SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant (X)
Filed by a Party other than the Registrant ( )
Check the appropriate box:
( )Preliminary Proxy Statement ( )Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2)
(X) Definitive Proxy Statement
( ) Definitive Additional Materials
( ) Soliciting Material Pursuant to ss. 240.14a-11(c) or ss. 240.14a-12
Southern BancShares (N.C.), Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
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(X)No fee required.
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pursuant to Exchange Act Rule 0-11 (set forth the amount on which
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( ) Check box if any part of the fee is offset as provided by Exchange
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fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
SOUTHERN BANCSHARES (N.C.), INC.
100 North Center Street
Mount Olive, North Carolina 28365
____________________________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
____________________________________________________
To Be Held April 15, 1998
NOTICE is hereby given that the Annual Meeting of Shareholders of
Southern BancShares (N.C.), Inc. ("Southern BancShares") will be held as
follows:
Place: Goldsboro Country Club
1500 South Slocumb Street
Goldsboro, North Carolina
Date: Wednesday, April 15, 1998
Time: 3:00 P.M.
The purposes of the meeting are:
1. To elect a 19-member Board of Directors, each member to hold
office for a term of one year or until his or her respective
successor is duly elected and qualified.
2. To consider and vote on a proposal to ratify the appointment
of KPMG Peat Marwick LLP as Southern BancShares' independent
public accountants for 1998.
3. To amend the Bylaws to increase the maximum authorized number
of directors from 23 to 30.
4. To transact any other business that may properly come before
the Annual Meeting.
SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
HOWEVER, TO ENSURE THE PRESENCE OF A QUORUM, ALL SHAREHOLDERS, EVEN THOUGH
THEY PLAN TO ATTEND, ARE URGED TO COMPLETE, SIGN AND DATE THE ACCOMPANYING
PROXY AND PROMPTLY RETURN IT IN THE POSTAGE PREPAID ENVELOPE PROVIDED FOR THAT
PURPOSE. THE GIVING OF SUCH PROXY WILL NOT AFFECT YOUR RIGHT TO REVOKE IT AND
VOTE IN PERSON IF YOU ATTEND THE MEETING.
By Order of the Board of Directors
/s/ David A. Bean
David A. Bean, Secretary
March 20, 1998
SOUTHERN BANCSHARES (N.C.), INC.
100 North Center Street
Mount Olive, North Carolina 28365
PROXY STATEMENT
Annual Meeting of Shareholders
To Be Held April 15, 1998
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Southern BancShares (N.C.), Inc. ("Southern
BancShares") of proxies in the form enclosed herewith to be used at the Annual
Meeting of Shareholders of Southern BancShares to be held at the Goldsboro
Country Club, 1500 South Slocumb Street, Goldsboro, North Carolina, at 3:00
P.M. on April 15, 1998, or any adjournments thereof. In addition to
solicitation by mail, proxies may be solicited personally or by telephone by
directors, officers or employees of Southern BancShares and the Bank.
Expenses of such proxy solicitation will be paid by Southern BancShares.
Persons named in the proxy to represent shareholders at the meeting are R. S.
Williams, W. A. Potts and John N. Walker. This Proxy Statement is first being
mailed to Southern BancShares' shareholders on March 20, 1998.
Shares represented by each proxy that is properly executed and returned,
and not revoked, will be voted in accordance with the instructions contained
therein. If no instructions are given, those shares will be voted "FOR" the
election of each of the 19 nominees for director named in Proposal 1 below,
"FOR" ratification of the appointment of KPMG Peat Marwick LLP as Southern
BancShares' independent public accountants for 1998, and "FOR" the amendment
of the Bylaws to increase the maximum authorized number of directors from 23
to 30. On such other matters as may properly come before the meeting, the
persons named in the form of proxy to represent shareholders will be
authorized to vote all proxies in accordance with their best judgment on such
matters. If, at or before the time of the Annual Meeting, any nominee named
in Proposal 1 has become unavailable for any reason, all proxies may be voted
for a substitute nominee designated by the Board of Directors. A shareholder
who executes a proxy has the right to revoke it at any time before it is voted
by filing with the Secretary either an instrument revoking the proxy or a duly
executed proxy bearing a later date, or by attending the Annual Meeting and
requesting the right to vote in person.
VOTING SECURITIES
At the close of business on March 9, 1998, Southern BancShares had
outstanding voting securities as follows: 119,918 shares of $5 par value
common stock, entitled to one vote per share; 405,645 shares of no par value
Series B non-cumulative preferred stock, entitled to one vote per 38 shares;
and 43,631 shares of no par value Series C non-cumulative preferred stock,
entitled to one vote per 38 shares.
RECORD DATE; VOTE REQUIRED FOR APPROVAL
March 9, 1998, has been set as the record date for the determination of
shareholders entitled to notice of and to vote at the Annual Meeting. At the
Annual Meeting, shareholders will be entitled to cast the appropriate number
of votes for the shares of Southern BancShares' voting securities standing of
record in their respective names at the close of business on the record date.
In the election of directors, the 19 candidates receiving the highest numbers
of votes shall be elected. For Proposals 2 and 3 to be approved, an
affirmative majority of the votes represented, in person or by proxy, and
entitled to be cast on these proposals at the Annual Meeting, must be cast in
favor of approval. In the voting at the Annual Meeting, abstentions will have
the same effect as votes against Proposals 2 and 3. Broker non-votes will
have no effect in the voting on Proposals 2 and 3.
