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 Section 240.14a-11(c) or Section 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)
Payment of Filing Fees. (Check the appropriate box):
(X) No fee required.
( ) Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
( ) Fee paid previously with preliminary materials.
( ) Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting 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:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
SOUTHERN BANCSHARES (N.C.), INC.
100 North Center Street
Mount Olive, North Carolina 28365
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
NOTICE is hereby given that the 2000 Annual Meeting of Shareholders of
Southern BancShares (N.C.), Inc. ("BancShares") will be held at the Goldsboro
Country Club located at 1500 South Slocumb Street, Goldsboro, North Carolina, at
3:00 p.m. on Wednesday, April 19, 2000.
The purposes of the meeting are:
1. Election of Directors: To elect 23 directors of BancShares for
terms of one year or until their respective successors are
duly elected and qualified;
2. Proposal to Ratify Appointment of Independent Accountants: To
consider and vote on a proposal to ratify the appointment of
KPMG LLP as BancShares' independent public accountants for
2000; and,
3. Other Business: To transact any other business properly
presented for action at the Annual Meeting.
YOU ARE INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. HOWEVER, EVEN
IF YOU PLAN TO ATTEND, YOU ARE REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED
APPOINTMENT OF PROXY AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE TO ENSURE
THAT A QUORUM IS PRESENT AT THE ANNUAL MEETING. RETURNING A SIGNED APPOINTMENT
OF PROXY WILL NOT AFFECT YOUR RIGHT TO REVOKE IT OR TO ATTEND THE ANNUAL MEETING
AND VOTE IN PERSON.
By Order of the Board of Directors
/s/David A. Bean
----------------
David A. Bean, Secretary
March 17, 2000
SOUTHERN BANCSHARES (N.C.), INC.
100 North Center Street
Mount Olive, North Carolina 28365
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
General
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Southern BancShares (N.C.), Inc. ("BancShares") of
appointments of proxy in the enclosed form for use at the Annual Meeting of
BancShares' shareholders (the "Annual Meeting") and at any adjournments thereof.
The Annual Meeting will be held at the Goldsboro Country Club located at 1500
South Slocumb Street, Goldsboro, North Carolina, at 3:00 p.m. on Wednesday,
April 19, 2000. This Proxy Statement is being mailed to BancShares' shareholders
on or about March 17, 2000.
Appointment and Voting of Proxies
Persons named in the enclosed appointment of proxy to represent
shareholders as proxies at the Annual Meeting (the "Proxies") are R. S.
Williams, W. A. Potts, and John N. Walker. Shares represented by each
appointment of proxy that is properly executed and returned, and not revoked,
will be voted by the Proxies in accordance with the directions contained
therein. If no directions are given, those shares will be voted by the Proxies
"FOR" the election of each of the 23 nominees for director named in Proposal 1
and "FOR" Proposal 2. If, at or before the time of the Annual Meeting, any
nominee named in Proposal 1 has become unable or unwilling to serve as a
director for any reason, the Proxies will have the discretion to vote for a
substitute nominee named by the Board of Directors. On any other matters that
may properly be presented for action at the Annual Meeting, the form of
appointment of proxy will authorize the Proxies to vote in accordance with their
best judgment.
Revocation of Appointment of Proxy
Any shareholder who executes an appointment of proxy may revoke it at
any time before it is exercised by filing with BancShares' Secretary either a
written instrument revoking it or a duly executed appointment of proxy bearing a
later date, or by attending the Annual Meeting and announcing his or her
intention to vote in person.
Expenses of Solicitation
BancShares will pay all costs of the solicitation of appointments of
proxy for the Annual Meeting, including costs of preparing, assembling and
mailing this Proxy Statement. In addition to solicitation by mail, appointments
of proxy may be solicited personally or by telephone by directors, officers and
employees of BancShares and its bank subsidiary, Southern Bank and Trust Company
("Southern").
Record Date
The close of business on March 10, 2000, has been fixed as the record
date (the "Record Date") for the determination of shareholders entitled to
notice of and to vote at the Annual Meeting. Only shareholders of record on the
Record Date will be eligible to vote on the matters presented for action by
shareholders at the Annual Meeting.
Voting Securities
On the Record Date, BancShares' outstanding voting securities consisted
of (i) 118,626 shares of $5.00 par value common stock ("Common Stock"), (ii)
397,370 shares of no par value Series B non-cumulative preferred stock ("Series
B"), and (iii) 39,825 shares of no par value Series C non-cumulative preferred
stock ("Series C"). At the Annual Meeting, each shareholder will be entitled to
one vote for each share of Common Stock, one vote for each 38 shares of Series
B, and one vote for each 38 shares of Series C, held of record on the Record
Date for each director to be elected and on each other matter submitted for
voting.
Voting Procedures; Votes Required for Approval
In the election of directors, the 23 nominees receiving the highest
numbers of votes will be elected. For approval of Proposal 2, a majority of the
votes represented by shares of voting securities present at the Annual Meeting,
in person or by proxy, and entitled to be voted, must be cast in favor of
Proposal 2. As long as a quorum is present at the Annual Meeting, abstentions
and broker non-votes will have no effect in the election of directors, but they
will have the same effect as votes against Proposal 2. Shareholders may not vote
cumulatively in the election of directors.
