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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OF 1934
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 240.14a-11(c) or 240.14a-12
SOUTHFIRST BANCSHARES, INC.
(Name of Registrant as Specified in Its Charter)
N/A
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) 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:
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[SOUTHFIRST LETTERHEAD]
February 19, 1997
Dear Stockholder:
You are cordially invited to attend the Annual Meeting of Stockholders of
SouthFirst Bancshares, Inc., which will be held on Wednesday, March 19, 1997,
at 10:00 a.m., at the Company's main office, 126 North Norton Avenue,
Sylacauga, Alabama 35150.
The formal notice of the meeting and the proxy statement appear on the
following pages and describe the matters to be acted upon. Time will be
provided during the meeting for discussion, and you will have an opportunity to
ask about your Company.
Whether or not you plan to attend the meeting in person, it is important
that your shares be represented and voted. After reading the enclosed notice
of the meeting and proxy statement, please complete, sign, date and return the
enclosed proxy at your earliest convenience. Returning the signed proxy card
will not prevent you from voting in person at the meeting, should you later
decide to do so.
Sincerely,
/s/ Donald C. Stroup
-------------------------------------
Donald C. Stroup
President and Chief Executive Officer
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SOUTHFIRST BANCSHARES, INC.
126 NORTH NORTON AVENUE
SYLACAUGA, ALABAMA 35150
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MARCH 19, 1997
To the Holders of Common Stock of SOUTHFIRST BANCSHARES, INC.:
Notice is hereby given that the Annual Meeting of Stockholders of
SouthFirst Bancshares, Inc. (the "Company") will be held on Wednesday, March
19, 1997, at 10:00 a.m., at the Company's principle executive offices, 126
North Norton Avenue, Sylacauga, Alabama 35150, for the following purposes:
(1) To elect three (3) directors to hold office until the 1999 Annual
Meeting of Stockholders or until their successors are elected and qualified;
(2) To consider ratification of the appointment of KPMG Peat Marwick LLP,
as auditors for fiscal year 1997; and
(3) To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed February 10, 1997, as the record date for
the determination of stockholders entitled to vote at the Annual Meeting of
Stockholders. Only stockholders of record at the close of business on that
date will be entitled to notice of, and to vote at, the meeting or any
adjournment thereof.
A Proxy Statement and a proxy solicited by the Board of Directors,
together with a copy of the 1996 Annual Report to Stockholders are enclosed
herewith. Stockholders are cordially invited to attend the Annual Meeting.
Whether or not you expect to attend the meeting in person, you are requested to
complete, sign and date the enclosed proxy and return it as promptly as
possible in the accompanying envelope. If you attend the meeting, you may, if
you wish, withdraw your proxy and vote in person.
By Order of the Board of Directors
/s/ Joe K. McArthur
-------------------
Joe K. McArthur
Secretary
Sylacauga, Alabama
February 19, 1997
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON, YOU ARE URGED TO COMPLETE, SIGN, DATE AND PROMPTLY MAIL THE ENCLOSED
PROXY IN THE ACCOMPANYING POSTAGE PAID ENVELOPE. IF YOU ATTEND THE MEETING,
YOU MAY REVOKE THE PROXY AND VOTE YOUR SHARES IN PERSON.
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SOUTHFIRST BANCSHARES, INC.
126 NORTH NORTON AVENUE
SYLACAUGA, ALABAMA 35150
ANNUAL MEETING OF STOCKHOLDERS
MARCH 19, 1997
--------------------------
PROXY STATEMENT
--------------------------
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of SouthFirst Bancshares, Inc. (the
"Company") for the Annual Meeting of Stockholders to be held on Wednesday,
March 19, 1997, and any adjournment thereof, at the time and place and for the
purposes set forth in the accompanying notice of the meeting. The expense of
this solicitation, including the cost of preparing and mailing this Proxy
Statement, will be paid by the Company. In addition to solicitations by mail,
officers and regular employees of the Company, at no additional compensation,
may assist in soliciting proxies by telephone. This Proxy Statement and the
accompanying proxy are first being mailed to stockholders on or about February
19, 1997. The address of the principal executive offices of the Company is 126
North Norton Avenue, Sylacauga, Alabama 35150, and the Company's telephone
number is (205) 245-4365. The Company is the parent of First Federal of the
South (the "Bank"), a wholly-owned subsidiary which is a federally chartered
savings bank.
Any proxy given pursuant to this solicitation may be revoked by any
stockholder who attends the meeting and gives oral notice of his or her
election to vote in person, without compliance with any other formalities. In
addition, any proxy given pursuant to this solicitation may be revoked prior to
the meeting by delivering to the Secretary of the Company an instrument
revoking it or a duly executed proxy for the same shares bearing a later date.
Proxies which are returned properly executed and not revoked will be voted in
accordance with the stockholder's directions specified thereon. Where no
direction is specified, proxies will be voted FOR the election of the nominees
named herein and FOR the ratification of the appointment of the auditors named
herein. The items enumerated herein constitute the only business which the
Board of Directors intends to present or knows will be presented at the
meeting. However, the proxy confers discretionary authority upon the persons
named therein, or their substitutes, with respect to any other business which
may properly come before the meeting. Abstentions and broker non-votes will
not be counted as votes either in favor of or against the matter with respect
to which the abstention or broker non-vote relates.
The record of stockholders entitled to vote at the Annual Meeting was
taken on February 10, 1997. On that date, the Company had outstanding and
entitled to vote 821,100 shares of Common Stock, par value $.01 per share, with
each share entitled to one vote. One-third (1/3) of the outstanding shares of
Common Stock entitled to vote must be present, in person or by proxy, to
constitute a quorum.
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SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of February 1, 1997,
with respect to ownership of the outstanding Common Stock of the Company by (i)
all persons known to the Company to own beneficially more than five percent
(5%) of the outstanding Common Stock of the Company, (ii) each director and
director nominee of the Company, (iii) each executive officer of the Company
named in the Summary Compensation Table on page 7 and (iv) all directors and
executive officers of the Company as a group:
Unless otherwise indicated, each of the stockholders has sole voting and
investment power with respect to the shares beneficially owned.
