SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1997. Commission File No. 0-10852
SOUTHERN BANCSHARES (N.C.), INC.
(Exact name of registrant as specified in its charter)
DELAWARE 56-1538087
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
121 East Main Street Mount Olive, North Carolina 28365
( Address of Principal Executive offices) (Zip Code)
Registrant's Telephone Number, including Area Code: (919) 658-7000
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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 90 days.
Yes _X_ No ___
Indicate the number of shares outstanding of the Registrant's common stock as
of the close of the period covered by this report.
119,918 shares
SOUTHERN BANCSHARES (N.C.), INC June 30, December 31,
CONSOLIDATED BALANCE SHEETS 1997 1996
________ ________
(Dollars in thousands except per share data) (Unaudited)
ASSETS
Cash and due from banks $28,557 $21,445
Federal funds sold 6,375 11,020
Investment securities:
Held-to-maturity, at amortized cost (fair value $55,855 and $64,559, respectively) 55,023 63,676
Available-for-sale, at fair value (amortized cost $97,080 and $88,504, respectively) 114,565 105,013
Loans, net of unearned income 346,965 317,755
Less allowance for loan losses (6,149) (6,163)
_______ _______
Net Loans 340,816 311,592
Premises and equipment 17,896 15,439
Accrued interest receivable 4,526 3,999
Intangible assets 6,546 5,991
Other assets 789 2,583
_______ _______
Total assets $575,093 $540,758
======= =======
LIABILITIES
Deposits:
Noninterest-bearing $ 63,040 $ 64,089
Interest-bearing 442,797 416,477
_______ _______
Total deposits 505,837 480,566
Short-term borrowings 6,732 5,064
Long-term obligations 5,650 1,400
Accrued interest payable 4,564 3,204
Other liabilities 5,290 5,746
_______ _______
Total liabilities 528,073 495,980
_______ _______
SHAREHOLDERS' EQUITY
Series B non-cumulative preferred stock, no par value; 408,728 shares authorized and
406,344 shares issued and outstanding at June 30, 1997 and 407,752 shares issued
and outstanding at December 31, 1996 1,980 1,986
Series C non-cumulative preferred stock, no par value; 43,631 shares authorized and
43,631 shares issued and outstanding at June 30, 1997 and December 31,1996 578 578
Common stock, $5 par value; 158,485 shares authorized and 119,918 shares issued and
outstanding at June 30, 1997 and December 31, 1996 600 600
Surplus 10,000 10,000
Retained earnings 22,322 20,718
Unrealized gain on securities available-for-sale, net of tax 11,540 10,896
_______ _______
Total shareholders' equity 47,020 44,778
_______ _______
Total liabilities and shareholders' equity $575,093 $540,758
======= =======
The accompanying notes are an integral part of these consolidated financial statements.
SOUTHERN BANCSHARES (N.C.), INC. (Unaudited)
CONSOLIDATED STATEMENTS OF INCOME Three Months Ended June 30,
1997 1996
(Dollars in thousands except share and per share data)
Interest income:
Loans $7,191 $6,653
Investment securities:
U. S. Government 1,590 1,719
State, county and municipal 569 520
Other 266 146
_____ _____
Total investment securities interest income 2,425 2,385
Federal funds sold 95 64
_____ _____
Total interest income 9,711 9,102
Interest expense:
Deposits 4,548 4,198
Short-term borrowings 72 91
Long-term obligations 118 55
_____ _____
Total interest expense 4,738 4,344
_____ _____
Net interest income 4,973 4,758
Provision for loan losses - 20
_____ _____
Net interest income after provision for loan losses 4,973 4,738
Noninterest income:
Service charges on deposit accounts 677 674
Other service charges and fees 216 184
Investment securities gains, net - 1
Insurance commissions 30 28
Gain (loss) on sale of loans 4 (151)
Other 52 277
_____ _____
Total noninterest income 979 1,013
Noninterest expense:
Personnel 2,164 1,991
Intangibles amortization 443 405
Data processing 465 330
Furniture and equipment 384 360
Occupancy 336 299
FDIC insurance assessment 28 74
Charitable contributions 2 10
Other 857 753
_____ _____
Total noninterest expense 4,679 4,222
_____ _____
Income before income taxes 1,273 1,529
Income taxes 130 415
_____ _____
Net income $1,143 $1,114
===== =====
Per share information:
Net income applicable to common shares $8.71 $8.46
Cash dividends declared on common shares .37 .375
Weighted average common shares outstanding 119,918 119,918
======= =======
The accompanying notes are an integral part of these consolidated financial statements.
SOUTHERN BANCSHARES (N.C.), INC. (Unaudited)
CONSOLIDATED STATEMENTS OF INCOME Six Months Ended June 30,
(Dollars in thousands except share and per share data) 1997 1996
Interest income:
Loans $14,097 $13,008
Investment securities:
U. S. Government 3,178 3,358
State, county and municipal 1,102 1,075
Other 384 241
_____ _____
Total investment securities interest income 4,664 4,674
Federal funds sold 205 304
_____ _____
Total interest income 18,966 17,986
Interest expense:
Deposits 8,857 8,556
Short-term borrowings 124 121
Long-term obligations 120 115
_____ _____
Total interest expense 9,101 8,792
_____ _____
Net interest income 9,865 9,194
Provision for loan losses 60 20
_____ _____
Net interest income after provision for loan losses 9,805 9,174
Noninterest income:
Service charges on deposit accounts 1,325 1,336
Other service charges and fees 424 363
Investment securities gains, net 3,534 1
Insurance commissions 47 92
Gain (loss) on sale of loans (6) (115)
Other 125 387
_____ _____
Total noninterest income 5,449 2,064
Noninterest expense:
Personnel 4,252 3,856
Intangibles amortization 845 818
Data processing 818 690
Furniture and equipment 768 706
Occupancy 661 585
FDIC insurance assessment 55 136
Charitable contributions 4,074 14
Other 1,671 1,517
______ _____
Total noninterest expense 13,144 8,322
______ _____
Income before income taxes 2,110 2,916
Income taxes 210 870
_____ _____
Net income $1,900 $2,046
===== =====
Per share information:
Net income applicable to common shares $14.19 $15.40
Cash dividends declared on common shares .74 .75
Weighted average common shares outstanding 119,918 119,918
======= =======
The accompanying notes are an integral part of these consolidated financial statements.