Beneficial Ownership of Voting Securities
Principal Shareholders. As of the Record Date, persons known to
BancShares' management to own, beneficially or of record, 5% or more of any
class of BancShares' voting securities were as follows:
Title of Name and address Amount and nature of Percentage Percentage of
class of beneficial owner beneficial ownership (1) of class (2) total votes (2)
----- ------------------- ------------------------ ------------ ---------------
Common Stock Frank B. Holding 32,294 (3) 27.22% 24.82%
Smithfield, NC
Lewis R. Holding 27,577 (4) 23.25% 21.19%
Lyford Cay, Bahamas
Series B Preferred Frank B. Holding 22,171 (3) 5.58% .45%
Smithfield, NC
Series C Preferred Rachel Ann Barnes 2,117 5.32% .04%
Conway, NC
James R. Hendrix 6,120 15.37% .12%
Tyner, NC
Elva W. Peele 3,517 8.83% .07%
Lewiston-Woodville, NC
Harry N. Willey 2,200 (5) 5.52% .04%
Enfield, NC
- ----------------
(1) Except as otherwise noted, each named individual exercises sole voting
and investment power with respect to all shares.
(2) "Percentage of class" reflects the listed shares as a percentage of the
total number of outstanding shares of that class of stock. "Percentage
of total votes" reflects the votes represented by the listed shares as
a percentage of the aggregate votes represented by all outstanding
shares of BancShares' voting securities.
(3) Includes an aggregate of 28,095 shares of Common Stock and 4,020 shares
of Series B held by or in trust for Mr. F. Holding's spouse and/or
adult children and their spouses and with respect to which shares he
disclaims beneficial ownership, and 17,205 shares of Series B held by a
corporation which Mr. F. Holding may be deemed to control and with
respect to which shares he may be deemed to exercise shared voting and
investment power.
(4) Includes an aggregate of 5,113 shares of Common Stock held by or in
trust for Mr. L. Holding's spouse and/or an adult daughter and with
respect to which shares he disclaims beneficial ownership.
(5) Includes 1,700 shares held by Mr. Willey jointly with his spouse and
with respect to which shares he exercises shared voting and investment
power.
2
Management. As of the Record Date, the beneficial ownership of
BancShares' voting securities by its current directors, nominees for election as
directors and certain named executive officers, and by all current directors and
executive officers as a group, was as follows:
Title of Amount and nature of Percentage Percentage of
class Name of beneficial owner beneficial ownership (1) of class (2) total votes (2)
----- ------------------------ ------------------------ ------------ ---------------
Common Stock Paul A. Brewer, Jr.......... 24 (3) .02% .02%
Bynum R. Brown.............. 372 .31% .29%
William H. Bryan............ 108 .09% .08%
D. Hugh Carlton............. 288 (4) .24% .22%
Robert J. Carroll........... 30 .03% .02%
Hope H. Connell............. 5,666 (5) 4.78% 4.35%
J. Edwin Drew............... 3,714 3.13% 2.85%
Samuel E. Ewell, Jr......... 10 * *
Moses B. Gillam, Jr......... 125 .11% .10%
LeRoy C. Hand, Jr........... 148 (6) .12% .11%
Joseph D. Hines............. 10 *
*
Frank B. Holding............ 32,294 (7) 27.22% 24.82%
George A. Hux............... 10 * *
M. J. McSorley.............. 204 (8) .17% .16%
W. B. Midyette, Jr.......... 150 .13% .12%
W. Hunter Morgan............ 350 (9) .30% .27%
John C. Pegram, Jr.......... 5 * *
Charles I. Pierce, Sr....... 70 .06% .05%
W. A. Potts................. 550 (10) .46% .42%
Richard D. Ray.............. 1 * *
Charles L. Revelle, Jr...... 1,020 .86% .78%
Watson N. Sherrod, Jr....... 10 * *
Charles O. Sykes............ 100 .08% .08%
Raymond M. Sykes............ 10 * *
John N. Walker.............. 190 .16% .15%
R. S. Williams.............. 225 (11) .19% .17%
All directors and executive
officers as a group (27 40,058 (14) 33.77% 30.78%
persons)........................
Series B Preferred Bynum R. Brown.............. 2,358 .59% .05%
Robert J. Carroll........... 2,687 (12) .68% .05%
Hope H. Connell............. 2,000 (5) .50% .04%
LeRoy C. Hand, Jr........... 17,522 (6) 4.41% .35%
Frank B. Holding............ 22,171 (7) 5.58% .45%
M. J. McSorley.............. 6,365 (8) 1.60% .13%
W. Hunter Morgan............ 7,368 (9) 1.85% .15%
3
Charles I. Pierce, Sr....... 336 (13) .08% .01%
R. S. Williams.............. 7,109 (11) 1.79% .14%
All directors and executive
officers as a group 65,959 (14) 16.60% 1.30%
(27 persons).................
Series C Preferred M. J. McSorley.............. 25 (8) .06% *
Charles I. Pierce, Sr....... 139 (13) .35% *
All directors and executive
officers as a group (27 164 .41% *
persons)....................
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(1) Except as otherwise noted, each named individual, and individuals
included in the group, exercise sole voting and investment power with
respect to all shares.
