SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1994
Commission File Number 0-11172
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
(Exact name of registrant as specified in its charter)
State of South Carolina 57-0738665
State or other jurisdiction of IRS Employer Identification No.)
incorporation or organization)
1230 Main Street
Columbia, South Carolina 29201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(803) 733-3456
NO CHANGE(Former name or former address, if changed since last report.)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. YES [ X ] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at April 30, 1994
Voting Common Stock, $5.00 Par Value 892,813 Shares
Non-voting Common Stock, $5.00 Par Value 52,720 Shares
Page 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET - UNAUDITED(dollars in thousands)
March 31, December March 31,
1994 31, 1993
(Unaudited) 1993 (Unaudited)
ASSETS
Cash and due from banks:
Noninterest-bearing $72,461 $96,442 $75,017
Interest-bearing 14,700 14,950 15,450
Total cash and due from ______ _______ ______
banks 87,161 111,392 90,467
Investment securities:
Held-to-maturity 480,184 467,977 458,184
Available-for-sale 9,958
_______ _______ _______
Total securities 490,142 467,977 458,184
------- ------- -------
Federal funds sold 10,800 23,600
------- ------- -------
Gross loans and discounts
Real estate - construction 20,161 18,952 21,144
Real estate - mortgage 516,214 509,314 470,350
Installment 250,929 253,874 236,593
Commercial, financial and
agricultural 93,528 98,863 91,954
Less: Unearned interest (4)
Less: Reserve for loans
losses (18,114) (18,061) (16,807)
_______ _______ -------
Net loans and discounts 862,718 862,942 803,230
Premises and equipment 36,424 36,853 38,483
Other real estate owned 286 410 481
Interest income accrued,
not collected 9,563 10,651 10,165
Intangible assets 13,767 14,584 17,043
Other assets 12,859 14,169 12,623
---------- ---------- ----------
TOTAL ASSETS $1,523,720 $1,518,978 $1,454,276
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $201,385 $208,606 $184,631
Time and savings 1,142,249 1,127,760 1,115,336
--------- --------- ---------
Total deposits 1,343,634 1,336,366 1,299,967
Federal funds purchased and
securities sold under
repurchase agreements 60,116 71,206 48,378
Subordinated notes and
term loan 14,150 14,400 15,150
Other liabilities 14,958 12,769 16,251
--------- --------- ---------
TOTAL LIABILITIES 1,432,858 1,434,741 1,379,746
Stockholders' Equity:
Preferred stock 3,282 3,282 3,300
Non-voting common stock -
$5.00 par value, authorized
1,000,000; issued and
outstanding March 31, 1994,
December 31, 1993 and
March 31, 1993 - 52,720 264 264 264
Voting common stock -
$5.00 par value, authorized
2,000,000; issued and
outstanding March 31, 1994,
December 31, 1993 and March
31, 1993 - 892,813 4,464 4,464 4,464
Surplus 55,000 55,000 40,000
Undivided profits 27,852 21,227 26,502
------- ------- -------
TOTAL STOCKHOLDERS' EQUITY 90,862 84,237 74,530
TOTAL LIABILITIES AND __________ __________ __________
STOCKHOLDERS' EQUITY $1,523,720 $1,518,978 $1,454,276
Page 3
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME - UNAUDITED (dollars in thousands, except
per share amounts)
Three Months Ended Increase
March 31, (Decrease)
1994 1993
Interest income and fees:
Loans $18,101 $18,314 ($213)
United States Government
obligations 4,793 6,058 (1,265)
Tax exempt securities 629 388 241
Other securities and
federal funds sold 398 400 (2)
______ ______ ______
23,921 25,160 (1,239)
Interest expense:
Deposits 8,346 9,486 (1,140)
Short-term borrowings 495 379 116
Long-term borrowings 256 269 (13)
------ ------ ------
9,097 10,134 (1,037)
Net interest income 14,824 15,026 (202)
Provision for loan losses 298 975 (677)
Net interest income after ------ ------ ----
provision for loan losses 14,526 14,051 475
------ ------ ----
Noninterest income:
Service charges on deposit
accounts 2,519 2,533 (14)
Fees for other customer
services 1,102 1,208 (106)
Investment securities
transactions 0 0 0
Other 861 791 70
----- ----- ---
4,482 4,532 (50)
Noninterest expense:
Salaries and employee benefits 6,947 6,596 351
Net occupancy expense ofpremises 561 632 (71)
Furniture and equipment expense 390 436 (46)