PRINCIPAL HOLDERS OF VOTING SECURITIES
At the close of business on March 9, 1998, persons known to management to
own beneficially or of record 5% or more of any class of Southern BancShares'
voting securities were as follows:
Amount and
Title Nature Percentage Percentage
of Name and Address of Beneficial of of Total
Class of Beneficial Owner Ownership* Class Votes**
--------- --------------------- ----------- ------- --------
Common Frank B. Holding 32,284(1) 26.92% 24.51%
Smithfield, North Carolina
Lewis R. Holding 27,577(2) 23.00% 20.93%
Lyford Cay, Bahamas
Series B Frank B, Holding 22,171(3) 5.44% .44%
Preferred Smithfield, North Carolina
Series C James R. Hendrix 6,120 14.03% .12%
Preferred Tyner, North Carolina
Elmo J. Peele 3,229 7.40% .06%
Lewiston-Woodville, North Carolina
Charlie H. Spivey 2,550 5.84% .05%
Sunbury, North Carolina
Harry N. and 2,200 5.04% .04%
Nell C. Willey
Enfield, North Carolina
____________
* Except as otherwise stated in the footnotes below, the shares shown as
beneficially owned are, to the best of management's knowledge, owned of
record by the persons named and such persons exercise sole voting and
investment power with respect to those shares.
** This column reflects the votes to which these shares are entitled as a
percentage of the aggregate votes that may be cast by the holders of all
shares of Southern BancShares' outstanding voting securities. For further
information as to the number of outstanding shares and voting rights of the
common and preferred stock, see the section of this Proxy Statement above
entitled "VOTING SECURITIES."
(1)Frank B. Holding exercises sole voting and investment power as to 7,349
shares of common stock held directly. He disclaims beneficial ownership as
to shares included above and held by his wife (1,802 shares), by his adult
son and daughters and their spouses (22,033 shares) and by his wife and
First-Citizens Bank & Trust Company as co-trustees of several irrevocable
trusts for the benefit of his adult son and daughters (1,100 shares).
(2)Lewis R. Holding exercises sole voting and investment power as to 22,576
shares of common stock held directly. He disclaims beneficial ownership as
to shares included above and held by his wife directly (4,298 shares), by
his wife and George H. Broadrick as co-trustees of an irrevocable trust for
the benefit of an adult daughter (550 shares) and held directly by an adult
daughter (153 shares).
(3)Frank B. Holding exercises sole voting and investment power as to 946
shares of Series B preferred stock held directly. He exercises shared
voting and investment power as to 17,205 shares of Series B held by First
Citizens BancShares, Inc., a corporation of which Mr. Holding is deemed a
control person for beneficial ownership purposes. He disclaims beneficial
ownership as to 4,020 shares of Series B held by his adult children and
their spouses, which shares are included above.
(4)Harry N. Willey and Nell C. Willey exercise shared voting and investment
power as to 1,700 shares of Series C preferred stock held jointly, and Mr.
Willey exercises sole voting and investment power as to an additional 500
shares of Series C held directly and included above.
2
OWNERSHIP OF VOTING SECURITIES BY MANAGEMENT
As of the close of business on March 9, 1998, the beneficial ownership of
Southern BancShares' voting securities by its directors, nominees for
director, and certain named executive officers, and by all directors, nominees
for director, and executive officers as a group, was as follows:
Amount and
Title Nature Percentage Percentage
of Name of of Beneficial of of Total
Class Beneficial Owner Ownership Class Votes**
- --------- ----------------- ------------- -------- ---------
Common Bynum R. Brown 372 .31% .28%
William H. Bryan 108 .09% .08%
D. Hugh Carlton 288(1) .24% .22%
Robert J. Carroll 30 .03% .02%
Hope H. Connell 5,266(2) 4.39% 4.00%
J. Edwin Drew 3,593(3) 3.00% 2.73%
Moses B. Gillam, Jr. 125 .10% .09%
LeRoy C. Hand, Jr. 148(4) .12% .11%
Frank B. Holding 32,284(5) 26.92% 24.51%
M. J. McSorley 204(6) .17% .15%
W. B. Midyette, Jr. 150 .13% .11%
W. Hunter Morgan 350(7) .29% .27%
John C. Pegram, Jr. 5 .00% .00%
Charles I. Pierce, Sr. 70 .06% .05%
W. A. Potts 550(8) .46% .42%
Charles L. Revelle, Jr. 1,020 .85% .77%
Charles O. Sykes 100 .08% .08
John N. Walker 190 .16% .14%
R. S. Williams 225(9) .19% .17%
All directors, 39,887 33.26% 30.28%
nominee for director,
and executive officers
as a group (22 persons)
Series B Bynum R. Brown 2,358 .58% .05%
Preferred
Robert J. Carroll 2,687(10) .66% .05%
Hope H. Connell 2,000(2) .49% .04%
LeRoy C. Hand, Jr. 17,522(4) 4.32% .35%
Frank B. Holding 22,171(11) 5.47% .44%
M. J. McSorley 6,565(12) 1.62% .10%
3
Amount and
Title Nature Percentage Percentage
of Name of of Beneficial of of Total
Class Beneficial Owner Ownership* Class Votes**
- --------- ------------------ ---------- ------ -----------
Series B W. Hunter Morgan 7,368(7) 1.82% .15%
Preferred
Charles I. Pierce, Sr. 336(13) .08% .01%
R. S. Williams 7,109(9) 1.75% .14%
All directors, 66,116 16.30% 1.32%
nominees for director
and executive officers
as a group (22 persons)
Series C M. J. McSorley 25(12) .06% .00%
Preferred
Charles I. Pierce, Sr. 139(12) .32% .00%
All directors, nominees 164 .38% .00%
for director and executive
officers as a group
(22 persons)
___________
* Except as otherwise stated in the footnotes below, the shares shown above
as beneficially owned are, to the best of management's knowledge, owned of
record by the persons named and such persons exercise sole voting and
investment power with respect to such shares.