SOUTHERN BANCSHARES (N.C.), INC.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
Preferred Stock Unrealized
_______________ Common gain on
Series B Series C Stock securities
________ ________ _____ available- Total
(dollars in thousands Retained for-sale Shareholders'
except per share data) Shares Amount Shares Amount Shares Amount Surplus Earnings net of taxes Equity
______ ______ ______ ______ ______ ______ _______ ________ ____________ ______
BALANCE, DECEMBER 31, 1995 408,728 $1,991 43,631 $578 119,918 $600 $10,000 $16,948 $7,046 $37,163
Net Income 2,046 2,046
Cash dividends:
Common stock ($.75 per share) (90) (90)
Preferred B ($.44 per share) (180) (180)
Preferred C ($.44 per share) (19) (19)
Change in unrealized gain on
available-for-sale securities,
net of taxes 765 765
_______ _____ ______ ___ _______ ___ ______ ______ _____ ______
BALANCE, JUNE 30, 1996 408,728 $1,991 43,631 $578 119,918 $600 $10,000 $18,705 $7,811 $39,685
BALANCE, DECEMBER 31, 1996 407,752 $1,986 43,631 $578 119,918 $600 $10,000 $20,718 $10,896 $44,778
Net income 1,900 1,900
Purchases and retirements of stock (1,408) (6) (9) (15)
Cash dividends:
Common stock ($.74 per share) (89) (89)
Preferred B ($.44 per share) (179) (179)
Preferred C ($.44 per share) (19) (19)
Change in unrealized gain on
available-for-sale securities,
net of taxes 644 644
_______ _____ ______ ___ _______ ___ ______ ______ ______ ______
BALANCE, JUNE 30, 1997 406,344 $1,980 43,631 $578 119,918 $600 $10,000 $22,322 $11,540 $47,020
======= ===== ====== === ======= === ====== ====== ====== ======
The accompanying notes are an integral part of these consolidated financial statements.
SOUTHERN BANCSHARES (N.C.), INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six months ended June 30,
(Thousands) 1997 1996
OPERATING ACTIVITIES:
Net income $1,900 $2,046
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 60 20
Contribution expense for donation of marketable equity securities 4,071 -
Gain on contribution of marketable equity securities (3,529) -
Gains on issuer calls of securities (5) (1)
Loss (gain) on sale and abandonment of premises and equipment 32 (34)
Net accretion on investments (44) (29)
Amortization of intangibles 845 818
Depreciation 486 472
Net increase in accrued interest receivable (527) (3,267)
Net increase (decrease) in accrued interest payable 1,360 (480)
Net decrease in other assets 1,794 247
Net increase (decrease) in other liabilities (456) 1,068
_____ _____
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,987 860
_____ _____
INVESTING ACTIVITIES:
Proceeds from maturities and issuer calls of investment securities held-to-maturity 26,177 24,660
Proceeds from maturities and issuer calls of investment securities available-for-sale 3,105 185
Purchases of investment securities held-to-maturity (17,764) (4,685)
Purchases of investment securities available-for-sale (12,264) (31,495)
Net increase in loans (27,694) (29,769)
Additions to premises and equipment (2,700) (1,829)
Net cash received for branches acquired 19,730 3,018
______ _____
NET CASH USED IN INVESTING ACTIVITIES (11,410) (39,915)
______ _____
FINANCING ACTIVITIES:
Net decrease in demand and interest bearing demand deposits (14,195) (7,586)
Net increase in time deposits 16,469 4,957
Net proceeds (repayments) of long-term obligations 4,250 (600)
Net proceeds of short-term borrowings 1,668 21,677
Cash dividends paid (287) (289)
Purchase and retirement of stock (15) -
______ ______
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,890 18,159
______ ______
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2,467 (20,896)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR 32,465 42,906
______ ______
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD $34,932 $22,010
====== ======
SUPPLEMENTAL DISCLOSURES OF CASH PAID DURING THE PERIOD FOR:
Interest $7,740 $5,545
Income taxes $799 $383
====== =====
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Unrealized gain (loss) on securities available-for-sale $976 $1,159
=== =====
The accompanying notes are an integral part of these consolidated financial statements.
SOUTHERN BANCSHARES (N. C.), INC.
Notes to consolidated financial statements
(Dollars in thousands)
Note 1. Summary of significant accounting policies
BancShares
Southern BancShares (N. C.), Inc. ("BancShares") is the holding company for
Southern Bank and Trust Company ("Southern"), which operates 41 banking offices
in eastern North Carolina. Southern, which began operations in January, 1901,
has a non-bank subsidiary, Goshen, Inc. whose insurance operations complement
the operations of its parent. BancShares and Southern are headquartered in
Mount Olive, North Carolina.
Principles of Consolidation
The consolidated financial statements include the accounts of BancShares,
and its wholly-owned subsidiary, Southern. The statements also include the
accounts of Goshen, Inc., a wholly-owned subsidiary of Southern, and Goshen
Properties, Inc., a wholly-owned property management subsidiary of Southern,
which was dissolved on April 17, 1997 with no material gain or loss.
BancShares' financial resources are primarily provided by dividends from
Southern and there are no material differences between the results of
operations or financial position of BancShares or of Southern. All significant
intercompany balances have been eliminated in consolidation.
Basis of Financial Statement Presentation
The financial statements in this report are unaudited. In the opinion of
management, all adjustments (none of which were other than normal accruals)
necessary for a fair presentation of the financial position and results of
operations for the periods presented have been included.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent liabilities at the date of the financial statements
and the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. The most significant
estimates made by BancShares in the preparation of its consolidated financial
statements are the determination of the allowance for loan losses, the
valuation of other real estate and the valuation allowance for deferred tax
assets. The statements should be read in conjunction with the consolidated
financial statements and accompanying notes for the year ended December 31,
1996, incorporated by reference in the 1996 Annual Report on Form 10-K.
