FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 1997 Commission File Number 0-11172
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
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, former address and former fiscal year, 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 October 31, 1997
----- ------------------------------------
Voting Common Stock, $5.00 Par Value 892,813 Shares
Non-voting Common Stock, $5.00 Par Value 36,409 Shares
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA AND SUBSIDIARY
- --------------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
CONSOLIDATED BALANCE SHEET - UNAUDITED (dollars in thousands)
<TABLE>
<CAPTION>
September 30, December 31, September 30,
1997 1996 1996
----------- ------------ --------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $95,303 $103,844 $73,939
------- -------- -------
Interest-bearing deposits in financial institutions 8,325 11,300 11,300
Investment securities:
Held-to-maturity 545,610 467,798 451,039
Available-for-sale 29,883 17,653 16,038
------- ------- -------
Total securities 575,493 485,451 467,077
------- -------- -------
Federal funds sold 0 0 4,300
Gross loans 1,382,262 1,269,779 1,250,174
Less: Reserve for loan losses (25,564) (23,483) (23,587)
------- -------- -------
Net loans 1,356,698 1,246,296 1,226,587
------- -------- -------
Other real estate owned 490 518 776
Other assets 110,607 100,290 99,030
------- -------- -------
TOTAL ASSETS $2,146,916 $1,947,699 $1,883,009
========== ========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $303,644 $283,590 $275,377
Time & Savings 1,492,629 1,377,482 1,346,549
--------- --------- ---------
Total deposits 1,796,273 1,661,072 1,621,926
Securities sold under repurchase agreements 171,049 132,891 111,748
Other liabilities 28,189 21,095 22,765
--------- --------- ---------
TOTAL LIABILITIES 1,995,511 1,815,058 1,756,439
--------- --------- ---------
Stockholders' Equity:
Preferred stock 3,282 3,282 3,282
Non-voting common stock - $5.00 par value, authorized
1,000,000; issued and outstanding September 30, 1997 and
December 31, 1996 - 36,409 and September 30, 1996 - 46,069 182 182 230
Voting common stock - $5.00 par value, authorized 2,000,000;
issued and outstanding September 30, 1997, December 31, 1996
and September 30, 1996 - 892,813 4,464 4,464 4,464
Surplus 55,000 55,000 55,000
Undivided profits 76,596 60,688 55,791
Unrealized gain on investment securities available-for-sale,
net of taxes 11,881 9,025 7,803
--------- --------- ---------
TOTAL STOCKHOLDERS' EQUITY 151,405 132,641 126,570
--------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,146,916 $1,947,699 $1,883,009
========== ========= =========
</TABLE>
Page 2
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA AND SUBSIDIARY
- --------------------------------------------------------------
CONSOLIDATED STATEMENT OF INCOME - UNAUDITED
(dollars in thousands, except for per share amounts)
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
---------------------------------------- -----------------------------------
1997 1996 % 1997 1996 %
--------------------------------------- ----------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest income and fees:
Loans $30,493 $27,044 12.75% $87,303 $76,911 13.51%
United States Government obligations 7,318 6,433 13.76% 20,527 19,292 6.40%
Mortgage-backed securities 21 25 -16.00% 68 80 -15.00%
Tax-exempt securities 476 496 -4.03% 1,522 1,592 -4.40%
Other securities and federal funds sold 569 410 38.78% 1,846 1,456 26.79%
------- ------- ------- ------- ------ -------
38,877 34,408 12.99% 111,266 99,331 12.02%
------- ------- ------- ------- ------ -------
Interest expense:
Deposits 14,676 12,950 13.33% 41,871 38,070 9.98%
Short-term borrowings 1,928 1,418 35.97% 5,679 4,022 41.20%
Long-term borrowings 225 206 9.22% 598 653 -8.42%
16,829 14,574 15.47% 48,148 42,745 12.64%
------- ------- ------- ------- ------ -------
Net interest income 22,048 19,834 11.16% 63,118 56,586 11.54%
Provision for loan losses 448 1,513 -70.39% 2,848 3,823 -25.50%
------- ------- ------- ------- ------ -------
Net interest income after
provision for loan losses 21,600 18,321 17.90% 60,270 52,763 14.23%
------- ------- ------- ------- ------ -------
Noninterest income:
Service charges on deposit accounts 3,760 3,241 16.01% 10,416 8,762 18.88%
Fees for other customer services 2,135 1,791 19.21% 6,032 5,235 15.22%
Securities gains 3 0 100.00% 51 0 100.00%
Other 526 518 1.54% 1,435 1,657 -13.40%