** This column reflects the votes to which these shares are entitled as a
percentage of the aggregate votes that may be cast by the holders of all
shares of Southern BancShares' outstanding voting securities. For further
information as to the number of outstanding shares and voting rights of the
common and preferred stock, see the section of this Proxy Statement above
entitled "VOTING SECURITIES."
(1) D. Hugh Carlton exercises sole voting and investment power as to 114 shares
of common stock held directly, and shared voting and investment power as to
149 shares of common stock held by Carlton Insurance Agency, Inc., of which
he is deemed a control person. He shares voting and investment power as to
an additional 25 shares of common stock held by his spouse.
(2) Hope H. Connell exercises sole voting and investment power as to 2,595
shares of common stock held directly and as to 924 shares of common stock
held by her as custodian for her sons. She exercises shared voting and
investment power as to 924 shares of common stock held in a trust for her
benefit by First-Citizens Bank & Trust Company and her mother as
co-trustees. She disclaims beneficial ownership as to 537 shares of common
stock and 2,000 shares of Series B held by her husband on his own behalf
and as to 990 shares of common stock held by her husband as custodian for
their sons and included above. All of such shares also are included, and
disclaimed, in the beneficial ownership shown above for her father, Frank
B. Holding.
(3) J. Edwin Drew exercises sole voting and investment power as to 2,979 shares
of common stock held directly and 614 shares of common stock held in a
self-directed retirement plan.
(4) LeRoy C. Hand, Jr. exercises sole voting and investment power as to 100
shares of common stock and 11,233 shares of Series B preferred stock held
directly. He disclaims beneficial ownership as to 48 shares of common
stock and 6,289 shares of Series B preferred stock owned by his wife and
included above.
(5) For an explanation of the nature of the beneficial ownership of the common
stock shown above as beneficially owned by Frank B. Holding, see footnote
(1) of the section of this Proxy Statement entitled "PRINCIPAL HOLDERS OF
VOTING SECURITIES." Included in the shares shown as beneficially owned by
Mr. Holding are 5,266 shares of common stock also shown above as
beneficially owned by his daughter, Hope H. Connell, as to which shares Mr.
Holding disclaims beneficial ownership.
(6) M. J. McSorley exercises sole voting and investment power as to 144 shares
of common stock held directly and disclaims beneficial ownership as to 60
shares of common stock held by his wife and included above.
4
(7) W. Hunter Morgan exercises sole voting and investment power as to 225
shares of common stock and 1,795 shares of Series B preferred stock held
directly. He disclaims beneficial ownership as to 125 shares of common
stock and 2,131 shares of Series B held by his wife and included above.
He exercises shared voting and investment power as to 3,442 shares of
Series B held by Kellogg-Morgan Agency, Inc., a corporation of which Mr.
Morgan is deemed a control person for beneficial ownership purposes,
which shares are included above.
(8) W. A. Potts exercises sole voting and investment power as to 350 shares of
common stock held directly and disclaims beneficial ownership as to 200
shares of common stock held by his wife and included above.
(9) R. S. Williams exercises sole voting and investment power as to 175 shares
of common stock and 6,785 shares of Series B preferred stock held directly.
He disclaims beneficial ownership as to 50 shares of common stock and 324
shares of Series B held by his wife and included above.
(10)Robert J. Carroll exercises sole voting and investment power as to 1,994
shares of Series B preferred stock held directly and disclaims beneficial
ownership as to 693 shares of Series B held by his wife and included above.
(11)For an explanation of the nature of the beneficial ownership of the Series
B preferred stock shown above as beneficially owned by Frank B. Holding,
see footnote (3) of the section of this Proxy Statement entitled "PRINCIPAL
HOLDERS OF VOTING SECURITIES."
(12)M. J. McSorley exercises sole voting and investment power as to 550 shares
of Series B preferred stock held directly and disclaims beneficial
ownership as to 5,815 shares of Series B and 25 shares of Series C held by
his wife, and 200 shares of Series B held by his adult son, all of which
are included above.
(13)Charles I. Pierce, Sr. exercises sole voting and investment power as to
265 shares of Series B and 110 shares of Series C preferred stock held
directly. His exercises shared voting and investment power as to 71
shares of Series B and 29 shares of Series C held jointly with his adult
son.
Section 16(a) Beneficial Ownership Reporting Compliance
Southern BancShares' directors and executive officers are required to
file certain reports with the Securities and Exchange Commission ("SEC")
regarding the amount of and changes in their beneficial ownership of Southern
BancShares' common and preferred stock. Based on its review of copies of
those reports, Southern BancShares' proxy materials are required to disclose
failures to report shares beneficially owned, or changes in such beneficial
ownership, or to timely file required reports during the previous fiscal year.
To the best of Southern BancShares' knowledge, there were no such failures to
file the required reports for 1997.
PROPOSAL 1: ELECTION OF DIRECTORS
The Bylaws of Southern BancShares currently provide for not less than 5
nor more than 23 directors; however, if Proposal 3 below is approved by the
shareholders, the maximum number of authorized directors will increase to
30. The Board of Directors is authorized to establish within those limits the
number of directors to be elected each year and has set the number of
directors at 19 for election at the Annual Meeting. The nominees for the
Board of Directors set forth below consist of (i) the 18 current directors of
Southern BancShares, each of whom has been nominated for reelection, and (ii)
John C. Pegram, Jr., a new nominee. Mr. Pegram was elected and began serving
as a director of the Bank on January 21, 1998, on which date he also was
elected as President of Southern BancShares and the Bank.
All directors elected at the Annual Meeting will serve for terms of one
year or until their successors have been duly elected and qualified.
