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U.S. SECURITIES AND EXCHANGE COMMISSION  FORM 10-QSB [X]
    
    QUARTERLY REPORT PURSUANT TO 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934For the quarterly period ended March 31, 2004[  ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to Commission File Number: 333-86082 SOUTHERN COMMUNITY BANCSHARES, INC. 
 Georgia
    
    58 - 2639705(State or other jurisdiction of
incorporation or organization)
    
    (I.R.S. Employer
Identification Number)
 525 North Jeff Davis Drive, Fayetteville, Georgia 30214 
 (770) 461-4365 
 N/A 
 State the number of shares outstanding of each of the issuers classes of
capital stock, as of April 6, 2004: 1,934,777; no par value Transitional Small Business Disclosure Format    Yes [  ] No [X] 1




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SOUTHERN COMMUNITY BANCSHARES, INC. AND SUBSIDIARY INDEX PagePart I. Financial InformationItem 1. Financial StatementsConsolidated Balance Sheet as of March 31, 2004
    
    
    3Consolidated Statements of Income for the Three Months ended March 31, 2004 and 2003
    
    
    4Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2004 and 2003
    
    
    5Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2004 and 2003
    
    
    6Notes to Consolidated Financial Statements
    
    
    7-8Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    9-13Item 3. Controls and Procedures
    
    
    14Part II. Other InformationItem 6. Exhibits and Reports on Form 8-K
    
    
    14Signatures
    
    
    15Certifications
    
    
    16-21EX-31.1 SECTION 302 CERTIFICATION OF THE CEOEX-31.2 SECTION 302 CERTIFICATION OF THE CFOEX-32.1 SECTION 302 CERTIFICATION OF THE CEOEX-32.2 SECTION 302 CERTIFICATION OF THE CFO
  2




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SOUTHERN COMMUNITY BANCSHARES, INC.
AND SUBSIDIARY 
 CONSOLIDATED BALANCE SHEETS
March 31, 2004 2004AssetsCash and due from banks
    
    $
    3,387,381Federal funds sold
    
    
    9,746,000Securities available for sale
    
    
    53,685,001Restricted equity securities
    
    
    1,200,000Loans
    
    
    140,692,625Less allowance for loan losses
    
    
    1,572,986Loans, net
    
    
    139,119,639Premises and equipment
    
    
    5,306,539Other assets
    
    
    1,636,109Total assets
    
    $
    214,080,669Liabilities and Shareholders EquityDepositsNoninterest-bearing
    
    $
    19,574,895Interest-bearing
    
    
    147,372,682Total deposits
    
    
    166,947,577Securities sold under repurchase agreements
    
    
    2,430,224Federal Home Loan Bank Advances
    
    
    24,000,000Other liabilities
    
    
    982,152Total liabilities
    
    
    194,359,953Shareholders equityCapital stock, no par value; 10,000,000 shares authorized;
1,934,777 shares issued and outstanding
    
    
    16,050,433Retained earnings
    
    
    3,356,620Accumulated other comprehensive income
    
    
    313,663Total shareholders equity
    
    
    19,720,716Total liabilities and shareholders equity
    
    $
    214,080,669
 See Notes to Consolidated Financial Statements. 3




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SOUTHERN COMMUNITY BANCSHARES, INC.
AND SUBSIDIARY 
 CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 2004 and 2003 Three Months EndedMarch 31,2004
    
    2003Interest incomeLoans, including fees
    
    $
    2,416,593
    
    
    $
    1,702,229Taxable securities
    
    
    496,327
    
    
    
    139,735Nontaxable securities
    
    
    91,085
    
    
    
    40,627Federal funds sold
    
    
    13,056
    
    
    
    12,567Total interest income
    
    
    3,017,061
    
    
    
    1,895,158Interest expenseDeposits
    
    
    831,795
    
    
    
    614,819Other borrowings
    
    
    146,401
    
    
    
    9,270Total interest expense
    
    
    978,196
    
    
    
    624,089Net interest income
    
    
    2,038,865
    
    
    
    1,271,069Provision for loan losses
    
    
    153,121
    
    
    