Shares of
Common Stock Percent of
Beneficial Owner Beneficially Owned(1) Outstanding Shares
--------------------------- --------------------- ------------------
Paul A. Brown(2) 16,194 2.0%
Hobert Cook(3) 13,810 1.7%
H. David Foote, Jr.(4) 8,490 1.0%
John T. Robbs(5) 17,490 2.1%
Allen Gray McMillan, III(6) 12,490 1.5%
Charles R. Vawter, Jr.(7) 30,790 3.7%
Donald C. Stroup(8) 42,025 5.1%
Joe K. McArthur(9) 14,556 1.7%
All directors and
executive officers
as a group (7 persons)(10) 142,035 17.0%
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(1) "Beneficial Ownership" includes shares for which an individual, directly
or indirectly, has or shares voting or investment power or both and also
includes options which are exercisable within sixty days of the date
hereof. Beneficial ownership as reported in the above table has been
determined in accordance with Rule 13d-3 of the Securities Exchange Act of
1934. The percentages are based upon 821,100 shares outstanding, except
for certain parties who hold presently exercisable options to purchase
shares. The percentages for those parties holding presently exercisable
options are based upon the sum of 821,100 shares plus the number of shares
subject to presently exercisable options held by them, as indicated in the
following notes.
(2) Of the amount shown, 4,690 shares are owned jointly by Mr. Brown and his
wife, 3,000 shares are owned by his wife, 4,414 shares are held in an
individual retirement account, 830 shares are subject to presently
exercisable options and 1,660 shares represent restricted stock granted
under the Company's Management Recognition Plan "A," 332 shares of which
are fully vested.
(3) Of the amount shown, 7,500 shares are owned jointly by Mr. Cook and his
wife, 500 shares are owned jointly by Mr. Cook and his son and 4,150
shares are subject to presently exercisable options. Mr. Cook is
currently serving as a director, emeritus.
(4) Of the amount shown, 3,000 shares are owned jointly by Mr. Foote and his
wife, 1,500 are held by Mr. Foote as custodian for each of his two minor
children, 830 shares are subject to presently exercisable options and
1,660 shares represent restricted stock granted under the Company's
Management Recognition Plan "A," 332 shares of which are fully vested.
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(5) Of the amount shown, 2,293 shares are owned jointly by Mr. Robbs
and his wife, 3,662 shares are held in an Individual Retirement Account
for the benefit of Mr. Robb's wife, 5,000 shares are held jointly with his
father, 830 shares are subject to presently exercisable options and 1,660
shares represent restricted stock granted under the Company's Management
Recognition Plan "A," 332 shares of which are fully vested.
(6) Of the amount shown, 10,000 shares are owned jointly by Mr. McMillan and
his wife, 830 shares are subject to presently exercisable options and
1,660 shares represent restricted stock granted under the Company's
Management Recognition Plan "A," 332 shares of which are fully vested.
(7) Of the amount shown, 27,700 shares are owned jointly by Mr. Vawter and
his wife, 600 shares are held by Mr. Vawter as custodian for his two minor
children, 830 shares are subject to presently exercisable options and
1,660 shares represent restricted stock granted under the Company's
Management Recognition Plan "A," 332 shares of which are fully vested.
(8) Of the amount shown, 14,100 shares are owned jointly by Mr. Stroup and
his wife, 3,000 shares are held jointly with Gwendolyn W. Abercrombie, a
long-time friend of the Stroup family, 300 shares are held by Mr. Stoup's
son Bradley, 300 shares are held by Mr. Stroup's son Randall, 9,094 shares
are held in his account under the Company's 401(k) plan, 2,781 shares are
held in his account under the Bank's ESOP, 4,150 shares are subject to
presently exercisable options and 8,300 shares represent restricted stock
granted under the Company's Management Recognition Plans "A" and "B,"
1,660 shares of which are fully vested.
(9) Of the amount shown, 1,500 shares are owned jointly by Mr. McArthur and
his wife, 2,621 shares are held in his account under the Company's 401(k)
plan, 2,467 shares are held in his account under the Bank's ESOP, 2,656
shares are subject to presently exercisable options and 5,312 shares
represent restricted stock granted under the Company's Management
Recognition Plans "A" and "B," 1,062 shares of which are fully vested.
(10) Amount shown does not include the shares beneficially owned by Hobert
Cook who is currently serving on the Board of Directors of the Company and
the Bank as a director, emeritus. Joe K. McArthur and Donald C. Stroup
are the only executive officers of the Company.
There are no arrangements known to the Company, the operation of which may
at a subsequent date, result in a change in control of the Company.
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AGENDA ITEM ONE
ELECTION OF DIRECTORS
The Company's Board of Directors presently consists of seven (7)
directors, elected to staggered three-year terms. The terms of Messrs. Brown,
Stroup and Vawter will expire at the Annual Meeting of Stockholders. The Board
of Directors has nominated Messrs. Brown, Stroup and Vawter for re-election as
directors of the Company. Unless otherwise directed, the proxies will be voted
at the meeting for the election of the nominees. In the event of an unforeseen
contingency and any nominee is unable or declines to serve as a director at the
time of the meeting, the persons named as proxies therein will have
discretionary authority to vote the proxies for the election of such person or
persons as may be nominated in substitution by the present Board of Directors.
Management knows of no current circumstances which would render any nominee
named herein unable to accept nomination or election. The affirmative vote of
a plurality of the votes present in person or by proxy at the meeting is
required for the election of the three nominees standing for election. THE
BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE ELECTION OF THE NOMINEES.
The following persons have been nominated by management for election to
the Board of Directors for a term of three years and until their successors are
elected and qualified:
PAUL A. BROWN, age 71, has served as a member of the Board of Directors of
the Bank since 1972 and of the Company since 1994. Mr. Brown has served as
Chairman of the Board of the Bank since 1987 and of the Company since 1994.
Mr. Brown was owner of Brown Auto Parts from 1977 to 1987 and is presently
retired.
DONALD C. STROUP, age 47, has served as the President, Chief Executive
Officer and a member of the Board of Directors of the Bank since February,
1988, and of the Company since 1994. Mr. Stroup has 22 years of experience in
the banking industry and has a B. S. in Business Administration from Samford
University, and a Certificate of Achievement and Diploma of Merit from the
Institute of Financial Education, Chicago, Illinois. He is former Chairman of
the Southern Community Bankers, a Director of the Boys' Club and a member of
the Sylacauga School Board, Red Cross, Sylacauga Industrial Development Board,
Hospice Care, Talladega County Economic Development Authority and Boy Scouts
Advisory. Mr. Stroup is a current member and former President of Sylacauga
Rotary Club and a former Board member of the Sylacauga Chamber of Commerce and
Coosa Valley Country Club. Mr. Stroup is a member of the First Baptist Church
of Sylacauga.