5
Positions with
Southern Year Principal Occupation
Name, Address BancShares First and Business Experience
and Age and Bank Elected(1) for Past Five Years
- ---------------- ------------- ---------- ---------------------------
Bynum R. Brown Director 1986 President and Owner, Bynum R.
Murfreesboro, NC Brown Agency, Inc.(real
72 estate and insurance);
Secretary/Treasurer, Roanoke
Valley Nursing Home, Inc.;
President and Owner, Brown
Manor, Inc. (family care home)
5
Positions with
Southern Year Principal Occupation
Name, Address BancShares First and Business Experience
and Age and Bank Elected(1) for Past Five Years
- ---------------- ------------- ---------- ---------------------------
William H. Bryan Director 1992 President, Director and
Mount Olive, NC Treasurer, Mount Olive Pickle
40 Company, Inc. (manufacturer of
pickle and pepper products)
D. Hugh Carlton Director 1994 President, Carlton Insurance
Warsaw, NC Agency, Inc. (insurance)
66
Robert J. Carroll Director 1986 President and Owner, Carroll's
Gates, NC Garage, Inc.(truck and farm
73 equipment dealer)
Hope H. Connell (2) Director 1992 Senior Vice President,
Raleigh, NC First-Citizens Bank & Trust
34 Company
J. Edwin Drew Director 1973 Retired physician and former
Macclesfield, NC President, J. Edwin Drew,
67 M.D., P.A.
Moses B. Gillam, Jr.(3) Director 1982 Partner, Gillam and Gillam
Windsor, NC (attorneys)
81
LeRoy C. Hand, Jr. Director 1986 Retired physician and former
Camden, NC President, Albemarle Emergency
77 Associates, P.A.
Frank B. Holding (2) Director 1962 Executive Vice Chairman of the
Smithfield, NC Chairman of Board, First Citizens
69 Executive BancShares, Inc. and First-
Committee Citizens Bank & Trust Company;
Vice Chairman of the Board,
First Citizens Bancorporation
of S.C., Inc. and
First-Citizens Bank and Trust
Company of South Carolina
M. J. McSorley Vice 1990 Vice Chairman of Bank since
Mount Olive, NC Chairman January 1998; formerly
64 President and Chief Executive
Officer of the Bank; Vice
President of Southern BancShares
W. B. Midyette, Jr. Director 1982 Retired Farmer
Bath, NC
78
W. Hunter Morgan Director 1986 President, Kellogg-Morgan
Sunbury, NC Agency, Inc. (insurance)
67
John C. Pegram, Jr. President Nominee President of Southern BancShares
Mount Olive, NC of Southern and Bank since January 1998;
53 BancShares and formerly Executive Vice President
Bank; Director of Bank and Vice President of
of Bank Southern BancShares; prior to
that, Senior Vice President of
Bank
6
Positions with
Southern Year Principal Occupation
Name, Address BancShares First and Business Experience
and Age and Bank Elected(1) for Past Five Years
- ------------------ ----------- -------- -------------------------------
C>
Charles I. Pierce, Sr. Director 1986 President, Pierce Printing Co.,
Ahoskie, NC Inc. (commercial printers)
80
W. A. Potts Vice 1968 Retired veterinarian and former
Mount Olive, NC Chairman of President, W. A. Potts, DVM,
71 the Board P.A.; former Chairman of the
Board, Mount Olive Pickle
Company, Inc.
Charles L. Revelle,Jr. Director 1986 Chairman of the Board, Revelle
Murfreesboro, NC Agri-Products, Inc.; Vice
71 President, Revelle Builders of
NC, Inc.; President, Revelle
Equipment Co., Inc.
(agribusiness)
Charles O. Sykes Director 1984 President, Mount Olive Livestock
Mount Olive, NC Market, Inc. (livestock auction
68 market and dealer)
John N. Walker Director 1971 President Emeritus (former
Mount Olive, NC President, Chief Executive
72 Officer and Director), Mount
Olive Pickle Company, Inc.
(manufacturer of pickle and
pepper products)
R. S. Williams Chairman of 1971 Chairman of the Board and
Mount Olive, NC the Board Consultant, Southern BancShares
69 and Bank; (retired President
of Southern BancShares and Bank)
____________
(1)Refers to the year each director first became a director of Southern
BancShares or its predecessor or, if elected to the Board prior to
December 31, 1982, the year first elected to the Board of the Bank.
(2)Ms. Connell is the daughter of Frank B. Holding.
(3)The firm of Gillam and Gillam performed legal services for the Bank in
1997, and it is expected that such relationship will continue during
1998. Mr. Gillam is senior partner in the law firm.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" ELECTION
OF THE 19 NOMINEES LISTED ABOVE FOR THE BOARD OF DIRECTORS.
Compensation of Directors
Compensation paid to directors includes a quarterly retainer of $400,
plus $200 for attendance at each meeting of the Board of Directors, $100 for
attendance at each meeting of a Board committee of which a director is a
member, and $40 for attendance at each monthly local advisory board meeting.
Directors R. S. Williams, Frank B. Holding,M. J. McSorley, and John C. Pegram,
Jr. do not receive directors' compensation for serving on the Board of
Directors or its committees.
Since his retirement as the Bank's President in December 1989, R. S.
Williams has been compensated for his services pursuant to a consulting and
noncompetition agreement with the Bank under which he currently receives
monthly payments of $2,533 for the noncompetition arrangement and $300 for his
consulting services. In addition, Mr. Williams receives payments under the
Bank's Pension Plan. For further information, see the sections of this Proxy
7
Statement entitled "Executive Compensation," "Pension Plan" and "Employment
Contracts, Termination of Employment and Change-in-Control Arrangements."