Depreciation expense 1,066 998 68
Amortization of intangibles 918 850 68
Other 5,136 4,315 821
----- ----- ---
15,018 13,827 1,191
Income before income taxes
and cumulative effect 3,990 4,756 (766)
Applicable income taxes 1,289 1,820 (531)
Income before cumulative
effect of a change in
accounting principle 2,701 2,936 (235)
Cumulative effect on prior
years (to December 31, 1992)
of changing to a different
method of accounting for
income taxes 0 221 (221)
------ ------ -----
Net Income $2,701 $3,157 ($456)
Per share amounts:
Earnings per common share:
Income before cumulative
effect of a change in
accounting principle $2.81 $3.06 ($0.25)
Cumulative effect on prior
years (to December 31,
1992) of changing to a
different method of
accounting for income taxes 0.00 0.23 (0.23)
----- ----- ------
Net income $2.81 $3.29 ($0.48)
Weighted average common
shares outstanding 945,533 945,533 0
Page 4
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars in thousands)
Non- Total
Voting Voting Pre- Undi- Stock-
Common Common ferred vided holders'
Stock Stock Stock Surplus Profits Equity
Balance at
December
31, 1992 $3,300 $264 $4,464 $40,000 $23,388 $71,416
Net income 3,157 3,157
Preferred
stock
dividends (43) (43)
Balance at
March 31, ----- --- ----- ------ ------ ------
1993 3,300 264 4,464 40,000 26,502 74,530
Net income 9,847 9,847
Preferred
stock
dividends (129) (129)
Transfer to
surplus 15,000 (15,000) 0
Reacquired
preferred
stock (18) 7 (11)
Balance at
December ----- --- ----- ------ ------ ------
31, 1993 3,282 264 4,464 55,000 21,227 84,237
Net income 2,701 2,701
Preferred
stock
dividends (43) (43)
Net unrealized
gains on
securities
available-
for-sale
- net of
taxes 3,967 3,967
Balance at
March 31, ------ ---- ------ ------- ------- -------
1994 $3,282 $264 $4,464 $55,000 $27,852 $90,862
Page 5
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS - UNAUDITED (dollars in thousands)
Three Months Ended March 31,
1994 1993
Cash Flows From Operating
Activities:
Net income $2,701 $3,157
Adjustments to reconcile
net income to net cash
cash provided by operating
activities:
Provision for loan losses 298 974
Depreciation and
amortization 1,984 1,848
Amortization/accretion
of investment securities 152 429
Deferred income tax benefit 188 543
Gain on sales of premises
and equipment (23) (1)
Decrease in interest income
accrued, not collected 1,088 1,301
Decrease in accrued interest
payable (136) (800)
Originations of loans held
for resale (13,141) (9,093)
Proceeds from sales of loans
held for resale 15,544 8,914
Gains on sales of loans held
for resale (89) (103)
Increase in other assets (1,014) (1,497)
Increase in other liabilities 2,189 1,257
Other operating activities (62) 4
Net Cash Provided By Operating ------ -----
Activities 9,679 6,933
Cash Flows From Investing Activities:
Net increase in loans (2,388) (11,331)
Proceeds from maturities of investment
securities 122,085 24,526
Purchases of investment securities (138,299) (24,207)
Increase in federal funds sold (10,800) (23,600)
Proceeds from sales of premises and
equipment 111 3
Purchases of premises and equipment (730) (3,246)
Net (increase) decrease in other real
estate owned 124 (166)
Net (increase) decrease in intangible
assets 102 (419)
Net Cash Used In Investing ------- -------
Activities (29,795) (38,440)
Cash Flows From Financing Activities:
Net increase in deposits 7,268 16,842
Increase (decrease) in federal funds
purchased and securities sold under
agreements to repurchase (11,090) 2,976
Maturities of subordinated notes and
term loan (250) (250)
Cash dividends paid (43) (43)
Net Cash Provided By Financing ------- ------
Activities (4,115) 19,525
Decrease in cash and cash equivalents (24,231) (11,982)
Cash and cash equivalents at beginning
of year 111,392 102,449
------- -------
Cash and cash equivalents at March 31 $87,161 $90,467
Supplemental disclosures of cash flow
information:
Interest paid $9,233 $10,934
Income taxes paid $160 $150
Page 6
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The foregoing financial statements are unaudited; however, in the opinion
of Management, all adjustments (comprising only normal recurring accruals)
necessary for a fair presentation of financial statements have been included.
