The Southern Banc Company, Inc. (SRNN) 8-K Results of Operations and Financial Condition

Exhibit 99.1

For Immediate Release	Contact: Gates Little
	(256) 543-3860
	For Immediate Release
	September 8, 2004

THE SOUTHERN BANC COMPANY, INC. ANNOUNCES

2004 ANNUAL EARNINGS

The Southern Banc Company, Inc. (OTCBB: SRNN), the holding company for The Southern Bank Company, formerly First Federal Savings and Loan Association of Gadsden, Alabama, announced net income of $577,000, or $0.66 per basic and $0.63 per diluted share, for the year ended June 30, 2004, as compared to net income of $894,000, or $1.02 per basic and $1.00 per diluted share, for the year ended June 30, 2003.

Gates Little, President and Chief Executive Officer of the Company, stated that the decrease in net income and earnings per share for the year ended June 30, 2004, was primarily due to a decrease in the gain on sale of securities of approximately $291,000 and a decrease in the net interest margin of approximately $105,000.

For the three month period ended June 30, 2004, the Company reported net income of $121,000, or $0.14 per basic and diluted share, as compared to net income of $159,000, or $0.18 per basic and diluted share. The decrease in net income and earnings per share for the three month period ended June 30, 2004, was primarily attributable to a decrease in the gain on sale of securities of approximately $38,000 and a decrease in the net interest margin of $67,000.

The Company’s total assets at June 30, 2004 were $106.4 million as compared to $111.7 million at June 30, 2003. Total stockholders’ equity at June 30, 2004, was $17.3 million, or 16.2% of total assets.

The Bank has four offices located in Gadsden, Albertville, Guntersville, and Centre, Alabama. The stock of The Southern Banc Company, Inc. is listed on the NASDAQ OTC Bulletin Board under the symbol “SRNN”.

Certain statements in this release contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, which statements can generally be identified by the use of forward-looking terminology, such as “may,” “will,” “expect,” “estimate,” “anticipate,” “believe,” “target,” “plan,” “project,” “continue,” or the negatives thereof, or other variations thereon or similar terminology, and are made on the basis of management’s plans and current analyses of the Company, its business and the industry as a whole. These forward-looking statements are subject to risks and uncertainties, including, but not limited to, economic conditions, competition, interest rate sensitivity and exposure to regulatory and legislative changes. The above factors, in some cases, have affected, and in the future could affect, the Company’s financial performance and could cause actual results to differ materially from those expressed or implied in such forward-looking statements, even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

(Selected financial data attached)

THE SOUTHERN BANC COMPANY, INC.

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollar Amounts in Thousands)

	June 30, 2004			June 30, 2003
ASSETS
CASH AND CASH EQUIVALENTS	$	5,734		$	9,393
SECURITIES AVAILABLE FOR SALE, at fair value		56,717			53,723
SECURITIES HELD TO MATURITY, at amortized cost, fair value of $4,475 and $7,174, respectively		4,194			7,215
FEDERAL HOME LOAN BANK STOCK		792			886
LOANS HELD FOR SALE		0			50
LOANS RECEIVABLE, net of allowance for loan losses of $144 and $140, respectively		37,477			38,917
PREMISES AND EQUIPMENT, net		486			507
ACCRUED INTEREST AND DIVIDENDS RECEIVABLE		439			483
OTHER ASSETS		514			527
TOTAL ASSETS	$	106,353		$	111,701
LIABILITIES
DEPOSITS	$	82,005		$	84,357
FHLB ADVANCES		6,916			7,750
OTHER LIABILITIES		179			728
TOTAL LIABILITIES		89,100			92,835
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, 562,452 and 493,252 shares, respectively		(7,347	)		(6,182	)
Additional paid-in capital		13,910			13,818
Unearned compensation		(71	)		(157	)
Shares held in trust, at cost, 34,799 and 65,738 shares, respectively		(495	)		(852	)
Retained earnings		11,341			11,082
Accumulated other comprehensive income (loss)		(100	)		1,142
TOTAL STOCKHOLDERS’ EQUITY		17,253			18,866
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	106,353		$	111,701

THE SOUTHERN BANC COMPANY, INC.

