UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended
December 31, 1998 Commission File No. 0-10852
SOUTHERN BANCSHARES (N.C.), INC.
(Exact name of registrant as specified in its charter)
DELAWARE 56-1538087
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
121 East Main Street 28365
Mount Olive, North Carolina (Zip Code)
(Address of Principal Executive offices)
Registrant's Telephone Number,
including Area Code: (919) 658-7000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Series B non-cumulative preferred stock, no par value
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ X ]
The aggregate market value of the voting stock held by nonaffiliates of the
Registrant as of March 26, 1999: The Registrant's voting stock has no readily
ascertainable market value as of any date within the last sixty days or
otherwise for the reason that such stock is not regularly traded and has no
quoted prices. Therefore, the aggregate market value of the voting stock held by
non-affiliates is not determinable.
The number of shares outstanding of the Registrant's common stock as of March
26, 1999: Common Stock, $5.00 par value - 119,186 shares
Documents Incorporated by Reference
1. Portions of the Registrant's 1998 Annual Report to Shareholders are
incorporated by reference into Parts I and II.
2. Portions of the Registrant's definitive Proxy Statement dated March 26, 1999
for the 1999 Annual Meeting of Shareholders are incorporated by reference
into Part III.
PART I
ITEM 1 - BUSINESS:
General
Southern BancShares (N.C.), Inc., a Delaware corporation (hereinafter, with
all of its subsidiaries, referred to as the "Registrant" or "BancShares"), is a
bank holding company pursuant to the provisions of the Bank Holding Company Act
of 1956, as amended. BancShares is the successor to Southern BancShares (N.C.),
Inc., a North Carolina corporation ("SBS") which was formed in 1982 to become
the parent company of Southern Bank and Trust Company ("Southern"), its
principal operating subsidiary, which it acquired in late 1982. BancShares was
formed in 1986 in order to effect the reincorporation in Delaware of the holding
company of Southern Bank by the merger of SBS into BancShares, which was
effective on December 28, 1986. BancShares has a wholly-owned subsidiary:
Southern Capital Trust I, a statutory business trust that issued $23.0 million
of 8.25% Capital Securities (the Capital Securities) in June 1998 maturing in
2028. All significant activities of the Registrant and its subsidiary are
banking related so that the Registrant operates within one industry segment.
Neither BancShares nor its subsidiary has any foreign operations.
The operating subsidiary of BancShares is Southern Bank and Trust Company
("Southern"), which is engaged in commercial banking primarily in eastern North
Carolina. Southern's predecessor bank was organized on January 29, 1901, as the
Bank of Mount Olive. In 1913, it became the First National Bank and remained so
until 1936 when it rechartered as the Bank of Mount Olive. In 1967, Southern
acquired its present name. Over the years, Southern's growth has been generated
principally through branching and by merging with five other banks: Roanoke
Chowan Bank, Roxobel, North Carolina in 1969, Merchants' and Farmers' Bank,
Macclesfield, North Carolina in 1973, Tarheel Bank & Trust Co., Gatesville,
North Carolina in 1986, Citizens Savings Bank, Rocky Mount, North Carolina in
1993 and Enfield Savings Bank, Enfield, North Carolina in 1998. Also in 1993,
Southern acquired deposits in four branches of two savings institutions and an
office of NationsBank in Pollocksville, North Carolina. In 1994 Southern
acquired deposits in branches in Scotland Neck, North Carolina and Turkey, North
Carolina from First Citizens Bank. In 1995 Southern acquired deposits in
branches in Farmville, North Carolina; Garland, North Carolina; Kill Devil
Hills, North Carolina and Salemburg, North Carolina from First Union National
Bank. In 1995 Southern also acquired the deposits of a branch in Kill Devil
Hills, North Carolina from First Citizens Bank. In 1996 Southern acquired
deposits in a branch in Windsor, North Carolina from First Citizens Bank,
acquired deposits in a branch in Edenton, North Carolina from United Carolina
Bank and sold the deposits of its branch in Scotland Neck, North Carolina to
Triangle Bank. In 1997 Southern acquired deposits in branches in Aulander, North
Carolina, Aurora, North Carolina and Hamilton, North Carolina from Wachovia Bank
of North Carolina, N.A. In 1998 Southern acquired deposits of a branch in Gates,
North Carolina from First Citizens Bank and acquired deposits of a branch in Red
Springs, North Carolina from First Union National Bank. See Note 15 on pages 37
and 38 of BancShares' 1998 Annual Report, attached as Exhibit 13 to this Report,
for additional information regarding BancShares' relationship with First
Citizens Bank. In terms of total assets, at December 31, 1998, Southern was the
twelfth largest bank in North Carolina.
Business
Southern conducts a general banking business designed to meet the needs of
the people of its market area. These services, all of which are offered at its
45 offices, include, among other items: taking deposits; cashing checks and
providing for individual and commercial cash needs; and providing numerous
checking and savings plans, including automatic transfer services, direct
deposit, and banking by mail.
Southern also makes commercial, consumer and mortgage loans at its 34 full
service offices and provides individual retirement account service, safe deposit
box rental, travelers' check service, and Master Card and Visa credit card
programs.
The Bank has nineteen automatic teller machines; one each in Ahoskie,
Ayden, Belhaven, Bethel, Edenton, Farmville, LaGrange, Mount Olive,
Murfreesboro, Nashville, Plymouth, Roanoke Rapids, Warsaw, Whitakers and
Windsor, North Carolina and two in Kill Devil Hills and Rocky Mount, North
Carolina.
Southern does not operate in the international financing market.
Southern has a wholly-owned subsidiary, Goshen, Inc., which acts as agent
for credit life and credit accident and health insurance written in connection
with loans made by Southern and sells such insurance to a subsidary of First
Citizens Bank. See Note 15 on pages 37 and 38 of BancShares' 1998 Annual Report
attached as Exhibit 13 to this report for additional information regarding
BancShares' relationship with First Citizens Bank.
Supervision and Regulation
The business and operations of BancShares and Southern are subject to
extensive federal and state governmental regulation and supervision.
BancShares is a bank holding company registered with the Board of Governors
of the Federal Reserve System (the "Federal Reserve") under the Bank Holding
Company Act of 1956 as amended (the "BHCA"), and is subject to supervision and
examination by and the regulations and reporting requirements of the Federal
Reserve. Under the BHCA, the activities of BancShares are limited to banking,
managing or controlling banks, furnishing services to or performing services for
its subsidiaries or engaging in any other activity which the Federal Reserve
determines to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto.