    70,000Net interest income after provision for loan losses
    
    
    1,885,744
    
    
    
    1,201,069Other incomeService charges on deposit accounts
    
    
    95,444
    
    
    
    88,813Gain on sale of securities available for sale
    
    
    49,185
    
    
    
    Gain on sale of loans
    
    
    
    
    
    
    21,113Other operating income
    
    
    14,326
    
    
    
    6,676Total other income
    
    
    158,955
    
    
    
    116,602Other expensesSalaries and employee benefits
    
    
    686,708
    
    
    
    441,352Equipment and occupancy expenses
    
    
    153,919
    
    
    
    113,651Other operating expenses
    
    
    319,547
    
    
    
    254,409Total other expenses
    
    
    1,160,174
    
    
    
    809,412Net income before income taxes
    
    
    884,525
    
    
    
    508,259Income tax expense
    
    
    301,517
    
    
    
    193,138Net income
    
    $
    583,008
    
    
    $
    315,121Basic earnings per share
    
    $
    0.30
    
    
    $
    0.16Diluted earnings per share
    
    $
    0.29
    
    
    $
    0.16Dividends declared per share
    
    $
    
    
    
    $
    
 See Notes to Consolidated Financial Statements. 4




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SOUTHERN COMMUNITY BANCSHARES, INC.
AND SUBSIDIARY 
 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended March 31, 2004 and 2003 Three Months EndedMarch 31,2004
    
    2003Net income
    
    $
    583,008
    
    
    $
    315,121Other comprehensive income (loss):Unrealized holding gains on securities available for sale arising during period, net of tax
    
    
    682,269
    
    
    
    85,444Reclassification adjustment for gains realized in net income, net of taxes
    
    
    (30,495
    )
    
    
    Other comprehensive income
    
    
    651,774
    
    
    
    85,444Comprehensive income
    
    $
    1,234,782
    
    
    $
    400,565
 See Notes to Consolidated Financial Statements. 5




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SOUTHERN COMMUNITY BANCSHARES, INC.
AND SUBSIDIARY 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 2004 and 2003 2004
    
    2003OPERATING ACTIVITIESNet income
    
    $
    583,008
    
    
    $
    315,121Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation
    
    
    79,235
    
    
    
    63,596Provision for loan losses
    
    
    153,121
    
    
    
    70,000Gain on sale of securities available for sale
    
    
    (49,185
    )
    
    
    Decrease (increase) in interest receivable
    
    
    (232,546
    )
    
    
    17,555Increase in interest payable
    
    
    45,645
    
    
    
    3,355Net other operating activities
    
    
    134,180
    
    
    
    (30,630
    )Net cash provided by operating activities
    
    
    713,458
    
    
    
    438,997INVESTING ACTIVITIESPurchase of securities available for sale
    
    
    (245,000
    )
    
    
    (2,286,578
    )Proceeds from maturities of securities available for sale
    
    
    2,267,547
    
    
    
    3,187,903Proceeds from sales of securities available for sale
    
    
    5,192,337
    
    
    
    Purchase of restricted equity securities
    
    
    (450,000
    )
    
    
    (147,100
    )Net increase in federal funds sold
    
    
    (9,130,000
    )
    
    
    (8,431,000
    )Net increase in loans
    
    
    (15,491,117
    )
    
    
    (1,902,929
    )Purchase of premises and equipment
    
    
    (175,352
    )
    
    
    (412,360
    )Net cash used in investing activities
    
    
    (18,031,585
    )
    
    
    (9,992,064
    )FINANCING ACTIVITIESNet increase in deposits
    
    
    7,172,511
    
    
    
    10,310,460Proceeds from issuance of capital stock
    
    
    
    
    
    
    705,200Net decrease in federal funds purchased
    
    
    
    
    
    
    (719,000
    )Net increase in Federal Home Loan Bank advances
    
    
    9,000,000
    
    
    
    Net increase in repurchase agreements
    
    
    726,036
    
    
    
    14,278Net cash provided by financing activities
    
    
    16,898,547
    
    
    
    10,310,938Net increase (decrease) in cash and due from banks
    
    
    (419,580
    )
    