------- ------- ------- ------- ------ -------
6,424 5,550 15.75% 17,934 15,654 14.56%
------- ------- ------- ------- ------ -------
Noninterest expense:
Salaries and employee benefits 8,071 7,207 11.99% 24,360 21,386 13.91%
Net occupancy expense 741 681 8.81% 2,086 1,864 11.91%
Furniture and equipment expense 517 419 23.39% 1,313 1,227 7.01%
Depreciation expense 1,207 921 31.05% 3,152 2,536 24.29%
Amortization of intangibles 2,169 1,912 13.44% 6,509 5,162 26.09%
Other 5,575 6,025 -7.47% 15,982 15,905 0.48%
------- ------- ------- ------- ------ -------
18,280 17,165 6.50% 53,402 48,080 11.07%
------- ------- ------- ------- ------ -------
Income before income taxes 9,744 6,706 45.30% 24,802 20,337 21.96%
Applicable income taxes 3,409 2,354 44.82% 8,765 7,173 22.19%
------- ------- ------- ------- ------ -------
Net Income $6,335 $4,352 45.57% $16,037 $13,164 21.82%
======= ======= ======== ======= ====== =======
Net Income per common share $6.77 $4.58 47.86% $17.12 $13.86 23.52%
Weighted average common
shares outstanding 929,222 940,533 -1.20% 929,222 940,713 -1.22%
</TABLE>
Page 3
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA AND SUBSIDIARY
- --------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED
(dollars in thousands)
<TABLE>
<CAPTION>
Non- Unrealized Total
Voting Voting Gain on Stock-
Preferred Common Common Undivided Investment holders'
Stock Stock Stock Surplus Profits Securities Equity
----------- ---------- ----------- ------------ ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $3,282 $254 $4,464 $55,000 $43,152 $5,934 $112,086
Net income 13,164 13,164
Preferred stock dividends (128) (128)
Reacquired non-voting
common stock (24) (397) (421)
Change in unrealized gain
on investment securities
available-for-sale, net of taxes 1,869 1,869
------- -------- -------- ------ --------- ------ ---------
Balance at September 30, 1996 3,282 230 4,464 55,000 55,791 7,803 126,570
Net income 5,790 5,790
Preferred stock dividends (43) (43)
Reacquired non-voting
common stock (48) (850) (898)
Change in unrealized gain
on investment securities
available-for-sale, net of taxes 1,222 1,222
-------- -------- -------- ------ ------- ------ -------
Balance at December 31, 1996 3,282 182 4,464 55,000 60,688 9,025 132,641
Net income 16,037 16,037
Preferred stock dividends (129) (129)
Change in unrealized gain
on investment securities
available-for-sale, net of taxes 2,856 2,856
-------- -------- -------- ------ ------- ------ ---------
Balance at September 30, 1997 $3,282 $182 $4,464 $55,000 $76,596 $11,881 $151,405
======== ======== ======== ======= ======== ======= ========
</TABLE>
Page 4
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA AND SUBSIDIARY
- --------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS - UNAUDITED (dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30, 1997
---------------------------------
1997 1996
---------------------------------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $16,037 $13,164
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 2,848 3,823
Depreciation and amortization 9,740 7,705
Accretion of investment securities (116) (178)
Provision for deferred income taxes (19,430) (1,519)
(Gains)/losses on sales of premises and equipment 2 (105)
(Increase)/decrease in interest income accrued, not collected (1,221) 1,500
Increase/(decrease) in accrued interest payable 162 (250)
Originations of loans held for resale (51,483) (50,309)
Proceeds from sales of loans held for resale 54,852 46,527
Losses/(gains) on sales of loans held for resale 150 (148)
Decrease/(increase) in other assets 8,935 (775)
Increase/(decrease) in other liabilities 247 (852)
=================================
Net Cash Provided By Operating Activities 20,723 18,583
=================================
Cash Flows From Investing Activities:
Net increase in loans (113,468) (110,921)
Proceeds from maturities of investment securities, held-to-maturity 187,901 62,885
Purchases of investment securities, held-to-maturity (265,597) (61,951)
Net decrease in interest bearing deposits 2,975 1,375
Increase in federal funds sold 0 (4,300)
Proceeds from sales of premises and equipment 634 427
Purchases of premises and equipment (9,317) (8,214)
Decrease/(increase) in other real estate owned 28 (303)
Net increase in intangible assets (436) (139)
Purchase of institutions, net of cash acquired 77,247 44,988
=================================
Net Cash Used In Investing Activities (120,033) (76,153)
=================================