The BHCA prohibits BancShares from acquiring direct or indirect control of
more than 5 % of the outstanding voting stock or substantially all of the assets
of any financial institution, or merging or consolidating with another bank
holding company or savings bank holding company, without prior approval of the
Federal Reserve. Additionally, the BHCA prohibits BancShares from engaging in,
or acquiring ownership or control of more than 5% of the outstanding voting
stock of any company engaged in a nonbanking activity unless such activity is
determined by the Federal Reserve to be so closely related to banking as to be
properly incident thereto. In approving an application by BancShares to engage
in a non-banking activity, the Federal Reserve must consider whether that
activity can reasonably be expected to produce benefits to the public, such as
greater convenience, increased competition or gains in efficiency, that outweigh
possible adverse effects, such as undue concentration of resources, decreased or
unfair competition, conflicts of interest or unsound banking practices.
There are a number of obligations and restrictions imposed by law on a bank
holding company and its insured depository institution subsidiaries that are
designed to minimize potential loss to depositors and the FDIC insurance funds.
For example, if a bank holding company's insured depository institution
subsidiary becomes "undercapitalized," the bank holding company is required to
guarantee (subject to certain limits) the subsidiary's compliance with the terms
of any capital restoration plan filed with its appropriate federal banking
agency. Also, a bank holding company is required to serve as a source of
financial strength to its depository institution subsidiaries and to commit
resources to support such institutions in circumstances where it might not do
so, absent such policy. Under the BHCA, the Federal Reserve has the authority to
require a bank holding company to terminate any activity or to relinquish
control of a nonbank subsidiary upon the Federal Reserve's determination that
such activity or control constitutes a serious risk to the financial soundness
and stability of a depository institution subsidiary of the bank holding
company.
As a result of its ownership of a North Carolina-chartered commercial bank,
BancShares also is registered with and subject to examination and regulation by
the North Carolina Commissioner of Banks under the state's bank holding company
laws.
Southern is a North Carolina commercial bank and its deposits are insured
by the FDIC. It is subject to supervision and examination by and the regulations
and reporting requirements of the North Carolina Commissioner of Banks (the
"Commissioner") and the FDIC.
Southern is subject to legal limitations on the amounts of dividends it is
permitted to pay. Prior approval of the Commissioner is required if the total of
all dividends declared by Southern in any calendar year exceeds its net profits
(as defined by statute) for that year combined with its retained net profits (as
defined by statute) for the preceding two calendar years, less any required
transfers to surplus. As an insured depository institution, Southern also is
prohibited from making capital distributions, including the payment of
dividends, if, after making such distribution, it would become
"undercapitalized" (as such term is defined in the Federal Deposit Insurance
Act).
Under current federal law, certain transactions between a depository
institution and its affiliates are governed by Sections 23A and 23B of the
Federal Reserve Act. An affiliate of a depository institution is any company or
entity that controls, is controlled by or is under common control with the
institution, and, in a holding company context, the parent holding company of a
depository institution and any companies which are controlled by such parent
holding company are affiliates of the depository institution. Generally,
Sections 23A and 23B (i) limit the extent to which a depository institution or
its subsidiaries may engage in covered transactions with any one affiliate, and
(ii) require that such transactions be on terms and under circumstances
substantially the same, or at least as favorable, to the institution or the
subsidiary as those provided to a nonaffiliate.
Southern is subject to various other state and federal laws and
regulations, including state usury laws, laws relating to fiduciaries, consumer
credit and equal credit, fair credit reporting laws and laws relating to branch
banking. As an insured institution, Southern is prohibited from engaging as a
principal in activities that are not permitted for national banks unless (i) the
FDIC determines that the activity would pose no significant risk to the
appropriate deposit insurance fund and (ii) the institution is, and continues to
be, in compliance with all applicable capital standards. Insured institutions
also are prohibited from directly acquiring or retaining any equity investment
of a type or in an amount not permitted for national banks.
The Federal Reserve, the FDIC and the Commissioner all have broad powers to
enforce laws and regulations applicable to BancShares and Southern and to
require corrective action of conditions affecting the safety and soundness of
Southern. Among others, these powers include cease and desist orders, the
imposition of civil penalties and the removal of officers and directors.
Capital Requirements
Bank holding companies are required to comply with the Federal Reserve's
risk-based capital guidelines which require a minimum ratio of total capital to
risk-weighted assets of 8%. At least half of the total capital is required to be
Tier I capital. In addition to the risk-based capital guidelines, the Federal
Reserve has adopted a minimum leverage capital ratio under which a bank holding
company must maintain a level of Tier I capital to average total consolidated
assets of at least 3 % in the case of a bank holding company which has the
highest regulatory examination rating and is not contemplating significant
growth or expansion. All other bank holding companies are expected to maintain a
leverage capital ratio of at least 1% to 2% above the stated minimum.
Southern is also subject to capital requirements imposed by the FDIC. Under
the FDIC's regulations, insured institutions that receive the highest rating
during the examination process and are not anticipating or experiencing any
significant growth are required to maintain a minimum leverage ratio of 3% of
Tier I capital to average total consolidated assets. All other insured
institutions are required to maintain a minimum ratio of 1% or 2% above the
stated minimum, with a minimum leverage ratio of not less than 4%.
Insurance Assessments
Southern is subject to insurance assessments imposed by the FDIC. During 1996
the FDIC reduced the Bank Insurance Fund ("BIF") assessment rates to a range of
0.00 % to 0.27% for the highest rated banks to the weakest banks. This BIF
premium reduction did not affect the deposit premium paid on Savings Association
Insurance Fund ("SAIF") insured deposits. The actual assessment to be paid by
each insured institution is based on the institution's assessment risk
classification, which is determined based on whether the institution is
considered "well capitalized", "adequately capitalized" or "under capitalized",
as such terms have been defined in applicable federal regulations, and whether
the institution is considered by its supervisory agency to be financially sound
or to have supervisory concerns. The FDIC also is authorized to impose one or
more special assessments in any amount deemed necessary to enable repayment of
amounts borrowed by the FDIC from the United States Treasury Department.
The Deposit Insurance Funds Act of 1996 ("DIFA96") required the FDIC to
impose a one-time special assessment on SAIF-assessable deposits, including
those held by BIF-member OAKAR ("OAKAR") institutions, such as Southern, to
capitalize the SAIF to its target Designated Reserve Ratio. Southern was
accordingly assessed $569 thousand in September 1996.
The DIFA96 also required that, beginning January 1, 1997, BIF banks and
OAKAR institutions would begin to be charged a separate assessment for the
Financing Corporation ("FICO") funding requirements. The FICO rate is not tied
to the FDIC risk classification and is subject to change by the FDIC within
certain limitations.
