offer other
financial services. Any such expansion of services would be intended to enhance
the Company's profitability and stockholder value.
Article III ("Powers") of the Company's Certificate of Incorporation
provides as follows:
The purpose for which the Corporation is organized is to act as a
savings institution holding company and to transact all other lawful
business for which corporations may be incorporated pursuant to the
laws of the State of Delaware. The Corporation shall have all the
powers of a corporation organized under the General Corporation Law of
the State of Delaware.
Although the Board of Directors has no current plan to change the charter
of the Bank or to form subsidiaries in addition to the Bank, the Board believes
that it is authorized to do so under the Company's Certificate of Incorporation.
To avoid any confusion in this regard, the Board is proposing to amend the first
sentence of Article III of the Certificate of Incorporation to substitute
"financial services holding company" for "savings institution holding company".
The Board believes that such an amendment will clarify that the Bank or any
other subsidiary may engage in a variety of financial services in addition to
those currently authorized under the Bank's federal thrift charter.
Approval of the proposed amendment to Article III of the Certificate of
Incorporation requires the affirmative vote of the holders of a majority of the
shares entitled to vote at the Meeting. The proposed amendment to Article III is
attached as Appendix A to this Proxy Statement.
8
<PAGE>
RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS
Arthur Andersen LLP, which was the Company's independent certified public
accounting firm for the 2000 fiscal year, has been retained by the Board of
Directors to be the Company's auditors for the 2001 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 10% 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 as to
which proxies in the accompanying form confer discretionary authority, it is
intended that proxies in the accompanying form will be voted in respect thereof
in accordance with the determination of a majority 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.
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, 2001, which will be held on or about November 12, 2001, 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 8, 2001. With respect to the 2001 Annual Meeting of Stockholders
of the Company, if notice of a stockholder proposal, which the stockholder has
not previously sought to include in the Company's proxy statement, is not
received by October 13, 2001, management proxies will be allowed to use their
discretionary authority to vote on such proposal without any discussion of the
matter in the proxy statement.
9
<PAGE>
Nothing herein shall be deemed to require the Company to include in its
proxy statement and proxy relating to an annual meeting, or to consider and vote
upon at such meeting, any stockholder proposal which does not meet all of the
requirements established by the SEC or the Company's Certificate of
Incorporation or Bylaws in effect at the time such proposal is received. The
Company's Certificate of Incorporation provides that due notice of business to
be brought before an annual meeting by a stockholder must be submitted in
writing to the Secretary of the Company not less than 30 nor more than 60 days
prior to the date of any such meeting; provided, however, that if less than 40
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 6, 2000
--------------------------------------------------------------------------------
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE FISCAL YEAR
ENDED JUNE 30, 2000 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.
--------------------------------------------------------------------------------
10
<PAGE>
APPENDIX A
CERTIFICATE OF AMENDMENT
OF THE
CERTIFICATE OF INCORPORATION
OF
THE SOUTHERN BANC COMPANY, INC.
---------------------------------------------
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
----------------------------------------------
THE SOUTHERN BANC COMPANY, INC., a Delaware corporation, does hereby
certify as follows:
FIRST: Article III of the Corporation's Certificate of Incorporation is
hereby amended to read in its entirety as set forth below:
ARTICLE III
Powers
The purpose for which the Corporation is organized is to act
as a financial services holding company and to transact all other
lawful business for which corporations may be incorporated pursuant to
the laws of the State of Delaware. The Corporation shall have all the
powers of a corporation organized under the General Corporation Law of
the State of Delaware.
SECOND: The foregoing amendment was duly adopted in accordance with Section
242 of the General Corporation Law of the State of Delaware.
IN WITNESS WHEREOF, the undersigned has cause this Certificate to be duly
executed in its corporate name this _____ day of __________, 2000.
THE SOUTHERN BANC COMPANY, INC.
By: _______________________________
Name:
Title:
ATTEST:
By: _______________________________
Name:
Title:
<PAGE>
REVOCABLE PROXY
THE SOUTHERN BANC COMPANY, INC.
-------------------------------
ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 9, 2000
-------------------------------
The undersigned hereby appoints Rex G. Keeling, Jr. and Fred Taylor, or either
of them, 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 The Southern Bank Company, 221 S.
6th Street, Gadsden, Alabama on Thursday, November 9, 2000 at 5:00 p.m., local
time, and at any and all adjournments thereof, as follows:
<TABLE>
<CAPTION>
FOR WITHHOLD EXCEPT
--- -------- ------
<S> <C> <C> <C>
I. The election as directors of all nominees [ ] [ ] [ ]
listed below (except as marked to the
contrary below):
Nominees for Terms to Expire in 2003
Craig G. Cantrell
James B. Little, Jr.
INSTRUCTION: TO WITHHOLD AUTHORITY
TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
"EXCEPT" AND WRITE THAT NOMINEE'S NAME
IN THE SPACE PROVIDED BELOW.
____________________________________________
</TABLE>
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C> <C>
II. The approval of a proposal to amend Article III +- +- +-
of the Company's Certificate of Incorporation
to clarify that the purpose for which the Company
has been organized is to act as the holding
company for a subsidiary institution or institutions
which may offer a variety of financial services, as
well as to transact all other lawful business for
which corporations may be incorporated pursuant
to the laws of the State of Delaware.
</TABLE>
III. Such other matters as may properly come before the Annual Meeting or
any adjournment thereof.
<PAGE>
--------------------------------------------------------------------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE LISTED PROPOSITIONS.
THIS PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS
PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED. IF ANY OTHER BUSINESS IS
PRESENTED AT THE ANNUAL MEETING AS TO WHICH THIS PROXY CONFERS DISCRETIONARY
AUTHORITY, THIS PROXY WILL BE VOTED BY THOSE NAMED IN THIS PROXY AS DETERMINED
BY A MAJORITY 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, MATTERS INCIDENT TO THE CONDUCT OF THE
ANNUAL MEETING AND ANY OTHER MATTER PRESENTED TO THE ANNUAL MEETING IF NOTICE OF
SUCH MATTER HAS NOT BEEN DELIVERED TO THE COMPANY IN ACCORDANCE WITH THE
CERTIFICATE OF INCORPORATION AND BYLAWS.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
--------------------------------------------------------------------------------
Please be sure to sign and date this proxy in the box below. Date __________
______ Stockholder sign above _______ Co-holder (if any) sign above
Should the above signed 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 above signed stockholder acknowledges receipt from the Company, prior to the
execution of this proxy, of Notice of the Annual Meeting, a Proxy Statement
dated October 6, 2000, 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 CARD TODAY