Cash Flows From Financing Activities:
Net increase in deposits 47,632 51,200
(Decrease)increase in federal funds purchased and securities sold
under agreements to repurchase 38,158 (6,759)
Net increase/(decrease) in long term borrowing 5,108 (1,275)
Cash dividends paid (129) (128)
Reacquired common stock 0 (421)
=================================
Net Cash Provided By Financing Activities 90,769 42,617
=================================
Decrease in cash and due from banks (8,541) (14,953)
Cash and due from banks at beginning of period 103,844 88,892
=================================
Cash and due from banks at end of period $95,303 $73,939
=================================
</TABLE>
Page 5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- ------------------------------------------
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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 1996. The significant accounting policies used during
the current quarter are unchanged from those disclosed in the 1996 Annual
Report.
In June 1996, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 125, "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities". This
statement, which was adopted on January 1, 1997, establishes a new framework for
accounting for transfers, sales and servicing of financial assets and
extinguishments of liabilities. The statement requires an entity to recognize
each of the components of the financial instruments it controls, derecognize the
components of the assets it has surrendered control over and derecognize
liabilities which it has paid or been legally released from. In that
Bancorporation had previously adopted SFAS No. 122, "Accounting for Mortgage
Servicing Rights", the effects of adopting SFAS No. 125 were not material to the
consolidated financial statements.
MANAGEMENT'S OPINION
The preceding financial statements and the notes thereto are unaudited; however,
in the opinion of management, all adjustments comprising all normal recurring
accruals necessary for a fair presentation of financial statements have been
included. Certain amounts in prior periods have been reclassified to conform to
the 1997 presentation.
Page 6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
SUMMARY (dollars in thousands):
<TABLE>
<CAPTION>
Quarter ended Nine Months Ended
September 30, September 30,
------------------------------ -----------------------------
SELECTED AVERAGE BALANCES: 1997 1996 1997 1996
- -------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Total assets $2,120,210 $1,853,435 $2,048,410 $1,805,148
Gross loans 1,365,995 1,226,628 1,325,418 1,169,535
Short-term borrowed funds 156,463 112,281 155,838 110,885
Long-term debt 11,456 10,476 9,993 10,904
Noninterest bearing deposits 302,211 257,164 290,402 248,665
Total deposits 1,789,980 1,592,218 1,726,618 1,549,860
Stockholders' Equity 147,188 124,234 141,518 119,638
QUALITY DATA:
- -------------
Nonperforming assets 3,183 3,413 3,183 3,413
Net chargeoffs/(recoveries) (200) 426 767 1,389
Reserve for loan losses 25,564 23,587 25,564 23,587
Gross loans 1,382,262 1,250,174 1,382,262 1,250,174
RATIOS:
- -------
Return on assets 1.20% .94% 1.04% .97%
Return on equity 17.22% 15.49% 15.11% 14.67%
Nonperforming assets to gross loans .23% .27% .23% .27%
Annualized net chargeoffs/(recoveries) to
gross loans (.06%) .14% .08% .15%
Reserve for loan losses to gross loans 1.85% 1.89% 1.85% 1.89%
Reserve for loan losses times
nonperforming assets 8.03x 6.91x 8.03x 6.91x
</TABLE>
Bancorporation continues to introduce innovative new products and services and
new methods to deliver those products and services. PC Banking is now available
to our customers. Through personal computers and our PC Banking software,
customers can now have access to their accounts 24 hours a day. Customers can
also pay bills electronically through PC Banking.
ACQUISITIONS (dollars in thousands):
Bancorporation continues to look for opportunities to expand business though
acquisitions. In the third quarter, the Bancorporation purchased assets and
assumed deposits of a branch of another financial institution. Total assets
purchased were $977. Deposits assumed totaled $22,736. A premium of $2,387 was
paid for deposits. An acquisition of a branch from another institution is
planned for the fourth quarter of 1997. Total assets purchased will be
approximately $10,825 and deposits assumed will be approximately $13,825. The
premium to be paid for this acquisition is based on deposit levels at closing
and is estimated to be $1,348.