(2) "Percentage of class" reflects the listed shares as a percentage of the
total number of outstanding shares of that class of stock. "Percentage
of total votes" reflects the votes represented by the listed shares as
a percentage of the aggregate votes represented by all shares of
Bancorp's voting securities. An asterisk indicates less than .01%.
(3) Includes 10 shares held by Mr. Brewer's spouse and with respect to
which shares he disclaims beneficial ownership.
(4) Includes 149 shares held by a corporation which Mr. Carlton may be
deemed to control and with respect to which shares he may be deemed to
exercise shared voting and investment power, and 25 shares held by his
spouse and with respect to which shares he disclaims beneficial
ownership.
(5) Includes 220 shares of Common Stock held in trust for Ms. Connell's
benefit and with respect to which shares she exercises shared voting
and investment power, and an aggregate of 2,312 shares of Common Stock
and 2,000 shares of Series B held by her spouse individually and/or as
custodian for their children and with respect to which shares she
disclaims beneficial ownership. All listed shares also are shown as
beneficially owned by Mr. Holding.
(6) Includes 48 shares of Common Stock and 6,289 shares of Series B owned
by Dr. Hand's spouse and with respect to which shares he disclaims
beneficial ownership.
(7) Includes an aggregate of 28,095 shares of Common Stock and 4,020 shares
of Series B held by or in trust for Mr. Holding's spouse and/or adult
children and their spouses and with respect to which shares he
disclaims beneficial ownership, and 17,205 shares of Series B held by a
corporation which Mr. Holding may be deemed to control and with respect
to which shares he may be deemed to exercise shared voting and
investment power. Of the listed shares, 5,666 shares of Common Stock
and 2,000 shares of Series B also are included in the shares shown as
beneficially owned by Ms. Connell.
(8) Includes an aggregate of 60 shares of Common Stock, 5,815 shares of
Series B, and 25 shares of Series C held by Mr. McSorley's spouse and
with respect to which shares he disclaims beneficial ownership.
(9) Includes 3,442 shares of Series B held by an entity which Mr. Morgan
may be deemed to control and with respect to which shares he may be
deemed to exercise shared voting and investment power, and 125 shares
of Common Stock and 2,131 shares of Series B held by Mr. Morgan's
spouse with respect to which shares he disclaims beneficial ownership.
(10) Includes 200 shares held by Dr. Potts' spouse and with respect to which
shares he disclaims beneficial ownership.
(11) Includes 50 shares of Common Stock and 324 shares of Series B held by
Mr. Williams' spouse and with respect to which shares he disclaims
beneficial ownership.
(12) Includes 693 shares held by Mr. Carroll's spouse and with respect to
which shares he disclaims beneficial ownership.
(13) Includes 71 shares of Series B and 29 shares of Series C held by an
entity which Mr. Pierce may be deemed to control and with respect to
which shares he may be deemed to exercise shared voting and investment
power.
(14) Shares listed as beneficially owned by both Mr. Holding and Ms. Connell
are included only once in the beneficial ownership of the group.
Section 16(a) Beneficial Ownership Reporting Compliance
BancShares' directors and executive officers are required to file
certain reports with the Securities and Exchange Commission regarding the amount
of and changes in their beneficial ownership of BancShares' voting securities.
Based on its review of copies of those reports, BancShares' proxy statement each
year is required to disclose failures to report shares beneficially owned or
changes in such beneficial ownership, or to timely file required reports, during
the previous year. Management of BancShares recently learned that, due to an
administrative error, a year-end report covering a gift of 55 shares of
BancShares' Common Stock during 1999 by one of its principal shareholders, Lewis
R. Holding, to his adult daughter was not filed by its due date.
4
PROPOSAL 1: ELECTION OF DIRECTORS
BancShares' Bylaws provide for a Board of Directors composed of not
less than five nor more than 30 members and authorize BancShares' Board of
Directors to set and change the actual number of directors from time to time
within those limits. Directors are elected each year at the Annual Meeting for
terms of one year or until their respective successors have been duly elected
and qualified.
The number of BancShares' directors for the year following the Annual
Meeting has been set at 23, and the persons named below have been nominated by
the Board of Directors for election as directors at the Annual Meeting. Each
nominee currently serves as a director of BancShares and Southern. The following
table contains information about each of the nominees.
Positions with Year first Principal occupation
Name and age BancShares (1) elected (2) and business experience
------------ -------------- ----------- -----------------------
Bynum R. Brown Director 1986 President and Owner, Bynum R. Brown Agency, Inc.
74 (real estate); Secretary/Treasurer, Roanoke Valley
Nursing Home, Inc.; President and Owner, Brown
Manor, Inc. (family care home)
William H. Bryan Director 1992 President, Director and Treasurer, Mount Olive
42 Pickle Company, Inc. (manufacturer of pickle
and pepper products)
D. Hugh Carlton Director 1994 President and Owner, Carlton Insurance Agency, Inc.
68 (general insurance agency)
Robert J. Carroll Director 1986 Retired; former President and Owner, Carroll's
75 Garage, Inc. (truck and farm equipment sales and
service)
Hope H. Connell (3) Director 1992 Senior Vice President, First-Citizens Bank & Trust
37 Company; Director, Yadkin Valley Company (credit life
reinsurance company)
J. Edwin Drew Director 1973 Retired physician; former President,
69 J. Edwin Drew, M.D., P.A.
Samuel E. Ewell, Jr. (4) Director 1998 President and Owner, Ewell Ford Sales, Inc.
