FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
ANNUAL REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended 12/31/97 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
Securities Registered Pursuant to Section 12(b) of the Act:
None
----
Securities Registered Pursuant to Section 12 (g) of the Act:
Common Stock, $5.00 per value
-----------------------------
(Title of Class)
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 by check mark if disclosure of delinquent filers pursuant to Item 405
Regulation S-K is not contained herein, and will not be contained, to be the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the Registrant's Voting Common Stock held by
non-affiliates as of March 6, 1998 was $122,159,450. The Registrant's voting
Preferred Stock is not regularly traded and has no quoted prices and therefore
has no readily ascertainable market value.
As of March 6, 1998, there were 892,813 outstanding shares of the Registrant's
Voting Common Stock, $5.00 par value per share, and 36,409 outstanding shares of
its Non-Voting Common Stock, $5.00 par value per share.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the Registrant's Annual Report to Shareholders for the
fiscal year ended December 31, 1997, are incorporated by reference into Parts I
and II.
(2) Portions of the Registrant's definitive Proxy Statement for the Annual
Meeting of Shareholders to be held April 22, 1998, are incorporated by reference
into Part III.
<PAGE>
PART I.
ITEM 1. BUSINESS
First Citizens Bancorporation of South Carolina, Inc. ("Bancorporation" or
"Registrant"), a South Carolina corporation, is a bank holding company organized
in 1982 which owns all the outstanding stock of First-Citizens Bank and Trust
Company of South Carolina ("Bank"). The Bank, which is the principal asset and
source of income of Bancorporation, is engaged in the general banking business
throughout South Carolina and offers complete retail, commercial banking and
trust services. The net income of the Bank constituted approximately 101% of the
consolidated net income of Bancorporation for the year ended December 31, 1997,
and the assets of the Bank constituted approximately 99% of the consolidated
assets of Bancorporation at December 31, 1997. Wateree Enterprises, Inc., a
wholly-owned subsidiary of the Bank, through its wholly-owned subsidiary,
Wateree Life Insurance Company, a South Carolina corporation, issues credit
life, accident and health insurance on borrowers from the Bank. Another
wholly-owned subsidiary of Wateree Enterprises, Inc. is Wateree Agency, Inc., a
South Carolina corporation, which acts as agent for the sale of insurance to the
Bank's customers.
SUPERVISION AND REGULATION
As a bank holding company, Bancorporation is subject to regulation by the
Federal Reserve Board ("FRB") under the Bank Holding Company Act of 1956, as
amended ("BHC Act"), and its examination and reporting requirements.
Bancorporation is likewise subject to the requirements of the BHC Act which
impose certain limitations and restrictions on the degree to which
Bancorporation may conduct non-banking activities and the extent to which
Bancorporation may engage in merger and acquisition activities. In addition to
the provisions of the BHC Act, state banking commissions serve in a supervisory
and regulatory capacity with respect to bank holding company activities.
Federal law regulates transactions among Bancorporation and its
affiliates, including the amount of its banking affiliate's loans to, or
investment in, non-banking affiliates. In addition, various requirements and
restrictions under federal and state laws regulate the operations of
Bancorporation's banking affiliate, requiring the maintenance of reserves
against deposits, limiting the nature of loans and interest that may be charged
thereon, restricting investments and other activities, and subjecting the
banking affiliate to regulation and examination by the state banking authorities
and the FDIC.
There are various legal and regulatory limits on the extent to which
Bancorporation's subsidiary bank may pay dividends or otherwise supply funds to
Bancorporation. In addition, federal and state regulatory agencies have the
authority to prevent a bank or bank holding company from paying a dividend or
engaging in any activity that, in the opinion of the agency, would constitute an
unsafe or unsound practice.
Under FRB policy, Bancorporation is expected to act as a source of
financial strength to, and commit resources to support, its subsidiary bank. In
addition, under the Financial Institutions Reform, Recovery and Enforcement Act
("FIRREA"), a depository institution insured by the FDIC can be held liable for
any loss incurred by, or reasonably expected to be incurred by, the FDIC in
connection with the default of a commonly controlled FDIC insured depository
institution. Under the Federal Deposit Insurance Corporation Improvement Act of
1991 ("FDICIA"), federal banking regulators are required to take prompt
corrective action in respect of depository institutions that do not meet minimum
capital requirements. FDICIA generally prohibits a depository institution from
making any capital distribution or paying management fees to its holding company
if the depository institution would thereafter be undercapitalized. In addition,
undercapitalized institutions will be subject to restrictions on borrowing from
the Federal Reserve System, to growth limitations and to obligations to submit
capital restoration plans. In order for a capital restoration plan to be
acceptable, the depository institution's parent holding company must guarantee
the institution's compliance with the capital restoration plan up to an amount
not exceeding 5% of the depository institution's total assets. Significantly
undercapitalized institutions are subject to greater restrictions, and
critically undercapitalized institutions are subject to appointment of a
receiver.