The FICO rate for the first quarter of 1999 is set at an annual rate of
6.10 basis points of OAKAR adjusted deposits as defined by the FDIC and 1.220
basis points of BIF adjusted deposits. At December 31, 1998 the FICO assessable
OAKAR deposit base for Southern was $109.4 million and the BIF deposit base was
$437.8 million. If Southern's deposits remained at these levels and the FDIC
maintained the same rates, the expense for the FICO obligation for Southern
would be approximately $120 thousand for 1999.
Change in Control
State and federal law restricts the amount of voting stock of a bank
holding company, or a bank, that a person may acquire without the prior approval
of banking regulators.
Pursuant to North Carolina law, no person may, directly or indirectly,
purchase or acquire voting stock of any bank holding company or bank which would
result in the change of control of that entity unless the Commissioner first
shall have approved that proposed transaction. A person will be deemed to have
acquired "control" of a bank holding company or bank if that person, directly or
indirectly, (i) owns, controls or has the power to vote 10% or more of the
voting stock of the bank holding company or bank, or (ii) possesses the power to
direct or cause the direction of its management and policy. Federal law imposes
additional restrictions on acquisitions of stock in bank holding companies and
insured banks. Under the federal Change in Bank Control Act and regulations
thereunder, a person or group acting in concert must give advance notice to the
Federal Reserve or the FDIC before directly or indirectly acquiring the power to
direct the management or policies of, or to vote 25% or more of any class of
voting securities of, any bank holding company or insured bank. Upon receipt of
such notice, the federal regulator either may approve or disapprove the
acquisition.
Under the Act, a change in control is presumed to occur if, among other
things, a person or group acquires more than 10% of any class of voting stock of
a holding company or insured bank and, after such acquisition, the acquirer will
be the largest shareholder.
Interstate Banking and Branching
Federal law permits adequately capitalized and managed bank holding
companies to acquire control of the assets of banks in any state (the
"Interstate Banking Law"). Acquisitions will be subject to anti-trust provisions
that cap at 10 % of the portion of the total deposits of insured depository
institutions in the United States that a single bank holding company may
control, and generally cap at 30 % of the portion of the total deposits of
insured depository institutions in a state that a single bank holding company
may control. Under certain circumstances, states have the authority to increase
or decrease the 30% cap, and states may set minimum age requirements of up to
five years on target banks within their borders.
Beginning June 1, 1997, and subject to certain conditions, the Interstate
Banking Law permitted interstate branching by allowing a bank to merge with a
bank located in a different state. The Interstate Banking Law also permits banks
to establish branches in other states, by opening new branches or acquiring
existing branches of other banks, if the laws of those other states specifically
permit that form of interstate branching. North Carolina has adopted statutes
which, subject to conditions contained therein, specifically authorize
out-of-state bank holding companies and banks to acquire or merge with North
Carolina banks and to establish or acquire branches in North Carolina.
Economic Considerations
As a bank holding company whose primary asset is the capital stock of a
commercial bank, BancShares is directly affected by regulatory measures
affecting the banking industry in general. Additionally, since BancShares'
banking business is centered in eastern North Carolina, the general state of the
economy of eastern North Carolina, especially the agricultural sector, has a
direct effect on its business and profitability.
Among governmental regulators of primary importance is the Federal Reserve
which acts as the nation's central bank and can directly affect money supply and
thereby affect Southern's lending ability by increasing or decreasing its
interest costs and availability of funds. An important function of the Federal
Reserve is to regulate the national supply of bank credit in order to combat
recession and curb inflationary pressures. Among the instruments of monetary
policy used by the Federal Reserve to implement these objectives are open market
operations in U. S. Government securities, changes in the discount rate and
surcharge, if any, on member bank borrowings, and changes in reserve
requirements against bank deposits. These means are used in varying combinations
to influence overall growth of bank loans, investments and deposits and may also
affect interest rates charged on loans or paid for deposits.
Southern is not a member of the Federal Reserve System, but is subject to
reserve requirements imposed on non-member banks by the Federal Reserve. The
monetary policies of the Federal Reserve have had a significant effect on the
operating results of commercial banks in the past and are expected to continue
to do so in the future.
Competition
The banking laws of North Carolina allow statewide branching; therefore,
commercial banking in the state is highly competitive. Southern competes
directly in many of its markets with one or more of the largest banking
organizations in North Carolina. Such competitors range in size to over $225
billion in consolidated resources (including resources represented by banking
organizations in other states owned by or which control certain of such
competitors), have broader geographic markets and higher lending limits and
offer more services than Southern, and can, therefore, make more effective use
of media advertising, support services and electronic technology than can
BancShares or Southern.
In 1997 BancShares developed a plan to deal with the "Year 2000 issue". See
pages 13 through 15 of BancShares' 1998 Annual Report attached as Exhibit 13 to
this Report for additional information regarding the Year 2000 issue.
Employees
At December 31, 1998, Southern employed 290 full-time employees and 34
part-time employees. It is not a party to any collective bargaining agreements
and considers relations with its employees to be good. BancShares and Goshen do
not have any separate employees.
Statistical Information
Certain additional statistical information with respect to BancShares'
business is included in the information incorporated herein under "Part II, Item
7" below.