53 (automobile dealership)
Moses B. Gillam, Jr. (5) Director 1982 Senior Partner, Gillam and Gillam (attorneys)
83
LeRoy C. Hand, Jr. Director 1986 Retired physician; former President,
79 Albemarle Emergency Associates, P.A.
Joseph D. Hines (4) Director 1998 President and Owner, Enfield Tractor and Equipment
70 Company and Hines Equipment Company (retail farm and
industrial equipment sales)
Frank B. Holding (3) Director and 1962 Executive Vice Chairman, First Citizens BancShares,
71 Executive Committee Inc. and First-Citizens Bank & Trust Company; Vice
Chairman Chairman, First Citizens Bancorporation of S.C., Inc.
and First-Citizens Bank and Trust Company of South
Carolina
George A. Hux (4) Director 1998 Retired Attorney and former Partner, Hux, Livermon &
84 Armstrong, LLP
M. J. McSorley Director and 1990 Vice President of BancShares; Vice Chairman of
66 Vice President Southern since January 1998; retired President and
former Chief Executive Officer of Southern
5
Positions with Year first Principal occupation
Name and age BancShares (1) elected (2) and business experience
------------ -------------- ----------- -----------------------
W. Hunter Morgan Director 1986 President, Kellogg-Morgan Agency, Inc.
69 (general insurance agency)
John C. Pegram, Jr. Director, President 1998 Executive Officer of BancShares and Southern
55 and Chief Executive
Officer
Charles I. Pierce, Sr. Director 1986 President, Pierce Printing Co., Inc. (commercial
82 printers)
W. A. Potts Vice Chairman 1968 Retired veterinarian; former President, W. A. Potts,
73 DVM, P.A.; former Chairman of the Board, Mount Olive
Pickle Company, Inc.
Charles L. Revelle, Jr. Director 1986 Chairman of the Board, Revelle Agri-Products, Inc.;
73 Vice President, Revelle Builders of NC, Inc.;
President, Revelle Equipment Co., Inc. (agribusiness)
Watson N. Sherrod, Jr. (4) Director 1998 Senior Vice President of Southern since 1998;
71 previously, President, Chief Executive Officer and
Director, ESB Bancorp, Inc. and Enfield Savings Bank,
Inc., SSB
Charles O. Sykes (4) Director 1984 President, Mount Olive Livestock Market, Inc.
70 (livestock auction market and dealer)
Raymond M. Sykes Director 1998 Self-employed in farming operations
76
John N. Walker Director 1971 President Emeritus (former President, Chief Executive
74 Officer and Director), Mount Olive Pickle Company, Inc.
(manufacturer of pickle and pepper products)
R. S. Williams Chairman 1971 Retired; former President of BancShares and Southern
71
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(1) Each director also serves as a director of Southern.
(2) Refers to the year each director first became a director of BancShares
or its predecessor or, if prior to December 31, 1982, the year first
elected to Southern's Board of Directors.
(3) Ms. Connell is Mr. Holding's daughter.
(4) Messrs. Ewell, Hines, Hux, Sherrod, and Sykes served as directors of
ESB Bancorp, Inc. ("ESB") and its subsidiary, Enfield Savings Bank,
Inc., SSB, Enfield, North Carolina, which were acquired by BancShares
during 1998. Each of them has been nominated for reelection as a
director of BancShares pursuant to the agreement pertaining to
BancShares' acquisition of ESB which provided that each director of ESB
in office at the time of the acquisition would be appointed to
BancShares' Board of Directors and be nominated for election by
shareholders at BancShares' 1999 and 2000 Annual Meetings.
(5) The law firm of Gillam and Gillam performed legal services for Southern
in 1999 and is expected to continue to do so during 2000.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF
THE 23 NOMINEES FOR DIRECTOR NAMED ABOVE. THE 23 NOMINEES RECEIVING THE HIGHEST
NUMBERS OF VOTES WILL BE ELECTED AS DIRECTORS.
Compensation of Directors
Except as otherwise described below, directors are paid an annual
retainer of $400 plus fees of $200 for attendance at each meeting of BancShares'
or Southern's Board, $100 for attendance at each meeting of a Board committee,
and $40 for attendance at each meeting of a local advisory board. Directors do
not receive any additional compensation (other than meeting fees) for their
service as members of BancShares' Board of Directors. R. S. Williams, Frank B.
Holding, M. J. McSorley, John C. Pegram, Jr., and Watson N. Sherrod, Jr., do not
receive any compensation for their service as directors.
6
Samuel E. Ewell, Jr., Joseph D. Hines, George A. Hux, and Raymond M.
Sykes (each of whom formerly served as a director of ESB Bancorp, Inc. ("ESB")
and its subsidiary, Enfield Savings Bank, Inc., SSB, Enfield, North Carolina)
are paid $600 per month for their services as directors of BancShares and
Southern in lieu of the standard directors' fees stated above. Under the terms
of his separate employment agreement with Southern, Watson N. Sherrod, Jr.,
Senior Vice President of Southern (and the former President and Chief Executive
Officer of ESB) receives no compensation for his services as a director of
BancShares and Southern.
