-----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, DcWa5y7gSTMAA8Oyep0VaEv0uSFogutv3w7i38qSJqf/iijfnckUnKTODNN6Jifc b5VEriykTWEMaCDyWI1EZg== /in/edgar/work/0001025537-00-000127/0001025537-00-000127.txt : 20001115 0001025537-00-000127.hdr.sgml : 20001115 ACCESSION NUMBER: 0001025537-00-000127 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001114 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SOUTHERN BANC CO INC CENTRAL INDEX KEY: 0000946453 STANDARD INDUSTRIAL CLASSIFICATION: [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: 767066 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 0001.txt 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 September 30, 2000 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 November 13, 2000, there were 1,006,498 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) September 30, June 30, 2000 2000 ---- ---- ASSETS CASH AND CASH EQUIVALENTS $ 5,744 $ 5,746 SECURITIES AVAILABLE FOR SALE, at fair value 29,859 27,109 SECURITIES HELD TO MATURITY, at amortized cost fair value of $22,398 and $23,640, respectively 22,615 23,886 LOANS RECEIVABLE, net 38,638 39,840 PREMISES AND EQUIPMENT, net 472 473 ACCRUED INTEREST AND DIVIDENDS RECEIVABLE 736 677 PREPAID EXPENSES AND OTHER ASSETS 197 356 -------- -------- TOTAL ASSETS $ 98,261 $ 98,087 ======== ======== LIABILITIES DEPOSITS $ 81,394 $ 81,436 OTHER LIABILITIES 352 331 -------- -------- TOTAL LIABILITIES 81,746 81,767 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 value $.01 per share, 3,500,000 authorized, 1,454,750 shares issued 15 15 Treasury stock, at cost, 448,252 and 446,252 shares, respectively (5,642) (5,624) Additional paid-in capital 13,720 13,745 Unearned compensation (458) (536) Shares held in trust, 65,275 and 65,275 shares, respectively (846) (846) Retained Earnings 10,056 10,035 Accumulated other comprehensive loss (330) (469) -------- -------- TOTAL STOCKHOLDERS' EQUITY 16,515 16,320 -------- -------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 98,261 $ 98,087 ======== ======== 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 September 30, 2000 1999 ---- ---- INTEREST INCOME: Interest and fees on loans $ 749 $ 786 Interest and dividends on securities available for sale 474 362 Interest and dividends on securities held to maturity 432 446 Other interest income 80 117 -------- -------- Total interest income 1,735 1,711 INTEREST EXPENSE: Interest on deposits 1,105 973 -------- -------- Net interest income 630 738 Provision for loan losses 30 0 -------- -------- Net interest income after provision for loan losses 600 738 -------- -------- NON-INTEREST INCOME: Fees and other non-interest income 33 30 -------- -------- NON-INTEREST EXPENSE: Salaries and employee benefits 301 340 Office building and equipment expenses 80 69 Other operating expense 80 118 -------- -------- Total non-interest expense 461 527 -------- -------- Income before income taxes 172 241 PROVISION FOR INCOME TAXES 63 85 -------- -------- Net Income $ 109 $ 156 ======== ======== EARNINGS PER SHARE: Basic $ 0.12 $ 0.17 Diluted $ 0.12 $ 0.17 DIVIDENDS DECLARED PER SHARE $ 0.0875 $ 0.0875 AVERAGE SHARES OUTSTANDING: Basic 883,097 910,032 Diluted 890,829 926,341 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 Three Months Ended September 30, 2000 1999 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $ 109 $ 156 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 12 10 Amortization (accretion), net (36) (7) Amortization of unearned compensation 78 91 Provision for loan losses 30 0 Change in assets and liabilities: Increase in accrued interest & dividends receivable (59) (78) (Increase) decrease in other assets 159 (19) (Increase) decrease in other liabilities (59) 35 ------- ------- Total adjustments 125 32 ------- ------- Net cash provided by operating activities 234 188 ------- ------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of securities available for sale (2,550) (6,169) Proceeds from maturities and principal payments on securities available for sale 451 1,364 Purchases of securities held to maturity (441) (4,500) Proceeds from maturities and principal payments on securities held to maturity 1,282 1,584 Net loan (originations) repayments 1,172 (62) Capital expenditures (11) (4) ------- ------- Net cash used in investing activities (97) (7,787) ------- ------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase (decrease) in deposits, net (42) 949 Increase in advance payments by borrowers for taxes and insurance 9 12 Dividends paid (72) (77) Purchases of shares held in trust (16) (17) Purchase of treasury stock (18) (232) Increase in FHLB Advances 0 5,000 ------- ------- Net cash provided by financing activities (139) 5,635 Net decrease in cash and cash equivalents (2) (1,964) ------- ------- CASH AND CASH EQUIVALENTS, beginning of period 5,746 8,681 ------- ------- CASH AND CASH EQUIVALENTS, end of period $ 5,744 $ 6,717 ======= ======= SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid during the period for: Income taxes $ 90 $ 85 ======= ======= Interest $ 1,231 $ 921 ======= ======= Non-cash transactions: Change in unrealized net gain/ (loss) on securities available for sale, net $ 139 $ (14) ======= =======