Page 7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (continued)
- --------------------------------------------------------------------------------
INVESTMENT SECURITIES (dollars in thousands):
As of September 30, 1997, the investment portfolio was $575,493 compared to
$467,077 for the same period in 1996. Bancorporation continues to invest
primarily in short-term U.S. Government obligations thereby minimizing credit,
interest rate and liquidity risk. The portfolio was comprised of 88.74% U.S.
Government obligations as of September 30, 1997 as compared to 88.23% for the
same period in 1996. The remainder of the investment portfolio primarily
consists of municipal bonds owned by the Bank and equity securities owned by
Bancorporation.
LOANS:
Growth in loans is attributed primarily to strong loan demand. The loan
portfolio mix did not change significantly and no major change is expected in
1997. The growth was funded by deposits acquired through acquisitions and growth
in core deposits and short-term borrowings.
CAPITAL RATIOS:
September 30
------------------
1997 1996
---- ----
Tier I leverage ratio 5.78% 5.72%
Risk based capital ratio total 10.52% 10.36%
Tier I 9.12% 8.81%
Tier II 1.40% 1.55%
Regulatory agencies divide capital into Tier I, consisting of stockholders'
equity less ineligible intangible assets, and Tier II, consisting of the
allowable portion of the reserve for loan losses and certain long-term debt.
Capital adequacy is measured by applying both capital levels to the Bank's
risk-adjusted assets and off-balance sheet items. Regulatory requirements
presently specify that Tier I capital should exclude the market appreciation or
depreciation of securities available-for-sale arising from valuation adjustments
under SFAS No. 115. In addition to these capital ratios, regulatory agencies
have established a Tier I leverage ratio which measures Tier I capital to
average assets less ineligible intangible assets.
Regulatory guidelines require a minimum total capital to risk-adjusted assets
ratio of 8 percent (with 50 percent consisting of tangible common stockholders'
equity) and a minimum Tier I leverage ratio of 3 percent. Banks which meet or
exceed a Tier I ratio of 6 percent, a total risk based capital ratio of 10
percent and a Tier I leverage ratio of 5 percent are considered well-capitalized
by regulatory standards. Although acquisitions in the third quarter reduced Tier
I capital by $2,387, the Bank remains well-capitalized by regulatory standards.
Although the effect of the expected acquisition in the fourth quarter will
affect risk-based capital, that transaction is not expected to affect the Bank's
status as well-capitalized by regulatory standards.
Page 8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
NET INTEREST INCOME (Continued):
Taxable Equivalent Rate/Volume Variance Analysis* (dollars in thousands)
<TABLE>
<CAPTION>
Quarter Ended September 30,
---------------------------
Average Volume Interest Average Rate Variance Due To
-------------- -------- ------------ ---------------
1997 1996 1997 1996 1997 1996 Rate Volume Variance
---- ---- ---- ---- ---- ---- ---- ------ --------
Interest-earning assets:
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
$1,365,995 $1,226,628 $30,578 $27,104 8.88 8.79 Loans $380 $3,094 $3,474
520,797 428,251 7,398 6,514 5.64 6.05 Taxable investment securities (421) 1,305 884
34,201 37,551 731 763 8.55 8.13 Non-taxable investment securities 40 (72) (32)
26,050 12,039 361 154 5.50 5.09 Federal funds sold 14 193 207
8,936 11,725 150 200 6.66 6.79 Other earning assets (4) (46) (50)
- ----------- ---------- ------- ------- ---- ------ -----
1,955,979 1,716,194 39,218 34,735 7.96 8.05 Total interest-earning assets 9 4,474 4,483
---------- ---------- ------- ------- ---- ------ -----
Noninterest-earning assets:
79,962 62,125 Cash and due from banks
55,123 48,924 Premises and equipment
29,146 26,192 Other, less reserve for loan losses
------- -------
164,231 137,241 Total noninterest-earning assets
- ---------- ----------