FDICIA also substantially revises the bank regulatory insurance coverage
and funding provisions of the Federal Deposit Insurance Act and makes revisions
to several other federal banking statutes. FDICIA imposes substantial new
examination, audit and reporting requirements on insured depository
institutions. Under FDICIA, each federal banking agency must prescribe standards
for depository institutions and depository institution holding companies
relating to internal controls, information systems, internal audit systems, loan
documentation, credit underwriting, interest rate exposure, asset growth,
compensation, a maximum ratio of classified assets to capital, minimum earnings
sufficient to absorb losses, a minimum ratio of market value to book value for
publicly traded shares, and other standards as the agency deems appropriate.
<PAGE>
The FDIC has adopted or currently proposes to adopt rules pursuant to
FDICIA that include: (a) real estate lending standards for banks, (b) revision
to the risk-based capital rules; (c) rules requiring depository institutions to
develop and implement internal procedures to evaluate and control credit and
settlement exposure to their correspondent banks; (d) a rule restricting the
ability of depository institutions that are not well capitalized from accepting
brokered deposits; (e) rules addressing various "safety and soundness" issues,
including operations and managerial standards for asset quality, earnings and
stock valuations, and compensation standards for the officers, directors,
employees and principal shareholders of the depository institution; and (f)
rules mandating enhanced financial reporting and audit requirements.
Uncertainties surrounding the health and solvency of the banking and
thrift industries, as well as continued concerns relating to the viability of
the FDIC, will likely result in additional legislation aimed at banking industry
reform.
FIRST-CITIZENS BANK AND TRUST COMPANY OF SOUTH CAROLINA
The Bank was organized as a state bank in 1964. Its predecessor, Anderson
Brothers Bank, was organized in 1936. As measured by deposits, the Bank is the
fifth largest commercial bank in South Carolina and has 130 offices throughout
South Carolina.
The Bank is an insured bank and is supervised, examined and regulated by
the Federal Deposit Insurance Corporation and the South Carolina State Board of
Financial Institutions.
For the year ended December 31, 1997, approximately 67.3% of the revenues of
the Bank were derived from interest and fees on loans, 17.7 % from income on
investment securities, 0.9% from income on temporary investments, 0.8% from
trust fees, 8.2% from service charges on deposit accounts and 5.1% from other
sources.
During 1997, the Bank acquired branch locations in Sumter, Abbeville,
Laurens, Jonesville, Beaufort and Chester, South Carolina, from other financial
institutions. Further information concerning these transactions is contained in
the section entitled "Management's Discussion and Analysis" of the Registrant's
1997 Annual Report to Shareholders which is incorporated herein by reference.
Commercial Banking Services. The Bank provides a wide range of traditional
commercial banking and related financial services to customers engaged in
manufacturing, wholesaling, retailing, providing services, buying and selling
real estate, and agriculture, and to institutions and agencies of state
government. It makes commercial loans for various purposes, including working
capital, real estate financing, equipment financing and floor plan loans for
automobile dealers. As of December 31, 1997, commercial and real estate loans
accounted for approximately 73% of the Bank's total loans. Interest and fees on
commercial and real estate loans constituted 46% of the Bank's operating
revenues for the year ended December 31, 1997.
Consumer Services. The Bank provides a full range of consumer banking
services, including checking accounts, savings programs, installment lending
services, real estate loans, trust accounts, travelers' cheques and safe deposit
facilities through its branch offices in South Carolina. The Bank provides
automated teller machines in over 118 locations and participates in an
electronic transfer network which presently gives customers access to their
accounts through automated teller machines worldwide. The Bank issues MasterCard
and VISA cards. As of December 31, 1997, consumer loans accounted for
approximately 25% of the Bank's total loan portfolio. Interest and fees for
consumer loans and services contributed 19% of the Bank's operating revenues for
the year ended December 31, 1997.
Trust Services. Through its trust department, the Bank offers a full range
of trust services. To individuals, the services offered include acting as
executor and administrator of decedents' estates, trustee of various types of
trusts, guardian of estates of minors and incompetents, portfolio management
service, investment counseling and assistance in estate planning. For
corporations, offered services include acting as registrar, transfer agent,
dividend paying agent for stock issues, and as trustee for bond and debenture
issues and pension and profit sharing plans. Fees for trust services contributed
0.8% of the Bank's operating revenues for the year ended December 31, 1997.
