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 September 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 September 30, December 31,
CONSOLIDATED BALANCE SHEETS 1997 1996
________ ________
(Dollars in thousands except per share data) (Unaudited)
ASSETS
Cash and due from banks $24,563 $21,445
Federal funds sold 8,095 11,020
Investment securities:
Held-to-maturity, at amortized cost (fair value $52,030 and $64,559, respectively) 51,124 63,676
Available-for-sale, at fair value (amortized cost $93,070 and $88,504, respectively) 115,196 105,013
Loans, net of unearned income 354,380 317,755
Less allowance for loan losses (6,113) (6,163)
_______ _______
Net Loans 348,267 311,592
Premises and equipment 18,371 15,439
Accrued interest receivable 5,118 3,999
Intangible assets 5,955 5,991
Other assets 5,739 2,583
_______ _______
Total assets $582,428 $540,758
======= =======
LIABILITIES
Deposits:
Noninterest-bearing $ 67,316 $ 64,089
Interest-bearing 440,966 416,477
_______ _______
Total deposits 508,282 480,566
Short-term borrowings 7,100 5,064
Long-term obligations 5,200 1,400
Accrued interest payable 4,601 3,204
Other liabilities 6,275 5,746
_______ _______
Total liabilities 531,458 495,980
_______ _______
SHAREHOLDERS' EQUITY
Series B non-cumulative preferred stock, no par value; 408,728 shares authorized and
406,344 shares issued and outstanding at September 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 September 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 September 30, 1997 and December 31, 1996 600 600
Surplus 10,000 10,000
Retained earnings 23,578 20,718
Unrealized gain on securities available-for-sale, net of tax 14,234 10,896
_______ _______
Total shareholders' equity 50,970 44,778
_______ _______
Total liabilities and shareholders' equity $582,428 $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 September 30,
1997 1996
(Dollars in thousands except share and per share data)
Interest income:
Loans $7,637 $6,922
Investment securities:
U. S. Government 1,586 1,588
State, county and municipal 479 531
Other 218 280
_____ _____
Total investment securities interest income 2,283 2,399
Federal funds sold 69 -
_____ _____
Total interest income 9,989 9,321
Interest expense:
Deposits 4,649 4,132
Short-term borrowings 105 168
Long-term obligations 91 45
_____ _____
Total interest expense 4,845 4,345
_____ _____
Net interest income 5,144 4,976
Provision for loan losses - 60
_____ _____
Net interest income after provision for loan losses 5,144 4,916
Noninterest income:
Service charges on deposit accounts 768 674
Other service charges and fees 213 211
Investment securities gains, net 1 -
Insurance commissions 23 27
Gain (loss) on sale of loans 31 (52)
Other 130 158
_____ _____
Total noninterest income 1,166 1,018
Noninterest expense:
Personnel 2,280 2,051
Intangibles amortization 461 411
Data processing 411 397
Furniture and equipment 373 269
Occupancy 351 337
FDIC insurance assessment 28 637
Charitable contributions 1 28
Other 969 938
_____ _____
Total noninterest expense 4,874 5,068
_____ _____
Income before income taxes 1,436 866
Income taxes 30 221
_____ ____
Net income $1,406 $645
===== ====
Per share information:
Net income applicable to common shares $10.87 $4.51
Cash dividends declared on common shares .38 .37
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 Nine Months Ended September 30,
(Dollars in thousands except share and per share data) 1997 1996
Interest income:
Loans $21,734 $19,930
Investment securities:
U. S. Government 4,764 4,946
State, county and municipal 1,581 1,606
Other 602 521
_____ _____
Total investment securities interest income 6,947 7,073
Federal funds sold 274 304
_____ _____
Total interest income 28,955 27,307
Interest expense:
Deposits 13,506 12,688
Short-term borrowings 229 225
Long-term obligations 211 224
_____ _____
Total interest expense 13,946 13,137
_____ _____
Net interest income 15,009 14,170
Provision for loan losses 60 80
_____ _____
Net interest income after provision for loan losses 14,949 14,090
Noninterest income:
Service charges on deposit accounts 2,093 2,010
Other service charges and fees 637 574
Investment securities gains, net 3,535 1
Insurance commissions 70 119
Gain (loss) on sale of loans 25 (167)
Other 255 545
_____ _____
Total noninterest income 6,615 3,082
Noninterest expense:
Personnel 6,532 5,907
Intangibles amortization 1,306 1,229
Data processing 1,229 1,087
Furniture and equipment 1,141 975
Occupancy 1,012 922
FDIC insurance assessment 83 773
Charitable contributions 4,075 42
Other 2,640 2,455
______ _____
Total noninterest expense 18,018 13,390