Reclassifications
Certain prior year balances have been reclassified to conform to the
current year presentation. Such reclassifications had no effect on net income
or shareholders' equity as previously reported.
Note 2. Investment securities June 30, 1997 December 31, 1996
Gross Gross Estimated Gross Gross Estimated
(Dollars in thousands) Amortized Unrealized Unrealized Fair Amortized Unrealized Unrealized Fair
Cost Gains Losses Value Cost Gains Losses Value
_____ _________ ________ ______ _______ ________ ________ _________
SECURITIES HELD-TO-MATURITY:
U. S. Government $32,302 70 - $32,372 $36,311 91 - $36,402
Obligations of states
and political subdivisions 22,521 777 (12) 23,286 27,165 799 (4) 27,960
Corporate securities 200 (3) 197 200 - (3) 197
______ ____ ____ ______ ______ _____ ___ _______
55,023 847 (15) 55,855 63,676 890 (7) 64,559
====== ==== ==== ====== ====== ===== === =======
SECURITIES AVAILABLE-FOR-SALE:
U. S. Government 79,136 78 (88) 79,126 70,121 - (15) 70,106
Marketable equity securities 8,334 17,140 - 25,474 8,612 16,296 (97) 24,811
Obligations of states
and political subdivisions 7,542 314 - 7,856 7,647 278 (4) 7,921
Mortgage-backed securities 2,068 41 - 2,109 2,124 106 (55) 2,175
______ ______ ____ ______ ______ ______ ___ _______
97,080 17,573 (88) 114,565 88,504 16,680 (171) 105,013
====== ====== ==== ====== ====== ====== === =======
TOTALS $152,103 $18,420 ($103) $170,420 $152,180 $17,570 ($178) $169,572
======= ====== ==== ======= ======= ====== === =======
SOUTHERN BANCSHARES (N.C.), INC.
Notes to consolidated financial statements
(Dollars in thousands except share and per share data)
June 30, December 31,
1997 1996
____ ____
Note 3. LOANS
Loans by type were as follows:
Commercial, financial and agricultural $87,746 $70,881
Real estate - construction 4,800 2,470
Real estate - mortgage 216,051 206,870
Consumer 35,701 35,512
Lease financing 3,105 2,370
_______ _______
Total loans 347,403 318,103
Less unearned income (438) (348)
_______ _______
Total loans less unearned income $346,965 $317,755
======= =======
Loans held for sale $ 2,914 $ 4,143
Loans serviced for others $ 75,555 $ 73,202
June 30, June 30,
(In thousands) 1997 1996
____ ____
Note 4. ALLOWANCE FOR LOAN LOSSES
Balance at beginning of year $6,163 $6,321
Provision for loan losses 60 20
Loans charged off (178) (206)
Loan recoveries 104 145
_____ _____
Balance at end of the period $6,149 $6,280
===== =====
SOUTHERN BANCSHARES (N.C.), INC.
Notes to consolidated financial statements
(Dollars in thousands except share and per share data)
June 30, December 31,
1997 1996
(In thousands) ____ ____
Note 5. Premises and Equipment
Land $ 3,017 $2,783
Buildings and improvements 10,998 9,262
Furniture and equipment 6,253 5,804
Construction-in-progress 3,869 3,467
______ ______
24,137 21,316
Less: accumulated depreciation (6,241) (5,877)
______ ______
$17,896 $15,439
====== ======
Note 6. Earnings per common share
Earnings per common share are computed by dividing income applicable to
common shares by the weighted average number of common shares outstanding
during the period. Income applicable to common shares represents net income
reduced by dividends paid to preferred shareholders.
Three Months Ended June 30, Six Months Ended June 30,
1997 1996 1997 1996
____ ____ ____ ____
Net income $1,143 $1,114 $1,900 $2,046
Less: Preferred dividends (98) (99) (198) (199)
_____ _____ _____ _____
Net income applicable to common shares $1,045 $1,015 $1,702 $1,847
===== ===== ===== =====
Weighted average common shares
outstanding during the period 119,918 119,918 119,918 119,918
======= ======= ======= =======
SOUTHERN BANCSHARES ((N.C.), INC.
Notes to consolidated financial statements
(Dollars in thousands except share and per share data)
Note 7. RELATED PARTIES
BancShares has entered into various service contracts with another bank
holding company and its subsidiary (the "Corporation"). The Corporation has
two significant shareholders, who also are significant shareholders of
BancShares. The first significant shareholder is a director of BancShares and,
at June 30, 1997, beneficially owned 31,424 shares, or 26.20 percent, of
BancShares' outstanding common stock and 22,171 shares, or 5.46 percent, of
BancShares' outstanding Series B preferred stock. At the same date, the second
significant shareholder beneficially owned 28,127 shares, or 23.46 percent, of
BancShares' outstanding common stock, and 17,205 shares, or 4.23 percent, of
BancShares' Series B preferred stock. The above totals include 17,205 Series B
preferred shares, or 4.23 percent, that are considered to be beneficially owned
by both of the shareholders and, therefore, are included in each of their
totals.
These two significant shareholders are directors and executive officers of
the Corporation and at June 30, 1997, beneficially owned 2,568,053 shares, or
26.65 percent, and 1,694,936 shares, or 17.59 percent, respectively, of the
Corporation's outstanding Class A common stock, and 632,146 shares, or 35.99
percent, and 184,632 shares, or 10.51 percent, respectively, of the
Corporation's outstanding Class B common stock. The above totals include
555,104 Class A common shares, or 5.76 percent, and 109,944 Class B Common
shares, or 6.26 percent, that are considered to be beneficially owned by both
of the shareholders and, therefore, are included in each of their totals. A
subsidiary of the Corporation is First-Citizens Bank & Trust Company
("First Citizens"). Southern acquired a branch from First Citizens in the
second quarter of 1996.