Since his retirement as Southern's President in December 1989, R. S.
Williams has received monthly payments of $2,833 pursuant to a consulting and
noncompetition agreement with Southern. That agreement expired during 1999, but
has been extended through 2000 with a reduced monthly payment of $1,417. Mr.
Williams also receives retirement benefits under Southern's Pension Plan.
Since his retirement as Southern's President and Chief Executive
Officer in June 1998, M. J. McSorley has received monthly payments of $1,423
pursuant to a consulting and noncompetition agreement with Southern. Mr.
McSorley also receives retirement benefits under Southern's Pension Plan.
Meetings and Committees of the Boards of Directors
BancShares' and Southern's Boards of Directors held four joint meetings
in 1999. All directors attended at least 75% of the aggregate number of meetings
of BancShares' Board and any committees on which they served during their terms,
with the exception of W. B. Midyette, Jr., George A. Hux, and Charles I. Pierce,
Sr., each of whose absences were due to illness.
The members of BancShares' and Southern's Boards of Directors are the
same. The Boards have several standing committees, including an Audit and
Compliance Committee and a Compensation Committee. The Board does not have a
standing nominating committee or other committee performing equivalent
functions.
The Audit and Compliance Committee is a joint committee of BancShares'
and Southern's Boards of Directors and currently consists of John N. Walker --
Chairman, William H. Bryan, W. A. Potts, and Charles O. Sykes. The Committee
generally oversees Southern's internal audit program 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 BancShares' shareholders,
the Committee engages independent accountants each year to audit BancShares'
consolidated financial statements, and it receives reports from and reviews
non-audit services proposed by management to be provided by BancShares'
independent accountants. During 1999, the Audit and Compliance Committee held
four meetings.
The Compensation Committee is a separate committee of Southern's Board
of Directors. As further described below, the Committee reviews Southern'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 approves salaries and other forms of
compensation. The Compensation Committee held one meeting during 1999.
BancShares' officers are compensated by Southern for their services as officers
of Southern, and they receive no compensation from BancShares. Therefore,
BancShares' Board of Directors does not have a compensation committee.
Compensation Committee Interlocks and Insider Participation
Southern's Compensation Committee currently consists of: Frank B.
Holding -- Chairman, William H. Bryan, W. A. Potts, Charles O. Sykes, John N.
Walker, and R. S. Williams.
7
Mr. Williams serves as Chairman of BancShares' Board of Directors. He
retired from active employment during 1989 but continued to serve as President
of BancShares until 1997. He currently receives $1,417 per month pursuant to a
consultation and noncompetition agreement with Southern.
Mr. Holding also serves as Executive Vice Chairman of First Citizens
BancShares, Inc. and its wholly-owned subsidiary, First-Citizens Bank & Trust
Company, Raleigh, North Carolina ("FCB"). Pursuant to an agreement between the
FCB and Southern, FCB provides to BancShares and Southern various data and item
processing, securities portfolio management, management consulting and other
services (including Mr. Holding's services as Chairman of BancShares' and
Southern's Executive Committees). During 1999, the fees paid by Southern to FCB
for such services were approximately $2,723,806. Also during 1999, Southern
purchased assets (including premises and loans) totaling approximately $11.1
million, and assumed an aggregate of approximately $14.8 million in deposit
liabilities, associated with a branch office of FCB. In connection with that
transaction, Southern paid FCB an aggregate deposit premium of $1,335,227.
Additional information regarding services provided by FCB are contained below
under the caption "Transactions with Management."
Committee Report on Executive Compensation
Southern 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
Southern's 401(k) plan and other customary employee benefit and welfare plans,
including a defined benefit pension plan). The Compensation Committee
administers Southern's compensation program and has the responsibility for
matters involving the compensation of executive officers.
For 1999, the Committee established the salary for each executive
officer, including the Chief Executive Officer of Southern, based on an
evaluation of that officer's individual level of responsibility and performance.
The performance of individual executive officers and Southern's financial
performance in general were considered by the Compensation Committee in
connection with the setting of salaries for 1999. However, the setting of
salaries is largely subjective and there are no specific formulae, objective
criteria, or other such mechanisms by which adjustments to each executive
officer's salary are tied empirically to his individual performance or to
Southern'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
BancShares or Southern receives annual compensation approaching that amount,
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
8
Executive Officers
BancShares' and Southern's current executive officers are as follows:
Name Age Positions with BancShares and Southern
---- --- --------------------------------------
R. S. Williams 71 Chairman of BancShares and Southern; formerly served as President and Chief
Executive Officer of BancShares (until 1998) and President of Southern
(until 1989)
M. J. McSorley 66 Vice Chairman of Southern (since 1998) and Vice President and Director of
BancShares (since 1990); formerly served as President and Chief Executive
Officer of Southern
John C. Pegram, Jr. 55 President and Chief Executive Officer of BancShares and Southern (since 1998);
formerly served as Vice President of BancShares (until 1998), Executive Vice
President of Southern (until 1998) and Senior Vice President of Southern
(until 1997)
Paul A. Brewer 57 Executive Vice President of Southern (since 1998); formerly served as Senior
Vice President (until 1998) and Regional Vice President (until 1993) of
Southern
Richard D. Ray 53 Executive Vice President of Southern (since 1998); formerly served as Senior
Vice President (until 1998) and Regional Vice President (until 1993) of
Southern
David A. Bean 51 Secretary and Treasurer of BancShares (since 1986) and Senior Vice President
(since 1998) and Controller (since 1984) of Southern
Executive Compensation
The following table shows cash and other compensation paid to or
deferred by certain executive officers of BancShares and Southern for the years
indicated. BancShares' officers are compensated by Southern for their services
as officers of Southern, and they receive no salaries or other separate
compensation from BancShares for their services as officers of BancShares.