______ _____
Income before income taxes 3,546 3,782
Income taxes 240 1,091
_____ _____
Net income $3,306 $2,691
===== =====
Per share information:
Net income applicable to common shares $25.05 $19.91
Cash dividends declared on common shares 1.12 1.12
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 NINE MONTHS ENDED SEPTEMBER 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 2,691 2,691
Cash dividends:
Common stock ($1.12 per share) (134) (134)
Preferred B ($ .66 per share) (274) (274)
Preferred C ($ .66 per share) (29) (29)
Change in unrealized gain on
available-for-sale securities,
net of taxes 2,108 2,108
_______ _____ ______ ___ _______ ___ ______ ______ _____ ______
BALANCE, SEPTEMBER 30, 1996 408,728 $1,991 43,631 $578 119,918 $600 $10,000 $19,202 $9,154 $41,525
======= ===== ====== === ======= === ====== ====== ===== ======
BALANCE, DECEMBER 31, 1996 407,752 $1,986 43,631 $578 119,918 $600 $10,000 $20,718 $10,896 $44,778
Net income 3,306 3,306
Purchases and retirements of stock (1,408) (6) (10) (16)
Cash dividends:
Common stock ($1.12 per share) (134) (134)
Preferred B ($ .67 per share) (273) (273)
Preferred C ($ .67 per share) (29) (29)
Change in unrealized gain on
available-for-sale securities,
net of taxes 3,338 3,338
_______ _____ ______ ___ _______ ___ ______ ______ ______ ______
BALANCE, SEPTEMBER 30, 1997 406,344 $1,980 43,631 $578 119,918 $600 $10,000 $23,578 $14,234 $50,970
======= ===== ====== === ======= === ====== ====== ====== ======
The accompanying notes are an integral part of these consolidated financial statements.
SOUTHERN BANCSHARES (N.C.), INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended September 30,
(Thousands) 1997 1996
OPERATING ACTIVITIES:
Net income $3,306 $2,691
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Provision for loan losses 60 80
Contribution expense for donation of available-for-sale securities 4,071 -
Gain on contribution of marketable equity securities (3,529) -
Gains on issuer calls of securities (6) -
Loss on sale and abandonment of premises and equipment 112 -
Net accretion on investments (66) (45)
Amortization of intangibles 1,306 1,229
Depreciation 762 703
Net increase in accrued interest receivable (1,119) (1,219)
Net increase (decrease) in accrued interest payable 1,397 (116)
Net increase in other assets (3,152) (4,700)
Net increase (decrease) in other liabilities 600 (149)
_____ _____
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 3,742 (1,526)
_____ _____
INVESTING ACTIVITIES:
Proceeds from maturities and issuer calls of investment securities held-to-maturity 35,610 31,596
Proceeds from maturities and issuer calls of investment securities available-for-sale 9,105 185
Purchases of investment securities held-to-maturity (26,114) (10,713)
Purchases of investment securities available-for-sale (13,364) (34,667)
Net increase in loans (35,291) (30,121)
Additions to premises and equipment (3,531) (2,845)
Net cash received for branches acquired 17,996 3,380
______ _____
NET CASH USED IN INVESTING ACTIVITIES (15,589) (43,185)
______ _____
FINANCING ACTIVITIES:
Net (decrease) increase in demand and interest bearing demand deposits (8,224) 8,300
Net increase in time deposits 14,880 4,824
Net proceeds (repayments) of long-term obligations 3,800 (900)
Net proceeds of short-term borrowings 2,036 6,683
Cash dividends paid (436) (437)
Purchase of federal funds - 6,245
Purchase and retirement of stock (16) -
______ ______
NET CASH PROVIDED BY FINANCING ACTIVITIES 12,040 24,715
______ ______
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 193 (19,996)
CASH AND CASH EQUIVALENTS AT THE BEGINNING OF YEAR 32,465 42,906
______ ______
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD $32,658 $22,910
====== ======
SUPPLEMENTAL DISCLOSURES OF CASH PAID DURING THE PERIOD FOR:
Interest $12,549 $12,688
Income taxes $899 $851
====== =====
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Unrealized gain (loss) on securities available-for-sale $5,617 $3,194
===== =====
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 42 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 September 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 $30,300 98 (4) $30,394 $36,311 91 - $36,402
Obligations of states
and political subdivisions 20,624 814 (1) 21,437 27,165 799 (4) 27,960
Corporate securities 200 (1) 199 200 - (3) 197
______ ____ ____ ______ ______ _____ ___ _______
51,124 912 (6) 52,030 63,676 890 (7) 64,559
====== ==== ==== ====== ====== ===== === =======
SECURITIES AVAILABLE-FOR-SALE:
U. S. Government 75,144 124 (27) 75,241 70,121 - (15) 70,106