The following table lists the various charges paid to the Corporation during
the three months ended:
June 30, June 30,
1997 1996
________ ________
Data and item processing $867 $798
Forms, supplies and equipment 93 87
Trustee for employee benefit plans 31 32
Consulting Fees 38 43
Trust investment services 11 12
Internal auditing services 40 26
Other services 42 50
____ _____
$1,122 $1,048
==== =====
Data and item processing expenses include courier services, proof and
encoding, microfilming, check storage, statement rendering and item processing
forms. BancShares also has a correspondent relationship with the Corporation.
Correspondent account balances with the Corporation included in cash and due
from banks totaled $11,268 at June 30, 1997 and $8,673 at December 31, 1996.
SOUTHERN BANCSHARES (N.C), INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - FIRST SIX MONTHS OF 1997 VS. FIRST SIX MONTHS OF 1996
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE DATA)
INTRODUCTION
In the first six months of 1997, the net income of Southern BancShares
decreased $146 from $2,046 in the first six months of 1996 to $1,900 in the
first six months of 1997, a decrease of 7 percent. One branch acquisition in
1996, three branch acquisitions in 1997, the opening of a new branch in 1996
and the sale of an existing branch in 1996 for a non-recurring gain of $213,
resulted in increased net interest income for the six months ended June 30,
1997, increased other noninterest income for the six months ended June 30, 1996
and increased personnel expense and other related operating expenses for the
six months ended June 30, 1997. Losses on the sales of mortgage loans
held-for-sale decreased $109 in the six months ended June 30, 1997 compared to
the six months ended June 30, 1996. A first quarter 1997 donation of
available-for-sale securities resulted in a significant increase in charitable
contributions expense which was more than offset by the resulting investment
securities gains and resulting reduction in income taxes.
Net income per common share for the first six months of 1997 was $14.19, a
decrease of $1.21, or 8 percent, from $15.40 in 1996. The return on average
equity declined to 9.37 percent, for the period ending June 30, 1997, from
11.58 percent for the period ending June 30, 1996 and the return on average
assets declined to .75 percent, for the period ending June 30, 1997, from .87
percent for the period ending June 30, 1996. At June 30, 1997, BancShares'
assets totaled $575,093, an increase of $34,335, or 6 percent, from the
$540,758 reported at December 31, 1996. During this six month period, net
loans increased $29,224 or 9 percent, from $311,592 to $340,816. During the
six months ended June 30, 1997 investment securities increased $899, or 1
percent from $168,689 at December 31, 1996 to $169,588 at June 30, 1997. Total
deposits increased $25,271, or 5 percent from $480,566 at December 31, 1996 to
$505,837 at June 30, 1997. The above increases resulted principally from the
1997 branch acquisitions discussed below.
Southern opened a branch in Whitakers, North Carolina in March, 1996 and
in June 1996, Southern acquired approximately $7 million of the deposits of the
Windsor, North Carolina office of First Citizens and sold approximately $4
million of the deposits of its Scotland Neck, North Carolina office to Triangle
Bank. Southern purchased $83 of the loans of the First Citizens', Windsor
branch and sold $42 of the loans of its Scotland Neck branch. Southern paid a
premium of $539, or approximately 7%, for the deposits of the Windsor branch.
This acquisition was accounted for as a purchase, and, therefore, the results
of operations prior to the purchase are not included in the consolidated
financial statements. Southern had a gain of $213, that is included in other
noninterest income, on the sale of the Scotland Neck branch. Southern did not
sell any branches in the 1997 period.
Southern acquired approximately $12 million, $4 million and $5 million,
respectively, of the deposits of the Aurora, Hamilton and Aulander offices of
Wachovia Bank of North Carolina, N.A. in May 1997. Southern purchased
approximately $.8 million, $.4 million and $.2 million of the loans of the
respective branches and paid a premium of $1.3 million, or approximately 6%,
for the deposits of the three branches. This acquisition was accounted for as
a purchase, and, therefore, the results of operations prior to the purchase are
not included in the consolidated financial statements.
The comparisons of the six months ending June 30, 1997 to the six months
ending June 30, 1996 are accordingly impacted by the above transactions.
INTEREST INCOME
Interest and fees on loans increased $1,089, or 8 percent, from $13,008
for the six months ended June 30, 1996 to $14,097 for the six months ended June
30, 1997. This increase was due to increased loan volume. Average loans for
the six months ending June 30, 1997 were $330 million, an increase of 10
percent from $301 million for the prior year six month period. The yield on
the loan portfolio was 8.7 percent in the six months ended June 30, 1996 and
8.8 percent in the six months ended June 30, 1997.
Interest income from investment securities, including U. S. Treasury and
Government obligations, obligations of state and county subdivisions and other
securities decreased $10, or .2 percent, from $4,674 in the six months ended
June 30, 1996 to $4,664 in the six months ended June 30, 1997. This decrease
was due to a decrease in the yield of the investment portfolio that more than
offset an increase in the volume of average investment securities for the six
months ended June 30, 1997 to $152 million as compared to $145 million for the
1996 period. The yield on investment securities was 6.3 percent for the 1996
period ending June 30 and 6.0 percent in the 1997 period ending June 30.
Interest income on federal funds sold decreased $99, or 33 percent, from
$304 for the six months ended June 30, 1996 to $205 for the six months ended
June 30, 1997. This decrease in income resulted primarily from the decrease in
the average federal funds sold to $8 million for the six months ended June 30,
1997 from an average of $11 million for the six months ended June 30, 1996.
Average federal funds sold yields were 5.2 percent for the six months ended
June 30, 1997 down from 5.4 percent for the six months ended June 30, 1996.
Total interest income increased $980, or 5 percent, from $17,986 for the
six months ended June 30, 1996 to $18,966 for the six months ended June 30,
1997. This increase was primarily the result of volume increases and a slight
overall increase in average earning asset interest yields.
Average earning asset interest yields for the six months ended June 30,
1997 increased to 7.85 percent from the 7.84 percent yield on average earning
assets for the six months ended June 30, 1996. Average earning assets
increased from $457 million in the six months ended June 30, 1996 to $489
million in the period ended June 30, 1997. This $32 million increase in the
average earning assets resulted primarily from the acquisitions discussed
above.
INTEREST EXPENSE
Total interest expense increased $309 or 4 percent, from $8,792 in the six
months ended June 30, 1996 to $9,101 for the six months ended June 30, 1997.