A summary of Bancorporation's significant accounting policies is set forth
in Note 1 to the Consolidated Financial Statements in Bancorporation's
Annual Report on Form 10-K for 1993. The significant accounting policies
used during the current quarter are unchanged from those disclosed in the
1993 Annual Report.
INCOME TAXES:
Effective January 1, 1993, Bancorporation adopted Statement of Financial
Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes."
The adoption of SFAS 109 changes Bancorporation's method of accounting for
income taxes from the deferred method (APB 11) to an asset and liability
approach. Previously Bancorporation deferred the past tax effects of timing
differences between financial reporting and taxable income. The asset and
liability approach requires the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of other assets and
liabilities. Further, SFAS 109 requires a valuation allowance be provided
against deferred tax assets unless management considers it more likely than
not that such assets will be realized. Based on current facts and
circumstances, management believes that deferred tax assets are reasonably
assured of realization and, accordingly, does not believe that a valuation
allowance is necessary. The cumulative benefit to Bancorporation's results
of operations from the implementation of the new accounting standard was
$221,000.
Deferred tax assets and liabilities recorded pursuant to SFAS 109 are
composed of the following at (dollars in thousands):
March 31, March 31,
1994 1993
Provision for loan losses in excess
of amount deductible for taxes $6,231 $5,660
Tax amortization of core deposit
premium less than book 157
Other, net 562 863
----- -----
Gross deferred tax asset 6,950 6,523
Book depreciation over tax (461) (536)
Interest income, accretion of bond
discount and expenses
recognized for books not taxed
until realized (225) (123)
Deferred income and expense items
recognized in differing accounting
periods (447) (335)
Pension plan (695) (540)
Net unrealized gains on securities
available-for-sale (2,136)
Other (101) (553)
Gross deferred tax liability (4,065) (2,087)
------ ------
Net deferred tax asset $2,885 $4,436
Page 7
PART I - FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
SUMMARY:
First Citizens Bancorporation reported net income of $2,701,000 for the first
quarter of 1994 a 14% decrease from the $3,157,000 for the first quarter a
year ago. The downturn in earnings is attributed to the decline in net
interest margin and interest spreads, along with increased cost of
operations.
Average loans net of unearned interest for the first quarter of 1994
increased $67,343,000 or 8.26% over the first quarter of 1993, with a yield
of 8.36% for the first quarter of 1994. Average taxable and non-taxable
investment securities for the first quarter of 1994 increased by $5,247,000
or 1.14% from the first quarter of 1993, with a taxable equivalent yield of
5.00% for the first quarter of 1994.
Noninterest income declined slightly by $50,000 or 1.10% for the first
quarter of 1994 as compared to the same period in 1993. Noninterest expense
for the first quarter of 1994 increased $1,191,000 or 8.61% as compared to
the same period in 1993. The increase was primarily due to increased salary,
wage and employee benefit costs and overall operating expenses.
Net income per common share for the three months ended March 31, 1994
decreased 14.59% to $2.81, as compared to $3.29 for the first quarter of 1993.
Book value per common share for the three months ended March 31, 1994
increased 22.97% to $92.63, as compared to $75.33 for the first quarter of
1993.
As illustrated in the following table, Tier 1 capital was 8.81% at March 31,
1994 as compared to 7.54% at March 31, 1993. Total risk based capital was
11.25% at March 31, 1994 as compared to 10.13% at March 31, 1993. The risk
based capital ratios were calculated using the 1992 Final Rules as defined
by Federal regulators.
Page 8
Components of Capital (dollars in thousands):
March 31,
1994 1993
Stockholders' Equity:
Preferred stock $ 3,282 $ 3,300
Common stock 4,728 4,728
Surplus 55,000 40,000
Undivided profits 27,852 26,502
Total stockholders' equity 90,862 74,530
Reserve for possible loan losses 18,114 16,807
Total primary capital 108,976 91,337
Long-term debt qualifying as
secondary capital 14,150 15,150
-------- --------
Total capital $123,126 $106,487
Tier I leverage ratio 5.07 4.30
Risk based capital ratio total 11.29 10.13
Tier I 8.81 7.54
Tier II 2.44 2.59
NET INTEREST INCOME:
Net interest income on a taxable equivalent basis was $15,261,000 for the
first quarter of 1994, a decrease of .38% from the $15,319,000 for the
comparable period in 1993.
