-----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, NGIeJg4XsTAk9eIoSrsL9MAXYGpNzlAwbMNNrBZwKfxmrlO9M5kb5VGLGFGZmw6f yJmSQCxoJlOwdE0wifPJuQ== 0001025537-00-000024.txt : 20000214 0001025537-00-000024.hdr.sgml : 20000214 ACCESSION NUMBER: 0001025537-00-000024 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000211 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: 536693 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 10QSB FOR THE SOUTHERN BANC COMPANY, INC. 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, 1999 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: (256) 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, 1999, there were 1,033,498 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. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (Dollar Amounts in Thousands) December 31, June 30, 1999 1999 ---- ---- ASSETS CASH AND CASH EQUIVALENTS $ 13,187 $ 8,681 SECURITIES AVAILABLE FOR SALE 25,139 21,350 SECURITIES HELD TO MATURITY, fair values of $21,000 and $23,646, respectively 21,183 23,707 LOANS RECEIVABLE, net 41,683 42,109 PREMISES AND EQUIPMENT, net 255 258 ACCRUED INTEREST AND DIVIDENDS RECEIVABLE 599 588 PREPAID EXPENSES AND OTHER ASSETS 352 182 --------- --------- TOTAL ASSETS $ 102,398 $ 96,875 ========= ========= LIABILITIES DEPOSITS $ 80,546 $ 79,734 OTHER LIABILITIES 5,452 496 --------- --------- TOTAL LIABILITIES 85,998 80,230 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY: Preferred stock, par value $.01 per share 500,00 shares authorized, shares issued and outstanding-- none 0 0 Common stock, par value $.01 per share, 1,454,750 shares issued, 3,500,000 authorized 15 15 Treasury stock, at cost, 421,252 and 380,652 shares, Respectively (5,435) (4,991) Additional paid-in capital 13,687 13,684 Unearned ESOP compensation (1,305) (1,532) Retained earnings 9,820 9,684 Unrealized gain on securities available for sale, net (382) (215) --------- --------- TOTAL STOCKHOLDERS' EQUITY 16,400 16,645 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 102,398 $ 96,875 ========= ========= The accompanying notes are an integral part of these condensed consolidated statements. 2 THE SOUTHERN BANC COMPANY, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Dollar Amounts in Thousands, except per share data)
Three Months Ended Six Months Ended December 31, December 31, 1999 1998 1999 1998 ---- ---- ---- ---- INTEREST INCOME: Interest and fees on loans $ 802 $ 801 $ 1,588 $ 1,594 Interest and dividends on securities available for sale 410 309 772 660 Interest and dividends on securities held to maturity 447 577 893 1,192 Other interest income 101 88 218 171 ---------- ---------- ---------- ----------- Total interest income 1,760 1,775 3,471 3,617 INTEREST EXPENSE: Interest on deposits and borrowings 1,030 1,078 2,003 2,224 ---------- ---------- ---------- ----------- Net interest income 730 697 1,468 1,393 Provision for loan losses 17 27 17 27 ---------- ---------- ---------- ----------- Net interest income after provision for loan losses 713 670 1,451 1,366 ---------- ---------- ---------- ----------- NON-INTEREST INCOME: Fees and other non-interest income 28 77 58 108 ---------- ---------- ---------- ----------- NON-INTEREST EXPENSE: Salaries and employee benefits 384 438 724 756 Office building and equipment expenses 67 60 136 123 Deposit insurance expense 12 13 24 26 Other operating expense 79 97 185 191 ---------- ---------- ---------- ----------- Total non-interest expense 542 608 1,069 1,096 ---------- ---------- ---------- ----------- Income before income taxes 199 139 440 378 PROVISION FOR INCOME TAXES 71 47 156 129 ---------- ---------- ---------- ----------- Net Income $ 128 $ 92 $ 284 $ 249 ========== ========== ========== =========== EARNINGS PER SHARE-BASIC $ 0.14 $ 0.09 $ 0.32 $ 0.24 EARNINGS PER SHARE- DILUTED $ 0.14 $ 0.08 $ 0.31 $ 0.23 DIVIDENDS DECLARED PER SHARE $0.0875 $0.0875 $0.1750 $0.1750
The accompanying notes are an integral part of these condensed consolidated statements. 3 THE SOUTHERN BANC COMPANY, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollar Amounts in Thousands)