STATISTICAL DATA
Certain statistical disclosures for bank holding companies required by
Guide 3 are included in the section entitled "Management's Discussion and
Analysis" on pages 3 through 18 of the Registrant's 1997 Annual Report to
Shareholders which is incorporated herein by reference.
<PAGE>
NON-BANKING SUBSIDIARY
Wateree Life Insurance Company issues credit life insurance on
borrowers from the Bank. All policies in excess of $30,000 are reinsured by
another insurance company. All individual accident and health policies are also
insured by another insurance company. The company had earned premiums of
$896,765 or 0.5% of Bancorporation's consolidated operating revenues for the
year ended December 31, 1997. For the year ended December 31, 1997, Wateree had
income of $409,129. Total insurance in force amounted to $55,981,000 at December
31, 1997.
Wateree Agency, Inc. acts as agent for the sale of insurance to the Bank's
customers. Net income for the year ended December 31, 1997 was not material.
EMPLOYEES OF BANCORPORATION
Bancorporation has no salaried employees. As of December 31, 1997, the
Bank and its subsidiaries had 1,074 full-time equivalent employees.
Bancorporation and its subsidiaries are not parties to any collective bargaining
agreement and relations with employees are considered to be good.
COMPETITION
Because South Carolina allows statewide branch banking, the Bank must
compete in local markets throughout the state with other depository
institutions. The Bank is subject to intense competition from various financial
institutions and other companies or firms that engage in similar activities,
both for local business in individual communities and for business in the
national market. The Bank competes for deposits with other commercial banks,
savings and loan associations, credit unions and with the issuers of commercial
paper and other securities, such as shares in money market funds. In making
loans, the Bank competes with other commercial banks, savings and loan
associations, consumer finance companies, credit unions, leasing companies and
other lenders. In addition, competition for personal and corporate trust
services is offered by insurance companies, other businesses and individuals.
A factor which has also increased competition in the Bank's local markets
is reciprocal interstate banking legislation. South Carolina law allows bank
holding companies in 12 other Southeastern states and the District of Columbia
to acquire banks and bank holding companies in South Carolina, provided that
reciprocal legislation has been passed in such other state or district. As a
result, a number of large bank holding companies located in other states and
having consolidated resources greater than those of Bancorporation (among them
four of the largest in the Southeastern United States) have acquired banks
located in South Carolina with which the Bank competes in its local markets. The
Bank is the fifth largest bank in South Carolina in terms of assets, but is the
largest bank owned by a South Carolina based holding company.
During September 1994, Congress adopted new legislation which, subject to
certain limitations, permits adequately capitalized and managed bank holding
companies to acquire control of a bank in any state (the "Interstate Banking
Law"). Also, beginning June 1, 1997 and subject to certain limitations, the
Interstate Banking Law permits banks to merge with one another across state
lines. Each state can authorize mergers earlier than that date and also can
choose to permit out-of-state banks to open branch offices within that state's
borders. Alternatively, a state can opt out of interstate branching by adopting
legislation before June 1, 1997. As of March 1998, South Carolina has not
adopted any such legislation in response to the Interstate Banking Law.
ITEM 2. PROPERTIES
Bancorporation owns in fee simple 1 piece of property having a book value
at December 31, 1997 of $59,646. To the limited extent necessary, it occupies
space owned by the Bank. Bancorporation's and the Bank's principal office is
located at 1230 Main Street in Columbia, South Carolina.
The Bank owns in fee simple 180 properties having a book value at December
31, 1997 of $44,728,498 which are used for its main office, branch office
locations, associated parking lots for customers and employees, or housing other
operational units of the Bank. In addition, the Bank leases 35 properties,
substantially all of which are used for branch office locations and associated
parking lots for customers and employees. All of these leases are for relatively
long terms or include renewal options considered by management of the Bank to be
adequate. Rental expense paid for these properties in 1997 was approximately
$528,000, which was offset by $850,00 in rental income.
The properties leased and owned are all generally considered adequate for
the Bank's purposes; however, there is a continuing program of modernization,
expansion, and the occasional replacement of facilities. Maintenance and repairs
are not significant items of expense in the Bank's operations. Items of a
capital nature are added to the property accounts, and, at such time as they are
retired or otherwise disposed of, the cost and accumulated depreciation are
removed from the related accounts and the resulting gains or losses are
reflected in income.
For information concerning Bancorporation's commitments under current
leasing arrangements, see Note 14 to Bancorporation's Consolidated Financial
Statements.