The following table presents the components, fully taxable, of net interest
income for the first quarter of 1994 and 1993:
Net Interest Income (dollars in thousands):
Three Months Ended March 31,
1994 1993
Total interest income $23,921 $25,160
Total interest expense 9,097 10,134
Net interest income 14,824 15,026
Tax equivalent adjustment to
interest income 437 293
Net interest income (taxable
equivalent yield at 65% ------- -------
for 1994 and 66% for 1993) $15,026 $15,319
Page 9
Taxable Equivalent Rate/Volume Variance Analysis (dollars in thousands)
Three Months Ended March 31
Interest
Average Balance Rev./Exp. Yield
1994 1993 1994 1993 1994 1993
Interest-earning
assets:
Loans, net of
unearned
interest $882,709 $815,366 $18,201 $18,407 8.36% 9.16%
Taxable
investment
securities 413,366 434,865 4,849 6,108 4.69% 5.62%
Non-taxable
investment
securities 50,326 23,580 967 588 7.69% 9.97%
Federal funds
sold 18,199 18,246 140 135 3.12% 3.00%
Other earning
assets 14,711 15,478 201 215 5.54% 5.63%
Total interest
-earning --------- --------- ------ ------
assets 1,379,311 1,307,535 24,358 25,453 7.14% 7.87%
Noninterest
-earning
assets:
Cash and due
from banks 75,947 75,535
Premises and
equipment 36,710 36,738
Other, less
reserve for
loan losses 22,798 24,807
Total
noninterest
-earning
assets 135,455 137,080
---------- ----------
TOTAL ASSETS $1,514,766 $1,444,615
Interest-bearing
liabilities:
Deposits $1,142,408 $1,113,102 8,346 9,486 2.96% 3.46%
Federal funds
purchased and
securities
sold under
agreements
to repurchase 65,850 53,372 495 379 3.05% 2.88%
Long-term debt 14,184 15,186 256 269 7.22% 7.09%
Total interest
-bearing --------- --------- ----- ------
liabilities 1,222,442 1,181,660 9,097 10,134 3.02% 3.48%
Noninterest
-bearing
liabilities:
Demand deposits 192,117 174,163
Other
liabilities 14,615 15,600
------- -------
206,732 189,763
Stockholders'
equity 85,592 73,192
TOTAL
LIABILITIES
AND
STOCKHOLDERS' ---------- ---------- ------- ------
EQUITY $1,514,766 $1,444,615 9,097 10,134
------- -------
Net interest income $15,261 $15,319
Interest income to
earning assets 7.14% 7.87%
Interest expense
to earning assets 2.67% 3.14%
Net interest income
to earning assets 4.46% 4.72%
Page 10
Net
Change Due To Increase
Rate Volume (Decrease)
Interest-earning
assets:
Loans, net of
unearned interest ($6,372) $6,166 ($206)
Taxable investment
securities (51) (1,208) (1,259)
Non-taxable investment
securities (2,289) 2,668 379
Federal funds sold 6 (1) 5
Other earning assets 29 (43) (14)
Total interest-earning ------ ----- ------
assets (8,676) 7,581 (1,095)
Interest-bearing liabilities:
Deposits (2,153) 1,013 (1,140)
Federal funds purchased
and securities sold under
agreements to repurchase (243) 359 116
Long-term debt 58 (71) (13)
Total interest-bearing ------ ----- ------
liabilities (2,338) 1,301 (1,037)
TOTAL LIABILITIES AND ------ ----- ------
STOCKHOLDERS' EQUITY (2,338) 1,301 (1,037)
------- ------ ------
Net interest income ($6,338) $6,280 ($58)
Page 11
RESERVE FOR POSSIBLE LOAN LOSSES:
The reserve at March 31, 1994 was $18,114,000 or 2.05% of total loans as
compared to $16,807,000 or 2.05% of total loans at March 31, 1993.
