SRNN Southern Banc Company Inc (PK)

The Southern Banc Company, Inc. (OTCBB: SRNN), the holding company for The Southern Bank Company, formerly First Federal Savings and Loan Association of Gadsden, Alabama, announced a net loss of $11,545, or $(0.01) per basic and diluted share, for the quarter ended December 31, 2008, as compared to a net loss of $81,115, or $(0.10) per basic and diluted share, for the quarter ended December 31, 2007. For the six month period ended December 31, 2008, the company recorded a net loss of $17,984, or $(0.02) per basic and diluted share, as compared to a net loss of $133,245, or $(0.17) per basic and diluted share, for the six month period ended December 31, 2007.

Gates Little, President and Chief Executive Officer of the Company, stated that the Company�s net interest margins improved during the quarter as compared to the same period in 2007. Net interest income for the six month period ended December 31, 2008 was approximately $1.1 million as compared to approximately $940,000 for the six month period ended December 31, 2007. The improvement in the net interest margin for the six month period was primarily attributable to a decrease in total interest expense of approximately $330,000, or 19.91%, offset in part by a decrease in total interest income of approximately $173,000, or 6.65%. For the six month period ended December 31, 2008, total non-interest income increased approximately $44,000, or 66.15%, while total non-interest expense increased approximately $11,000, or 0.90%, as compared to the same six month period in 2007. The increase in non-interest income was primarily attributable to an increase in customer service fees.

The Company�s total assets at December 31, 2008 were $97.8 million, as compared to $102.9 million at June 30, 2008. Total stockholders� equity was approximately $15.2 million, or 15.58% of total assets, at December 31, 2008 as compared to approximately $15.1 million, or 14.72% of total assets, at June 30, 2008.

The Bank has four offices located in Gadsden, Albertville, Guntersville, and Centre, Alabama. The stock of The Southern Banc Company, Inc. is listed on the OTC Bulletin Board.

Certain statements in this release contain �forward-looking statements� within the meaning of the Private Securities Litigation Reform Act of 1995, which statements can generally be identified by the use of forward-looking terminology, such as �may,� �will,� �expect,� �estimate,� �anticipate,� �believe,� �target,� �plan,� �project,� �continue,� or the negatives thereof, or other variations thereon or similar terminology, and are made on the basis of management�s plans and current analyses of the Company, its business and the industry as a whole. These forward-looking statements are subject to risks and uncertainties, including, but not limited to, economic conditions, competition, interest rate sensitivity and exposure to regulatory and legislative changes. The above factors, in some cases, have affected, and in the future could affect the Company�s financial performance and could cause actual results to differ materially from those expressed or implied in such forward-looking statements, even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

THE SOUTHERN BANC COMPANY, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(Dollar Amounts in Thousands)

� � December 31, � June 30, 2008 2008 � � � ASSETS � CASH AND CASH EQUIVALENTS $ 4,081 $ 4,344 � SECURITIES AVAILABLE FOR SALE, at fair value 55,866 60,320

SECURITIES HELD TO MATURITY, at amortized cost, fair value of $85 and $112, respectively

80 94 FEDERAL HOME LOAN BANK (FHLB) STOCK 328 328 �

LOANS RECEIVABLE, net of allowance for loan losses of $194 and $170, respectively

35,736 36,140 PREMISES AND EQUIPMENT, net 932 947 ACCRUED INTEREST AND DIVIDENDS RECEIVABLE 465 508 PREPAID EXPENSES AND OTHER ASSETS 291 207 � � TOTAL ASSETS $ 97,779 � $ 102,889 � � � LIABILITIES � DEPOSITS $ 79,172 $ 84,387 FHLB ADVANCES 3,075 3,075 OTHER LIABILITIES 303 283 � � TOTAL LIABILITIES 82,550 87,745 � � STOCKHOLDERS' EQUITY:

Preferred stock, par value $.01 per share 500,000 shares authorized, shares issued and outstanding -- none

0 0

Common stock, par value $.01 per share, 3,500,000 authorized, 1,454,750 shares issued

15 15 Additional paid-in capital 13,887 13,887

Shares held in trust, at cost, 25,768 shares

(571 ) (571 ) Retained earnings 10,658 10,811

Treasury stock, at cost, 648,664 shares

(8,825 ) (8,825 )

Accumulated other comprehensive (loss)

(66 ) (173 ) �

TOTAL STOCKHOLDERS� EQUITY

15,229 � 15,144 � �

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

97,779 � $ 102,889 �

THE SOUTHERN BANC COMPANY, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Dollar Amounts in Thousands, except per share data)

� � Three Months Ended � Six Months Ended December 31, December 31, � � 2008 2007 2008 2007 � � � � INTEREST INCOME: Interest and fees on loans $ 538 $ 534 $ 1,105 $ 1,047 Interest and dividends on securities available for sale 661 724 1,306 1,464 Interest and dividends on securities held to maturity 2 2 3 4 Other interest income 3 � 53 � 11 � 82 � �

Total interest income

1,204 1,313

2,425

2,597

�

INTEREST EXPENSE:

Interest on deposits 606 813 1,285 1,593 Interest on borrowings 21 � 30 � 43 � 64 � Total interest expense 627 � 843 � 1,328 � 1,657 �

Net interest income before provision for loan losses

576 470

1,097

940

Provision for loan losses 10 � 0 � 13 � 8 �

Net interest income after provision for loan losses

566 470

1,084

932

�

NON-INTEREST INCOME:

Fees and other non-interest income 50 26 102 48 Gain on sale of securities 0 0 0 11 Miscellaneous income 4 � 2 � 8 � 7 � Total non-interest income 54 � 28 � 110 � 66 � �

NON-INTEREST EXPENSE:

Salaries and employee benefits 383 357 732 663 Office building and equipment expenses 53 51 105 103 Professional Services Expense 51 47 93 125 Data Processing Expense 67 65 135 131 Other operating expense 85 � 108 � 157 � 190 � Total non-interest expense 639 � 628 � 1,223 � 1,212 � Income / (loss) before income taxes (19 ) (130 ) (29 ) (214 ) �

PROVISION / (BENEFIT) FOR INCOME TAXES

(7 ) (49 )

(11

)

(81

)

Net Income / (Loss)

$

(12 )

$

(81 )

$

(18 )

$

(133 ) � EARNINGS / (LOSS) PER SHARE: Basic $ (0.01 ) $ (0.10 ) $ (0.02 ) $ (0.17 ) Diluted $ (0.01 ) $ (0.10 ) $ (0.02 ) $ (0.17 ) �

DIVIDENDS DECLARED PER SHARE

$

0.0875

$

0.0875

�

$

�

0.1750

�

$

�

0.1750

� AVERAGE SHARES OUTSTANDING: Basic 780,318 780,318 780,318 780,451 Diluted 780,403 780,318 780,413 781,562