$2,120,210 $1,853,435 TOTAL ASSETS
========== ==========
Interest-bearing liabilities:
$1,487,769 $1,335,054 $14,677 $12,951 3.91 3.86 Deposits $233 $1,493 $1,726
Federal funds purchased and securities
156,463 112,281 1,927 1,418 4.89 5.02 sold under agreements to repurchase (31) 540 509
11,456 10,476 225 205 7.79 7.78 Long-term debt 1 19 20
- ----------- ---------- ------ ------ --- ----- -----
1,655,688 1,457,811 16,829 14,574 4.03 3.98 Total interest-bearing liabilities 203 2,052 2,255
- ---------- --------- ------ ------ --- ----- -----
Noninterest-bearing liabilities:
302,211 257,164 Demand deposits
15,123 14,226 Other liabilities
------- --------
317,334 271,390 Total noninterest-bearing liabilities
------- --------
147,188 124,234 Stockholders' equity
------- --------
TOTAL LIABILITIES AND
$2,120,210 $1,853,435 STOCKHOLDERS' EQUITY
========== ==========
3.93 4.07 Interest rate spread
==== ====
$22,389 $20,161 4.54 4.67 Net Interest Margin ($194) $2,422 $2,228
======= ======= ==== ==== ====== ====== ======
</TABLE>
* Interest income and yields are presented on a fully taxable equivalent basis
using the federal income tax rate and state tax rates, as applicable.
Page 9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
NET INTEREST INCOME (Continued):
Taxable Equivalent Rate/Volume Variance Analysis* (dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
Average Volume Interest Average Rate Variance Due To
-------------- -------- ------------ ---------------
1997 1996 1997 1996 1997 1996 Rate Volume Variance
- ---- ---- ---- ---- ---- ---- ---- ------ --------
Interest-earning assets:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
$1,325,418 $1,169,535 $87,561 $77,154 8.83 8.81 Loans $84 $10,323 $10,407
487,766 430,490 20,782 19,553 5.70 6.07 Taxable investment securities (1,220) 2,449 1,229
36,496 39,551 2,341 2,449 8.55 8.26 Non-taxable investment securities 88 (196) (108)
29,424 17,204 1,165 673 5.29 5.23 Federal funds sold 7 485 492
9,792 12,016 494 603 6.75 6.70 Other earning assets 4 (113) (109)
----- ------ --- --- ------- ------ ------
1,888,896 1,668,796 112,343 100,432 7.95 8.04 Total interest-earning assets (1,037) 12,948 11,911
--------- --------- ------- ------- ---- ---- ------- ------ ------
Noninterest-earning assets:
79,156 64,457 Cash and due from banks
52,752 47,072 Premises and equipment
27,606 24,823 Other, less reserve for loan losses
--------- ----------
159,514 136,352 Total noninterest-earning assets
--------- ---------
$2,048,410 $1,805,148 TOTAL ASSETS
========== ==========
Interest-bearing liabilities:
$1,436,216 $1,301,195 $41,871 $38,070 3.90 3.91 Deposits ($148) $3,949 $3,801
Federal funds purchased and securities
155,838 110,885 5,679 4,022 4.87 4.85 sold under agreements to repurchase 15 1,642 1,657
9,993 10,904 598 653 8.00 8.00 Long-term debt 0 (55) (55)
-------- --------- ------ ------ ----- ------ ------
1,602,047 1,422,984 48,148 42,745 4.02 4.01 Total interest-bearing liabilities (133) 5,536 5,403
- ---------- --------- ------ ------ ---- ----- -----
Noninterest-bearing liabilities:
290,402 248,665 Demand deposits
14,443 13,861 Other liabilities
-------- --------
304,845 262,526 Total noninterest-bearing liabilities
-------- --------
141,518 119,638 Stockholders' equity
-------- -------
TOTAL LIABILITIES AND
$2,048,410 $1,805,148 STOCKHOLDERS' EQUITY
========== ==========
3.93 4.03 Interest rate spread
===== ====
$64,195 $57,687 4.53 4.62 Net interest margin ($904) $7,412 $6,508
======= ======= ==== ==== ===== ====== ======
</TABLE>
* Interest income and rates are presented on a fully taxable equivalent basis
using the federal income tax rate and state tax rates, as applicable.
Page 10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (continued)
- --------------------------------------------------------------------------------
NET INTEREST INCOME (dollars in thousands):
The increase in net interest income in the third quarter was due to growth in
interest-earning assets, primarily commercial and residential mortgage loans.