CHARLES R. VAWTER, JR., age 35, has served as a director of the Bank since
1992 and of the Company since 1994. Mr. Vawter is Chief Financial Officer of
Automatic Gas and Appliance Co., Inc., where he has been employed since 1987.
Mr. Vawter is a member of the First Baptist Church. He is a member of the
Board of Directors of B. B. Comer Library Foundation and the Coosa Valley
Country Club. He is a past Board member of the Sylacauga Chamber of Commerce.
He is currently a member of the Planning Commission of the City of Sylacauga
Chamber of Commerce and has served on the Planning Committee of Alabama LP Gas
Association.
Each of the following persons is a member of the Board of Directors who is
not standing for election to the Board this year and whose term will continue
after the Annual Meeting of Stockholders:
HOBERT COOK, age 74, served as a member of the Board of Directors of the
Bank from 1977 to February 1996 and of the Company from 1994 to February 1996.
Mr. Cook is currently serving on the Board
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of Directors of the Company as a director, emeritus. Mr. Cook was formerly
Senior Vice President of the Bank from 1966 to 1986. Mr. Cook has 36 years of
experience in the banking industry and is presently retired.
H. DAVID FOOTE, JR., age 47, has served as a director of the Bank since
1988 and of the Company since 1994. Mr. Foote has been President and owner of
Foote Bros. Furniture since 1973. Mr. Foote has been a member of the Board of
Directors of the Sylacauga Chamber of Commerce, the Coosa Valley Country Club
and Talladega County E-911. He has served as President of Wesley Chapel
Methodist Men's Club and head of the Wesley Chapel Methodist Administrative
Board.
JOE K. MCARTHUR, age 45, has served as the Executive Vice President, Chief
Operating Officer and Chief Financial Officer of the Bank and the Company since
1992 and 1994, respectively. Mr. McArthur has served as a director of the Bank
and the Company since February 1996. He is currently serving as Chairman of
the Bank's Internal Control Review Committee, Compliance Officer, and
Secretary/Treasurer. Mr. McArthur has 19 years of experience in the banking
industry and a B. S. in Accounting from the University of Alabama-Birmingham
and a Masters of Business Administration equivalent from the National School of
Finance and Management. He has also completed all courses with the Institute
of Financial Education. Prior to joining the Bank, Mr. McArthur was Assistant
Executive Director of Finance of Humana, a hospital, from 1990 to 1992, and
Senior Vice president of First Federal of Alabama from 1983 to 1990. Mr.
McArthur is a member of the Sylacauga Kiwanis Club and a member of the United
Way Committee. He has also served as a manager of various Little League and
Babe Ruth Baseball teams. Mr. McArthur is a member of First United Methodist
Church of Sylacauga.
ALLEN GRAY MCMILLAN, III, age 40, has served as a director of the Bank
since 1993 and of the Company since 1994. Mr. McMillan is President of Brecon
Knitting Mill, where he has been employed since 1979. Mr. McMillan has been
active in the Kiwanis Club, United Way, and Boy Scouts of America. He is a
member of the First United Methodist Church.
JOHN T. ROBBS, age 42, has served as a director of the Bank since 1988 and
of the Company since 1994. Mr. Robbs is President of Michael Supply Co., Inc.,
where he has been employed since 1980.
There are no family relationships between any director or executive
officer and any other director or executive officer of the Company.
COMMITTEES OF THE BOARD
The Company's Board of Directors has established the following standing
committees:
(A) The Audit Committee, currently comprised of Messrs. Brown, McMillan,
Foote, Vawter and Robbs. The Audit Committee, which held one meeting in fiscal
1996, is authorized to review and make recommendations to the Board of
Directors with respect to the Company's audit procedures and independent
auditor's report to management and to recommend to the Board of Directors the
appointment of independent auditors for the Company, to review with the
independent auditors the scope and results of audits, to monitor the Company's
financial policies and control procedures, to monitor the non-audit services
provided by the Company's auditors and to review all potential conflicts of
interests.
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(B) The Stock Option Committee, currently comprised of Messrs. Brown,
Foote, Robbs, McMillan and Vawter. The Stock Option Committee, which held one
meeting in fiscal 1996, is responsible for administering the Company's Stock
Option and Incentive Plan.
(C) The Management Recognition Plan Committee, currently comprised of
Messrs. Brown, Foote, Robbs, McMillan and Vawter. The Management Recognition
Plan Committee, which held one meeting in fiscal 1996, is responsible for
administering the Company's two Management Recognition Plans.
The Company does not have a Directors Nominating Committee, that function
being reserved to the entire Board of Directors.
In addition to the Company's committees, the Bank has established various
committees including the Executive Committee, the Wage and Compensation
Committee, the Loan Committee, the Asset/Liability Committee and the Audit
Committee. The Company presently does not have a compensation committee
because no officers of the Company receive any compensation for services to the
Company. All officers of the Company are compensated by the Company's
wholly-owned subsidiary, the Bank, solely for their services to the Bank. In
addition, directors are paid for attendance at Bank committee meetings, but
employee members of committees are not paid.
The Executive Committee of the Bank consists of Messrs. Stroup, Brown
(Chairman), Foote, Robbs, McArthur, McMillan, and Vawter. The Committee meets
only as needed and is charged with the responsibility of overseeing the
business of the Bank. The Committee has the power to exercise most powers of
the Board of Directors in the intervals between meetings of the Board, and any
activity is reported to the Board monthly. The Bank's Loan Committee is
comprised of Messrs. Robbs (Chairman), Brown, and Vawter. Mr. Stroup serves an
alternate and Mr. Cook serves as an advisor. The committee meets weekly to
consider loan applications. Approval of a loan application requires approval
by at least two members (other than the person signing the application) of the
Loan Committee. The Audit Committee of the Bank consists of Messrs. Brown,
McMillan, Foote (Chairman), Vawter and Robbs. This committee meets at least
annually and more frequently if necessary to review the results of the audit
program. Recommendations and observations are reported to the Board of
Directors. The Asset/Liability Committee consists of Messrs. Stroup, McArthur,
Foote, and Vawter (Chairman). This Committee meets quarterly to establish and
monitor policies to control interest rate sensitivity. The Bank's Wage and
Compensation Committee consists of Messrs. Stroup, McArthur, Brown (Chairman),
Robbs, and Vawter. This Committee, which held one meeting in fiscal 1996, is
responsible for reviewing salaries and benefits of directors, officers, and
employees.