For the three months ended March 31, 1994, the provision for possible loan
losses was $298,000, a decrease of 69.44% from the $975,000 for the same
period in 1993.
Net charge-offs were $245,000 in the first quarter of 1994 which represented
a decrease of 67.64% when compared to the $757,000 reported for the
comparable period of 1993.
Provision and Reserve for Loan Losses (dollars in thousands):
Three Months Ended March 31,
1994 1993
Reserve for possible loan losses:
Balance at beginning of period $18,061 $16,589
Provision charged to expense 298 975
Charge-offs (439) (1,004)
Recoveries 194 247
Net chargeoffs (245) (757)
------- -------
Balance at end of period $18,114 $16,807
Ratios (annualized):
Consolidated Net Charge-offs to:
Average loans .12 .36
Loans at end of period .12 .36
Reserve for possible loan losses 5.40 18.00
NONINTEREST INCOME AND EXPENSE:
Total noninterest income for the first quarter of 1994 was $4,482,000, a
decrease of 1.08% from the $4,532,000 earned for the first quarter of 1993.
Total noninterest expense for the first quarter of 1994 was $15,018,000, an
increase of 8.62% when compared with $13,827,000 for the same period a year
ago.
The following table provides additional details of noninterest income and
expense:
Page 12
Noninterest Income and Expense (dollars in thousands):
Three Months
Ended
March 31, Change
1994 1993 Amount Percent
Noninterest income:
Service charges on
deposit accounts $2,519 $2,533 ($14) -0.55%
Commissions, service
charges and fees 296 316 (20) -6.33%
Mortgage servicing 417 523 (106) -20.27%
Bankcard fees and
discounts 389 368 21 5.71%
All other 861 792 69 8.71%
------ ------ ----
Total noninterest income $4,482 $4,532 ($50) -1.10%
Noninterest expense:
Salaries and wages $5,972 $5,280 $692 13.11%
Pension and other
employee benefits 975 1,316 (341) -25.91%
Total staff expenses 6,947 6,596 351 5.32%
Occupancy expense 829 907 (78) -8.60%
Furniture and equipment
expense 1,187 1,157 30 2.59%
Stationery and supplies 396 298 98 32.89%
FDIC insurance assessments 741 803 (62) -7.72%
Telephone 329 314 15 4.78%
Amortization of intangibles 918 850 68 8.00%
Postage 173 310 (137) -44.19%
Professional services 454 193 261 135.23%
Automated services 1,163 170 993 584.12%
Bankcard 374 391 (17) -4.35%
All other 1,507 1,838 (331) -18.01%
------- ------- ------
Total noninterest expense $15,018 $13,827 $1,191 8.61%
Page 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Neither Registrant nor its subsidiary, First Citizens Bank and Trust Company,
nor its subsidiaries, are a party to, nor is any of their property the
subject of, any material or other pending legal proceeding, other than
ordinary routine proceedings incidental to their business.
Item 2. Changes in Securities.
Not Applicable.
Item 3. Defaults upon Senior Securities.
Not Applicable.
Item 4. Submission of Matters to Vote of Security Holders.
Not Applicable.
Item 5. Other Information.
Not Applicable.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
11 Statement Re Computation of Per Share Earnings
(b) No reports on Form 8-K were filed during the quarter ended
March 31, 1994.
Page 14
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST CITIZENS BANCORPORATION
OF SOUTH CAROLINA, INC.
(Registrant)
Dated: May 11, 1994 Jay C. Case
Jay C. Case, Treasurer
Chief Financial Officer
Dated: May 11, 1994 Jay C. Case
Jay C. Case, Treasurer
Chief Financial Officer
ITEM 6. (a)
EXHIBIT 11
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA AND SUBSIDIARY
Statement Re Computation of Per Share Earnings
(dollars in thousands)
Three Months Ended March 31,
1994 1993
Net income $2,701 $3,157
Less: Preferred stock dividend
requirements 43 43
Net income applicable to common stock $2,658 $3,114
Weighted average common shares
outstanding 945,533 945,533
Earnings per common share:
Income before cumulative effect
of a change in accounting
principle $ 2.81 $ 3.06
Cumulative effect on prior years
(to December 31, 1992) of changing
to a different method of accounting
for income taxes .00 .23
Net income $ 2.81 $ 3.29
