-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AuSN35FwPEB39cmL3WWsfaS2lRa+sKh28VCl8RtMbvJEqkI3XM7aCkdgt2lQARu0 qwrp2h/pQNmlJsmU/7jpYg== 0000904280-98-000081.txt : 19980217 0000904280-98-000081.hdr.sgml : 19980217 ACCESSION NUMBER: 0000904280-98-000081 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980212 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN BANC CO INC CENTRAL INDEX KEY: 0000946453 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 631146351 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 001-13964 FILM NUMBER: 98533350 BUSINESS ADDRESS: STREET 1: 221 S. 6TH STREET CITY: GADSDEN STATE: AL ZIP: 35901-4102 BUSINESS PHONE: 2055433860 MAIL ADDRESS: STREET 1: 221 S 6TH STREET CITY: GADSDEN STATE: AL ZIP: 35901-4102 10QSB 1 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 --- --- PART I. FINANCIAL INFORMATION Item 1. Financial Statements THE SOUTHERN BANC COMPANY, INC. CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollar Amounts in Thousands)
December 31, June 30, 1997 1997 ------------ ------------ (Unaudited) 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 ======== ========
The accompanying notes are an integral part of these condensed consolidated statements. 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)
Three Months Ended Six Months Ended December 31, December 31, --------------------- -------------------- 1997 1996 1997 1996 ---------- --------- -------- -------- (Unaudited) (Unaudited) (Unaudited)(Unaudited) 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
The accompanying notes are an integral part of these condensed consolidated statements. 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)
1997 1996 ------- ------- (Unaudited) (Unaudited) 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 ======= =======
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. 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. 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:
Per Share Income Shares Amount ------ ------ --------- 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) --------- --------- --------
Changes in previously reported EPS: For the period ended December 31, 1996 -------------------------------------- Three Months Six Months ------------ ---------- 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)
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. 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. 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. 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 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) EX-27 2 - ARTICLE 9 FIN. DATA SCHEDULE FOR 2ND QTR 10-Q
9 1,000 6-MOS JUN-30-1998 DEC-31-1997 220 2,568 0 0 20,161 41,288 42,006 39,269 76 105,116 85,967 0 892 0 15 0 0 18,242 105,116 1,513 2,099 132 3,744 2,300 0 1,444 0 0 1,099 386 386 0 0 247 0.23 0.22 7.44 0 0 0 0 76 0 0 76 0 0 0
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