MEETINGS OF THE BOARD OF DIRECTORS
The Board of Directors of the Company held six meetings during the fiscal
year ended September 30, 1996. During fiscal 1996, each director attended at
least 75% of the aggregate number of meetings held by the Board of Directors
and Committee(s) on which he served.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's directors, certain officers and persons who own more than 10% of the
outstanding Common Stock of the Company to file with the Securities and
Exchange Commission reports of changes in ownership of the Common Stock of the
Company held by such persons. Officers, directors and greater than 10%
stockholders are also required to furnish the Company with copies of all forms
they file under this regulation. The Company first became subject to this
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regulation on February 13, 1995. To the Company's knowledge, based solely on a
review of copies of such reports furnished to the Company and representations
that no other reports were required, during the fiscal year ended September 30,
1996, all Section 16(a) filing requirements applicable to its officers,
directors and 10% holders were complied with, except John T. Robbs failed to
file on a timely basis one report relating to four transactions.
Although it is not the Company's obligation to make filings pursuant to
Section 16 of the Securities and Exchange Act of 1934, the Company has adopted
a policy requiring all Section 16 reporting persons to report monthly to a
designated employee of the Company as to whether any transactions in the
Company's Common Stock occurred during the previous month.
EXECUTIVE COMPENSATION
The following table provides certain summary information for fiscal 1996,
1995 and 1994 concerning compensation paid or accrued by the Company and the
Bank to or on behalf of the Company's Chief Executive Officer and the other
executive officers of the Company whose total annual salary and bonus exceeded
$100,000 during such periods (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
Annual Compensation(1)
----------------------
Long Term Compensation
--------------------------
Name and Principal Restricted Securities
- ------------------ Fiscal Other Annual Stock Underlying All Other
Position Year Salary Bonus Compensation(2) Award(s)$ Options/SARs(#) Compensation
-------- ------ ------ ----- -------------------- ----------- --------------- ------------
Donald C. Stroup, President 1996 $95,568 $163,093(3) $10,250 $116,200(5) 20,750 $2,255(7)
Chief Executive, Officer and 1995 91,000 15,168 10,500 -- -- 2,258
Vice Chairman of the Board 1994 78,456 12,656 13,554 -- -- 1,800
Joe K. McArthur, Executive
Vice President, Chief
Operating Officer, Chief 1996 $69,900 $100,316(4) $ 9,750 $ 74,368(6) 13,280 $1,400(8)
Financial Officer and 1995 66,564 11,094 6,000 -- -- 1,286
Director 1994 64,000 9,590 -- -- -- 954
(1) All compensation received by Mr. Stroup and Mr. McArthur was paid by the
Bank. No other officer of the Company received cash compensation in excess
of $100,000 during 1996.
(2) Fees received as member of Board of Directors of the Bank and the Company.
(3) Includes a regular bonus of $15,928 as well as $147,165 of compensation
recognized on dividends paid under the Company's Dividend Investment
Plan on unexercised stock options and unvested shares of restricted stock
issued under the Company's Management Recognition Plans "A" and "B" and a
corresponding bonus paid to assist in the payment of the applicable federal
income tax due in connection with the restricted stock issued under such
plans. See "--Compensation of Directors"
(4) Includes a regular bonus of $11,650 as wells as $88,666 of compensation
recognized on dividends paid under the Company's Dividend Investment
Plan on unexercised stock options and unvested shares of restricted stock
issued under the Company's Management Recognition Plans "A" and "B" and a
corresponding bonus paid to assist in the payment of the applicable federal
income tax due in connection with the restricted stock issued under such
plans. See "--Compensation of Directors."
(5) Represents 8,300 shares all of which, as of September 30, 1996, were
subject to certain vesting requirements, as more fully described in the
Company's Management Recognition Plans "A" and "B." As of September 30,
1996, the aggregate market value of the shares was $103,750.
(6) Represents 5,312 shares all of which, as of September 30, 1996, were
subject to certain vesting requirements, as more fully described in the
Company's Management Recognition Plan "A" and "B." As of September 30,
1996, the aggregate market value of the shares was $66,400.
(7) Represents a $1,733 automobile allowance and income of $522 recognized on
employer provided group term life insurance in excess of $50,000.
(8) Represents an $878 automobile allowance and income of $522 recognized on
employer provided group term life insurance in excess of $50,000.
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EMPLOYMENT AND DEFERRED COMPENSATION AGREEMENTS
Employment Agreements. The Company and the Bank have entered into
employment agreements with Donald C. Stroup, President and Chief Executive
Officer of the Company and the Bank and Joe K. McArthur, Executive Vice
President, Chief Operating Officer and Chief Financial Officer of the Company
and the Bank (collectively, the "Employment Agreements"). The Employment
Agreements amend employment agreements previously entered into between Messrs.
Stroup and McArthur with the Company and the Bank.
The Employment Agreements were effective as of October 1, 1996 and provide
for a term of three years. Pursuant to the Employment Agreements, the Bank
will pay Mr. Stroup an annual base salary of $100,308 and Mr. McArthur an
annual base salary of $73,380, for which the Company is jointly and severally
liable. On each anniversary date from the expiration of the initial three year
term of the Employment Agreements, the term of Messrs. Stroup's and McArthur's
employment will be extended for an additional one-year period beyond the then
effective expiration date, upon a determination by the Board of Directors that
the performance of Messrs. Stroup and McArthur have met the required
performance standards and that such Employment Agreements should be extended.
The Employment Agreements entitle both Mr. Stroup and Mr. McArthur to
participate with all other senior management employees of the Company or the
Bank in any discretionary bonuses that the Board of Directors of the Company or
the Bank may award. In addition, Mr. Stroup and Mr. McArthur participate in
standard retirement and medical plans, and are entitled to customary fringe
benefits, vacation and sick leave. The Employment Agreements will terminate
upon the employee's death or disability, and are terminable for "cause" (as
defined in the Employment Agreements). In the event of termination for cause,
no severance benefits are payable to the employee. If the Company or the Bank
terminates the employee without cause, the employee will be entitled to a
continuation of his salary and benefits from the date of termination through
the remaining term of the Employment Agreement plus an additional twelve-month
period. The employee may voluntarily terminate his Employment Agreement by
providing 60 days written notice to the Board of Directors of the Bank and the
Company, in which case the employee is entitled to receive only his
compensation, vested rights and benefits up to the date of termination.