Meetings and Committees of the Boards of Directors
The Boards of Directors of Southern BancShares and the Bank held five
joint meetings in 1997. All directors attended at least 75% of the aggregate
number of meetings of Southern BancShares' Board and any committees on which
they served during their terms, except W. B. Midyette, Jr., whose absences
were due to illness.
There are several standing committees of the Boards, including an Audit
and Compliance Committee and a Compensation Committee. Southern BancShares'
Board of Directors does not have a standing nominating committee or any other
committee performing equivalent functions.
The Audit and Compliance Committee currently consists of John N. Walker -
Chairman, William H. Bryan, W. A. Potts, and Charles O. Sykes. The Committee
oversees the scope and detail of the continuous audit program conducted by the
Bank's internal audit staff and periodically reviews reports on the work of
the internal auditors and related matters. Subject to the approval of the
Board of Directors and ratification by the shareholders of Southern
BancShares, the Committee engages a qualified firm of certified public
accountants to conduct an annual audit of Southern BancShares' consolidated
financial statements and receives written reports from, and reviews non-audit
services proposed by management to be provided by, the accounting firm.
During 1997, the Audit and Compliance Committee held four meetings.
The members of the Compensation Committee are listed below. The
Compensation Committee reviews the Bank's compensation program, including
salary, pension and incentive compensation plans and such other employee
benefit matters as it deems appropriate. In conjunction with management, the
Committee makes recommendations to the entire Board of Directors with regard
to salaries and other forms of compensation. The Compensation Committee held
one meeting during 1997.
Compensation Committee Interlocks and Insider Participation
The current members of the Compensation Committee are: Frank B. Holding
- - Chairman, William H. Bryan, W. A. Potts, Charles O. Sykes, John N. Walker
and R. S. Williams. Mr. Holding is Executive Vice Chairman of First Citizens
BancShares, Inc. and its wholly-owned subsidiary, First-Citizens Bank & Trust
Company, Raleigh, N.C. ("First Citizens"). First Citizens provides various
services to the Bank and Southern BancShares, including the management
consulting services of Mr. Holding (see "Transactions with Management"). Mr.
Williams is Chairman of the Board of Southern BancShares and, until January
21, 1998, when John C. Pegram, Jr. was elected to succeed him, he also served
as President of Southern BancShares. Mr. Williams retired from his employment
as President of the Bank in December 1989, but continues to serve as a
consultant to both the Bank and Southern BancShares (see footnote (2) to the
Summary Compensation Table below and see "Employment Contracts, Termination of
Employment and Change-in-Control Arrangements" below).
Committee Report on Executive Compensation
The Bank attempts to provide compensation at levels that will enable it
to attract and retain qualified and motivated individuals as officers and
employees. At the present time, annual salary is the only form of compensation
paid to or for the benefit of executive officers (other than benefits under
the Bank's 401(k) salary deferral plan and other customary employee benefit
and welfare plans, including a defined benefit pension plan).
The Compensation Committee (the "Committee") administers the Bank's
compensation program and has the responsibility for matters involving the
compensation of executive officers.
For 1997, the Committee established a recommended salary for each
executive officer, including the chief executive officer of the Bank, based on
an evaluation of that officer's individual level of responsibility and
performance. The Committee's recommendations were reported to and subject to
the approval of the Board of Directors, which made all final decisions
regarding the salaries of executive officers. The performance of individual
executive officers and the Bank's financial performance in general were
considered by the Committee and the Board of Directors in connection with the
setting of salaries for 1997. However, the setting of salaries largely is
subjective and there are no specific
8
formulae, objective criteria or other such mechanism by which adjustments to
each executive officer's salary are tied empirically to his individual
performance or to the Bank's financial performance.
Section 162(m) of the Internal Revenue Code of 1986, as amended, limits
the deductibility of annual compensation in excess of $1,000,000 paid to
certain executive officers of public corporations. As none of the executive
officers of Southern BancShares or the Bank receives annual compensation
approaching that amount, Southern BancShares' Board of Directors has not
adopted a policy with respect to Section 162(m).
Compensation Committee:
Frank B. Holding, Chairman Charles O. Sykes
William H. Bryan John N. Walker
W. A. Potts R. S. Williams
Executive Officers
Certain information regarding the executive officers of Southern
BancShares and the Bank is set forth in the following table. All executive
officers serve at the pleasure of the Board of Directors.
Positions with Southern BancShares and
Name Age Bank and Prior Positions for Past Five Years
- --------------- ---- -------------------------------------------------
R. S. Williams 68 Chairman of the Board of Southern BancShares and
Bank; formerly President and Chief Executive
Officer of Southern BancShares until January
1998; President of Bank prior to July 1989
M. J. McSorley 64 Vice Chairman of Bank since January 1998;
formerly President and Chief Executive Officer of
Bank from July 1989 to January 1998; Vice
President and Director of Southern BancShares and
Director of Bank since 1990
John C. Pegram, Jr. 53 President of Southern BancShares and Bank since
January 1998; prior to that, Executive Vice
President of Bank and Vice President of Southern
BancShares; formerly Senior Vice President of Bank
Paul A. Brewer 55 Senior Vice President of Bank since December
1992; formerly Regional Vice President of Bank;
Assistant Secretary of Southern BancShares since
1986
Richard D. Ray 51 Senior Vice President of Bank since January 1993;
formerly Regional Vice President of Bank;
Assistant Treasurer of Southern BancShares since
1991
David A. Bean 49 Secretary of Southern BancShares and Bank since
January 1992; Vice President and Controller of
Bank since 1984; Treasurer of Southern BancShares
since 1986
9
Executive Compensation
The following table shows, for 1997, 1996 and 1995, the cash and certain
other compensation paid to or received or deferred by certain of the executive
officers of Southern BancShares and the Bank, respectively, in all capacities
in which they served.