Marketable equity securities 8,334 21,570 (3) 29,901 8,612 16,296 (97) 24,811
Obligations of states
and political subdivisions 7,541 422 (6) 7,957 7,647 278 (4) 7,921
Mortgage-backed securities 2,051 47 (1) 2,097 2,124 106 (55) 2,175
______ ______ ____ ______ ______ ______ ___ _______
93,070 22,163 (37) 115,196 88,504 16,680 (171) 105,013
====== ====== ==== ====== ====== ====== === =======
TOTALS $144,194 $23,075 ($43) $167,226 $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)
September 30, December 31,
1997 1996
____ ____
Note 3. LOANS
Loans by type were as follows:
Commercial, financial and agricultural $91,566 $70,881
Real estate - construction 4,631 2,470
Real estate - mortgage 218,659 206,870
Consumer 34,646 35,512
Lease financing 6,275 2,370
_______ _______
Total loans 355,777 318,103
Less unearned income (1,397) (348)
_______ _______
Total loans less unearned income $354,380 $317,755
======= =======
Loans held for sale $ 2,956 $ 4,143
Loans serviced for others $ 77,108 $ 73,202
September 30, September 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 80
Loans charged off (261) (344)
Loan recoveries 151 215
_____ _____
Balance at end of the period $6,113 $6,272
===== =====
SOUTHERN BANCSHARES (N.C.), INC.
Notes to consolidated financial statements
(Dollars in thousands except share and per share data)
September 30, December 31,
1997 1996
(In thousands) ____ ____
Note 5. Premises and Equipment
Land $ 3,249 $2,783
Buildings and improvements 12,297 9,262
Furniture and equipment 6,462 5,804
Construction-in-progress 2,785 3,467
______ ______
24,793 21,316
Less: accumulated depreciation (6,422) (5,877)
______ ______
$18,371 $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 September 30, Nine Months Ended September 30,
1997 1996 1997 1996
____ ____ ____ ____
Net income $1,406 $645 $3,306 $2,691
Less: Preferred dividends (102) (104) (302) (303)
_____ _____ _____ _____
Net income applicable to common shares $1,304 $541 $3,004 $2,388
===== ===== ===== =====
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 September 30, 1997, beneficially owned 31,474 shares, or 26.25 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 4.29 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 September 30, 1997, beneficially owned 2,568,088 shares,
or 26.71 percent, and 1,694,936 shares, or 17.63 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 5.77 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
third quarter of 1996.
The following table lists the various charges paid to the Corporation during
the nine months ended:
September 30, September 30,
1997 1996
________ ________
Data and item processing $1,355 $1,282
Forms, supplies and equipment 133 261
Trustee for employee benefit plans 48 47
Consulting Fees 57 61
Trust investment services 17 18
Internal auditing services 41 40
Other services 61 63
_____ _____
$1,712 $1,772
===== =====
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 $6,276 at September 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 NINE MONTHS OF 1997 VS. FIRST NINE MONTHS OF 1996
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE DATA)
INTRODUCTION
In the first nine months of 1997, the net income of Southern BancShares
increased $615 from $2,691 in the first nine months of 1996 to $3,306 in the
first nine months of 1997, an increase of 23 percent. This increase was
principally the result of a September 1996 one-time Congress mandated FDIC SAIF
insurance assessment of $569 and a September 1996 $176 nonrecurring external
credit card fraud. Excluding the after tax effect of the above SAIF assessment
and fraud expense, the net income for Southern BancShares would have increased
approximately $92, or 3 percent, for the nine months ended September 30, 1997
compared to the nine months ended September 30, 1996. Two branch acquisitions
in 1996, three branch acquisitions in 1997, the opening of new branches in 1996
and 1997 and the sale of an existing branch in 1996 for a gain of $213,
resulted in increased net interest income for the nine months ended September
30, 1997. The above net branch additions also resulted in increased other
noninterest income for the nine months ended September 30, 1997 and increased
personnel expense and other related operating expenses for the nine months
ended September 30, 1997. Losses on the sales of mortgage loans held-for-sale
decreased $192 in the nine months ended September 30, 1997 compared to the nine
months ended September 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 the resulting reduction in income taxes.