The Employment Agreements provide that, in the event of the employee's
termination in connection with, or within one year after, any change in control
(as defined in the Employment Agreements) of the Bank or, the Company, other
than for "cause," or death or disability, the employee will be paid, within ten
days of such termination, an amount equal to the difference between: (i) 2.99
times his "base amount," as defined in Section 280G(b)(3) of the Internal
Revenue Code; and (ii) the sum of any other parachute payments, as defined
under Section 280G(b)(2) of the Internal Revenue Code, that the employee
receives on account of the change in control. Such payment would be reduced to
the extent it would cause the Bank to fail to meet any of its regulatory
capital requirements. Each Employment Agreement also provides for a similar
lump sum payment to be made in the event of the employee's voluntary
termination of employment within one year following a change in control of the
Bank or the Company.
Deferred Compensation Agreements. The Bank has entered into deferred
compensation agreements with Messrs. Stroup and McArthur, pursuant to which
each will receive certain retirement benefits at age 65. Under the Deferred
Compensation Agreements, benefits are payable for 15 years. A portion of the
retirement benefits accrue each year until age 65 or, if sooner, until
termination of employment. If Mr. Stroup remains in the employment of the Bank
until age 65, his annual benefit will be $65,000. If Mr. McArthur remains in
the employment of the Bank until age 65, his annual benefit will be $45,000.
If either of these officers die
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12
prior to age 65, while in the employment of the Bank, the full retirement
benefits available under the deferred compensation agreements will accrue and
will, thereupon, be payable to their respective beneficiaries. The retirement
benefits available under the deferred compensation agreements are unfunded.
However, the Bank has purchased life insurance policies on the lives of these
officers that will be available to the Company and the Bank to provide, both,
for retirement benefits and for key man insurance. The aggregate cost of these
arrangements was $51,045 in 1996 and 1995, and was $28,522 in 1994.
MANAGEMENT RECOGNITION PLANS
The Board of Directors of the Company has adopted two management
recognition plans, denominated SouthFirst Bancshares, Inc. Management
Recognition Plan "A" ("Plan A") and SouthFirst Bancshares, Inc. Management
Recognition Plan "B" ("Plan B") (Plan A and Plan B are referred to collectively
as the "Plans" or the "MRPs"). The objective of the MRPs is to enable the
Company and the Bank to reward and retain personnel of experience and ability
in key positions of responsibility by providing such personnel with a
proprietary interest in the Company and by recognizing their past contributions
to the Company and the Bank, and to act as an incentive to make such
contributions in the future.
Plan A and Plan B are identical except that Plan A provides for awards to
employees, as well as to non-employee directors, of the Company and the Bank,
while Plan B provides for awards only to employees. The Plans are administered
by a committee (the "Committee") of the Board of Directors of the Company.
Awards under the Plans are in the form of restricted stock awards and bear
restrictive legends until vested, as described below. Each MRP has reserved a
total of 16,600 shares of Common Stock for issuance pursuant to awards made by
the Committee. The Committee may make awards to eligible participants under
the MRPs in its discretion, from time to time. Under Plan A, on November 15,
1995, each non-employee director serving in such capacity on February 13, 1995
(the effective date of the conversion from a mutual to stock form of ownership)
automatically received an award of 1,660 shares. In selecting the employees to
whom awards are granted under the Plans, the Committee considers the position,
duties and responsibilities of the employees, the value of their services to
the Company and the Bank and any other factors the Committee may deem relevant.
As of September 30, 1996, a total of 33,200 shares had been awarded under the
Plans and no shares remain available for future issuance.
Once an award is made, a participant "earns" the shares under the award
(i.e., the shares vest) at the rate of 20% per year, commencing on the first
anniversary of the date of the award. The Committee may, however, from time to
time and in its sole discretion, accelerate the vesting with respect to any
participant, if the Committee determines that such acceleration is in the best
interest of the Company. If a participant terminates employment for reasons
other than retirement, death or disability, the participant forfeits all rights
to the allocated shares under restriction. If the participant's termination is
caused by retirement, death or disability, all restrictions expire and all
shares allocated become vested and consequently, unrestricted. Participants
will recognize compensation income when their interests vest, or at such
earlier date pursuant to a participant's election to accelerate recognition
pursuant to Section 83(b) of the Internal Revenue Code.
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STOCK OPTION PLAN
On June 8, 1994, the Board of Directors of the Company adopted a Stock
Option Plan denominated the SouthFirst Bancshares, Inc. Stock Option and
Incentive Plan (the "Stock Option Plan"). The objective of the Stock Option
Plan is to attract, retain, and motivate the best possible personnel for
positions of substantial responsibility with the Company and the Bank. The
Stock Option Plan provides select officers, directors and employees of the Bank
and the Company with an opportunity to participate in the ownership of the
Company. The Stock Option Plan authorizes the grant of up to 83,000 shares of
Common Stock to select officers, directors and employees in the form of (i)
incentive and nonqualified stock options ("Options"); (ii) stock appreciation
rights ("SARs"); or (iii) restricted stock (collectively referred to as
"Awards"). The exercise price for Options may not be less than the fair market
value of the shares on the day of the grant, and no Awards shall be exercisable
after the expiration of ten years from the date of this grant. The Stock
Option Plan has a term of ten years unless earlier terminated by the Board of
Directors. The Stock Option Plan is administered by a committee of the
directors of the Company (the "Option Plan Committee"). Except as discussed
below with respect to non-employee directors, the Option Plan Committee has
complete discretion to make Awards to persons eligible to participate in the
Stock Option Plan, and will determine the number of shares to be subject to
such Awards, and the terms and conditions of such Awards. In selecting the
persons to whom Awards are granted under the Stock Option Plan, the Option Plan
Committee will consider the position, duties, and responsibilities of the
employees, the value of their services to the Company and the Bank, and any
other factor the Option Plan Committee may deem relevant to achieving the
stated purpose of the Stock Option Plan.
Options granted under the Stock Option Plan are exercisable on a
cumulative basis in equal installments of 20.0% per year commencing one year
from the date of grant except that all options would be 100.0% exercisable in
the event the optionee terminates his employment due to death, disability or
retirement or in the event of a change in control of the Bank or the Company.
In order to attract and retain members of the board of directors who
contribute to the Company's success, the Stock Option Plan further provides for
the award of nonqualified stock options to non-employee directors of the
Company. All directors who were not employees of the Company, as of November
15, 1995 (the date of the approval of the Stock Option Plan by the stockholders
of the Company and OTS), received non-qualified stock options for the purchase
of 4,150 shares with an exercise price equal to $14.00 per share, the fair
market value of the Common Stock on the date of grant. As of September 30,
1996, options to purchase a total of 83,000 shares have been issued under the
Stock Option Plan and no shares remain available for future issuance.