    
    757,871Cash and due from banks at beginning of year
    
    
    3,806,961
    
    
    
    3,789,657Cash and due from banks at end of period
    
    $
    3,387,381
    
    
    $
    4,547,528
 See Notes to Consolidated Financial Statements. 6




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SOUTHERN COMMUNITY BANCSHARES, INC. AND SUBSIDIARY 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  NOTE 1. BASIS OF PRESENTATION The consolidated financial information included for Southern
Community Bancshares, Inc. (the Company) and Southern Community
Bank (the Bank) herein is unaudited; however, such information
reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary
for a fair statement of results for the interim periods. The results of operations for the three months ended March 31,
2004 are not necessarily indicative of the results to be expected
for the full year. NOTE 2. STOCK COMPENSATION PLANS At March 31, 2004, the Company has two stock-based employee
compensation plans. The Company accounts for those plans
under the recognition and measurement principles of APB Opinion No.
25, Accounting for Stock Issued to Employees,and related
Interpretations. No stock-based employee compensation cost is
reflected in net income, as all options granted under these plans
have an exercise price equal to the market value of the underlying
stock on the date of grant. The following table illustrates the
effect on net income and earnings per share if the Company had
applied the fair value recognition provisions of SFAS Statement No.
123, Accounting for Stock-Based Compensation, to stock-based employee
compensation. Three Months EndedMarch 31,2004
    
    2003Net income, as reported
    
    $
    583,008
    
    
    $
    315,121Deduct: Total stock-based employee compensation
expense determined under fair value based
method for all awards, net of related tax effects
    
    
    
    
    
    
    Pro forma net income
    
    $
    583,008
    
    
    $
    315,121Earnings per share:Basic - as reported
    
    $
    0.30
    
    
    $
    0.16Basic - pro forma
    
    $
    0.30
    
    
    $
    0.16Diluted - as reported
    
    $
    0.29
    
    
    $
    0.16Diluted - pro forma
    
    $
    0.29
    
    
    $
    0.16
 7




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NOTE 3. EARNINGS PER CAPITAL SHARE Presented below is a summary of the components used to calculate
basic and diluted earnings per capital share for the periods ended
March 31, 2004 and 2003 Three Months EndedMarch 31,2004
    
    2003Net income
    
    $
    583,008
    
    
    $
    315,121Weighted average capital shares outstanding
    
    
    1,934,777
    
    
    
    1,911,992Net effect of the assumed exercise of stock
options based on the treasury stock method
using average market price for the period
    
    
    41,957
    
    
    
    9,609Total weighted average capital shares and
Capital stock equivalents outstanding
    
    
    1,976,734
    
    
    
    1,921,601Diluted earnings per capital share
    
    $
    0.29
    
    
    $
    0.16
 8




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SOUTHERN COMMUNITY BANCSHARES, INC. AND SUBSIDIARY 
 Item 2. MANAGEMENTS DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is managements discussion and analysis of certain significant
factors which have affected our financial position and operating results during
the periods included in the accompanying consolidated financial statements. Forward-Looking Statements This quarterly report contains certain forward-looking statements which are
based on certain assumptions and describe future plans, strategies, and our
expectations. These forward-looking statements are generally identified by use
of the words believe, expect, intend, anticipate, estimate,
project, or similar expressions. Our ability to predict results or the
actual effect of future plans or strategies is inherently uncertain. Factors
which could have a material adverse effect on our operations include, but are
not limited to, changes in interest rates, general economic conditions,
legislation and regulation, monetary and fiscal policies of the U.S.
Government, including policies of the U.S. Treasury and the Federal Reserve
Board, the quality or composition of our loan and investment portfolios, demand
for loan products, deposit flows, competition, demand for financial services in
our market area, and accounting principles and guidelines. You should consider
these risks and uncertainties in evaluating forward-looking statements and
should not place undue reliance on such statements. We will not publicly
release the result of any revisions which may be made to any forward-looking
statements to reflect events or circumstances after the date of such statements
or to reflect the occurrence of anticipated or unanticipated events. FINANCIAL CONDITION Total assets increased $18 million from $196 million to $214 million, or 9.42%
for the three months ended March 31, 2004. The increase in total assets in
2004 is more than the $11 million growth for the same period in 2003. The
growth was funded primarily by increases in total deposits, which increased by
$7 million and $10 million, respectively and increases in borrowings for 2004
from the Federal Home Loan Bank of $9 million. The net increase in total
assets for the three months ended March 31, 2004 consisted primarily of an
increase of $15 million in total loans, an increase in Federal funds sold of $9
million and a decrease in securities available-for-sale of $6 million. The
loan to deposit ratio at March 31, 2004 was 84% compared to 78% at December 31,
2003. The increase in the loan to deposit ratio as compared to December 31,
2003 is due to total loans increasing by $15 million and total deposits only
increasing by $7 million. Shareholders equity increased by $1.2 million for the three months ended March
31, 2004. This net increase consists of net income of $583,000, and an
increase in unrealized gains on securities of $652,000. LIQUIDITY Liquidity management involves the matching of the cash flow requirements of
customer withdrawals of funds and the funding of loan originations, and the
ability of our subsidiary bank to meet those requirements. Management monitors
and maintains appropriate levels of liquidity so that maturities of 9