I. AVERAGE BALANCE SHEET ITEMS AND NET INTEREST DIFFERENTIAL AVERAGE BALANCES
AND AVERAGE RATES EARNED AND PAID
Statistical Information
(Dollars in thousands)
I. AVERAGE BALANCE SHEET ITEMS AND NET INTEREST DIFFERENTIAL AVERAGE BALANCES
AND AVERAGE RATES EARNED AND PAID
DECEMBER 31, 1998 DECEMBER 31, 1997
--------------------------------------- ---------------------------------
AVERAGE AVERAGE AVERAGE AVERAGE
ASSETS BALANCE INTEREST RATE BALANCE INTEREST RATE
- - ------ ------- -------- ---- ------- -------- ----
Interest earning assets:
Loans (1) (2) $ 362,298 $ 31,000 8.56% $ 340,195 $ 29,225 8.59%
Taxable investment securities 141,193 8,085 5.73% 126,829 7,532 5.94%
Nontaxable investment securities (3) 22,842 1,982 8.68% 24,581 2,130 8.66%
Federal funds sold 18,321 972 5.31% 11,526 623 5.41%
Other interest earning assets 5,367 293 5.46% 4,840 269 5.56%
--------- -------- ------ --------- -------- ------
Total interest earning assets 550,021 42,332 7.70% 507,971 39,779 7.83%
-------- --------
Non-interest earning assets:
Cash and due from banks 19,250 17,730
Premises and equipment, net 18,304 17,457
Other 28,253 24,078
Total assets $ 615,828 $ 567,236
========= =========
LIABILITIES & EQUITY Interest bearing liabilities:
Demand deposits $ 78,283 $ 1,073 1.37% $ 76,080 $ 1,234 1.62%
Savings deposits 92,657 2,325 2.51% 87,577 2,259 2.58%
Time deposits 285,869 15,318 5.36% 270,863 14,736 5.44%
Short-term borrowed funds 6,531 292 4.47% 6,295 303 4.81%
Long-term obligations 15,056 1,320 8.77% 4,539 295 6.50%
--------- -------- ------ --------- -------- ------
Total interest bearing liabilities 478,396 20,328 4.25% 445,354 18,827 4.23%
-------- --------
Non-interest bearing liabilities:
Demand deposits 69,746 63,783
Other 11,263 12,396
Shareholders' equity 56,423 45,703
-------- ---------
Total liabilities and equity $ 615,828 $ 567,236
========= =========
Interest rate spread (4) 3.45% 3.60%
Net interest income and
Net interest margin (5) $ 22,004 4.00% $ 20,952 4.12%
======== =========
II. AVERAGE BALANCE SHEET ITEMS AND NET INTEREST DIFFERENTIAL ANALYSIS OF
CHANGES IN INTEREST DIFFERENTIAL
DECEMBER 31, 1996
----------------------------------------
AVERAGE AVERAGE
BALANCE INTEREST RATE
------- -------- ----
ASSETS
Interest earning assets:
Loans (1) (2)
Taxable investment securities $ 310,389 $ 26,878 8.66%
Nontaxable investment securities (3) 125,068 7,899 6.32%
Federal funds sold 25,914 2,290 8.84%
Other interest earning assets 6,895 402 5.83%
1,526 62 4.06%
Total interest earning assets --------- --------
469,792 37,531 7.99%
---------
Non-interest earning assets:
Cash and due from banks
Premises and equipment, net 15,726
Other 13,498
20,525
Total assets
$ 519,541
=========
LIABILITIES & EQUITY Interest bearing liabilities
Demand deposits
Savings deposits $ 70,443 1,227 1.74%
Time deposits 83,761 2,202 2.63%
Short-term borrowed funds 247,575 13,504 5.45%
Long-term obligations 8,160 400 4.90%
2,021 117 5.79%
--------- -------- ------
Total interest bearing liabilities
411,960 17,450 4.24%
---------
Non-interest bearing liabilities:
Demand deposits
Other 57,773
Shareholders' equity 9,574
40,234
---------
Total liabilities and equity
$ 519,541
========
Interest rate spread (4)
Net interest income and 3.75%
Net interest margin (5)
$ 20,081 4.27%
========
(1) Includes non-accrual loans
(2) Interest income includes amortization of loan fees.
(3) The average rate on nontaxable investment securities has been adjusted to a
tax equivalent yield using a 34% tax rate.
(4) Interest rate spread is the difference between earning asset yield and
interest bearing liability rate.
(5) Net interest margin is net interest income divided by average earning
assets.
(Dollars in thousands) December 31, 1998 Increase (Decrease)
----------------------------------------------------------
AMOUNT AMOUNT AMOUNT
TOTAL ATTRIBUTABLE ATTRIBUTABLE ATTRIBUTABLE
CHANGE TO CHANGE TO CHANGE TO CHANGE IN
1997-1998 IN VOLUME IN RATE RATE/VOLUME
--------- --------- ------- -----------
ASSETS
Interest earning assets:
Loans $1,775 $1,836 $(68) $7
Taxable investment securities 577 971 (355) (39)
Non-taxable investment securities (148) (151) 5 (2)
Federal funds sold 349 368 (12) (7)
------- ------- ----- -----
Total interest income 2,553 3,024 (430) (41)
------- ------- ----- -----
LIABILITIES & EQUITY Interest bearing liabilities:
Demand deposits (161) 36 (190) (7)
Savings deposits 66 131 (61) (4)
Time deposits 582 728 (135) (11)
Short-term borrowed funds 22 45 (22) (1)
Long-term obligations 992 771 67 154
------- ------- ----- -----
Total interest expense 1,501 1,711 (341) 131
------- ------- ----- -----
Net interest income $1,052 $1,313 $(89) $(172)
======= ======= ===== =====
(Dollars in thousands) December 31, 1997 Increase (Decrease)
----------------------------------------------------------
AMOUNT AMOUNT AMOUNT
TOTAL ATTRIBUTABLE ATTRIBUTABLE ATTRIBUTABLE
CHANGE TO CHANGE TO CHANGE TO CHANGE IN
1996-1997 IN VOLUME IN RATE RATE/VOLUME
--------- --------- ------- -----------
ASSETS
Interest earning assets:
Loans $2,347 $2,581 $(217) ($17)
Taxable investment securities (183) 339 (506) (16)
Non-taxable investment securities (161) (144) (18) 1
Federal funds sold 221 270 (29) (20)
------- ------- ----- ----
Total interest income 2,224 3,046 (770) (52)
------- ------- ----- ----
LIABILITIES & EQUITY Interest bearing liabilities:
Demand deposits (479) 98 (535) (42)
Savings deposits 57 100 (42) (1)
Time deposits 1,718 1,269 421 28
Short-term borrowed funds (97) (91) (7) 1
Long-term obligations 178 146 14 18
------- ------- ----- ----
Total interest expense 1,377 1,522 (149) 4
------- ------- ----- ----
Net interest income $847 $1,524 $(621) $(56)
======= ======= ===== ====
Average loan balances include nonaccrual loans. BancShares earns tax-exempt
interest on certain loans and investment securities due to the borrower or
issuer being either a governmental agency or a quasi-governmental agency. Yields
related to loans and securities exempt from federal income taxes are stated on a
taxable-equivalent basis assuming a statutory federal income tax rate of 34% for
all periods. The taxable equivalent adjustment was $543 in 1998, $2,024 in 1997
and $740 in 1996.
III. INVESTMENT PORTFOLIO
The following table sets forth the carrying amount of investment securities
December 31,
------------------------------------
(Dollars in thousands) 1998 1997 1996
-------- -------- -------
U.S. Treasury and other
U.S. Government agencies (1) $143,350 $118,589 $108,592
States and political subdivisions 29,281 31,150 35,086
Other (2) 28,936 30,394 25,011
-------- -------- --------
Total $201,567 $180,133 $168,689
======== ======== ========
The following table sets forth the maturities of investment securities at
December 31, 1998 (dollars in thousands) and the weighted average yields of such
securities. (Note that nontaxable investment securities have not been adjusted
to a tax equivalent basis and unrealized gain (loss) on available for sale
securities is not included.)