The yield increased on non-taxable investment securities due to replacing
matured securities with investments at a higher yield.
PROVISION AND RESERVE FOR LOAN LOSSES (dollars in thousands):
The provision for loan losses reflects management's assessment of the adequacy
of the reserve for loan losses to absorb potential losses inherent in the loan
portfolio due to a decline in credit conditions or change in risk profile.
Factors considered in this assessment include growth and mix of the loan
portfolio, current and anticipated economic conditions and historical credit
loss experience.
<TABLE>
<CAPTION>
Quarter ended Nine Months Ended
September 30, September 30,
------------- -------------
Reserve for loan losses: 1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Balance at beginning of period $24,916 $22,500 $23,483 $21,153
Provision for loan losses 448 1,513 2,848 3,823
------ ------- ------- -------
Chargeoffs (560) (704) (2,203) (2,305)
Recoveries 760 278 1,436 916
------ ------- ------- -------
Net (chargeoffs)/recoveries 200 (426) (767) (1,389)
------ ------- ------- -------
Balance at end of period $25,564 $23,587 $25,564 $23,587
------- ------- ------- -------
Nonperforming assets $3,183 $ 3,413 $ 3,183 $ 3,413
Annualized net chargeoffs/(recoveries) to:
Average loans (.06%) .14% .08% .16%
Loans at end of period (.06%) .14% .07% .15%
Reserve for loan losses (3.13%) 7.22% 4.00% 7.85%
</TABLE>
NONINTEREST INCOME AND EXPENSE (dollars in thousands):
Total noninterest income increased $874 or 15.75% and $2,280 or 14.56% for the
quarter and nine months ended September 30, 1997, respectively. Growth in both
periods was primarily due to an increase in service charges on deposit accounts
as the result of growth in the number of deposit accounts and an increased
emphasis on collecting service fees formerly waived.
Total noninterest expense was up $1,115 or 6.50% and $5,322 or 11.07% for the
quarter and nine months ended September 30, 1997, respectively. Most of the
increase in both periods was due to an increase in goodwill amortization related
to new branch acquisitions and a related increase in salaries and employee
benefits.
Page 11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Neither Registrant nor its subsidiary, First-Citizens Bank and Trust Company of
South Carolina, 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 a Vote of Security Holders.
Not Applicable.
Item 5. Other Information (dollars in thousands).
On August 14, 1997, Registrant purchased the assets and assumed the deposits of
an office of another financial institution located in Chester, South Carolina.
Total assets purchased were $977 and deposits assumed totaled $22,736. A premium
of $2,387 was paid on deposits purchased and will be amortized over five years
using the straight-line method of amortization.
Pro forma financial information is not attached for the purchase since the
business acquired is not considered a "significant subsidiary" per Rule 1-02(v).
Registrant also has entered into an agreement to purchase an office from another
institution. Total assets purchased will be approximately $10,825 and deposits
assumed will be approximately $13,825. The premium to be paid for this
acquisition is based on deposit levels at closing and is estimated to be $1,348.
This acquisition is expected to close in the fourth quarter of 1997.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
11 Statement Re Computation of Earnings Per Share
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended September 30,
1997
Page 12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST CITIZENS BANCORPORATION
OF SOUTH CAROLINA, INC.
(Registrant)
Dated: 11/10/97 By: /s/ Jay C. Case
Jay C. Case, Treasurer
(Chief Financial Officer)
Page 13
<PAGE>
Item 6.(a)
EXHIBIT 11
Statement Re Computation of Earnings Per Share
(dollars in thousands, except for Earnings Per Share)
Quarter Ended Nine Months Ended
September 30, September 30,
---------------- ------------------
1997 1996 1997 1996
------ ------ ------ --------
Net income $6,335 $4,352 $16,037 $13,164
Less: Preferred stock dividend 43 43 129 128
------ ------- ------- --------
Net income applicable to common stock $6,292 $4,309 $15,908 $13,036
Weighted average common shares
outstanding 929,222 940,533 929,222 940,713
Earnings per common share $6.77 $4.58 $17.12 $13.86
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
Form 10-Q
</LEGEND>
<CIK> 0000708848
<NAME> FIRST CITIZENS
<S> <C>
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