Net income per common share for the first nine months of 1997 was $25.05,
an increase of $5.14, or 26 percent, from $19.91 in 1996. The return on
average equity improved to 10.40 percent, for the period ending September 30,
1997, from 9.84 percent for the period ending September 30, 1996 and the return
on average assets improved to .85 percent, for the period ending September 30,
1997, from .73 percent for the period ending September 30, 1996. At September
30, 1997, BancShares' assets totaled $582,428, an increase of $41,670, or 8
percent, from the $540,758 reported at December 31, 1996. During this nine
month period, net loans increased $36,675 or 12 percent, from $311,592 to
$348,267. During the nine months ended September 30, 1997 investment
securities decreased $2,369, or 1 percent from $168,689 at December 31, 1996 to
$166,320 at September 30, 1997. Total deposits increased $27,716, or 6 percent
from $480,566 at December 31, 1996 to $508,282 at September 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. 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 June 1996 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 for 1996, on the June 1996 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.
Southern opened a second branch office in Rocky Mount in September 1997.
At September 30, 1997 this office had $1.2 million in deposits.
The comparisons of the nine months ending September 30, 1997 to the nine
months ending September 30, 1996 are accordingly impacted by the above
transactions.
INTEREST INCOME
Interest and fees on loans increased $1,804, or 9 percent, from $19,930
for the nine months ended September 30, 1996 to $21,734 for the nine months
ended September 30, 1997. This increase was due to increased loan volume.
Average loans for the nine months ended September 30, 1997 were $337 million,
an increase of 9 percent from $308 million for the nine months ended September
30, 1996. The yield on the loan portfolio was 8.6 percent in the nine months
ended September 30, 1996 and 8.5 percent in the nine months ended September 30,
1997.
Interest income from investment securities, including U. S. Treasury and
Government obligations, obligations of state and county subdivisions and other
securities decreased $126, or 2 percent, from $7,073 in the nine months ended
September 30, 1996 to $6,947 in the nine months ended September 30, 1997. This
decrease was due to a decrease in the yield of the investment portfolio and
an increase in the volume of average investment securities for the nine months
ended September 30, 1997 to $150 million compared to $146 million for the nine
months ended September 30, 1996. The yield on investment securities was 6.3
percent for the nine months ending September 30, 1996 and 6.0 percent for the
nine months ending September 30, 1997.
Interest income on federal funds sold decreased $30, or 10 percent, from
$304 for the nine months ended September 30, 1996 to $274 for the nine months
ended September 30, 1997. This decrease in income resulted primarily from the
decrease in the average federal funds sold to $7 million for the nine months
ended September 30, 1997 from an average of $8 million for the nine months
ended September 30, 1996. Average federal funds sold yields were 5.3 percent
for the nine months ended September 30, 1997 down from 5.4 percent for the nine
months ended September 30, 1996.
Total interest income increased $1,648, or 6 percent, from $27,307 for the
nine months ended September 30, 1996 to $28,955 for the nine months ended
September 30, 1997. This increase was the result of volume increases partially
offset by a slight decrease in average earning asset interest yields.
Average earning asset interest yields for the nine months ended September
30, 1997 decreased to 7.7 percent from the 7.8 percent yield on average
earning assets for the nine months ended September 30, 1996. Average earning
assets increased from $461 million in the nine months ended September 30, 1996
to $494 million in the period ended September 30, 1997. This $33 million
increase in the average earning assets resulted primarily from the acquisitions
discussed above.