SUMMARY COMPENSATION TABLE
Annual Compensation Long-Term Compensation
----------------------- ------------------------
Awards Payouts
Other --------------- ------ All
Annual Restricted Other
Name and Compen- Stock Options/ LTIP Compen-
Principal Salary Bonus sation Awards SARs Payouts sation
Position Year ($)(1) ($) ($) ($) (#) ($) ($)
___________________ ____ _____ _____ _____ _____ _____ _____
R. S. Williams, 1997 -0- -0- -0- -0- -0- -0- 80,900(3)
Chairman of the
Board, President 1996 -0- -0- -0- -0- -0- -0- 80,900(3)
and Chief Executive
Officer of Southern 1995 -0- 6,000 -0- -0- -0- -0- 78,500(3)
BancShares (2)
M. J. McSorley, 1997 134,640 -0- -0- -0- -0- -0- 6,083(5)
President and Chief
Executive Officer 1996 128,055 -0- -0- -0- -0- -0- 5,286(5)
of Bank and Vice
President of 1995 119,730 -0- -0- -0- -0- -0- 5,237(5)
Southern
BancShares (4)
______________
(1) Includes amounts deferred at the election of Mr. McSorley pursuant to
the Bank's Section 401(k) salary deferral plan.
(2) Mr. Williams retired from active employment with the Bank in December
1989, but continued to serve as President and Chief Executive Officer of
Southern BancShares until January 21, 1998 when John C. Pegram was
elected as President of Southern BancShares. Mr. Williams continues to
serve as Chairman of the Board of Southern BancShares and the Bank and
provides consulting services to such entities.
(3) For 1997 and 1996 with respect to Mr. Williams, the "Other Compensation"
of $80,900 is comprised of $46,900 in benefits from the Bank's pension
plan and $34,000 received pursuant to a noncompetition and consulting
agreement with the Bank. For 1995, the $78,500 shown in "Other
Compensation" is comprised of $46,900 in benefits from the Bank's pension
plan and $31,600 received from Mr. Williams' agreement with the Bank.
(Also, see the sections of this Proxy Statement entitled "Pension Plan"
and "Employment Contracts, Termination of Employment and Change-in-Control
Arrangements" below.)
(4) Mr. McSorley served in the capacities indicated above during 1995, 1996
and 1997. On January 21, 1998, he was elected as Vice Chairman of the
Bank's Board and John C. Pegram, Jr. was elected as President of the Bank.
Mr. McSorley also continues to serve as Vice President of Southern
BancShares.
(5) Consists entirely of the Bank's contributions on behalf of Mr. McSorley
pursuant to the terms of the Bank's Section 401(k) salary deferral plan.
10
Pension Plan
The following table shows the estimated annual benefits payable to a
covered participant at normal retirement age under the Bank's qualified
defined benefit pension plan (the "Pension Plan") based on various specified
numbers of years of service and levels of covered compensation.
Years of Service
-------------------------------------------------------------------
Final
Average 10 15 20 25 30 35 40
Compensation Years Years Years Years Years Years Years
__________ ______ ______ ______ ______ ______ _______ _______
$175,000 $30,470 $45,705 $60,940 $76,176 $91,411 $106,646 $117,146
150,000 25,845 38,768 51,690 64,613 77,536 90,458 99,458
125,000 21,220 31,830 42,440 53,051 63,661 74,271 81,771
100,000 16,595 24,893 33,190 41,448 49,786 58,083 64,083
75,000 11,970 17,955 23,940 29,926 35,911 41,896 46,396
50,000 7,345 11,018 14,690 18,363 22,036 25,708 28,708
</TABLE
Benefits shown in the table are computed as straight life annuities
beginning at age 65 and are not subject to a deduction for Social Security
benefits or any other offset amount. A participant's compensation covered by
the Pension Plan is his base salary, and the participant's benefits are based
on his "final average compensation" covered by the Pension Plan, which
consists of the average earnings of the participant during the five highest
consecutive earning years of the last ten complete calendar years as a
participant. The current estimated years of service and "final average
compensation," respectively, for Mr. M. J. McSorley are 38 years and $120,285.
Mr. R. S. Williams retired from employment with the Bank in December 1989 and
receives benefits of $46,900 per year pursuant to the terms of the Pension
Plan.
Employment Contracts, Termination of Employment
and Change-in-Control Arrangements
Effective on Chairman R. S. Williams' retirement from employment with the
Bank in December 1989, he entered into a noncompetition and consulting
agreement with the Bank pursuant to which he provides advisory and consulting
services to the Bank, agreed not to compete with the Bank in North Carolina,
and currently receives monthly payments of $2,533 for the noncompetition
arrangement and $300 for consulting services. The agreement, as amended, will
terminate on December 31, 1998, unless further extended by mutual agreement of
the parties involved.
Pursuant to the terms of a similar agreement with the Bank, M. J.
McSorley, President of the Bank, will receive monthly payments of $1,067 for a
noncompetition arrangement and $356 for consulting services during the
ten-year period following his retirement.
11
Performance Graph
The following line graph compares the cumulative total shareholder return
(the "CTSR") on Southern BancShares' common stock during the previous five
fiscal years with the CTSR over the same measurement period of the Nasdaq-U.S.
index and the Nasdaq Banks index. Each line graph assumes $100 invested on
January 1, 1992, and that dividends were reinvested in additional shares.