SUMMARY COMPENSATION TABLE
Annual Compensation
---------------------------------------
Other annual All other
Name and Salary Bonus compensation compensation
principal position Year ($) (1) ($) ($)(2) ($)(3)
------------------ ---- ------- --- ------ ------
John C. Pegram, Jr. 1999 $117,000 -0- -0- $5,476
President and 1998 99,000 -0- -0- 4,631
Chief Executive Officer 1997 84,000 -0- -0- 4,026
of BancShares and Southern
Paul A. Brewer 1999 106,500 -0- -0- 4,840
Executive Vice President 1998 100,500 -0- -0- 4,568
of Southern 1997 94,800 -0- -0- 4,310
Richard D. Ray 1999 104,280 -0- -0- 4,785
Executive Vice President 1998 98,280 -0- -0- 4,493
of Southern 1997 92,700 -0- -0- 4,240
- ---------------
(1) Includes amounts deferred at the election of each officer pursuant to
Southern's Section 401(k) plan.
(2) In addition to compensation paid in cash, Southern's executive officers
receive certain personal benefits. The value of non-cash benefits
received each year by each named officer did not exceed 10% of his cash
compensation for that year.
(3) For 1999, consists entirely of Southern's contributions on behalf of
each named officer to Southern's Section 401(k) plan.
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Pension Plan
The following table shows, for various numbers of years of service and
levels of compensation, the estimated benefits payable to a participant at
normal retirement age under Southern's qualified defined benefit pension plan
(the "Pension Plan") based on federal tax laws in effect on January 1, 2000.
Years of service
-------------------------------------------------------------------------------------------
Final
average
compensation 10 years 15 years 20 years 25 years 30 years 35 years 40 years
- ------------ -------- -------- -------- -------- -------- -------- --------
$ 50,000 $6,969 $10,453 $13,937 $17,421 $20,906 $24,390 $27,390
75,000 11,594 17,390 23,187 28,984 34,781 40,577 45,077
100,000 16,219 24,328 32,437 40,546 48,656 56,765 62,765
125,000 20,844 31,265 41,687 52,109 62,531 72,952 80,452
150,000 25,469 38,203 50,937 63,671 76,406 89,140 98,140
175,000 26,579 39,868 53,157 66,446 79,736 93,025 102,385
200,000 26,579 39,868 53,157 66,446 79,736 93,025 102,385
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 annual compensation covered
by the Pension Plan includes earnings as reported on a participant's W-2
statement and earnings deferred by the participant's own contribution to
Southern's Section 401(k) plan. Benefits are calculated based on each
participant's "final average compensation", which is defined as the
participant's average earnings during the five highest consecutive earning years
of the last ten complete calendar years as a participant. However, under current
tax laws, $170,000 is the maximum amount of annual compensation for 2000 that
can be included for purposes of calculating a participant's final average
compensation, and the maximum annual benefit that may be paid to a retiring
participant is $135,000. The maximum years of credited service which may be
counted in calculating benefits under the Pension Plan is 40 years.
The credited years of service and final average compensation,
respectively, as of January 1, 2000, for each of the executive officers named in
the Summary Compensation Table above are as follows: Mr. Pegram -- 25 years and
$89,307; Mr. Brewer -- 35 years and $95,682; and Mr. Ray -- 29 years and
$93,877.
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Performance Graph
The following graph compares the cumulative total shareholder return
(the "CTSR") on 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. The graph assumes $100 invested on January 1, 1994, and that
dividends were reinvested in additional shares.
Comparison of Five-Year Cumulative Total Shareholder Return among
Southern BancShares (N.C.), Inc., Nasdaq Banks Index and Nasdaq-US Index
[GRAPHIC-GRAPH PLOTTED TO POINTS LISTED BELOW]
Year Southern BancShares Nasdaq Banks Index Nasdaq US Index
---- ------------------- ------------------ ---------------
1994 $100 $100 $100
1995 106 149 141
1996 170 197 174
1997 171 329 213
1998 173 327 300
1999 184 314 542
Transactions with Management
Southern has had, and expects to have in the future, banking
transactions in the ordinary course of its business with certain of its and
BancShares' directors, executive officers, principal shareholders, and their
associates. All loans included in such transactions were made on substantially
the same terms, including interest rates, repayment terms, and collateral, as
those prevailing at the time such loans were made for comparable transactions
with other persons, and did not involve more than the normal risk of
collectibility or present other unfavorable features. Each such transaction was
approved by Southern's Board of Directors.