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assets and deposit growth are such that adequate funds are provided to meet
estimated customer withdrawals and loan requests. At March 31, 2004, the Banks liquidity ratio was 19.02% which is slightly
lower than the Banks target ratio of 20%. The Bank has an available borrowing
capacity to meet any unexpected liquidity needs. REGULATORY CAPITAL REQUIREMENTS Banking regulations require us to maintain minimum capital levels in relation
to assets. At March 31, 2004, the Banks capital ratios were considered well
capitalized based on regulatory minimum capital requirements. The minimum
capital requirements and the actual capital ratios at March 31, 2004 are as
follows: RegulatoryMinimumConsolidated
    
    Bank
    
    RequirementLeverage Capital Ratio
    
    
    9.31
    %
    
    
    7.21
    %
    
    
    4.00
    %Risk-Based Capital RatiosCore Capital
    
    
    12.37
    %
    
    
    9.59
    %
    
    
    4.00
    %Total Capital
    
    
    13.37
    %
    
    
    10.59
    %
    
    
    8.00
    %
 During the second quarter of 2004, we expect to open two in-store banking
facilities, one located in Coweta County and the second located in Clayton
County. During that same period of time, we anticipate opening a traditional
branch located in the Henry County market of Locust Grove. In addition, we own
a piece of property located within Coweta County with an expected opening late
in the third quarter of 2004. The total commitment for all branches in 2004 is
estimated at $2.7 million. The Company issued $5.6 million of Trust Preferred securities during the second
quarter of 2004. These securities will be issued by a statutory trust that has
been established to facilitate the transaction. The securities have a 30-year
maturity, callable without penalty after five years, and pay a floating rate
based on Prime plus 12.5 basis points. The Company expects that the principal
balance of these securities will count toward tier one capital. The Company
intends to use the proceeds from this transaction to fund asset growth. The
Company will fully and unconditionally guarantee the securities. We are not aware of any other recommendations by the regulatory authorities,
events or trends, which, if they were to be implemented, would have a material
effect on our liquidity, capital resources, or operations. OFF BALANCE SHEET ARRANGEMENTS Our financial statements do not reflect various commitments and contingent
liabilities that arise in the normal course of business. These off-balance
sheet financial instruments include commitments to extend credit and standby
letters of credit. Such financial instruments are included in the financial
statements when funds are distributed or the instruments become payable. Our
exposure to credit loss in the event of nonperformance by the other party to
the financial instrument for commitments to extend 10




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credit and standby letters of credit is represented by the contractual amount
of those instruments. We use the same credit policies in making commitments as
we do for on-balance sheet instruments. Although these amounts do not
necessarily represent future cash requirements, a summary of our commitments as
of March 31, 2004 and December 31, 2003 are as follows: March 31, 2004
    
    December 31, 2003Commitments to extend credit
    
    
    31,315
    
    
    