Maturing
---------------------------------------------------------------------------------------------
After One But After Five But
Within One Year Within Five Years Within Ten Years After Ten Years
------------------ ------------------- -------------------- -----------------
Amount Yield Amount Yield Amount Yield Amount Yield
------ ----- ------ ----- ------ ----- ------ -----
U.S. Treasury and other
U.S. Government agencies (1) $73,904 5.81% $68,989 4.90% $11 5.65% $1,892 6.45%
States and political subdivisions 5,795 5.92% 8,057 6.37% 7,678 5.84% 7,179 5.41%
Other (2) 10,747 2.63% - - - - 100 6.75%
------- ---- ------- ---- ------ ---- ------ ----
$90,446 5.44% $77,046 5.05% $7,689 5.84% $9,171 5.62%
======= ======= ====== ======
(1) Mortgage-backed securities are included in the obligations of U.S.
Government agencies and spread within the columns according to their
anticipated repayment schedules.
(2) The "Within One Year" column of the "Other" category includes marketable
equity securities held by BancShares. Accordingly, the yield on these
securities represents anticipated dividend income rather than interest
income.
IV. LOAN PORTFOLIO
Analysis of loans by type and maturity
The table below classifies loans by major category (dollars in thousands):
(Dollars in thousands) December 31,
------------------------------------------------------------
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
Commercial, financial and agricultural $86,980 $84,281 $70,881 $57,398 $36,343
Real estate:
Construction 5,276 5,209 2,470 1,533 3,221
Mortgage:
One to four family residential 113,984 106,444 113,915 111,372 108,804
Commercial 62,446 58,056 52,686 43,580 41,090
Equityline 28,698 27,759 18,654 13,828 10,858
Other 26,846 27,868 21,615 20,535 17,261
Consumer 36,775 35,643 35,512 37,548 33,762
Lease financing 3,484 3,956 2,022 2,166 1,272
-------- -------- -------- -------- --------
Total loans $364,489 $349,216 $317,755 $287,960 $252,611
======== ======== ======== ======== ========
The following table identifies the maturities of all loans as of December 31,
1998 and addresses the sensitivity of these loans to changes in interest rates.
(Dollars in thousands)
Within After One Year But After
One Year Within Five Years Five Years Total
-------- ----------------- ---------- -------
Commercial and Financial $68,103 $18,877 $ - $86,980
Real Estate:
Construction 4,383 893 - 5,276
One to four family residential 31,487 48,385 34,112 113,984
Commercial 17,250 26,509 18,687 62,446
Equityline 7,952 12,220 8,526 28,698
Other 7,439 12,794 6,613 26,846
Consumer 25,386 11,389 - 36,775
Lease Financing 519 2,114 851 3,484
-------- -------- ------- --------
Total $162,519 $133,181 $68,789 $364,489
======== ======== ======= ========
Fixed Rate $42,766 $107,631 $68,752 $219,149
Variable Rate 119,753 25,550 37 145,340
-------- -------- ------- --------
Total $162,519 $133,181 $68,789 $364,489
======== ======== ======= ========
Non-accrual, past-due, and restructured loans
The following analysis identifies other real estate owned and loans that were
either non-accruing, past-due or restructured. Accrual of interest is
discontinued on a loan when management believes the borrowers' financial
condition is such that collection of principal or interest is doubtful. Loans
are returned to the accrual status when the factors indicating doubtful
collectibility cease to exist.
December 31,
--------------------------------------------
(Dollars in thousands) 1998 1997 1996 1995 1994
---- ---- ---- ---- ----
Non-accrual loans $ 166 $230 $147 $50 $77
Restructured loans 43 - 8 - 204
Accruing loans past-due 90 days or more 805 466 343 508 234
------ ---- ---- ---- ------
Total non-performing loans 1,014 696 498 558 515
Other real estate owned 84 48 - 86 1,339
------ ---- ---- ---- ------
Total non-performing loans and assets $1,098 $744 $498 $644 $1,854
====== ==== ==== ==== ======
The amount of interest which would have been recorded in 1998 on
non-accrual loans, had they been in accordance with the original terms
throughout the period, was immaterial.
V. SUMMARY OF LOAN LOSS EXPERIENCE
Analysis of the allowance for loan losses
The table presented below summarizes activity in the allowance for loan
losses for the five years ended (dollars in thousands):
December 31,
----------------------------------------------------------------
(Dollars in thousands) 1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
Allowance for loan losses - beginning of year $5,971 $6,163 $6,321 $6,653 $6,717
Charge - offs:
Commercial, financial and agricultural 158 47 5 - 26
Real estate:
Mortgage:
One to four family residential 41 86 106 34 89
Commercial 15 - - - -
Equityline 32 - - - -
Other - 23 - 209 -
Consumer 298 307 428 220 181
-------- -------- -------- -------- --------
Total charge-offs 544 463 539 463 296
Recoveries:
Commercial, financial and agricultural 11 13 - 54 29
Real estate:
Construction - - 19 - -
Mortgage:
One to four family residential 20 59 131 19 27
Equityline 8 - - - 15
Other 5 - - - 20
Consumer 67 139 91 58 141
-------- -------- -------- -------- --------
Total recoveries 111 211 241 131 232
-------- -------- -------- -------- --------
Net charge-offs 433 252 298 332 64
Provision for loan losses 155 60 140 - -
Additions from bank acquisition 269 - - - -
-------- -------- -------- -------- --------
Allowance for loan losses - end of year $5,962 $5,971 $6,163 $6,321 $6,653
Average loans outstanding during the year $362,298 $340,195 $310,389 $270,563 $242,360
Ratio of net charge-offs to average loans outstanding 0.12% 0.07% 0.10% 0.12% 0.03%
The allowances for loan losses is increased by charges to the provision for
loan losses and reduced by loans charged off, net of recoveries. Southern's
provision is the amount necessary to maintain the allowance at a level
considered adequate to provide for possible loan losses based on management's
internal evaluation of the loan portfolio, as well as prevailing and anticipated
economic conditions.