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 September 30, 2000 and June 30, 2000, and for the three month periods ended September 30, 2000 and 1999, 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 months ended September 30, 2000 and 1999. 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, 2000. The accounting policies followed by the Company are set forth in the summary of significant accounting policies in the Company's June 30, 2000 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 reduced when compensation expense is recognized based on employee services rendered in relation to shares which are committed to be released. At September 30, 2000, the Employee Stock Ownership Plan had 58,477 shares allocated and 51,808 shares unallocated. Management Recognition Plan ("MRP") 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 21,699 shares at September 30, 2000 of which 7,732 shares have been granted but not vested. 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 5 the open market for issuance upon future exercises of stock options under the Option Plan. The Plan held 51,308 shares at September 30, 2000. 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. 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-month periods ended September 30, 2000 and 1999. 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 month periods ended September 30, 2000 and 1999, 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 month period ended September 30, 2000, there were approximately 123,000 shares under option that were excluded from the earnings per share calculation because these shares would have been antidilutive. The following table represents the earnings per share calculations for the three months ended September 30, 2000 and 1999:
For the Three Months Ended Net Earnings September 30, 2000: Income Shares Per Share - ------------------- ------ ------ --------- Basic earnings per share: Income available to common shareholders $ 109,000 883,097 $ 0.12 ---------- ------ Dilutive Securities: Management recognition plan shares 7,732 Stock option plan shares 0 ------- Dilutive earnings per share: Income available to common shareholders plus assumed conversions $ 109,000 890,829 $ 0.12 ---------- ------- ------ For the Three Months Ended September 30, 1999: - ------------------- Basic earnings per share: Income available to common shareholders $ 156,000 910,221 $ 0.17 ---------- ------ Dilutive Securities: Management recognition plan shares 16,309 Stock option plan shares 0 ------- Dilutive earnings per share: Income available to common shareholders plus assumed conversions $ 156,000 926,530 $ 0.17 ---------- ------- ------
6 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 three month period ended September 30, 2000 the net unrealized loss on these securities decreased by approximately $139,000 or 29.64% from $469,000 to $330,000. For the three month period ended September 30, 1999 the net unrealized loss on these securities increased by $14,000. 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 three-month periods ended September 30, 2000 and 1999, the Company recognized a corresponding adjustment in the accumulated other comprehensive income component of equity. Since comprehensive income is a measure of all nonowner changes in equity of an enterprise that result from transactions and other economic events of the period, this change in unrealized gain/loss serves to increase or decrease comprehensive income. The following table represents comprehensive income for the three-month periods ended September 30, 2000 and 1999: Three Months Ended September 30, 2000 1999 ---- ---- Net income $ 109 $ 156 Other comprehensive income (loss), net of tax: Unrealized gain (loss) on securities 139 (14) ----------- ----------- Comprehensive income $ 248 $ 142 =========== =========== 5. LITIGATION The Company is a party to litigation and claims arising in the normal course of business. Management, after consulting with legal counsel, believes that the liabilities, if any, arising from such litigation and claims will not be material to the consolidated financial statements. 7 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 SEPTEMBER 30 AND JUNE 30, 2000. Total assets increased approximately $174,000 or 0.18% from $98.1 million at June 30, 2000 to $98.3 million at September 30, 2000. During the period ended September 30, 2000, net loans decreased approximately $1.2 million or 3.02%, securities available for sale increased approximately $2.8 million or 10.14% and securities held to maturity decreased approximately $1.3 million or 5.32%. Purchases of securities available for sale and securities held to maturity are based on management's assessment of market conditions. Cash and cash equivalents were $5.7 million and $5.8 million at September 30, 2000 and June 30, 2000, respectively. The decrease in cash was primarily attributable to purchases of investment securities during the period ended September 30, 2000. Allowance for loan losses increased by approximately $26,000 or 22.61% from $115,000 at June 30, 2000 to $141,000 at September 30, 2000. 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. Accrued interest and dividends receivable increased approximately $59,000 or 8.71% from $677,000 at June 30, 2000 to $736,000 at September 30, 2000. Prepaid expenses and other assets decreased approximately $159,000 or 44.66% from $356,000 at June 30, 2000 to $197,000 at September 30, 2000. This change was primarily attributable to a decrease in prepaid federal income taxes. Total deposits decreased approximately $42,000 or 0.05% during the period ending September 30, 2000. At September 30, 2000, total deposits were $81.4 million. Other liabilities during the period ended September 30, 2000 increased approximately $21,000 from $331,000 to $352,000. The change in other liabilities was primarily attributable to a decrease in the reserve for taxes on securities available for sale. Total equity increased approximately $195,000 or 