Southern is party to a contract with First-Citizens Bank & Trust
Company, Raleigh, North Carolina ("FCB"), pursuant to which FCB provides to
Southern and BancShares various data and item processing
11
services, securities portfolio management services, management consulting
services (including the services of Frank B. Holding as director and Chairman of
BancShares' and Southern's Executive Committees), the purchase of fixed assets,
building rent, and services as trustee for Southern's pension plan and Section
401(k) plan. Aggregate fees paid by Southern to FCB for all such services during
1999 totaled approximately $2,723,806, of which $79,436 was in the form of
reimbursement to FCB for a portion of Mr. Holding's salary paid by FCB. (Mr.
Holding receives no salary, directors fees or other compensation from BancShares
or Southern for his services.) It is estimated that aggregate fees for all such
services provided by FCB during 2000 will amount to approximately $3,000,000.
FCB is the wholly-owned bank subsidiary of First Citizens BancShares, Inc.
("FCBancShares"). Mr. Holding (a director of BancShares and Southern and a
principal shareholder of BancShares) and Lewis R. Holding (also a principal
shareholder of BancShares) are directors and executive officers of FCBancShares
and FCB, and also are principal shareholders of FCBancShares. Also, Hope H.
Connell, a director of BancShares and Southern, is a principal shareholder of
FCBancShares and an officer of FCB. Southern's contract with FCB was negotiated
at arms-length and was approved by Southern's Board of Directors, with Mr.
Holding and Ms. Connell abstaining from the voting. Based on its comparison of
the terms of the contract in previous years with terms available to it from
other providers of the services being obtained from FCB, management of Southern
believes the terms of its contract with FCB, including prices, are no less
favorable to Southern than could be obtained from an unrelated provider.
During 1999, Southern purchased assets (including premises and loans)
totaling approximately $11.1 million, and assumed an aggregate of approximately
$14.8 million in deposit liabilities, associated with FCB's Ahoskie, North
Carolina, branch office. In connection with that transaction, Southern paid FCB
an aggregate deposit premium of $1,335,227.
Triangle Life Insurance Company ("Triangle Life"), a subsidiary of FCB,
is the issuer of credit life insurance policies sold to Southern's loan
customers through its subsidiary, Goshen, Inc. ("Goshen"). Pursuant to an
arrangement between Triangle Life and Yadkin Valley Life Insurance Company
("Yadkin Valley Life"), certain policies issued by Triangle Life, including
certain policies sold through Goshen, are reinsured by Yadkin Valley Life. Hope
H. Connell, a director of BancShares and Southern, is a principal shareholder
and director of Yadkin Valley Life's parent company, Yadkin Valley Company, and
Lewis R. Holding, a principal shareholder of BancShares, also is a principal
shareholder of Yadkin Valley Company. During 1999, Triangle Life received total
premiums of $151,477 on policies sold through Goshen, from which Goshen received
total commissions of $57,098. Yadkin Valley Life received total premiums of
$86,901 from Triangle Life on policies sold through Goshen that it reinsured.
During 1999, Southern paid $102,248 in premiums for general liability
and comprehensive insurance policies on property and vehicles, and workers'
compensation coverage and umbrella policies, all of which were purchased through
Carlton Insurance Agency, Inc. D. Hugh Carlton, a director of BancShares and
Southern, is President and owner of Carlton Insurance Agency, Inc. It is
expected that such relationship will continue during 2000.
PROPOSAL 2: RATIFICATION OF INDEPENDENT ACCOUNTANTS
BancShares' current independent public accounting firm, KPMG LLP, has
been reappointed by the Board of Directors to serve as BancShares' independent
accountants for 2000, and a proposal to ratify that appointment will be
submitted for voting by shareholders at the Annual Meeting. Representatives of
KPMG LLP are expected to attend the Annual Meeting and be available to respond
to appropriate questions, and they will have the opportunity to make a statement
if they desire to do so.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL
2. TO BE APPROVED, A MAJORITY OF THE VOTES REPRESENTED BY SHARES PRESENT AT THE
ANNUAL MEETING, IN PERSON OR BY PROXY, AND ENTITLED TO BE VOTED, MUST BE CAST IN
FAVOR OF PROPOSAL 2.
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OTHER MATTERS
The Board of Directors knows of no other matters that will be presented
for action by shareholders at the Annual Meeting. Should other matters properly
be presented at the Annual Meeting, the Proxies, or their substitutes, will be
authorized to vote shares represented by appointments of proxy according to
their best judgment.
PROPOSALS OF SHAREHOLDERS
It is anticipated that the 2001 Annual Meeting will be held on a date
during April 2001. Any proposal of a shareholder which is intended to be
presented for action at the 2001 Annual Meeting must be received by BancShares
in writing at its main office in Mount Olive, North Carolina, no later than
November 17, 2000, to be considered timely received for inclusion in the proxy
statement and form of appointment of proxy distributed by BancShares in
connection with that meeting. In order to be included in BancShares' proxy
materials for a particular meeting, the person submitting the proposal must own,
beneficially or of record, at least 1% or $2,000 in market value of shares of
BancShares' stock entitled to be voted on that proposal at the meeting, and must
have held those shares for a period of at least one year and continue to hold
them through the date of the meeting. Also, the proposal and the shareholder
submitting it must comply with certain other eligibility and procedural
requirements contained in rules of the Securities and Exchange Commission.