Allocation of the allowance for loan losses:
The composition of the allowance by loan category shown in the table below
is based upon management's evaluation of the loan portfolio, past history, and
prevailing economic conditions:
(Dollars in thousands) December 31,
----------------------------------------------------------------------------------
% of loans % of loans % of loans
in each in each in each
category to category to category to
1998 total loans 1997 total loans 1996 total loans
---- ----------- ---- ----------- ---- -----------
Commercial, financial and agricultural $2,200 24% $2,149 24% $2,214 22%
Real estate:
Construction 100 2% 60 1% 76 1%
Mortgage:
One to four family residential 1,100 31% 1,194 30% 1,245 36%
Commercial 550 17% 537 17% 566 17%
Equityline 200 8% 239 8% 204 6%
Other 212 7% 239 8% 248 6%
Consumer 1,500 10% 1,493 10% 1,537 11%
Lease financing 100 1% 60 2% 73 1%
------ ------ ------ ------
$5,962 100% $5,971 100% $6,163 100%
====== === ====== ====== ====== ======
% of loans % of loans
in each in each
category to category to
1995 total loans 1994 total loans
---- ----------- ---- -----------
Commercial, financial and agricultural $1,264 20% $774 14%
Real estate:
Construction 63 1% 247 1%
Mortgage:
One to four family residential 2,188 39% 2,813 43%
Commercial 853 15% 1,061 16%
Equityline 260 5% 277 4%
Other 408 7% 460 8%
Consumer 1,222 13% 1,021 13%
Lease financing 63 - - 1%
------ ------ ------ ---
$6,321 100% $6,653 100%
====== ====== ====== ===
VI. DEPOSITS
The average monthly volume of deposits, which is considered representative
of BancShares' operations, and the average rates paid on such deposits are
presented below (dollars in thousands):
Year ended December 31,
-------------------------------------------------------------------------------------
1998 1997 1996
(Dollars in thousands) ------------------------ ---------------------- ------------------------
Average Average Average Average Average Average
Balances Rates Balances Rates Balances Rates
-------- ----- -------- ----- -------- -----
Non-interest bearing demand $ 69,746 - $ 63,783 - $ 57,773 -
Interest bearing demand 78,283 1.37% 76,080 1.62% 70,443 1.74%
Savings 92,657 2.51% 87,577 2.58% 83,761 2.63%
Time deposits 285,869 5.36% 270,863 5.44% 247,575 5.45%
-------- -------- ---------
Total deposits $ 526,555 $498,303 $ 459,552
========= ======== =========
Maturities of $100,000 or more time certificates of deposit at December 31,
1998 are summarized as follows (dollars in thousands):
Maturity Category
Three months or less $25,728
Over three through six months 13,560
Over six months through twelve months 13,585
Over one year through five years 7,190
Over five years -
-------
$60,063
=======
VII. RETURN ON EQUITY AND ASSETS
The following table presents certain ratios of the Company:
December 31,
-------------------------------
1998 1997 1996
------ ------ -------
Return on assets (net income divided by average total assets) 0.91% 1.17% 0.84%
Return on equity - including Series B and C preferred 9.92% 14.47% 10.85%
(net income divided by average total equity)
Dividend payout ratio (Dividends paid divided by net income) 10.38% 8.85% 13.45%
Equity to assets ratio - including Series B and C preferred 9.16% 8.06% 7.74%
(Average equity divided by average total assets)
VIII. CAPITAL ADEQUACY
The following table presents certain calculations of BancShares' capital and
related ratios:
December 31,
------------------------------------
1998 1997 1996
------- ------- -------
(Dollars in thousands)
Total Shareholders' Equity $56,033 $54,984 $44,778
Tier 1 capital 51,240 34,380 27,891
Total capital (1) 65,666 38,449 31,861
Tier 1 capital ratio (2) 16.01% 11.43% 9.33%
Total capital ratio (2) 20.52% 12.78% 10.66%
(1) The Capital Securities issued in 1998 are considered part of Tier I Capital.
(2) The minimum ratio of qualifying total capital to risk weighted assets is 8%,
of which 4% must be Tier 1 capital, which is common equity, retained
earnings, and a limited amount of perpetual preferred stock, less certain
intangibles.
IX. RATE OF INTERNAL CAPITAL GENERATION
December 31,
-------------------------------------------
1998 1997 1996
------ ------ -------
Return on average assets (based on net income) 0.91% 1.17% 0.84%
Average equity as a percentage of total average assets 9.16% 8.06% 7.74%
Return on average equity 9.92% 14.47% 10.85%
Dividend payout ratio (Dividends paid divided by net income) 10.38% 8.85% 13.45%
Earnings retention 89.62% 91.15% 86.55%
(Net income less dividends divided by net income)
Rate of internal capital generation 8.89% 13.19% 9.39%
(Return on average equity times earnings retention ratio)
X. INTEREST RATE SENSITIVITY ANALYSIS
(Dollars in thousands)
31-Dec-98
----------------------------------------------------------------------------------
Non-Rate
1-30 31-90 91-180 181-365 Sensitive
Days Days Days Days & Over
Sensitive Sensitive Sensitive Sensitive 1 Year Total
--------- -------- -------- -------- -------- --------
Earning Assets:
Loans $ 93,298 $14,098 $14,943 $ - $242,150 $364,489
Investment Securities 5,197 17,212 17,266 43,546 118,346 201,567
Temporary Investments 19,535 - - - - 19,535
Other - 5,108 - - - 5,108
--------- -------- -------- -------- -------- --------
Total earning assets $118,030 $36,418 $32,209 $43,546 $360,496 $590,699
========= ======== ======== ======== ======== ========
Interest-Bearing Liabilities:
Savings and core time deposits $225,668 $45,392 $64,395 $33,998 $49,686 $419,139
Time deposits of $100,000 and more 10,776 14,952 13,560 13,585 7,190 60,063
Short-term borrowings 5,124 - - - - 5,124
Long-term obligations - - - - 23,000 23,000
--------- -------- -------- -------- -------- --------
Total interest bearing liabilites $241,568 $60,344 $77,955 $47,583 $79,876 $507,326
========= ======== ======== ======== ======== ========
Interest sensitive Gap $(123,538) $(23,926) $(45,746) $(4,037) $280,620 $83,373
========= ======== ======== ======== ======== ========
Interest sensitivity is continually changing. The table above reflects
BancShares' gap position at December 31, 1998 and does not necessarily represent
its position on any other dates.
XI. SHORT-TERM BORROWINGS
(Dollars in thousands)
1998 1997 1996
--------------------- -------------------- ---------------------
Amount Rate Amount Rate Amount Rate
------ ---- ------ ---- ------ ----
Repurchase agreements
At December 31 $ 4,953 3.35% $ 4,761 5.62% $ 3,838 6.71%
Average during year 5,655 4.09% 4,819 4.18% 2,934 4.04%
Maximum month-end balance during year 6,459 5,929 4,507
U. S. Treasury tax and loan accounts
At December 31 $ 171 4.11% $ 2,065 5.25% $ 1,226 5.15%
Average during year 861 5.97% 997 5.85% 1,052 5.09%
Maximum month-end balance during year 2,206 2,215 1,300
ITEM 2 - PROPERTIES
BancShares does not own or lease any real property. Except for two tracts
of land that are leased and upon which are constructed leasehold improvements
for the conduct of its banking business, Southern owns all of the real property
utilized in its operations.