Comparison of Five-Year Cumulative Total Shareholder Return among
Southern BancShares (N.C.), Inc., Nasdaq Banks and
Nasdaq-US Companies Indices
[GRAPHIC OMITTED]
=Southern =Nasdaq
Year BancShares Banks =Nasdaq-US
----- ---------- ------- ---------
1992 $100 $100 $100
1993 101 114 115
1994 143 114 112
1995 145 169 159
1996 146 236 209
1997 235 377 240
Transactions with Management
The Bank has had, and expects to have in the future, banking transactions
in the ordinary course of business with several of the directors, executive
officers, and principal shareholders of Southern BancShares and the Bank and
their associates. Loans included in those transactions were made on the same
terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with others, and did not involve more than
the normal risk of collectibility or present other unfavorable features. Each
such transaction has been approved by the Board of Directors of the Bank.
12
Frank B. Holding, a director and principal shareholder of Southern
BancShares, and Lewis R. Holding, a principal shareholder of Southern
BancShares, are directors, executive officers and principal shareholders of
First Citizens BancShares, Inc., the bank holding company for First-Citizens
Bank & Trust Company, Raleigh, N.C. ("First Citizens"). Hope H. Connell, the
daughter of Frank B. Holding and niece of Lewis R. Holding, and a director of
Southern BancShares, also is a principal shareholder of First Citizens
BancShares, Inc. and an officer of First Citizens. During 1997, the Bank paid
fees to First Citizens in an aggregate amount of $2,361,815 for data and item
processing services, securities portfolio management services, the management
consulting services of Frank B. Holding, and services as trustee for the
Bank's pension plan and Section 401(k) salary deferral plan. During 1998, the
Bank projects that its payments to First Citizens for similar services will be
approximately $2,560,000, of which total the salary reimbursement payments to
First Citizens for the management consulting services of Frank B. Holding are
projected to amount to approximately $77,549.
During 1997, the Bank paid $98,323 to Carlton Insurance Agency, Inc., of
which D. Hugh Carlton, a director of Southern BancShares and the Bank, is
President, for servicing the general liability and comprehensive insurance
policies on property and vehicles for the Bank, as well as the Bank's workers'
compensation coverage and umbrella policies. It is expected that such
relationship will continue during 1998.
PROPOSAL 2: RATIFICATION OF INDEPENDENT ACCOUNTANTS
Subject to ratification by the shareholders, the Board of Directors has
approved the appointment of KPMG Peat Marwick LLP, Certified Public
Accountants ("Peat Marwick"), as Southern BancShares' independent accountants
for fiscal 1998. Representatives of Peat Marwick are expected to be present
at the Annual Meeting and available to respond to appropriate questions from
shareholders, and will have the opportunity to make a statement if they so
desire.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS OF SOUTHERN BANCSHARES FOR 1998. THE AFFIRMATIVE
VOTE OF A MAJORITY OF VOTES REPRESENTED, IN PERSON OR BY PROXY, AND ENTITLED
TO BE CAST AT THE ANNUAL MEETING IS REQUIRED FOR APPROVAL OF PROPOSAL 2.
PROPOSAL 3: AMENDMENT OF BYLAWS
TO INCREASE MAXIMUM AUTHORIZED NUMBER OF DIRECTORS
On January 21, 1998, Southern BancShares' Board of Directors approved,
and recommended for shareholder consideration and adoption, an amendment of
Southern BancShares' Bylaws to increase the maximum authorized number of
Southern BancShares' directors to 30, and a proposal to approve that amendment
is proposed for action by shareholders at the Annual Meeting.
The Bylaw amendment is proposed in connection with the Bank's acquisition
of Enfield Savings Bank, Inc., SSB ("Enfield") and its parent holding company,
ESB Bancorp, Inc. ("ESB"), which currently is expected to become effective
during the second quarter of 1998. Southern BancShares has agreed that,
following consummation of the merger, each of ESB's then current directors
will be appointed to serve as a director of the Bank, and a number of those
directors will be appointed as directors of Southern BancShares equal to the
difference between the maximum number of directors provided for by Southern
BancShares' Bylaws and the number of Southern BancShares' then current
directors. Additionally, because Southern BancShares' Bylaws currently limit
the number of directors to 23 (which means there are only four available
positions on the Board), Southern BancShares has agreed to submit a proposal
for approval by its shareholders to expand the number of members of its Board
of Directors to at least 25 so as to provide available positions on its Board
to potentially accommodate the appointment of each of ESB's six current
directors.
The Board of Director unanimously recommends that shareholders vote to
approve the proposed bylaw amendment to increase the number of authorized
directorships of Southern BancShares. The Board believes that an increase in
the authorized maximum number of directors will benefit Southern BancShares by
enabling it to meet the obligations of the Merger Agreement with ESB and
Enfield, and will provide flexibility in the future to further expand the
Board if and when such further expansion is deemed appropriate and advisable
by the Board, and when qualified candidates for such director positions have
been identified. If the proposed bylaw amendment is approved and becomes
13
effective, the Board of Directors will have the authority to increase the
number of members of the Board up to 30, and to fill the vacancies thereby
created by appointing persons as directors of Southern BancShares without
any further shareholder approval. However, any such persons so appointed
could serve as directors only until the next annual meeting of shareholders,
at which time their continued service as directors would be subject to their
reelection by the shareholders.
If Proposal 3 is approved by shareholders at the Annual Meeting, Section
2 of Article III of Southern BancShares' Bylaws would be amended to read as
follows:
Section 2. Number, Term and Qualifications: The number of directors of the
corporation shall be not less than five nor more than thirty. The directors,
by a majority vote of the remaining directors, though less than a quorum, or
by the sole remaining director, shall determine the exact number of directors,
which shall not be less than five nor more than thirty without a Bylaw
modification. Each director shall hold office until his death, resignation,
retirement, removal, disqualification, or until his successor is elected and
qualified. Directors need not be residents of the State of Delaware nor
shareholders of the corporation; provided, however, that not less than
three-fourths (3/4) of the directors shall be residents of the State of North
Carolina and stock ownership for qualification shall be subject to North
Carolina law.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE
"FOR" THE PROPOSED AMENDMENT OF THE BYLAWS TO INCREASE THE MAXIMUM AUTHORIZED
NUMBER OF DIRECTORS OF THE CORPORATION TO THIRTY. THE AFFIRMATIVE VOTE OF A
MAJORITY OF VOTES REPRESENTED, IN PERSON OR BY PROXY, AND ENTITLED TO BE CAST
AT THE ANNUAL MEETING IS REQUIRED FOR APPROVAL OF PROPOSAL 3.