INTEREST EXPENSE
Total interest expense increased $809 or 6 percent, from $13,137 in the
nine months ended September 30, 1996 to $13,946 for the nine months ended
September 30, 1997. The principal reason for the increase was the acquisitions
discussed above. BancShares' total cost of funds decreased from 4.24 percent
at September 30, 1996 to 4.22 percent one year later. Average interest bearing
deposits were $430 million in the nine months ended September 30, 1997, an
increase of $27 million from the $403 million in the nine months ending
September 30, 1996.
NET INTEREST INCOME
Net interest income increased $859, or 6 percent, from $14,090 for the
nine months ended September 30, 1996 to $14,949 for the nine months ended
September 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 September 30, 1997 was 3.50 percent, a decrease of
7 basis points from the 3.57 percent net interest margin at September 30, 1996.
ASSET QUALITY AND PROVISION FOR LOAN LOSSES
For the nine months ended September 30, 1997 management added $60 as a
volume related addition to the provision for loan losses. Management made a
$80 addition to the provision for loan losses for the nine months ended
September 30, 1996. During the first nine months of 1997 management
charged-off loans totaling $261 and received recoveries of $151, resulting in
net charge-offs of $110. During the same period in 1996, $344 in loans were
charged-off and recoveries of $215 were received, resulting in net charge-offs
of $129. The 1997 decrease in net charge-offs was the result of both decreased
charge-offs and decreased recoveries for the nine months ended September 30,
1997 as compared to the nine months ended September 30, 1996. The following
table presents comparative Asset Quality ratios of BancShares:
September 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 1.72% 1.94%
Non-performing loans
to loans, net of unearned income .06% .16%
Non-performing loans and assets
to total assets .05% .09%
Allowance for loan losses
to non-performing loans 2,705% 1,238%
* Annualized
The ratio of net annualized charge-offs to average loans, net of unearned
income outstanding decreased to .04 percent at September 30, 1997 from .10
percent at December 31, 1996 due to increased average loans and lower net
charge-offs. The allowance for loan losses represented 1.72 percent of loans,
net of unearned income at September 30, 1997, a decrease of 22 basis points
from the December 31, 1996 ratio of 1.94 percent. Loans, net of unearned
income increased $37 million, or 12 percent, from December 31, 1996 to
September 30, 1997.
The ratio of nonperforming loans to loans, net of unearned income
decreased from .16 percent at December 31, 1996 to .06 percent at September 30,
1997. Nonperforming loans and assets to total assets decreased to .05 percent
at September 30, 1997 from .09 percent at December 31, 1996. The allowance for
loan losses to nonperforming loans represented 2,705 percent of nonperforming
loans at September 30, 1997, an increase from the 1,238 percent at December 31,
1996. The above performance improvements resulted primarily from a decrease in
nonperforming loans to $226 at September 30, 1997 from $498 at December 31,
1996. The nonperforming loans at September 30, 1997 included $102 of
nonaccrual loans, $124 of accruing loans 90 days or more past due and no
restructured loans. BancShares had $48 of assets classified as other real
estate at September 30, 1997 and no assets classified as other real estate at
September 30, 1996. Foregone interest income and interest income recognized
during the nine months ended September 30, 1997 and 1996 on both non-accrual
and impaired loans was not material.
Management considers the September 30, 1997 allowance for loan losses
adequate to cover the losses and risks inherent in the loan portfolio at
September 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 September 30, 1997, Southern
has no loans classified for regulatory purposes as loss, no loans classified
as doubtful and $929 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 $3,534 in net investment securities gains, in
the nine months ended September 30, 1997 principally related to the donation of
available-for-sale securities discussed above.
BancShares had gains on the sale of mortgage loans of $25 in the nine
months ended September 30, 1997 compared to $167 in losses on the sales of
mortgage loans in the nine months ended September 30, 1996. Southern had a
1996 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 September 30, 1997. Income from service charges on
deposit accounts, other service charges and fees, insurance commissions and
other noninterest income not detailed above increased $20, or 1 percent, from
$3,035 for the nine months ended September 30, 1996 to $3,055 for the nine
months ended September 30, 1997.
NONINTEREST EXPENSE
BancShares had an increase in charitable contribution expense of $4,033
in the nine months ended September 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 $595 or 4
percent, from $13,348 in the nine months ended September 30, 1996 to $13,943 in
the nine months ended September 30, 1997.