The principal reason for the increase was the acquisitions discussed above.
BancShares' total cost of funds decreased from 4.35 percent at June 30, 1996 to
4.20 percent one year later. Average interest bearing deposits were $427
million in the six months ended June 30, 1997, an increase of $28 million from
the $399 million in the six months ending June 30, 1996.
NET INTEREST INCOME
Net interest income increased $671, or 7 percent, from $9,194 for the six
months ended June 30, 1996 to $9,865 for the six months ended June 30, 1997.
This increase was primarily due to the impact of the acquisitions discussed
above, which increased interest earning assets.
The net interest margin at June 30, 1997 was 3.65 percent, an increase of 16
basis points from the 3.49 percent interest margin at June 30, 1996.
ASSET QUALITY AND PROVISION FOR LOAN LOSSES
For the six months ended June 30, 1997 management added $60 as a volume
related addition to the provision for loan losses. Management made a $20
addition to the provision for loan losses for the six months ended June 30,
1996. During the first six months of 1997 management charged-off loans
totaling $178 and received recoveries of $104, resulting in net charge-offs of
$74. During the same period in 1996, $206 in loans were charged-off and
recoveries of $145 were received, resulting in net charge-offs of $61. The
increase in net charge-offs was principally due to decreased recoveries in
1997. The following table presents comparative Asset Quality ratios of
BancShares:
June 30, December 31,
1997 1996
Ratio of net loans charged off
to average loans, net of unearned income .04% * .10%
Allowance for loan losses
to loans, net of unearned income 1.77% 1.94%
Non-performing loans
to loans, net of unearned income .31% .16%
Non-performing loans and assets
to total assets .19% .09%
Allowance for loan losses
to non-performing loans 564% 1,238%
* Annualized
The ratio of net annualized charge-offs to average loans, net of unearned
income outstanding decreased to .04 percent at June 30, 1997 from .10 percent
at December 31, 1996 primarily due to increased loans. The allowance for loan
losses represented 1.77 percent of loans, net of unearned income at June 30,
1997, a decrease of 17 basis points from the December 31, 1996 ratio of 1.94
percent. Loans, net of unearned income increased $29 million, or 9 percent,
from December 31, 1996 to June 30, 1997.
The ratio of nonperforming loans to loans, net of unearned income
increased from .16 percent at December 31, 1996 to .31 percent at June 30,
1997. Nonperforming loans and assets to total assets increased to .19 percent
at June 30, 1997 from .09 percent at December 31, 1996. The allowance for loan
losses to nonperforming loans represented 564 percent of nonperforming loans at
June 30, 1997, a decrease from the 1,238 percent at December 31, 1996. The
above performance declines resulted primarily from an increase in nonperforming
loans to $1,091 at June 30, 1997 from $498 at December 31, 1996. The
nonperforming loans at June 30, 1997 included $327 of nonaccrual loans, $754
of accruing loans 90 days or more past due and no restructured loans.
BancShares had no assets classified as other real estate at June 30, 1997.
Other real estate at June 31, 1996 was $35.
Management considers the June 30, 1997 allowance for loan losses adequate
to cover the losses and risks inherent in the loan portfolio at June 30, 1997
and will continue to monitor its portfolio and to adjust the relative level of
the allowance as needed. BancShares' impaired loans have not materially
changed since December 31, 1996. At June 30, 1997, Southern has $4 of loans
classified for regulatory purposes as loss, no loans classified as doubtful and
$995 of loans classified as substandard. Management actively maintains a
current loan watch list and knows of no other loans which are material and (i)
represent or result from trends or uncertainties which management reasonably
expects will materially impact future operating results, liquidity or capital
resources, or (ii) represent material credits about which management is aware
of any information which causes management to have serious doubts as to the
ability of such borrowers to comply with the loan repayment terms.
NONINTEREST INCOME
Bancshares had an increase of $3,533 in net investment securities gains, in
the six months ended June 30, 1997 principally related to the donation of
available-for-sale securities discussed above.
BancShares had losses on the sale of mortgage loans of $6 in the six months
ended June 30, 1997 compared to $115 in losses on the sales of mortgage loans
in the six months ended June 30, 1996. Southern had a gain of $213, that is
included in other noninterest income, on the Scotland Neck branch sale
discussed above. Southern did not sell any branches in the period ending June
30, 1997. Income from service charges on deposit accounts, other service
charges and fees, insurance commissions and other noninterest income not
detailed above decreased $44, or 2 percent, from $1,965 for the six months
ended June 30, 1996 to $1,921 for the six months ended June 30, 1997.
NONINTEREST EXPENSE
BancShares had an increase in charitable contribution expense of $4,060
in the six months ended June 30, 1997 principally related to the
available-for-sale securities donation discussed above.
Noninterest expense, other than contribution expense, including personnel,
occupancy, furniture and equipment, data processing, FDIC insurance and state
assessments, printing and supplies and other expenses, increased $762 or 9
percent, from $8,308 in the six months ended June 30, 1996 to $9,070 in the six
months ended June 30, 1997.
This increase was primarily due to an increase in personnel expense of
$396, or 10 percent, from $3,856 at June 30 1996 to $4,252 at June 30, 1997 and
increased occupancy, furniture and equipment expense and other volume related
expenses resulting from the branch acquisitions in June and August of 1996 and
May 1997 discussed above.
INCOME TAXES
In the six months ended June 30, 1997 BancShares had income tax expense of
$210, a decrease of $660, or 76 percent, from $870 in the prior year period.
This decrease was due both to reduced profitability resulting from the donation
of the available-for-sale securities discussed above and the resulting tax
benefits of this donation. The resulting effective tax rates based on the
accruals for the six months ended in June 1997 and 1996 were 10 percent and 30
percent, respectively.