For The Six Months Ended December 31, 1999 1998 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 284 $ 249 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation 18 17 Amortization (accretion), net (21) (11) Amortization of unearned compensation 264 237 Provision for loan losses 17 27 Change in assets and liabilities: (Increase) decrease in accrued interest & dividends receivable (11) 28 (Increase) decrease in other assets (170) (89) (Increase) decrease in other liabilities 65 133 -------- -------- Total adjustments 162 342 -------- -------- Net cash provided by (used in) operating activities 446 591 -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of securities available for sale (6,708) (10,559) Proceeds from maturities and principal payments on securities available for sale 2,677 11,560 Purchases of securities held to maturity (5,000) (5,780) Proceeds from maturities and principal payments on securities held to maturity 7,520 6,829 Net loan (originations) repayments 426 (1,313) Capital expenditures (15) (13) -------- -------- Net cash provided by (used in) investing activities (1,100) 724 -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase (decrease) in deposits, net 812 (1,738) Increase (decrease) in advance payments by borrowers for taxes and insurance (22) (33) Dividends paid (152) (179) Contributions to plan trusts (34) (31) Purchase of treasury stock (444) (756) Borrowing on FHLB Advances 5,000 0 -------- -------- Net cash provided by (used in) financing activities 5,160 (2,737) Net increase (decrease) in cash and cash equivalents 4,506 (1,422) -------- -------- CASH AND CASH EQUIVILENTS, beginning of period 8,681 6,422 -------- -------- CASH AND CASH EQUIVILENTS, end of period $ 13,187 $ 5,000 ======== ======== SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for: Income taxes $ 163 $ 71 ======== ======== Interest $ 2,928 $ 2,225 ======== ======== Non-cash transactions: Change in unrealized net gain on securities available for sale, net $ (254) $ 47 ======== ========
4 THE SOUTHERN BANC COMPANY, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements as of December 31, 1999 and June 30, 1999, and for the three and six month period ended December 31, 1999 and 1998, include the accounts of the Company, the Bank, and 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 period ended December 31, 1999 and 1998. 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, 1999. The accounting policies followed by the Company are set forth in the summary of significant accounting policies in the Company's June 30, 1999 consolidated financial statements. 2. RETIREMENT AND SAVINGS PLANS Employee Stock Ownership Plan The Bank has 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 Bank 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. At December 31, 1999, the Employee Stock Ownership Plan had 60,884 shares allocated and 51,808 shares unallocated. Management Recognition Plan The Bank's MRP provides for awards of common stock to directors and officers of the Bank. 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 29,404 shares at December 31, 1999. 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 51,308 shares at December 31, 1999. 5 3. 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, 1999 and 1998. 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, 1999 and 1998, 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. For the three and six month periods ended December 31, 1999, there were approximately 123,000 shares under option that were excluded from the earnings per share calculation because these shares would have been anti-dilutive. The following table represents the earnings per share calculations for the three and six month periods ended December 31, 1999 and 1998:
For the Three Months Ended Earnings December 31, 1999 Income Shares Per Share - ----------------- --------------- ------------ ------------ Net Income $ 128,000 --------------- Basic earnings per share: Income available to common shareholders 128,000 896,869 $ 0.14 ------------ Dilutive Securities: Management recognition plan shares 16,309 Stock option plan shares --------------- ------------ Dilutive earnings per share: Income available to common shareholders plus assumed conversions $ 128,000 913,178 $ 0.14 --------------- ------------ ------------ For the Three Months Ended December 31, 1998 - ----------------- Net Income $ 92,000 ---------------- Basic earnings per share: Income available to common shareholders 92,000 1,036,631 $ 0.09 ------------ Dilutive Securities: Management recognition plan shares 24,449 Stock option plan shares 9,483 --------------- ------------ Dilutive earnings per share: Income available to common shareholders plus assumed conversions $ 92,000 1,070,563 $ 0.08 --------------- ------------ ------------
6
For the Six Months Ended Earnings December 31, 1999 Income Shares Per Share - ----------------- --------------- ------------ ------------ Net Income $ 284,000 --------------- Basic earnings per share: Income available to common shareholders 284,000 903,450 $ 0.32 ------------ Dilutive Securities: Management recognition plan shares 16,309 Stock option plan shares --------------- ------------ Dilutive earnings per share: Income available to common shareholders plus assumed conversions $ 284,000 919,759 $ 0.31 --------------- ------------ ------------ For the Six Months Ended December 31, 1998 - ----------------- Net Income $ 249,000 --------------- Basic earnings per share: Income available to common shareholders 249,000 1,057,417 $ 0.24 ------------ Dilutive Securities: Management recognition plan shares 24,449 Stock option plan shares 16,823 --------------- ------------ Dilutive earnings per share: Income available to common shareholders plus assumed conversions $ 249,000 1,098,689 $ 0.23 --------------- ------------ ------------