CONSOLIDATED STATEMENTS OF INCOME

(Dollar Amounts in Thousands, except per share data)

	Three Months Ended June 30,				Twelve Months Ended June 30,
	2004		2003		2004		2003
INTEREST INCOME:
Interest and fees on loans	$	536	$	602	$	2,243	$	2,374
Interest and dividends on securities available for sale		589		651		2,329		2,792
Interest and dividends on securities held to maturity		80		128		392		657
Other interest income		7		4		43		68
Total interest income		1,212		1,385		5,007		5,891
INTEREST EXPENSE:
Interest on deposits		428		538		1,780		2,518
Interest on borrowings		77		73		340		381
Total interest expense		505		611		2,120		2,899
Net interest income before provision for loan losses		707		774		2,887		2,992
Provision for loan losses		0		9		11		13
Net interest income after provision for loan losses		707		765		2,876		2,979
NON-INTEREST INCOME:
Fees and other non-interest income		30		62		125		156
Gain on sale of securities		0		38		63		354
Miscellaneous income, net		14		0		47		13
Total non-interest income		44		100		235		523
NON-INTEREST EXPENSE:
Salaries and employee benefits		323		285		1,243		1,109
Office building and equipment expenses		19		22		81		93
Professional Service expense		49		12		238		187
Data Processing expenses		53		57		214		202
Other operating expense		97		112		377		421
Total non-interest expense		541		488		2,153		2,012
Income before income taxes		210		377		958		1,490
PROVISION FOR INCOME TAXES		89		218		381		596
Net Income	$	121	$	159	$	577	$	894
EARNINGS PER SHARE:
Basic	$	0.14	$	0.18	$	0.66	$	1.02
Diluted	$	0.14	$	0.18	$	0.63	$	1.00
DIVIDENDS DECLARED PER SHARE	$	0.0875	$	0.0875	$	0.350	$	0.350
AVERAGE SHARES OUTSTANDING:
Basic		854,340		875,448		878,391		876,172
Diluted		889,770		906,994		912,704		894,421

THE SOUTHERN BANC COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollar Amounts in Thousands)

	For The Twelve Months Ended June 30,
	2004			2003
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	577		$	894
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		45			58
Amortization (Accretion), net		266			209
Amortization of unearned compensation		178			146
Provision for loan losses		12			13
Deferred income tax (benefit) provision		(3	)		65
Net gain on sale of secondary market loans		(19	)		(53	)
Gain on sale of securities		(62	)		(354	)
Proceeds from sale of secondary market loans		1,266			3,372
Loans originated for secondary market		(1,197	)		(3,369	)
Change in assets and liabilities:
Decrease in accrued interest & dividends receivable		43			103
Decrease (increase) in other assets		1			(433	)
Increase (decrease) in other liabilities		4			(25	)
Net cash provided by operating activities		1,111			626
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of securities available for sale		(29,144	)		(33,154	)
Proceeds from maturities, principal payments, and sales of securities available for sale		21,172			22,872
Proceeds from sale of securities available for sale		2,984			10,965
Proceeds from maturities and principal payments on securities held to maturity		3,031			4,326
Proceeds from sale of FHLB stock		94			563
Net loan (originations) repayments		1,429			(4,416	)
Purchase of FHLB stock		0			0
Capital expenditures, net		(24	)		(35	)
Net cash provided by (used in) investing activities		(458	)		1,121
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase in deposits, net		(2,352	)		2,800
Dividends paid		(319	)		(310	)
Proceeds from exercise of stock options		357			0
Purchase of treasury stock		(1,165	)		(540	)
Increase (decrease) in FHLB advances, net		(833	)		(1,833	)
Net cash provided by financing activities		(4,312	)		117
Net increase in cash and cash equivalents		(3,659	)		1,864
CASH AND CASH EQUIVALENTS, beginning of period		9,393			7,529
CASH AND CASH EQUIVALENTS, end of period	$	5,734		$	9,393
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for:
Income taxes	$	358		$	554
Interest	$	2,124		$	2,916