The following table presents information regarding fiscal 1996 grants to
the Named Executive Officers of options to purchase shares of the Company's
Common Stock.
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OPTIONS GRANTS IN FISCAL 1996
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term(1)
----------------------------------------- ------------------------
% of Total
Number of Options
Securities Granted to
Underlying Employees Expiration
Options in Fiscal Exercise
Name Granted(2) Year Price Date 5% 10%
- ---------------- -------------------- ---------- -------- ---------- -------- ----------
Donald C. Stroup 20,750 25% $14.00 11/15/05 $182,808 $463,140
Joe K. McArthur 13,280 16% $14.00 11/15/05 $116,997 $296,410
(1) The dollar amounts under these columns represent the potential realizable
value of each option assuming that the market price of the common stock
appreciates in value from the date of grant for the full 10 year term at
the 5% and 10% annualized rates prescribed by regulation and therefore are
not intended to forecast possible future appreciation, if any, of the
price of the common stock.
(2) Options vest with respect to 20% of the underlying shares on each of
November 15, 1996, 1997, 1998, 1999 and 2000.
The following table provides certain information concerning each exercise
of stock options under the Company's Stock Option Plan during the fiscal year
ended September 30, 1996, by the Named Executive Officers and the fiscal year
end value of unexercised options held by such persons:
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION VALUES
Number of Securities Value of Unexercised
Underlying In-the-Money
Unexercised Options at Options at Fiscal
Fiscal Year End Year End
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise Realized Unexercisable Unexercisable(1)
---- --------------- ---------- -------------------- --------------------
Donald C. Stroup 0 $0 0/20,750 $0/$0
Joe K. McArthur 0 $0 0/13,280 $0/$0
- -----------------------
(1) The market value of the Company's common stock on September 30, 1996 was
$12.50 per share. The actual value, if any, an executive may realize will
depend upon the amount by which the market price of the Company's common
stock exceeds the exercise price when the options are exercised.
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15
EMPLOYEE RETIREMENT SAVINGS PLAN
The Bank has established a savings and profit-sharing plan that qualifies
as a tax-deferred savings plan under Section 401(k) of the Internal Revenue
Code (the "401(k) Plan") for its salaried employees who are at least 21 years
old and who have completed one year of service with the Bank. Under the 401(k)
Plan, eligible employees may contribute up to 10% of their gross salary to the
401(k) Plan or $9,240, whichever is less. Each participating employee is fully
vested in contributions made by such employee. Prior to the Bank's adoption of
an Employee Stock Ownership Plan, the first 1.0% to 3.0% of employee
compensation was matched by a Bank contribution of $0.50 for each $1.00 of
employee contribution and contributions from 4.0% to 6.0% were 100.0% matched.
During this period, such contributions were 100.0% vested following the
completion of five years of service and were invested in one or more investment
accounts administered by an independent plan administrator.
EMPLOYEE STOCK OWNERSHIP PLAN ("ESOP")
The Bank has adopted an ESOP for the exclusive benefit of participating
employees. All employees of the Bank who have attained age 21 and who have
completed a year of service with the Bank are eligible to participate in the
ESOP. With the exception of terminations due to death, disability or
retirement, a participant must be employed by the Bank on the last day of the
plan year and have earned 1,000 hours of service during the plan year in order
to share in the allocation for the plan year. Any dividends paid on
unallocated shares of Common Stock are to be used to repay the ESOP loan and
any dividends paid on shares of Common Stock allocated to participant accounts
will be credited to said accounts. A participant will become 20.0% vested in
his or her benefits under the ESOP once he or she has earned two years of
service. The participant will earn an additional 20.0% for each additional
year of service so that he or she is fully vested once he or she has completed
six years of service. Participants also become fully vested upon death,
disability, attainment of normal retirement age, and termination of the ESOP.
For vesting purposes, a year of service means any plan year in which an
employee completes at least 1,000 hours of service with the Bank. An
employee's years of service prior to the ESOP's effective date is considered
for purposes of determining vesting under the ESOP. A participant who
separates from service because of death, disability or retirement will be
entitled to receive an immediate distribution of his or her benefits. A
participant who separates from service for any other reason will be eligible to
begin receiving benefits once he or she has incurred his or her fifth one year
break in service. Distributions will generally be made in whole shares of
Common Stock, with the value of fractional shares being paid in cash. Although
accounts will generally be distributed in a lump sum, accounts valued in excess
of $500,000 may be distributed in installments over a five-year period.
The Company is the plan administrator of the ESOP and First Alabama Bank
serves as the trustee of the ESOP (the "ESOP Trustee"). A participant may vote
any shares of Common Stock that are allocated to his or her account. Any
unallocated shares of Common Stock and allocated shares of Common Stock for
which no timely direction is received will be voted by the ESOP Trustee in
accordance with its fiduciary obligations.
COMPENSATION OF DIRECTORS
Each member of the Board of Directors of the Bank (other than the
Chairman) receives a fee of $750 for each board meeting attended (with one
excused absence), and each non-employee director of the Bank, if a member of a
committee, receives $500 for each committee meeting attended. The Chairman of
the Board of the Bank receives a fee of $850 for each board meeting attended.
Each member of the Board of Directors of the Company receives a fee of $250 for
each board meeting attended.
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During fiscal 1996, the Company also granted to each non-employee director
of the Company an option to purchase 4,150 shares of Common Stock at an
exercise price of $14.00 per share. The options were granted under the
Company's Stock Option and Incentive Plan and have a 10 year term. The Company
also awarded 1,660 shares of Common Stock to each non-employee director of the
Company. The shares were awarded under the Company's Management Recognition
Plan "A" in the form of restricted stock (the "Restricted Stock"), which stock
vests at the rate of 20% per year, commencing on the first anniversary of the
date of grant. As of September 30, 1996, all of the Restricted Stock remained
unvested.
In addition, the Company has adopted, by board resolution, a Dividend
Investment Plan pursuant to which holders of the Company's options to purchase
Common Stock and holders of Restricted Stock issued under the Company's
Management Recognition Plans which remain subject to vesting requirements, are
paid an amount equal to the number of shares underlying stock options or the
number of shares of Restricted Stock held by them, as the case may be,
multiplied by the amount of dividends the Company pays to the holders of its
Common Stock. As such, during fiscal 1996, each non-employee director was paid
a total of $10,375 with respect to the shares of Common Stock underlying
options held by him and a total of $4,150 with respect to the Restricted Stock
held by him as provided under the Dividend Investment Plan. In connection with
the grant of Restricted Stock to the Company's directors, each non-employee
director was further paid a bonus of $15,458 to assist such director pay the
applicable federal tax due in connection with such grants.