Written notice of other shareholder proposals intended to be presented
at the 2001 Annual Meeting (proposals which are not intended to be included in
BancShares' proxy statement and form of appointment of proxy) must be received
by BancShares at its main office in Mount Olive, North Carolina, no later than
January 31, 2001, in order for such proposals to be considered timely received
for purposes of the Proxies' discretionary authority to vote on other matters
presented for action by shareholders at that meeting.
ANNUAL REPORT ON FORM 10-K
BancShares is subject to the reporting requirements of the Securities
Exchange Act of 1934 and, in accordance therewith, files reports and other
information with the Securities and Exchange Commission, including without
limitation proxy statements, annual reports and quarterly reports.
A COPY OF BANCSHARES' 1999 ANNUAL REPORT ON FORM 10-K AS FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION WILL BE PROVIDED WITHOUT CHARGE UPON THE
WRITTEN REQUEST OF ANY SHAREHOLDER ENTITLED TO VOTE AT THE ANNUAL MEETING.
REQUESTS FOR COPIES SHOULD BE DIRECTED TO DAVID A. BEAN, TREASURER AND
SECRETARY, SOUTHERN BANCSHARES (N.C.), INC., POST OFFICE BOX 729, MOUNT OLIVE,
NORTH CAROLINA 28365.
March 17, 2000
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SOUTHERN BANCSHARES (N.C.), INC.
100 North Center Street
Mount Olive, North Carolina 28365
APPOINTMENT OF 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, as attorneys and proxies (the "Proxies"), with
full power of substitution, to vote all outstanding shares of voting securities
of Southern BancShares (N.C.), Inc. ("Southern") held of record by the
undersigned on March 10, 2000, at the Annual Meeting of Shareholders of Southern
(the "Annual Meeting") to be held at the Goldsboro Country Club, 1500 South
Slocumb Street, Goldsboro, North Carolina, at 3:00 p.m. on April 19, 2000, and
any adjournments thereof. The undersigned hereby directs that the shares
represented by this appointment of proxy be voted as follows on the proposals
listed below:
1. ELECTION OF DIRECTORS:
[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY
(except as indicated otherwise) to vote for all nominees
listed below
Nominees: Bynum R. Brown; William H. Bryan; D. Hugh Carlton; Robert J. Carroll;
Hope H. Connell; J. Edwin Drew; Samuel E. Ewell, Jr.; Moses B. Gillam, Jr.;
LeRoy C. Hand, Jr.; Joseph D. Hines; Frank B. Holding; George A. Hux; M. J.
McSorley; W. Hunter Morgan; John C. Pegram, Jr.; Charles I. Pierce, Sr.; W. A.
Potts; Charles L. Revelle, Jr.; Watson N. Sherrod, Jr.; Charles O. Sykes;
Raymond M. Sykes; John N. Walker; and 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 LLP as Southern's independent accountants for 2000.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. OTHER BUSINESS: On such other matters as may properly be presented for
action at the Annual Meeting, the Proxies are authorized to vote the shares
represented by this appointment of proxy in accordance with their best
judgment.
PLEASE DATE AND SIGN THIS APPOINTMENT OF PROXY ON THE REVERSE SIDE
AND RETURN IT TO SOUTHERN IN THE ENVELOPE PROVIDED.
THE SHARES REPRESENTED BY THIS APPOINTMENT OF PROXY WILL BE VOTED AS DIRECTED
ABOVE. IN THE ABSENCE OF ANY DIRECTION, THE PROXIES WILL VOTE THE SHARES
REPRESENTED BY THIS APPOINTMENT OF PROXY "FOR" THE ELECTION OF EACH OF THE
NOMINEES FOR DIRECTOR LISTED IN PROPOSAL 1 AND "FOR" PROPOSAL 2. IF, AT OR
BEFORE THE TIME OF THE ANNUAL MEETING, ANY NOMINEE LISTED IN PROPOSAL 1 HAS
BECOME UNABLE OR UNWILLING TO SERVE AS A DIRECTOR FOR ANY REASON, THE PROXIES
ARE AUTHORIZED TO VOTE FOR A SUBSTITUTE NOMINEE NAMED BY THE BOARD OF DIRECTORS.
THIS APPOINTMENT OF PROXY MAY BE REVOKED AT ANY TIME BEFORE IT IS EXERCISED BY
FILING WITH BANCSHARES' SECRETARY A WRITTEN INSTRUMENT REVOKING IT OR A DULY
EXECUTED APPOINTMENT OF PROXY BEARING A LATER DATE, OR BY ATTENDING THE ANNUAL
MEETING AND ANNOUNCING HIS OR HER INTENTION TO VOTE IN PERSON.
Dated:_____________________ , 2000
____________________________
Signature
____________________________
Signature if held jointly
Instruction: Please sign
above exactly as your
name appears on this
appointment of proxy.
Joint owners of shares
should both sign.
Fiduciaries or other
persons signing in a
representative capacity
should indicate the
capacity in which they
are signing.
IMPORTANT: TO INSURE THAT A QUORUM IS PRESENT AT THE ANNUAL MEETING, PLEASE
SEND IN YOUR APPOINTMENT OF PROXY WHETHER OR NOT YOU PLAN TO ATTEND. EVEN IF YOU
SEND IN YOUR APPOINTMENT OF PROXY, YOU WILL BE ABLE TO VOTE IN PERSON AT THE
ANNUAL MEETING IF YOU SO DESIRE.