SOUTHERN BANCSHARES (N.C), INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - SECOND QUARTER OF 1997 VS. SECOND QUARTER OF 1996
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE DATA)
INTRODUCTION
In the second quarter of 1997, the net income of Southern BancShares
increased $29 from $1,114 in the second quarter of 1996 to $1,143 in the second
quarter of 1997, an increase of 3 percent. One branch acquisition in 1996,
three 1997 branch acquisitions and the sale of an existing branch in 1996 for a
non-recurring gain of $213, resulted in increased net interest income for the
three months ended June 30, 1997, increased other noninterest income in the
three months ended June 30, 1996, and increased personnel expense and other
related operating expenses in the three months ended June 30, 1997. Losses on
the sales of mortgage loans held-for-sale in the three months ended June 30,
1996 were $151. In the three months ended June 30 1997 gains of $4 were
realized on the sales of mortgage loans held-for-sale. The tax benefits of the
1997 first quarter contribution of available-for-sale securites resulted in
significantly lower income taxes on the second quarter income before income
taxes.
Net income per share for the second quarter of 1997 was $8.71 per common
share, an increase of $.25, or 3 percent, from $8.46 for the 1996 second
quarter.
In June 1996 Southern acquired approximately $7 million of the deposits of
the Windsor, North Carolina branch of First Citizens and sold its $4 million
deposit Scotland Neck, North Carolina branch to Triangle Bank. Southern
purchased $83 of the loans of the First Citizens branch and sold $42 of the
loans of its Scotland Neck branch. Southern paid First Citizens a premium of
$539, or approximately 7%, for the deposits of the Windsor branch. This
acquisition was accounted for as a purchase, and therfore, the results of
operations prior to the purchase are not included in the consolidated
financial statements. Southern had a gain of $213 on the 1996 second quarter
sale of the Scotland Neck branch which is included in other noninterest income.
Southern did not sell any branches in the second quarter of 1997.
Southern acquired approximately $12 million, $4 million and $5 million of
the deposits of the Aurora, Hamilton and Aulander offices of Wachovia Bank of
North Carolina, N.A. in May 1997. Southern purchased $.8 million, $.4 million
and $.2 million of the loans of the respective branches and paid a total
premium of approximately $1.3 million, or approximately 6%, for the deposits of
the three branches. This acquisition was accounted for as a purchase, and,
therefore, the results of operations prior to the purchase are not included in
the financial statements.
The following comparisons of the quarter ending June 30, 1997 to the
quarter ending June 30, 1996 are accordingly impacted by the above
transactions.
INTEREST INCOME
Interest and fees on loans increased $538, or 8 percent, from $6,653 for
the quarter ended June 30, 1996 to $7,191 for the quarter ended June 30, 1997.
This increase was due to increased loan volume. Average loans for the quarter
ending June 30, 1997 were $337 million, an increase of 9 percent from $309
million for the prior year quarter. The yield on the loan portfolio was 8.7
percent in the quarter ended June 30, 1996 and 8.6 percent in the quarter ended
June 30, 1997.
Interest income from investment securities, including U. S. Treasury and
Government obligations, obligations of state and county subdivisions and other
securities increased $40, or 2 percent, from $2,385 in the quarter ended June
30, 1996 to $2,425 in the quarter ended June 30, 1997. This increase was due
to a decrease in the yield of the investment portfolio to 5.87% for the quarter
ended June 30, 1997 from 6.29% for the quarter ended June 30, 1996 combined
with an increase in the volume of average investment securities for the quarter
ended June 30, 1997 to $154 million as compared to $147 million for the quarter
ended June 30, 1996.
Interest income on federal funds sold increased $31, or 48 percent, from
$64 for the quarter ended June 30, 1996 to $95 for the quarter ended June 30,
1997. This increase in income resulted primarily from the increase in the
average federal funds sold to $7 million for the quarter ended June 30, 1997
from $5 million for the quarter ended June 30, 1996. Average federal funds
sold yields were 5.3 percent for the quarter ended June 30, 1997 up from 5.2
percent for the quarter ended June 30, 1996.
Total interest income increased $609, or 7 percent, from $9,102 for the
quarter ended June 30, 1996 to $9,711 for the quarter ended June 30, 1997. This
increase was primarily the result of volume increases more than offsetting a
slight overall decrease in average earning asset interest yields. Average
earning asset interest yields for the quarter ended June 30, 1997 decreased to
7.7 percent from the 7.8 percent yield on average earning assets for the
quarter ended June 30, 1996. Average earning assets increased from $463
million in the quarter ended June 30, 1996 to $498 million in the quarter ended
June 30, 1997. This $35 million increase in the average earning assets
resulted primarily from the acquisitions discussed above.
INTEREST EXPENSE
Total interest expense increased $394 or 9 percent, from $4,344 in the
quarter ended June 30, 1996 to $4,738 for the quarter ended June 30, 1997. The
principal reason for the increase was the acquisitions discussed above.
BancShares' total cost of funds decreased from 4.24 percent for the quarter
ended June 31, 1996 to 4.23 percent for the quarter ended June 30, 1997.
Average interest bearing deposits were $433 million in the quarter ended June
30, 1997, an increase of $26 million from the $407 million in the quarter
ending June 30, 1996.
NET INTEREST INCOME
Net interest income was up $215, or 5 percent, from $4,758 for the quarter
ended June 30, 1996 to $4,973 for the quarter ended June 30, 1997. This
increase was primarily due to the increased earning asset volume resulting from
the acquisitions discussed above.
The net interest margin for the quarter ended June 30, 1997 was 3.50
percent, an increase of 7 basis points from 3.43 percent interest margin for
the quarter ending June 30, 1996.
ASSET QUALITY AND PROVISION FOR LOAN LOSSES
For the quarter ended June 30, 1996 management added $20 as a volume
related addition to the provision for loan losses. Management made no addition
to the provision for loan losses for the quarter ended June 30, 1997. During
the second quarter of 1997 Southern had net charge-offs of $97. During the
same period in 1996 net charge-offs were $30. The increase in net charge-offs
was due to both increased charge-offs and decreased recoveries in the second
quarter of 1997 compared to the second quarter of 1996.