1.19% from $16.3 million at June 30, 2000 to $16.5 million at September 30, 2000. This change was primarily attributable to an increase in retained earnings, additional paid-in capital, amortization of unearned compensation and unrealized gain on securities available for sale, offset in part by the payment of common stock dividends and treasury stock repurchases. Treasury stock at September 30, 2000 was $5.6 million. COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999. The Company reported net income for the three months ended September 30, 2000 of $109,000 compared with net income of $156,000 for the three months ended September 30, 1999. Net Interest Income. Net interest income for the three months ended September 30, 2000 was $630,000 as compared to $738,000 for the three months ended September 30, 1999. Total interest income increased approximately $24,000 or 1.40% for the three months ended September 30, 2000. This change was primarily attributable to an increase in interest and dividends on securities available for sale during the three-month period. Total interest expense increased approximately $132,000 or 13.57% for the three months ended September 30, 2000 compared with the three months ended September 30, 1999. 8 Provision for Loan Losses. The provision for loan losses increased approximately $30,000 for the three months ended September 30, 2000 as compared to the three months ended September 30, 1999. During the three month period ended September 30, 2000, the provision for loan losses was approximately $30,000. No provision for loan losses was deemed necessary for the three month period ended September 30, 1999. Non-interest Income. Non-interest income increased approximately $3,000 or 10.00% from $30,000 to $33,000 for the three month period ended September 30, 2000 compared to the three month period ended September 30, 1999. Non-interest Expense. Total non-interest expense decreased approximately $66,000 or 12.52% for the three month period ended September 30, 2000 from $527,000 at September 30, 1999 to $461,000 at September 30, 2000. During the three-month period ended September 30, 2000, salaries and employee benefits decreased by approximately $39,000 or 11.47%. This change was primarily attributable to a decrease in salary and benefit expenses related to certain employee benefit plans. Other operating expenses decreased by approximately $38,000 or 32.20% as compared to the three-month period ended September 30, 1999. The change in other operating expenses was primarily attributable to a reduction in advertising, professional, and forms and supplies expenses. Provision for Income Taxes. For the three month period ended September 30, 2000, provision for income tax expense decreased $22,000 or 25.88% as compared to the three-month period ended September 30, 1999. 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 month period ended September 30, 2000. 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 September 30, 2000, 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 190,000. 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 ("Goodyear") and Gulf States Steel Corporation ("Gulf States"). At present Goodyear employs 1,205 workers which is a decline from 1,600 workers as of January 1999. Negotiations are currently underway between Goodyear and state and local government for assistance in modernizing the Gadsden plant. If successful, the modernization would increase production and create approximately 300 jobs. Gulf States, which 9 previously employed 1,850 workers, ceased production on August 21, 2000 after operating under Chapter 11 Bankruptcy since July 1999. Currently, Honda Motor Company is constructing a manufacturing plant in Talladega County only 17 miles from Etowah County. According to projections, the Honda Plant, suppliers, and additional economic opportunities for local businesses could produce approximately 900 jobs for Etowah County residents. According to the Alabama Department of Industrial Relations, the unemployment rates for September 2000 in Etowah, Cherokee and Marshall Counties were 10.5%, 4.5% and 5.3%, respectively, as compared to 4.4% 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. 10 PART II. OTHER INFORMATION Item 1. Legal Proceedings From time to time, the Bank is a party to various legal proceedings incident to its business. At June 30, 2000, the Company was a party to litigation and claims in the normal course of business. Management, after consultation with legal counsel, believes that the liabilities, if any, arising from such litigation and claims will not be material to the consolidated financial statements. 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 None Item 5. Other Information On October 19, 2000, The Southern Banc Company, Inc. announced a dividend in the amount of $.0875 per share on or about December 18, 2000 to stockholders of record at the close of business on November 17, 2000. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 27 - Financial Data Schedule (SEC use only) (b) Form 8-K None 11 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: November 9, 2000 By: /s/ James B. Little Jr. ---------------- --------------------------------- James B. Little Jr. (Principal Executive and Financial Officer) 12 EX-27 2 0002.txt FDS -- THE SOUTHERN BANC COMPANY, INC.
9 1,000 U.S. DOLLARS 3-MOS JUN-30-2001 JUL-01-2000 SEP-30-2000 1 237 5,507 0 0 29,859 22,615 22,398 38,778 140 98,261 81,394 0 352 0 0 0 15 16,500 98,261 749 906 80 1,735 1,105 0 630 30 0 461 172 172 0 0 109 0 0 2.62 0 0 0 0 145 0 0 145 145 0 0
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