PROPOSALS OF SHAREHOLDERS
Any proposal of a shareholder which is intended to be presented at the
1999 Annual Meeting must be received by Southern BancShares at its principal
office in Mount Olive, North Carolina, no later than November 20, 1998, in
order that any such proposal be timely received for inclusion in the proxy
statement and form of proxy to be issued in connection with that meeting. It
is anticipated that the 1999 Annual Meeting will be held on a date during
April 1999.
ANNUAL REPORT ON FORM 10-K
Southern BancShares is required to file with the Securities and Exchange
Commission an Annual Report on Form 10-K within 90 days after the end of each
fiscal year. ON OR AFTER MARCH 31, 1998, UPON WRITTEN REQUEST TO DAVID A.
BEAN, TREASURER AND SECRETARY, SOUTHERN BANCSHARES (N.C.), INC., POST OFFICE
BOX 729, MOUNT OLIVE, NORTH CAROLINA 28365, BY A SHAREHOLDER OF SOUTHERN
BANCSHARES ENTITLED TO VOTE AT THE ANNUAL MEETING, A COPY OF SOUTHERN
BANCSHARES' ANNUAL REPORT ON FORM 10-K FOR 1997, INCLUDING FINANCIAL
STATEMENTS AND SCHEDULES THERETO, WILL BE PROVIDED WITHOUT CHARGE TO THE
SHAREHOLDER MAKING SUCH REQUEST.
OTHER MATTERS
The Board of Directors knows of no other business to be brought before
the meeting or any adjournment thereof. Should other matters properly come
before the meeting, the persons named in the proxy to represent the
shareholders will be authorized to vote according to their best judgment on
such matters.
By Order of the Board of Directors
David A. Bean, Secretary
March 20, 1998
14
- ------------------------------------------------------------------------------
APPENDIX
- ------------------------------------------------------------------------------
SOUTHERN BANCSHARES (N.C.), INC.
100 North Center Street
Mount Olive, North Carolina 28365
PROXY SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoints R. S. Williams, W. A. Potts and John N.
Walker, or any of them, attorneys and proxies, with power of substitution, to
vote all outstanding stock of Southern BancShares (N.C.), Inc. held of record
by the undersigned on March 9, 1998, at the Annual Meeting of Shareholders of
Southern BancShares (N.C.), Inc. to be held at the Goldsboro Country Club,
1500 South Slocumb Street, Goldsboro, North Carolina, at 3:00 P.M. on April
15, 1998, and any adjournments thereof, on the matters listed below:
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below [ ]WITHHOLD AUTHORITY to vote for
(except as indicated otherwise) all nominees listed below
Nominees: Bynum R. Brown; William H. Bryan; D. Hugh Carlton; Robert J.
Carroll; Hope H. Connell; J. Edwin Drew; Moses B. Gillam, Jr.; LeRoy C. Hand,
Jr.; Frank B. Holding; M. J. McSorley; W. B. Midyette, Jr.; W. Hunter Morgan;
John C. Pegram, Jr.; Charles I. Pierce, Sr.; W. A. Potts; Charles L. Revelle,
Jr.; Charles O. Sykes; John N. Walker; R. S. Williams.
(Instruction: To withhold authority to vote for any individual
nominee, write that nominee's name on the line below.)
________________________________________________________________________________
2.RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS: Proposal to ratify
the appointment of KPMG Peat Marwick LLP as independent accountants for
1998.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
3.AMENDMENT OF THE BYLAWS: Proposal to amend the Bylaws of Southern BancShares
to increase the maximum authorized number of directors to 30.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
4.OTHER BUSINESS: Should other matters properly come before the Annual
Meeting, the persons named herein as attorneys and proxies are authorized to
vote the shares represented by this proxy in accordance with their best
judgment.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED ABOVE. IN
THE ABSENCE OF ANY DIRECTION TO THE CONTRARY, THE PROXYHOLDERS WILL VOTE THIS
PROXY "FOR" PROPOSALS 2 AND 3, AND "FOR" THE ELECTION OF EACH OF THE NOMINEES
FOR DIRECTOR LISTED IN PROPOSAL 1. IF, AT OR BEFORE THE TIME OF THE MEETING,
ANY NOMINEE LISTED IN PROPOSAL 1 HAS BECOME UNAVAILABLE FOR ANY REASON, THE
PROXYHOLDERS ARE AUTHORIZED TO VOTE FOR A SUBSTITUTE NOMINEE. THIS PROXY MAY
BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED BY FILING WITH THE SECRETARY AN
INSTRUMENT REVOKING THE PROXY OR A DULY EXECUTED PROXY BEARING A LATER DATE OR
BY ATTENDING THE ANNUAL MEETING AND REQUESTING THE RIGHT TO VOTE IN PERSON.
Please date and sign exactly as name appears below. When shares are held
jointly by more than one person, all should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give full title as such.
If a corporation, please sign full corporate name by president or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated:__________________________, 1998
________________________________ (SEAL)
Signature
________________________________ (SEAL)
Signature if held jointly
PLEASE MARK, SIGN, DATE AND PROMPTLY RETURN THIS PROXY USING THE ENCLOSED
ENVELOPE