Excluding the non-recurring items discussed below, this increase was
primarily due to an increase in personnel expense of $625, or 11 percent, from
$5,907 at September 30, 1996 to $6,532 at September 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.
In addition in September 1996 Congress mandated a one-time assessment on
the Savings Association Insurance Fund ("SAIF") insured deposits of all
financial institutions. BancShares has deposits insured under both of the
FDIC's insurance funds, the Bank Insurance Fund ("BIF") and the SAIF. In
September 1996 BancShares recorded $569 as a one-time additional FDIC SAIF
insurance expense. BancShares also recorded a non-recurring loss in September
1996 of $176 related to an external credit card fraud.
INCOME TAXES
In the nine months ended September 30, 1997 BancShares had income tax
expense of $240, a decrease of $851, or 78 percent, from $1,091 in the prior
year period. This decrease was principally due to the resulting tax benefits
of the donation of the available-for-sale securities discussed above. The
resulting effective tax rates based on the accruals for the nine months ended
in September 1997 and 1996 were 7 percent and 29 percent, respectively.
SOUTHERN BANCSHARES (N.C), INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS - THIRD QUARTER OF 1997 VS. THIRD QUARTER OF 1996
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE DATA)
INTRODUCTION
In the third quarter of 1997, the net income of Southern BancShares
increased $761 from $645 in the third quarter of 1996 to $1,406 in the third
quarter of 1997, an increase of 118 percent. This increase was principally the
result of the aforementioned September 1996 FDIC SAIF insurance assessment of
$569 and fraud of $176. Excluding the 1996 assessment and fraud the after tax
income for the three months ended September 30, 1997 would have increased
approximately $244, or 20 percent over the net income for the three months
ended September 30, 1996.
Two 1996 branch acquisitions and three 1997 branch acquisitions resulted
in increased net interest income for the three months ended September 30, 1997,
increased other noninterest income in the three months ended September 30,
1997, and increased personnel expense and other related operating expenses in
the three months ended September 30, 1997. Losses on the sales of mortgage
loans held-for-sale in the three months ended September 30, 1996 were $52. In
the three months ended September 30, 1997 gains of $31 were realized on the
sales of mortgage loans held-for-sale. The tax benefits of the 1997 first
quarter contribution of available-for-sale securities resulted in significantly
lower income taxes on the third quarter income before income taxes.
Net income per share for the third quarter of 1997 was $10.87 per common
share, an increase of $6.36, or 141 percent, from $4.51 for the 1996 third
quarter.
INTEREST INCOME
Interest and fees on loans increased $715, or 10 percent, from $6,922 for
the quarter ended September 30, 1996 to $7,637 for the quarter ended September
30, 1997. This increase was due to increased loan volume. Average loans for
the quarter ending September 30, 1997 were $353 million, an increase of 10
percent from $321 million for the prior year quarter. The yield on the loan
portfolio was 8.5 percent in the quarter ended September 30, 1996 and 8.6
percent in the quarter ended September 30, 1997.
Interest income from investment securities, including U. S. Treasury and
Government obligations, obligations of state and county subdivisions and other
securities decreased $116, or 5 percent, from $2,399 in the quarter ended
September 30, 1996 to $2,283 in the quarter ended September 30, 1997. This
decrease was due to a decrease in the yield of the investment portfolio to
5.91% for the quarter ended September 30, 1997 from 6.21% for the quarter ended
September 30, 1996 combined with a decrease in the volume of average
investment securities for the quarter ended September 30, 1997 to $147 million
as compared to $149 million for the quarter ended September 30, 1996.
Interest income on federal funds sold was $69 for the quarter ended
September 30, 1997. Average federal funds sold was $5 million for the quarter
ended September 30, 1997. The average federal funds sold yield was 5.8 percent
for the quarter ended September 30, 1997. There were no federal funds sold in
the quarter ended September 30, 1996.
Total interest income increased $668, or 7 percent, from $9,321 for the
quarter ended September 30, 1996 to $9,989 for the quarter ended September 30,
1997. This increase was the result of volume increases. Average earning asset
interest yields for both the quarter ended September 30, 1997 and September 30,
1996 were 7.8 percent. Average earning assets increased from $470 million in
the quarter ended September 30, 1996 to $504 million in the quarter ended
September 30, 1997. This $34 million increase in the average earning assets
resulted primarily from the acquisitions discussed above.