Mr. Stroup and Mr. McArthur, each an executive officer and a director of
the Company, also received awards of stock options and Restricted Stock as well
as a bonus to assist them pay the applicable federal tax due in connection with
such Restricted Stock awards. See "Summary Compensation Table" and "Option
Grants in Fiscal 1996."
CERTAIN TRANSACTIONS
The Company's subsidiary, First Federal of the South, has outstanding
loans to certain of the Company's directors, their associates and members of
the immediate families of the directors and executive officers. These loans
were made in the ordinary course of business, were made on substantially the
same terms, including interest rates and collateral, as those prevailing at the
time for comparable transactions with persons not affiliated with the Company
or the Bank and did not involve more than the normal risk of collectibility or
present other unfavorable features.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Donald C. Stroup, President and Chief Executive Officer of the Company and
the Bank, and Joe K. McArthur, Executive Vice President, Chief Operating
Officer, and Chief Financial Officer of the Company and the Bank, serve as
members of the Wage and Compensation Committee of the Board of Directors of the
Bank. Such committee is responsible for reviewing salaries and benefits of
directors, officers, and employees of the Bank and the Company.
-13-
17
REPORT OF COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
In accordance with the proxy statement rules of the Securities and
Exchange Commission, the Wage and Compensation Committee of the Board of
Directors of the Bank (the "Compensation Committee") offers the following
report regarding compensation policies for executive officers and the Chief
Executive Officer of the Bank and information with respect to compensation paid
to such persons during the last fiscal year. The Company presently does not
have a compensation committee as no officers of the Company receive any
compensation for services to the Company. All executive officers are
compensated by the Company's wholly-owned subsidiary, the Bank, solely for
their services to the Bank.
The Compensation Committee of the Board of Directors is comprised of
Messrs. Stroup, McArthur and three non-employee directors of the Bank. It is
the Committee's responsibility to establish the salaries, bonuses and other
compensation of the Chief Executive Officer and other executive officers of the
Bank.
The Compensation Committee utilizes the following guidelines for
compensation decisions:
- Provide a competitive compensation package that enables the
Company and the Bank to attract and retain key executives.
- Integrate compensation programs with the Company's and the Bank's
annual and long-term business strategies and objectives and focus
executive actions on the fulfillment of those objectives.
The Bank's executive compensation program generally consists of base
salary, bonuses and equity incentives in the form of stock options and
restricted stock awards. Base salaries and bonuses for executive officers are
reviewed and adjusted annually following a review of the Bank's performance
during the previous fiscal year, the individual's contribution to that
performance and the individual's level of responsibility. To align executive
officers' interests more closely with the interests of the stockholders of the
Company and the Bank, the Bank's compensation program emphasizes the grant of
stock options exercisable for shares of Common Stock and awards of restricted
stock under the Company's Management Recognition Plans. The amount of such
awards, if any, is determined from time to time by the Stock Option Committee
and the Management Recognition Plan Committee. These Committees may take into
account various factors in determining the size of stock option grants and
restricted stock awards, including the need to attract and retain individuals
who will provide valuable service to the Company and the Bank. In order that
the Stock Option Committee and the Management Recognition Plan Committee may
remain disinterested in its administration of the Company's Stock Option and
Incentive Plan and the Company's Management Recognition Plans, Messrs. Stroup
and McArthur are not members of either the Stock Option Committee or the
Management Recognition Plan Committee.
The Chief Executive Officer's compensation, as well as that of the
Executive Vice President, Chief Operating Officer and Chief Financial Officer,
is comprised of a base salary which is directly related to the responsibilities
of the position and a bonus which is related to the Company's performance. The
Chief Executive Officer and the Executive Vice President work together as a
corporate team and, as such, bear the principal burden of corporate management
decisions -- the Chief Executive Officer, of course, bearing final
responsibility. Thus, these two officers participate more heavily in the
division of bonus awards. For fiscal 1996, these two officers received 36% of
total bonus awards.
-14-
18
The fiscal 1996 compensation of Donald C. Stroup, the President and Chief
Executive Officer of the Company and the Bank, and of Joe K. McArthur, the
Executive Vice President, Chief Operating Officer and Chief Financial Officer
of the Company and the Bank, was established by the terms of employment
agreements with the Company at $95,568 and $69,900, respectively, plus any
discretionary bonuses that the Board of Directors of the Company or the Bank
may award. The Board of Directors elected to grant a regular bonus of $15,928
to Mr. Stroup and a regular bonus of $11,650 to Mr. McArthur in fiscal 1996.
The Stock Option committee and the Management Recognition Plan Committee
further determined to award Messrs. Stroup and McArthur options to purchase a
total of 20,750 and 13,280 shares of Common Stock, respectively, as well as
8,300 and 5,312 shares of Restricted Stock, respectively. During Fiscal 1996,
the Company also paid an aggregate of $1.9 million in dividends to its
stockholders. Accordingly, under the Management Recognition Plans and the
Company's Dividend Investment Plan, which is designed to permit officers and
directors of the Company and the Bank to earn dividends on shares of Common
Stock underlying unexercised stock options, Messrs. Stroup and McArthur were
paid dividends of $68,994 and $44,156, respectively on shares of Restricted
Stock and shares subject to unexercised options held by them. These dividends
were treated as bonuses paid by the Company to Messrs. Stroup and McArthur. In
addition, under the Management Recognition Plans and in connection with the
grant of Restricted Stock to Messrs. Stroup and McArthur thereunder, the
Company paid Mr. Stroup an additional bonus of $95,290 and Mr. McArthur an
additional bonus of $55,466, to assist each officer pay the applicable federal
income tax due in connection with such grants.
In approving the compensation paid to Mr. Stroup and Mr. McArthur in
fiscal 1996, the Compensation Committee considered the following factors:
(a) the reasonableness of Mr. Stroup's and Mr. McArthur's salary in
amount relative to the executive officers of similarly placed banks;
(b) Mr. Stroup's and Mr. McArthur's performance in light of the
performance of the Company and the Bank and their prospects; and
(c) the performance of the Company's Common Stock.