Southern's home office is located at 121 East Main Street, Mount Olive,
North Carolina. At December 31, 1998 there were 45 Southern offices in North
Carolina. These offices are listed on page 41 of BancShares' 1998 Annual Report.
ITEM 3 - LEGAL PROCEEDINGS:
There are no material legal proceedings to which BancShares or its
subsidiaries are a party or to which any of their property is subject, other
than ordinary, routine litigation incidental to the business of commercial
banking.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITIES
HOLDERS:
None.
PART II
ITEM 5 - MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
SHAREHOLDER MATTERS:
Information required by this item is incorporated herein by reference
to the section captioned "Market for the Registrant's Common Stock and Related
Shareholder Matters" on page 15, and the Table captioned "Per Share of Stock" on
page 16 of the Registrant's 1998 Annual Report.
ITEM 6 - SELECTED FINANCIAL DATA:
Information required by this item is incorporated herein by reference
to the section captioned Table 1, Five-Year Financial Summary, Selected Balances
and Ratios, on page 4 of Registrant's 1998 Annual Report.
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS:
Information required by this item is incorporated herein by reference
to the section captioned "Management's Discussion and Analysis of Financial
Condition and Results of Operations" on pages 4 through 16 of the Registrant's
1998 Annual Report.
ITEM 7A - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required by this item is incorporated herein by reference
to the section captioned "Market Risk" on page 10 of the Registrant's 1998
Annual Report.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA:
The information required by this item is incorporated herein by
reference to the following financial statements, supplementary data, and
independent auditors' report on the indicated page numbers of the Registrant's
1998 Annual Report:
Independent Auditors' Report 17
Consolidated Balance Sheets as of December 31, 1998 and 1997 18
Consolidated Statements of Income for the years ended
December 31, 1998, 1997 and 1996 19
Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996 20
Consolidated Statements of Changes in Shareholders' Equity
for the years ended December 31, 1998, 1997 and 1996 21
Notes To Consolidated Financial Statements 22-38
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES:
None
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT:
The information under the captions "PROPOSAL 1: ELECTION OF DIRECTORS",
"Section 16(a) Beneficial Ownership Reporting Compliance," and "Executive
Officers" on pages 5 through 7 and page 9 of Registrant's definitive Proxy
Statement dated March 26, 1999, is incorporated herein by reference.
ITEM 11 - EXECUTIVE COMPENSATION:
The information under the captions "Compensation of Directors",
"Compensation Committee Interlocks and Insider Participation", "Executive
Compensation", "Pension Plan", and "Employment Contracts, Termination of
Employment and Change-in-Control Arrangements" on pages 7 through 8 and pages 10
through 11 of the Registrant's definitive Proxy Statement dated March 26, 1999,
is incorporated herein by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:
The information under the captions "PRINCIPAL HOLDERS OF VOTING SECURITIES"
and "OWNERSHIP OF VOTING SECURITIES BY MANAGEMENT" on pages 1 through 4 of the
Registrant's definitive Proxy Statement dated March 26, 1999, is incorporated
herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS:
The information contained in Footnote (3) to the table under the caption
"PROPOSAL 1: ELECTION OF DIRECTORS," and the information under the captions
"Compensation Committee Interlocks and Insider Participation" on page 8 and
"Transactions with Management" on pages 12 through 13 of the Registrant's
definitive Proxy Statement dated March 26, 1999, is incorporated herein by
reference.
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K:
(a) 1. Financial Statements
The following consolidated financial statements of Southern
BancShares (N.C.), Inc. and subsidiary, and Independent Auditors'
Report thereon, are incorporated herein by reference from
Registrant's 1998 Annual Report to Shareholders.
. Independent Auditors' Report
. Consolidated Balance Sheets at December 31, 1998 and 1997
. Consolidated Statements of Income for the years ended December
31, 1998, 1997 and 1996
. Consolidated Statements of Cash Flows for the years ended
December 31, 1998, 1997 and 1996
. Consolidated Statements of Changes in Shareholders' equity for
the years ended December 31, 1998, 1997 and 1996
. Notes to Consolidated Financial Statements
2. Financial statement schedules are omitted because of the absence of
conditions under which they are required or because the required
information is contained in the consolidated financial statements
or related notes thereto which are incorporated herein by reference
from Registrant's 1998 Annual Report to Shareholders.
3. Exhibits
The following exhibits are filed or incorporated herewith as part
of this report on Form 10-K:
Exhibit
Number Description of Exhibits
------ -----------------------
3.1 Certificate of Incorporation and Certificate of Amendment to the
Certificate of Incorporation of the Registrant (filed as exhibits
3.1 and 3.2) to Amendment No. 1 to the Registrant's
Registration Statement on Form S-4 (No. 33-8581) filed October
20, 1986 and incorporated herein by reference)
3.2 Registrant's Bylaws as amended April 15, 1998 (filed herewith)
4 Southern Bank and Trust Company Indenture dated February 27, 1971
(filed as exhibit 4 to the Registrant's Registration Statement on
Form S-14 (No. 2-78327) filed July 7, 1982 and incorporated
herein by reference)
10.1* Non-Competition and Consulting Agreement between R. S. Williams
and Southern Bank and Trust Company (filed as exhibit 10.1 to the
Registrant's 1989 Annual Report on Form 10-K and incorporated
herein by reference)
10.2* Ninth Amendment to Noncompetition and Consulting Agreement
between R. S. Williams and Southern Bank and Trust Company dated
December 31, 1998 (filed herewith)
10.3* Assignment and Assumption Agreement and First Amendment of
Noncompetition and Consultation Agreement between First-Citizens
Bank & Trust Company, Southern Bank and Trust Company and M. J.
McSorley (filed as exhibit 10.3 to the Registrant's 1989 Annual
Report on Form 10-K and incorporated herein by reference)
10.4* Employment Agreement between Watson N. Sherrod, Jr. and Southern
Bank and Trust Company (filed herewith)
10.5 Amended and Restated Trust Agreement of Southern Capital Trust I
(filed as Exhibit 4.3 to Amendment No. 1 to Registrant's
Registration Statement on Form S-4 (No. 333-52107) filed June
3, 1998 and incorporated herein by reference).
10.6 Form of Guarantee Agreement (filed as Exhibit 4.5 to Amendment
No. 1 to Registrant's Registration Statement on Form S-4 (No.
333-52107) filed June 3, 1998 and incorporated herein by
reference).
10.7 Junior Subordinated Indenture between Registrant and Bankers
Trust Company, as Debenture Trustee (filed as Exhibit 4.6 to
Amendment No. 1 to Registrant's Registration Statement on Form
S-4 (No. 333-52107)filed June 3, 1998 and incorporated herein by
reference).
13 Registrant's 1998 Annual Report to Shareholders (filed herewith)
22 Subsidiaries of the Registrant (filed herewith)
27 Financial Data Schedule (filed herewith)
99.1** Registrant's definitive Proxy Statement dated March 26, 1999
for the 1999 Annual Shareholders' Meeting
(b) Reports on Form 8-K
No reports on Form 8-K were filed for the fourth quarter of the year
ended December 31, 1998.
* Denotes a Management Contract or compensatory plan or arrangement in which
an executive officer or director of the Company participates
** Not being refiled
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
DATED: MARCH 16, 1999 SOUTHERN BANCSHARES (N.C.), INC.
By: /s/ R. S. Williams
------------------
R. S. Williams, Chairman of the Board
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
Signature Title Date
- - --------- ----- ----
/s/R. S. Williams Chairman of the Board of March 16, 1999
- - ----------------- Directors
R. S. Williams
/s/David A. Bean Treasurer (principal March 15, 1999
- - ---------------- financial and accounting
David A. Bean officer)
/s/Bynum R. Brown Director March 19, 1999
- - -----------------
Bynum R. Brown
/s/William H. Bryan Director March 18, 1999
- - -------------------
William H. Bryan
/s/D. Hugh Carlton Director March 19, 1999
- - ------------------
D. Hugh Carlton
/s/Robert J. Carroll Director March 19, 1999
- - --------------------
Robert J. Carroll
/s/Hope H. Connell Director March 18, 1999
- - ------------------
Hope H. Connell
/s/J. Edwin Drew Director March 22, 1999
- - ----------------
J. Edwin Drew
/s/Sam E. Ewell, Jr. Director March 22, 1999
- - -------------------
Sam E. Ewell, Jr.
/s/Moses B. Gillam, Jr. Director March 18, 1999
- - ----------------------
Moses B. Gillam, Jr.
/s/Leroy C. Hand, Jr. Director March 25, 1999
- - --------------------
LeRoy C. Hand, Jr.
/s/J. D. Hines Director March 22, 1999
- - --------------
J. D. Hines
/s/Frank B. Holding Director March 16, 1999
- - -------------------
Frank B. Holding
/s/George A. Hux Director March 22, 1999
- - ----------------
George A. Hux
/s/M. J. McSorley Director March 16, 1999
- - -----------------
M. J. McSorley
/s/W. B. Midyette, Jr. Director March 18, 1999
- - ---------------------
W. B. Midyette, Jr.
/s/W. Hunter Morgan Director March 19, 1999
- - -------------------
W. Hunter Morgan
/s/John C. Pegram, Jr. Director March 16, 1999
- - ---------------------
John C. Pegram, Jr.
/s/Charles I. Pierce Director March 24, 1999
- - ---------------------
Charles I. Pierce, Sr.
/s/W. A. Potts Director March 16, 1999
- - --------------
W. A. Potts
/s/Charles L. Revelle, Jr. Director March 19, 1999
- - -------------------------
Charles L. Revelle, Jr.
/s/Watson N. Sherrod, Jr. Director March 22, 1999
- - ------------------------
Watson N. Sherrod, Jr.
/s/ Charles O. Sykes Director March 16, 1999
- - --------------------
Charles O. Sykes
/s/ Raymond M. Sykes Director March 23, 1999
- - --------------------
Raymond M. Sykes
/s/John N. Walker Director March 16, 1999
- - -----------------
John N. Walker
EXHIBIT INDEX
Exhibit
Number Exhibits
------ --------
3.1 Certificate of Incorporation and Certificate of Amendment to the
Certificate of Incorporation of the Registrant (filed as exhibits
3.1 and 3.2) to Amendment No. 1 to the Registrant's
Registration Statement on Form S-4 (No. 33-8581) filed October
20, 1986 and incorporated herein by reference)
3.2 Registrant's Bylaws as amended April 15, 1998 (filed herewith)
4 Southern Bank and Trust Company Indenture dated February 27, 1971
(filed as exhibit 4 to the Registrant's Registration Statement on
Form S-14 (No. 2-78327) filed July 7, 1982 and incorporated
herein by reference)
10.1 Non-Competition and Consulting Agreement between R. S. Williams
and Southern Bank and Trust Company (filed as exhibit 10.1 to the
Registrant's 1989 Annual Report on Form 10-K and incorporated
herein by reference)
10.2 Ninth Amendment to Noncompetition and Consulting Agreement
between R. S. Williams and Southern Bank and Trust Company dated
December 31, 1998 (filed herewith)
10.3 Assignment and Assumption Agreement and First Amendment of
Noncompetition and Consultation Agreement between First-Citizens
Bank & Trust Company, Southern Bank and Trust Company and M. J.
McSorley (filed as exhibit 10.3 to the Registrant's 1989 Annual
Report on Form 10-K and incorporated herein by reference)
10.4 Employment Agreement between Watson N. Sherrod, Jr. and Southern
Bank and Trust Company (filed herewith)
10.5 Amended and Restated Trust Agreement of Southern Capital Trust I
(filed as Exhibit 4.3 to Amendment No. 1 to Registrant's
Registration Statement on Form S-4 (No. 333-52107) filed June
3, 1998 and incorporated herein by reference).
10.6 Form of Guarantee Agreement (filed as Exhibit 4.5 to Amendment
No. 1 to Registrant's Registration Statement on Form S-4 (No.
333-52107) filed June 3, 1998 and incorporated herein by
reference).
10.7 Junior Subordinated Indenture between Registrant and Bankers
Trust Company, as Debenture Trustee (filed as Exhibit 4.6 to
Amendment No. 1 to Registrant's Registration Statement on Form
S-4 No. 333-52107 filed June 3, 1998 and incorporated herein by
reference).
13 Registrant's 1998 Annual Report to Shareholders (filed herewith)
22 Subsidiaries of the Registrant (filed herewith)
27 Financial Data Schedule (filed herewith)
99.1 Registrant's definitive Proxy Statement dated March 26, 1999
for the 1999 Annual Shareholders' Meeting (not being refiled)