INTEREST EXPENSE
Total interest expense increased $500 or 12 percent, from $4,345 in the
quarter ended September 30, 1996 to $4,845 for the quarter ended September 30,
1997. The principal reason for the increase was the acquisitions discussed
above. BancShares' total cost of funds increased from 4.19 percent for the
quarter ended September 30, 1996 to 4.24 percent for the quarter ended
September 30, 1997. Average interest bearing deposits were $437 million in the
quarter ended September 30, 1997, an increase of $40 million from the $397
million in the quarter ending September 30, 1996.
NET INTEREST INCOME
Net interest income was up $228, or 5 percent, from $4,916 for the quarter
ended September 30, 1996 to $5,144 for the quarter ended September 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 September 30, 1997 was 3.53
percent, a decrease of 4 basis points from 3.57 percent interest margin for the
quarter ending September 30, 1996.
ASSET QUALITY AND PROVISION FOR LOAN LOSSES
For the quarter ended September 30, 1996 management added $60 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 September 30, 1997.
During the third quarter of 1997 Southern had net charge-offs of $36. During
the same period in 1996 net charge-offs were $68. The decrease in net
charge-offs was due to both decreased charge-offs and decreased recoveries in
the third quarter of 1997 compared to the third quarter of 1996.
NONINTEREST INCOME
BancShares had gains on the sale of mortgage loans of $31 in the quarter
ended September 30, 1997 compared to $52 in losses on the sales of mortgage
loans in the quarter ended September 30, 1996. Income from service charges on
deposit accounts, other service charges and fees, insurance commissions and
other noninterest income not detailed above increased $65, or 6 percent, from
$1,070 for the quarter ended September 30, 1996 to $1,135 for the quarter ended
September 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, decreased $194 or 4 percent, from $5,068 in the
quarter ended September 30, 1996 to $4,874 in the quarter ended September 30,
1997.
This decrease was primarily due to the net result of the aforementioned
SAIF assessment of $569 on September 30, 1996, the aforementioned $176 fraud in
the quarter ended September 30, 1996, an increase in personnel expense of $229,
or 11 percent, from $2,051 for the quarter ended September 30 1996 to $2,280
for the quarter ended September 30, 1997 and increased occupancy, furniture and
equipment expense and other volume related expenses resulting from the branch
additions discussed above.
INCOME TAXES
In the quarter ended September 30, 1997 BancShares had income tax expense
of $30, a decrease of $191, or 86 percent, from $221 for the quarter ended
September 30, 1996. This decrease was principally 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 September 1997 and 1996 were 2 percent and 29 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 million and increased its investment in Southern by $5 million 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 September 30, 1997 was 6.14 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 September 30, 1997, the Total RBC
ratio was 12.34 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 September 30,
1997 of $21.6 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:
September 30, December 31,
1997 1996
Tier 1 capital $ 33,598 $ 27,891
Total capital 37,622 31,861
Risk-adjusted assets 304,784 298,862
Average tangible assets 547,408 510,574
Tier 1 capital ratio 11.02% (1) 9.33% (1)
Total capital ratio 12.34% (1) 10.66% (1)
Leverage capital ratio 6.14% (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 30 percent at both September
30, 1997 and December 31, 1996.
The Statement of Cash Flows discloses the principal sources and uses of
cash from operating, investing and financing activities for the nine months
ended September 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 September 30, 1997 and at December
31, 1996 jumbo time deposits represented 10 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:
September 30, December 31, Regulatory
1997 1996 Guidelines
Loans, net of unearned income to total deposits 70% 66% 80% (1)
Interest-bearing deposits to total deposits 87% 87% N/A
Jumbo interest-bearing deposits to total deposits 10% 9% N/A
Loans, net of unearned income to total assets 61% 59% 70% (1)
Liquidity 30% 30% 25% (2)
Temporary investments to volatile liabilities (3) 125% 120% 100% (2)
Volatile liability dependency -3% -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
because BancShares does not have any common stock equivalents outstanding.
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
aggregate 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 has not determined the impact of this pronouncement 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 has not determined
the impact of this pronouncement 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 and Lumberton 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: November 10, 1997 ___________________________________
John C. Pegram, Jr., Vice President
/s/David A. Bean
Dated: November 10, 1997 ___________________________________
David A. Bean, Secretary/Treasurer