A significant portion of the compensation received by Messrs. Stroup and
McArthur was in the form of equity awards and dividends relating to such equity
awards. In light of the outstanding performance of the Company's Common Stock
and the amount of dividends paid to the stockholders of the Company in fiscal
1996, the Compensation Committee considered such compensation of Messrs. Stroup
and McArthur to be reasonable. During fiscal 1996, the Company paid an
aggregate of $1.9 million in dividends. It was determined that a majority of
these dividends paid in fiscal 1996, as well as since the Company's initial
public offering, will be treated, for income tax purposes, as a "return of
capital," as opposed to ordinary income. Accordingly, taking into account the
dividends paid to stockholders and their treatment for income tax purposes as a
return of capital, the value of the stockholders' Common Stock appreciated
significantly. Based on this analysis, the Compensation Committee determined
that the compensation paid to Messrs. Stroup and McArthur to be fair and
reasonable.
With respect to the other executive officers of the Bank, the Compensation
Committee considered the compensation levels to be commensurate with those of
similarly positioned executives in similar banks.
Donald C. Stroup John T. Robbs
Joe K. McArthur Charles R. Vawter, Jr.
Paul A. Brown
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19
STOCKHOLDER RETURN PERFORMANCE GRAPH
Set forth below is a line graph comparing the percentage change in the
cumulative total stockholder return on the Company's Common Stock against the
cumulative total stockholder return on stocks included in the American Stock
Exchange, Inc. ("AMEX") Market Index and the AMEX Financial Sub Index ("AMEX
Fin. Sub Index") during the period commencing February 14, 1995 (the date the
Company's Common Stock commenced trading on the American Stock Exchange) and
ending September 30, 1996. The graph assumes that the value of the investment
in the Company's Common Stock and each index was $100 on February 14, 1995.
COMPARES CUMULATIVE TOTAL RETURN AMONG
SOUTHFIRST BANCSHARES, INC., AMEX MARKET INDEX
AND AMEX FINANCIAL SUB INDEX
- ---------------------------------------FISCAL YEAR ENDING----------------------------------------
COMPANY 1995 1995 1996
SOUTHFIRST BANCSHARES, INC. 100.00 128.27 132.51
AMEX FINANCIAL SUB INDEX 100.00 117.22 135.80
AMEX MARKET INDEX 100.00 124.29 129.36
ASSUMES $100 INVESTED ON FEBRUARY 14, 1995
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDING SEPTEMBER 30, 1996
-16-
20
AGENDA ITEM TWO
APPOINTMENT OF AUDITORS
The firm of KPMG Peat Marwick LLP, independent certified public
accountants, audited the financial statements of the Company for the fiscal
year ended September 30, 1996. The Board of Directors has selected this same
firm to audit the accounts and records of the Company for the current fiscal
year and proposes that the stockholders ratify this selection at the Annual
Meeting. Neither such firm nor any of its members or associates has, or has
had during the past year, any financial interest in the Company, direct or
indirect, or any relationship with the Company, other than in connection with
their duties as auditors and income tax preparers.
Stockholder ratification of this appointment is not required. Management
has submitted this matter to the stockholders because it believes the
stockholders' views on the matter should be considered, and if the proposal is
not approved, management may reconsider the appointment. Representatives of
KPMG Peat Marwick LLP are expected to be present at the Annual Meeting to
respond to stockholders' questions and will have an opportunity to make any
statements they consider appropriate.
STOCKHOLDERS' PROPOSALS FOR 1998 ANNUAL MEETING
Stockholders may submit proposals appropriate for stockholder action at
the Company's 1998 Annual Meeting, consistent with the regulations of the
Securities and Exchange Commission. Proposals by stockholders intended to be
presented at the 1998 Annual Meeting must be received by the Company no later
than October 31, 1997, in order to be included in the Company's proxy materials
for that meeting. Such proposals should be directed to SouthFirst Bancshares,
Inc., Attention: Corporate Secretary, 126 North Norton Avenue, Sylacauga,
Alabama 35150.
OTHER MATTERS
The Board of Directors knows of no other matters to be brought before the
Annual Meeting. However, if other matters should come before the Annual
Meeting, it is the intention of the persons named in the enclosed form of Proxy
to vote the Proxy in accordance with their judgment of what is in the best
interest of the Company.
By Order of The Board of Directors
/s/ Joe K. McArthur
-------------------
Joe K. McArthur
Secretary
Sylacauga, Alabama
February 19, 1997
-17-
21
APPENDIX
[x] PLEASE MARK VOTES REVOCABLE PROXY
AS IN THIS EXAMPLE SOUTHFIRST BANCSHARES, INC.
THIS PROXY IS SOLICITED ON BEHALF 1. To elect three (3) With- For All
OF THE BOARD OF DIRECTORS FOR directors for a For hold Except
THE 1997 ANNUAL MEETING OF term of three years [ ] [ ] [ ]
STOCKHOLDERS. and until their
The undersigned hereby appoints Donald C. successors are
Stroup and Joe K. McArthur, or either of them, elected and have
with power of substitution to each, the proxies qualified.
of the undersigned to vote the Common Stock of PAUL A. BROWN, DONALD C. STROUP AND CHARLES R.
the undersigned at the Annual Meeting of VAWTER, JR.
Stockholders of SOUTHFIRST BANCSHARES, INC. to be INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY
held on Wednesday, March 19, 1997, at 10:00 a.m., INDIVIDUAL NOMINEE, MARK "FOR ALL EXCEPT" AND WRITE THAT
at the main office of SouthFirst Bancshares, NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.
Inc., located at 126 North Norton Avenue,
Sylacauga, Alabama 35150, and any adjournments or
postponements thereof:
------------------------------------------------------------
2. To ratify the appointment of For Against Abstain
KPMG Peat Marwick LLP as [ ] [ ] [ ]
auditors for fiscal year 1997.
3. To vote in accordance with their best judgment
with respect to any other matters that may
properly come before the meeting.
THE BOARD OF DIRECTORS FAVORS A VOTE "FOR" EACH OF THE
ABOVE PROPOSALS AND UNLESS INSTRUCTIONS TO THE CONTRARY ARE
INDICATED IN THE SPACE PROVIDED, THIS PROXY WILL BE SO
VOTED.
Please be sure to sign and date Please date and sign exactly as your name(s) appear(s)
this Proxy in the box below. Date on this card.
NOTE: When signing as an attorney, trustee, executor,
administrator or guardian, please give your title as such.
If a corporation or partnership, give full name by
Stockholder sign above -- Co-holder (if any) authorizing officer. In the case of joint tenants, each
sign above joint owner must sign.
- ---------------------------------------------------------------------------------------------------------------------
Detach above card, sign, date and mail in postage paid envelope provided.
SOUTHFIRST BANCSHARES, INC.
126 North Norton Avenue
Sylacauga, Alabama 35150
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY