FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): September 23, 1998
SouthBanc Shares, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-23751 58-2361245
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State or other jurisdiction Commission (I.R.S. Employer
of incorporation File Number Identification No.)
907 N. Main Street, Anderson, South Carolina 29621
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number (including area code): (864) 225-0241
Not Applicable
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(Former name or former address, if changed since last report)
Item 5. Other Events
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On September 23, 1998, the Registrant announced that it will record an
additional loss reserve of approximately $2.9 million on an after tax basis
for its investment in a limited partnership. As a result of the establishment
of the additional loss reserve, the Registrant anticipates a loss for the
fourth quarter ending September 30, 1998 ranging from $1.6 million to $2.1
million, or $0.36 to $0.48 per share. The establishment of the additional
loss reserve stems from the Registrant's 1996 $5.0 million equity investment
in a limited partnership that invests in mortgage servicing rights tied to a
national portfolio of residential mortgage loans. For further information,
reference is made to the Registrant's press release dated September 23, 1998,
which attached hereto as Exhibit 99 and incorporated herein by reference.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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Exhibits.
99 Registrant's Press Release Dated September 23, 1998
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
SOUTHBANC SHARES, INC.
Date: September 25, 1998 By: /s/Robert W. Orr
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Robert W. Orr
President and Chief Executive Officer
Exhibit 99
Registrant's Press Release Dated September 23, 1998
**FOR IMMEDIATE RELEASE**
Contacts:
Robert W. "Lujack" Orr
President and Chief Executive Officer
Thomas C. Hall
Chief Financial Officer
SOUTHBANC SHARES, INC. TO ESTABLISH
ADDITIONAL LOSS RESERVE FOR
UNREALIZED LOSSES IN PARTNERSHIP INVESTMENT
Anderson, South Carolina. September 23, 1998. SouthBanc Shares, Inc.
(Nasdaq National Market: SBAN) disclosed today that it will record an
additional loss reserve for its investment in a limited partnership of
approximately $2.9 million on an after tax basis. Due to the establishment of
this additional loss reserve the Company anticipates a fourth quarter loss
ranging from $1.6 million to $2.1 million, or $.36 to $.48 per share. Net
income for the fourth quarter from core operations is expected to range from
$1.3 million to $0.8 million or $0.29 to $0.18 per share.
Robert W. "Lujack" Orr, President and Chief Executive Officer, stated
"Fourth quarter and annual operating net income from core operations continue
to be favorable. In the second quarter we raised an additional $44 million in
capital. This capital allowed us to raise additional funds through Federal
Home Loan Bank advances and growth of customer deposits. We used these funds
to support loan growth of $27.6 million, an increase of 14.5% from this time
last year. We have also increased our investment in mortgage-backed
securities $48.7 million, or 109% from last year. These additions to earning
assets have increased our net interest income as well as generating $480,000
in loan and deposit fee income, or a 31% increase from last year. It is
unfortunate that these results will be blemished by the establishment of these
additional loss reserves."
The establishment of the additional loss reserve stems from the Company's
1996 $5.0 million equity investment in a limited partnership that invests in
mortgage servicing rights tied to a national portfolio of residential mortgage
loans. Recent declines in market interest rates, and current expectations for
further declines, have materially impaired the value of the mortgage servicing
rights. Consequently, the Company expects to reserve a significant portion of
its investment, which had a book value of approximately $5.2 million at June
30, 1998.
SouthBanc Shares, Inc. is the holding company for Perpetual Bank, A
Federal Savings Bank and has $370 million in assets and $77 million in
stockholders' equity. Perpetual Bank operates six full-service offices in
Anderson and Oconee Counties in northwest South Carolina.
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