NONINTEREST INCOME
BancShares had gains on the sale of mortgage loans of $4 in the quarter
ended June 30, 1997 compared to $151 in losses on the sales of mortgage loans
in the quarter ended June 30, 1996. Southern had a gain of $213, that is
included in other noninterest income, on the sale of the Scotland Neck branch
as discussed above. Southern did not sell any branches in the quarter ended
June 30, 1997. Income from service charges on deposit accounts, other service
charges and fees, insurance commissions and other noninterest income not
detailed above increased $24, or 3 percent, from $951 for the quarter ended
June 30, 1996 to $975 for the quarter ended June 30, 1997.
NONINTEREST EXPENSE
Noninterest expense including personnel, occupancy, furniture and
equipment, data processing, FDIC insurance and state assessments, printing and
supplies and other expenses, increased $457 or 11 percent, from $4,222 in the
quarter ended June 30, 1996 to $4,679 in the quarter ended June 30, 1997.
This increase was primarily due to an increase in personnel expense of
$173, or 9 percent, from $1,991 for the quarter ended June 30 1996 to $2,164
for the quarter ended June 30, 1997 and increased occupancy, furniture and
equipment expense and other volume related expenses resulting from the branch
acquisitions discussed above.
INCOME TAXES
In the quarter ended June 30, 1997 BancShares had income tax expense of
$130, a decrease of $285, or 69 percent, from $415 for the quarter ended June
30, 1996. This decrease was due to tax benefits resulting from the first
quarter donation of available-for-sale securities discussed above. The
resulting effective tax rates based on the accruals for the quarter ended in
June 1997 and 1996 were 10 percent and 27 percent, respectively.
SHAREHOLDERS' EQUITY AND CAPITAL ADEQUACY
Sufficient levels of capital are necessary to sustain growth and absorb
losses. To this end, the Federal Reserve Board, which regulates BancShares,
and the Federal Deposit Insurance Corporation, which regulates Southern, have
established minimum capital guidelines for the institutions they supervise.
In the quarter ended March 31, 1997 BancShares borrowed an additional
$5,000 and gave Southern an additional $5,000 in capital which improved each of
Southern's capital ratios from the levels calculated at December 31, 1996.
One of the regulator guidelines defines minimum requirements for
Southern's leverage capital ratio. Leverage capital equals total equity less
goodwill and certain other intangibles. According to these guidelines,
Southern's leverage capital ratio at June 30, 1997 was 6.01 percent. At
December 31, 1996, Southern's leverage capital ratio was 5.46 percent. Both of
these ratios are greater than the level designated as "well capitalized" by the
FDIC.
Southern is also required to meet minimum requirements for Risk Based
Capital ("RBC"). Southern's assets, including loan commitments and other
off-balance sheet items, are weighted according to federal guidelines for the
risk considered inherent in each asset. At June 30, 1997, the Total RBC ratio
was 11.63 percent. At December 31, 1996 the RBC ratio was 10.66 percent. Both
of these ratios are greater than the level designated as "well capitalized" by
the FDIC.
The regulatory capital ratios reflect increases in assets and liabilities
from the acquisitions Southern has made. Each of the acquisitions required the
payment of a premium for the deposits received. Each of these premiums
resulted in increased intangible assets on BancShares' financial statements,
which is deducted from total equity in the ratio calculations.
The unrealized gains on securities available for sale at June 30, 1997 of
$17.5 million and $16.5 million at December 31, 1996, although a part of
total shareholders' equity, are not included in the calculation of either the
RBC or leverage capital ratios pursuant to regulatory definitions of these
capital requirements. The following table presents capital adequacy
calculations and ratios of Southern:
June 30, December 31,
1997 1996
Tier 1 capital $ 32,215 $ 27,891
Total capital 36,290 31,861
Risk-adjusted assets 312,057 298,862
Average tangible assets 536,428 510,574
Tier 1 capital ratio 10.32% (1) 9.33% (1)
Total capital ratio 11.63% (1) 10.66% (1)
Leverage capital ratio 6.01% (1) 5.46% (1)
(1) These ratios exceed the minimum ratios for tier 1 capital of 6.00%, for
total capital of 10.00% and for leverage capital of 5.00% required for a
bank to be classified as "well capitalized," by the FDIC.
LIQUIDITY
Liquidity refers to the ability of Southern to generate sufficient funds
to meet its financial obligations and commitments at a reasonable cost.
Maintaining liquidity ensures that funds will be available for reserve
requirements, customer demand for loans, withdrawal of deposit balances and
maturities of other deposits and liabilities. Past experiences help management
anticipate cyclical demands and amounts of cash required. These obligations
can be met by existing cash reserves or funds from maturing loans and
investments, but in the normal course of business are met by deposit growth.
In assessing liquidity, many relevant factors are considered, including
stability of deposits, quality of assets, economy of the markets served,
business concentrations, competition and BancShares' overall financial
condition. BancShares' liquid assets include cash and due from banks, federal
funds sold and investment securities available-for-sale. The liquidity ratio,
which is defined as net cash plus short term and marketable securities divided
by net deposits and short term liabilities, was 29 percent at June 30, 1997 and
30 percent at December 31, 1996.
The Statement of Cash Flows discloses the principal sources and uses of
cash from operating, investing and financing activities for the six months
ended June 30, 1997 and 1996, respectively.
BancShares has no brokered deposits. Jumbo time deposits are considered
to include all time deposits of $100,000 or more. BancShares has never
aggressively bid on these deposits. Almost all jumbo time deposit customers
have other relationships with Southern, including savings, demand and other
time deposits, and in some cases, loans. At June 30, 1997 and at December 31,
1996 jumbo time deposits represented 11 percent and 9 percent, respectively, of
total deposits.
Management believes that BancShares has the ability to generate sufficient
amounts of cash to cover normal requirements and any additional needs which may
arise, within realistic limitations, and management is not aware of any known
demands, commitments or uncertainties that will affect liquidity in a material
way. The following table presents comparative liquidity ratios of BancShares:
June 30, December 31, Regulatory
1997 1996 Guidelines
Loans, net of unearned income to total deposits 69% 66% 80% (1)
Interest-bearing deposits to total deposits 88% 87% N/A
Jumbo interest-bearing deposits to total deposits 11% 9% N/A
Loans, net of unearned income to total assets 60% 59% 70% (1)
Liquidity 29% 30% 25% (2)
Temporary investments to volatile liabilities (3) 137% 120% 100% (2)
Volatile liability dependency -5% -3% 0 or (-)
(1) Maximum
(2) Minimum
(3) Volatile Liabilities include certificates of deposit of $100,000 or more, repurchase
agreements, and the Treasury Tax and Loan Account.
ACCOUNTING AND REGULATORY MATTERS
In September 1996, the FASB issued SFAS No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities," ("SFAS
No. 125") which establishes accounting standards for determining when a
liability should be considered extinguished through the transfer of assets to a
creditor or the setting aside of assets dedicated to eventually settling a
liability. The statement provides conditions for determining if a transferor
has surrendered control over transferred financial assets and requirements for
derecognizing a liability when it is extinguished. The statement also
requires the recognition of either a servicing asset or a servicing liability
when an entity undertakes an obligation to service financial assets. Such
servicing assets or liabilities shall be amortized in proportion to and over
the period of the estimated net servicing income or loss, as appropriate. SFAS
125 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after December 31, 1996 and is to be
only applied on a prospective basis. The application of SFAS 125 did not
have a material impact on BancShares financial condition or results of
operations.
In December 1996, the FASB issued SFAS No. 127, "Deferral of the Effective
Date of Certain Provisions of FSAB Statement No. 125, an Amendment to FASB
Statement No. 125" ("Statement 127"). Statement 127 delays the implementation
of certain provisions of Statement 125 because the changes required to be made
to information systems and accounting processes to allow compliance with
certain provisions of Statement 125 could not reasonably be expected to be made
in time for adoption on January 1, 1997. As a result of Statement 127,
Statement 125 guidance on transactions involving secured borrowings and
collateral, repurchase agreements, dollar-roll, securities lending and similar
transactions has been deferred until January 1, 1998. The impact from
BancShares' adoption of Statement 125, as amended by Statement 127, is
anticipated to be immaterial to BancShares' consolidated financial statements.
In February 1997, the FASB issued SFAS No. 128, "Earnings per Share"
("Statement 128"). Statement 128 establishes standards for computing and
presenting earnings per share ("EPS") and applies to entities with publicly
held common stock or potential common stock. This statement simplifies the
standards for computing EPS previously found in APB Opinion No. 15, "Earnings
per Share", and makes them comparable to international EPS standards. Statement
128 replaces the presentation of primary EPS with a presentation of basic EPS.
Statement 128 also requires dual presentation of basic and diluted EPS on the
face of the income statement for all entities with complex capital structures
and requires a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation.
Statement 128 provides specific guidance for the computation of basic and
diluted EPS and supercedes Opinion 15, AICPA Accounting Interpretation 1-102 of
Opinion 15, and other related accounting pronouncements. Statement 128 is
effective for financial statements issued for periods ending after December 15,
1997, including interim periods, with earlier application not permitted.
Additionally, once adopted, restatement of all prior-period EPS data presented
is required. Management does not expect that adoption of this pronouncement
will have a material effect on BancShares' consolidated financial statements.
In February 1997, the FASB issued SFAS No. 129, "Disclosure of Information
about Capital Structure" ("Statement 129"). Statement 129 establishes
standards for disclosing capital structure information for all entities and
continues the requirements to disclose certain capital structure information
found in APB Opinions No. 10, Omnibus Opinion-1996 and No. 15, Earnings per
Share and FASB Statement No. 47, "Disclosure of Long-Term Obligations".
Statement 129 requires summary explanations within the equity section of the
financial statements of pertinent rights and privileges of the various
securities outstanding such as dividend and liquidation preferences, voting
rights, call or redemption terms, additional issue contract terms and
aggregrate and per-share amounts of arrearages in cumulative preferred
dividends. Statement 129 is effective for financial statements for periods
ending after December 15, 1997. Management does not expect that adoption of
this pronouncement will have a material effect on BancShares' consolidated
financial statements.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130, "Reporting Comprehensive Income" ("SFAS No. 130"). SFAS No. 130
establishes standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements. It does not
address issues of recognition or measurement for comprehensive income and its
components. The provisions of SFAS No. 130 are effective for fiscal years
beginning after December 15, 1997. Earlier application is permitted.
Management does not expect that adoption of this pronouncement will have a
material effect on BancShares' consolidated financial statements.
In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131, "Disclosures about Segments of an Enterprise and Related Information"
(SFAS No. 131"). This statement requires that public business enterprises
report certain information about operating segments in complete sets of
financial statements issued to shareholders. It also requires that public
business enterprises report certain information about their products and
services, the geographic areas in which they operate, and their major
customers. SFAS No. 131 is effective for fiscal years beginning after December
15, 1997. Earlier application is encouraged. Management does not expect that
adoption of this pronouncement will have a material effect on BancShares'
consolidated financial statements.
The FASB also issues exposure drafts for proposed statements of financial
accounting standards. Such exposure drafts are subject to comment from the
public, to revisions by the FASB and to final issuance by the FASB as
statements of financial accounting standards. Management considers the effect
of the proposed statements on the consolidated financial statements of
BancShares and monitors the status of changes to issued exposure drafts and to
proposed effective dates.
OTHER EVENTS
BancShares previously announced that Mr. John C. Pegram, Jr., Executive
Vice President of Southern and Vice President of BancShares, will become
President of Southern upon the retirement of Southern President M. J. McSorley
on July 1, 1998.
Southern has received regulatory approval to open its first offices in
Wallace, Lumberton and Fairmont North Carolina. Southern plans to open these
offices in 1998.
Management is not aware of any other trends, events, uncertainties, or
current recommendations by regulatory authorities that will have or that are
reasonably likely to have a material effect on BancShares' liquidity, capital
resources or other operations.
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.
SOUTHERN BANCSHARES (N.C.), INC.
/s/John C. Pegram, Jr.
Dated: July 31, 1997 ___________________________________
John C. Pegram, Jr., Vice President
/s/David A. Bean
Dated: July 31, 1997 ___________________________________
David A. Bean, Secretary/Treasurer