    26,594Financial standby letters of credit
    
    
    
    
    
    
    Other standby letters of credit
    
    
    1,637
    
    
    
    1,228
 RESULTS OF OPERATIONS Net Interest Income. Net interest income increased by $768,000 for the three
month period ended March 31, 2004 compared to the same period in 2003. The
increase in net interest income is attributable to an increase in earning
assets of $82 million as compared to March 2003. Loans increased during this
period by $48 million, which generally provide greater yields to the Company.
During this same period, total deposits increased by $57 million, which
included an increase of $51 million in interest-bearing deposits and an
increase of $6 million in non-interest bearing deposits. The change in net
interest income is also based on the spread between rates earned on interest
earning assets and rates paid on interest bearing liabilities. The yield on
total loans for the three months ended March 31, 2004 is approximately 7.23% as
compared to 7.51% for the same period in 2003. The yield on total interest
earning assets for the three months ended March 31, 2004 was 6.13% compared to
6.49% for the same period in 2003, or a decrease of 36 basis points. The rate
paid on interest bearing liabilities for the same period decreased by only 41
basis points to 2.34% from 2.75%. These decreases in yields are directly
related to the continued adjustment in rates over the past two years. Due to the continued decrease in interest rates and increased volume of loans
and deposits at their respective current yields, the net interest margin
decreased to 4.14% at March 31, 2004 as compared to 4.35% at March 31, 2003.
We utilize floors on many of our adjustable rate loans to minimize the impact
of changing rates. Provision for Loan Losses. The provision for loan losses is based on
managements evaluation of the economic environment, the history of charged off
loans and recoveries, size and composition of the loan portfolio, nonperforming
and past due loans, and other aspects of the loan portfolio. We review the
allowance for loan loss on a monthly basis and make provisions as necessary. A
provision of $153,000 was made during the three month period ending March 31,
2004 based upon this evaluation process as compared to $70,000 for the same
period in 2003. The allowance for loan loss as a percentage of total loans was
1.12% at March 31, 2004, 1.13% at December 31, 2003, and 1.25% at March 31,
2003. Management believes the allowance for loan loss at March 31, 2004 is
adequate to meet any foreseeable losses in the loan portfolio. 11




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At March 31, 2004 and 2003, nonaccrual, past due, and restructured loans were
as follows: March 31,
    
    March 31,2004
    
    2003(Dollars in thousands)Total nonaccruing loans
    
    $
    730
    
    
    $
    336Loans contractually past due ninety days
or more as to interest or principal
payments and still accruing
    
    
    6Restructured loans
    
    
    
    
    
    
    
 Nonaccrual loans for the
quarter ended March 31, 2004 increased 117% over March 31,
2003. Management feels the increase is in part related to the
maturation of the portfolio and the hiring of a Chief Credit Officer
in the 4th quarter of 2003, who immediately instituted a more timely
identification process for identifying potential problem credits.
While the overall increase in nonaccrual loans is substantial, 65% is
concentrated in four loans. At this time management does not expect
any material losses due to the collateral position and specific
reserves related to these credits. It is our policy to
discontinue the accrual of interest income when, in the opinion of
management, collection of such interest becomes doubtful. This status
is accorded such interest when (1) there is a significant
deterioration in the financial condition of the borrower and full
repayment of principal and interest is not expected or (2) the
principal or interest is more than ninety days past due, unless the
loan is both well-secured and in the process of collection. Accrual
of interest on such loans is resumed when, in managements
judgment, the collection of interest and principal becomes probable. Loans classified for
regulatory purposes as loss, doubtful, substandard, or special
mention that have not been included in the table above do not
represent or result from trends or uncertainties which management
reasonably expects will materially impact future operating results,
liquidity, or capital resources. These classified loans do not
represent material credits about which management is aware of any
information which causes management to have serious doubts as to the
ability of such borrowers to comply with the loan repayment terms. Information regarding certain loans and allowance for loan loss data for the
three months ended March 31, 2004 and 2003 is as follows: Three Months EndedMarch 31,2004
    