4. COMPREHENSIVE INCOME The Company has classified certain securities as available for sale in accordance with Financial Accounting Standards Board Statement No. 115. For the six month period ended December 31, 1999 the net unrealized gain on these securities decreased by approximately $167,000. For the six month period ended December 31, 1998 the net unrealized gain on these securities increased by $32,000. Pursuant to Statement No.115, any unrealized gain or loss activity of available for sale securities is to be recorded as an adjustment to a separate component of shareholders' equity, net of income tax effect. Accordingly, for the six month periods ended December 31, 1999 and 1998, the Company recognized a corresponding adjustment in the net unrealized gain component of equity. Since comprehensive income is a measure of all changes in equity of an enterprise that result from transactions and other economic events of the period, this change in unrealized gain serves to increase or decrease comprehensive income. The following table represents comprehensive income for the six month periods ended December 31, 1999 and 1998: Six Months Ended December 31, ---------------------- 1999 1998 ---- ---- Net income $ 284 $ 249 Other comprehensive income (loss), net of tax: Unrealized gain (loss) on securities (167) 32 -------- -------- Comprehensive income (loss) $ 117 $ 281 ======== ======== 7 5. SHAREHOLDER RIGHTS PLAN In July 1999, the Board of Directors of the Company adopted a shareholder rights plan (the "Plan") and declared a dividend distribution of one common stock purchase right (a "Right") on each outstanding share of the Company's Common Stock. The Plan is designed to protect the Company's stockholders against certain unsolicited attempts to acquire the Company. The Plan is not intended to prevent an acquisition of the Company in which all stockholders are offered a fair price for all of their shares. The Rights were issued to stockholders of record at the close of business on August 2, 1999, and they expire on July 15, 2009. The Rights automatically trade with the Common Stock. The Rights would only become exercisable if one of the following were to occur: (i) a public announcement that a person has acquired 15% or more of the outstanding Common Stock; (ii) the commencement of, or announcement of an intention to make, a tender offer that would result in the acquisition by a person or group of 15% or more of the outstanding Common Stock; or (iii) the Company's Board of Directors declares a 10% or greater stockholder to be an "Adverse Person," as defined in the Plan. The Rights do not interfere with the Company's business plans or affect its financial position. The issuance of the Rights had no dilutive effect, will not affect earnings per share, were not taxable to stockholders or the Company, and did not change the way in which the Common Stock is traded on the American Stock Exchange. Depending on individual circumstances, stockholders may recognize taxable income, but only when (and if) the Rights become exercisable or upon the occurrence of certain events thereafter. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The Southern Banc Company, Inc. (the "Company") was incorporated in the State of Delaware in May 1995 for the purpose of becoming a holding company to own all of the outstanding capital stock of The Southern Bank Company ("Bank"), formerly the First Federal Savings & Loan Association of Gadsden. COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31 AND JUNE 30, 1999. Total assets increased approximately $5.5 million or 5.70% from $96.9 million at June 30, 1999 to $102.4 million at December 31, 1999. During the period ended December 31, 1999, net loans decreased approximately $426,000 or 1.01%, securities available for sale increased approximately $3.8 million or 17.75% and securities held to maturity decreased approximately $2.5 million or 10.65%. Cash and cash equivalents increased approximately $4.5 million or 51.91% from $8.7 million to $13.2 million at December 31, 1999. The increase in cash and cash equivalents was primarily attributable to the maturities and principal repayments on investment securities. Accrued interest and dividends receivable increased approximately $11,000 or 1.87% from $588,000 at June 30, 1999 to $599,000 at December 31, 1999. Prepaid expenses and other assets increased approximately $170,000 or 93.41% from $182,000 at June 30, 1999 to $352,000 at December 31, 1999. Total deposits increased approximately $812,000 or 1.02% from $79.7 million at June 30, 1999 to $80.5 million at December 31, 1999. Other liabilities during the period ended December 31, 1999 increased approximately $4.9 million or 999.19% from $496,000 at June 30, 1999 to $5.4 million at December 31, 1999. The increase in other liabilities was primarily attributable to an increase in a short-term Federal Home Loan Advance in the amount of $5,000,000 for possible additional liquidity needs during the century date change. Total equity decreased approximately $245,000 or 1.47% from $16.6 million at June 30, 1999 to $16.4 million at December 31, 1999. 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 and treasury stock purchases. Treasury stock at December 31, 1999 was $5.4 million. COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE AND SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998. The Company reported net income for the three and six month periods ended December 31, 1999 of $128,000 and $284,000, respectively. Net income for the three month period increased approximately $36,000 or 39.13% from $92,000 at December 31, 1998 to $128,000 at December 31, 1999. For the six month period, net income increased approximately $35,000 or 14.06% from $249,000 at December 31, 1998 to $284,000 at December 31, 1999. Net Interest Income. Net interest income for the three and six months ended December 31, 1999 and 1998 increased $33,000 or 4.73% and $75,000 or 5.38%, respectively. Total interest income decreased approximately $15,000 or 0.85% and $146,000 or 4.04% for the three and six months ended December 31, 1999 and 1998, respectively. Provision for Loan Losses. For the three and six month periods ended December 31, 1999, provision for loan losses decreased approximately $10,000 or 37.04% as compared to the three and six month periods ended December 31, 1998. The allowance for loan losses is based on management's evaluation of possible loan losses inherent in the Bank'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. 9 Non-interest Income. Non-interest income decreased approximately $49,000 or 63.64% from $77,000 to $28,000 for the three month period ended December 31, 1999 compared to the three month period ended December 31, 1998. For the six month period ended December 31, 1999 non-interest income decreased approximately $50,000 or 46.30% from $108,000 to $58,000. The decrease in non-interest income for the three and six months ended December 31, 1999 was primarily attributable to an decrease in prepayment penalties and mortgage loan origination fees. During the six month period ended December 31, 1998, the Bank recorded gains on the sale of securities of approximately $33,000. There were no gains recorded during the six month period ended December 31, 1999. Non-interest Expense. Non-interest expense decreased approximately $66,000 or 10.86% for the three month period ended December 31, 1999 from $608,000 to $542,000. For the six month period ended December 31, 1999, non-interest expense decreased approximately $27,000 or 2.46%. Salaries and employee benefits decreased approximately $54,000 or 12.33% for the three month period ended December 31, 1999 compared with the three month period ended December 31, 1998. For the six month period ended December 31, 1999, salaries and benefits decreased approximately $32,000 or 4.23% compared with the six month period ended December 31, 1998. The decrease for the three and six month period ended December 31, 1999 was primarily attributable to a decrease in salary and benefit expenses related to the establishment of certain employee benefit plans, subsequent to the conversion. Other operating expenses decreased by $18,000 or 18.56% and decreased by $6,000 or 3.14% for the three and six month periods ended December 31, 1999 and 1998, respectively. Provision for Income Taxes. For the three month period ended December 31, 1999, provision for income tax expense increased approximately $24,000 or 51.06%. For the six month period ended December 31, 1999, provision for income tax expense increased approximately $27,000 or 20.93%. For the three month period ended December 31, 1999, income before income taxes increased approximately $60,000 or 43.17% as compared to the three month period ended December 31, 1998. For the six month period ended December 31, 1999, income before income taxes increased approximately $62,000 or 16.40% compared to the six month period ended December 31, 1998. Liquidity and Capital Resources. As a holding company, the Company conducts its business through its subsidiary, the Bank. The Bank 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 Bank's average liquidity ratio well exceeded the required maximums at and during the three and six month periods ended December 31, 1999. The Bank adjusts its liquidity levels in order to meet funding needs of deposit outflows, repayment of borrowings and loan commitments. The Bank also adjusts liquidity as appropriate to meet its asset and liability management objectives. The Bank'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 Bank invests in short-term interest-earning assets which provide liquidity to meet lending requirements. The Bank is required to maintain certain levels of regulatory capital. At December 31, 1999, the Bank exceeded all minimum regulatory capital requirements. MARKET AREA The Bank considers its primary market area to consist of Etowah, Cherokee and Marshall Counties in which the Bank has its four offices. The City of Gadsden in which the Bank's main office is located is in Etowah County, approximately 65 miles northeast of Birmingham, Alabama. Based upon the 1990 population census, the combined population of Etowah, Cherokee and Marshall Counties was approximately 100,000. The economy in the Bank's market area includes a mixture of manufacturing and agriculture. For years the two major industrial employers were Goodyear Tire and Rubber Company and Gulf States Steel Corporation. On February 4, 1999, Goodyear Tire and Rubber Company announced that it would cut approximately 1,320 jobs by year-end as it ceases tire production at the Gadsden, Alabama plant. Recently, Goodyear announced that tire 10 production would be reestablished at the Gadsden plant. Goodyear plans to recall approximately 1,300 laid off workers by year-end as truck and passenger tire production is restored. Approximately 200 workers will remain employed at the Gadsden facility to operate a rubber-mixing center and tire storage site. On July 1, 1999, Gulf States Steel Corporation, currently employing 1,800, filed for relief under Chapter 11 Bankruptcy. While the company is allowed to continue operations under Chapter 11, a significant negative impact would be felt in the Bank's market area in the event Gulf States is unable to overcome its financial problems. According to the Alabama Department of Industrial Relations, the unemployment rates for June 1999 in Etowah, Cherokee and Marshall Counties were 6.7%, 4.8% and 6.5%, respectively, as compared to 4.5% for the state of Alabama. FORWARD-LOOKING STATEMENTS Management's discussion and analysis includes certain forward-looking statements addressing, among other things, the Company's prospects for earnings, asset growth and net interest margin. Forward-looking statements are accompanied by, and identified with, such terms as "anticipates," "believes," "expects," "intends," and similar phrases. Management's expectations for the Company's future involve a number of assumptions and estimates. Factors that could cause actual results to differ from the expectations expressed herein include: substantial changes in interest rates, and changes in the general economy; changes in the Bank's strategies for credit-risk management, interest-rate risk management and investment activities. Accordingly, any forward-looking statements included herein do not purport to be predictions of future events or circumstances and may not be realized. 11 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, 1999, 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 and Use of Proceeds None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders On November 17, 1999, the Registrant held its Annual Meeting of Stockholders for the purpose of electing three directors whose term will expire in 2002. All matters were approved. The results of the voting at the Annual Meeting were as follows: Proposal I - Election of Directors NOMINEE TERM VOTES VOTES EXPIRES FOR WITHHELD - ----------------------- ---------- ------------- ------------------- Gates Little 2002 864,163 102,763 Thomas F. Dowling 2002 864,163 102,763 Fred Taylor 2002 863,663 103,263 Item 5. Other Information On October 21, 1999, The Southern Banc Company, Inc. announced a dividend in the amount of $.0875 per share on or about December 20, 1999 to stockholders of record at the close of business on November 19, 1999. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 27 - Financial Data Schedule (SEC use only) (b) Reports on Form 8-K None 12 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: 2/11/2000 By: /s/ James B. Little, Jr. ----------------------------- James B. Little, Jr. (Principal Executive and Financial Officer) 13 EX-27 2 FDS -- THE SOUTHERN BANC COMPANY, INC.
9 1,000 6-MOS JUN-30-2000 DEC-31-1999 1,142 12,040 0 0 25,139 21,183 21,000 41,798 115 102,398 80,546 0 5,452 0 0 0 15 16,385 102,398 1,588 1,665 218 3,471 2,003 0 1,468 17 0 1,069 440 440 0 0 284 0.32 0.31 2.94 0 0 0 0 115 0 0 115 115 0 0
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