    2003(Dollars in thousands)Average amount of loans outstanding
    
    $
    134,025
    
    
    $
    91,934Balance of allowance for loan losses at beginning of period
    
    $
    1,420
    
    
    $
    1,141Loans charged offCommercial and financial
    
    
    
    
    
    
    Real estate
    
    
    
    
    
    
    (50
    )Installment
    
    
    
    
    
    
    
    
    
    
    (50
    )
 12




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Three Months EndedMarch 31,2004
    
    2003(Dollars in thousands)Loans recoveredCommercial and financial
    
    
    
    
    
    
    Real estate
    
    
    
    
    
    
    Installment
    
    
    
    
    
    
    
    
    
    
    Net charge-offs
    
    
    
    
    
    
    (50
    )Additions to allowance charged to operating expense during period
    
    
    153
    
    
    
    70Balance of allowance for loan losses at end of period
    
    
    1,573
    
    
    
    1,161Ratio of net loans charged-off during the
period to average loans outstanding
    
    
    
    %
    
    
    0.05
    %
 Other Income.Other operating income increased by $8,000 for the three months
ended March 31, 2004 compared to the same period in 2003. This increase is
directly related to the origination fees generated on mortgage loans. Gains on
sales of securities available for sale increased by $49,000 for the three
months ended March 31, 2004 compared to the same period in 2003. Deposit
service charges increased $7,000 for the three months ended March 31, 2004
compared to the same period in 2003 which is directly related to the growth in
deposit accounts. Gains on sale of loans decreased by $21,000 for the three
months ended March 31, 2004 compared to the same period in 2003. Other Expenses.Total other expenses increased by $351,000 for the three
months ended March 31, 2004 compared to the same period in 2003. The most
significant increases in 2004 are increases of $245,000 in salaries and
employee benefits and other operating expenses of $65,000 for the three months
ended March 31, 2004. The increase in salaries and employee benefits represent
normal increases in salaries and an increase in the number of employees. At
March 31, 2004, the number of full-time equivalent employees was 56 compared to
37 at March 31, 2003. The increase in the number of full-time equivalent
employees is directly related to the growth of the company and the hiring for
both in-store banking facilities which are expected to open the second quarter
of 2004. The increases in other operating expenses are not attributable to any
one particular item, but represent normal increases. Equipment and occupancy
expenses increased $40,000 for the three months ended March 31, 2004. This
increase is directly related to equipment purchases for new employees and
occupancy expenses related to the opening of our Peachtree City facility. Income Taxes.Income tax expense increased by $108,000 for the three months
ended March 31, 2004 as compared to the same period in 2003. The increase in
income tax expense is directly related to the increase in income before taxes
of $376,000 for the three months ended March 31, 2004 as compared to the same
period in 2003. The effective tax rate for 2004 and 2003 was 34.1% and 38%,
respectively. The decrease in our effective tax rate is due to the purchase
of non-taxable securities. Net Income. Net income increased by $268,000 for the three months ended March
31, 2004 as compared to the same period in 2003. The primary reason for the
increase in net income for the three months ended March 31, 2004 as compared
to the same period in 2003 is the increase in net interest income. 13




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Item 3. CONTROLS AND PROCEDURES Our Chief Executive Officer and Chief Financial Officer have evaluated the
Companys disclosure controls and procedures as of the end of the quarterly
period covered by this Form 10-QSB and have concluded that the Companys
disclosure controls and procedures are effective. During the first quarter of
2004 there were no changes in the Companys internal control over financial
reporting that have materially affected, or that are reasonably likely to
materially affect, the Companys internal control over financial reporting. 
 Item 6. Exhibits and Reports on Form 8-K  (a)
    
    Exhibits 31.1 Certificate of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2 Certificate of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1 Certificate of CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2 Certificate of CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  (b)
    
    Reports on Form 8-K. None. 14




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SIGNATURES In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized. SOUTHERN COMMUNITY
BANCSHARES, INC.Date: May 7, 2004
    /s/ Gary McGahaGary McGahaPresident and Director Date May 7, 2004
    /s/ Leslye GrindleLeslye GrindleSr. Vice President and
Chief Financial Officer 15