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
Neither Bancorporation nor its subsidiary, the Bank, 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 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The information required by this item is incorporated herein by reference
to the section entitled "Market and Dividend Information Regarding Common and
Preferred Stock" on the inside cover of the Registrant's 1997 Annual Report to
Shareholders.
ITEM 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated herein by reference
to the section entitled "Financial Highlights" on Page 1 of the Registrant's
1997 Annual Report to Shareholders.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The information required by this item is incorporated herein by reference
to the section entitled "Management's Discussion and Analysis" on pages 3
through 18 of the Registrant's 1997 Annual Report to Shareholders. The
statistical disclosures for bank holding companies required by Guide 3 are
included therein.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by reference
to the financial statements and supplementary data set forth on pages 19 through
35 of the Registrant's 1997 Annual Report to Shareholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information under the captions "PROPOSAL 2: ELECTION OF DIRECTORS",
"Executive Officers",and "Section 16(a) Benefincial Ownership Reporting
Compliances", of Bancorporation's definitive Proxy Statement is incorporated
herein by reference.
ITEM 11. EXECUTIVE COMPENSATION
The information under the captions "Directors' Fees", "Compensation
Committee Interlocks and Insider Participation", "Executive Compensation" and
"Pension Plan" of Bancorporation's definitive Proxy Statement for its Annual
Meeting of Shareholders to be held April 22, 1998, is incorporated herein by
reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the captions "PRINCIPAL HOLDERS OF VOTING
SECURITIES", "OWNERSHIP OF SECURITIES BY MANAGEMENT" and "REQUIRED REPORTS OF
BENEFICIAL OWNERSHIP" of Bancorporation's definitive Proxy Statement for its
Annual Meeting of Shareholders to be held April 22, 1998, is incorporated herein
by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information in Footnotes (4) and (6) to the table under the caption
"PROPOSAL 2: ELECTION OF DIRECTORS", and the information under the captions
"Compensation Committee Interlocks and Insider Participation" and "Transactions
with Management", of Bancorporation's definitive Proxy Statement for its Annual
Meeting of Shareholders to be held April 22, 1998, is incorporated herein by
reference.
<PAGE>
PART IV
ITEM 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) (1) Financial Statements:
The following consolidated financial statements of First Citizens
Bancorporation of South Carolina, Inc. and subsidiary included in the
Registrant's 1997 Annual Report to Shareholders are incorporated by
reference in Item 8 from pages 19 through 35 of the Annual Report:
Report of Independent Accountants
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Changes in Stockholders' Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules:
All schedules are omitted as the required information is either
inapplicable or is presented in the consolidated financial statements
of the Registrant and its subsidiary or Notes thereto incorporated
herein by reference.
(3) The following exhibits are either attached hereto or incorporated
by reference:
3.1 Articles of Incorporation of the Registrant as amended
(incorporated herein by reference to Exhibit 3.1 of the
Registrant's 1994 Annual Report on Form 10-K).
3.3 Bylaws of the Registrant as amended (incorporated herein
by reference to Exhibit 3.3 of the Registrant's 1997
Annual Report on Form 10-K).
10.1a Term Loan Agreement (incorporated herein by reference to
Exhibit 10.1 in the Registrant's 1987 Annual Report on
Form 10-K).
10.1b Credit Agreement between First-Citizens Bancorporation
of South Carolina and Wachovia Bank, N.A.
*10.2 Retirement Agreement between T. E. Brogdon and the
Bank (incorporated herein by reference to Exhibit 10.2
of the Registrant's 1988 Annual Report on Form 10-K).
*10.3 Employment Contract between E. Hite Miller, Sr. and
the Bank (incorporated herein by reference to Exhibit
10.3 of the Registrant's 1988 Annual Report on Form
10-K).
13. Registrant's 1997 Annual Report to Shareholders, filed
herewith.
22. Subsidiaries of the Registrant (incorporated herein by
reference to Exhibit 22 in the Registrant's 1995 Annual
Report on Form 10-K, as amended by form 10-K/A).
27. Financial Data Schedule, filed herewith.
**99. Registrant's Definitive Proxy Statement for the
Annual Meeting to be held April 22, 1998.
* Denotes a management contract or compensatory plan or
arrangement in which an executive officer or director of
Registrant participates.
** Pursuant to Rule 12b-23(a)(3), this exhibit is not being
refiled.
(b)Reports on Form 8-K:
No reports on Form 8-K were filed during the three month period ended
December 31, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Dated: 03/13/98 FIRST CITIZENS BANCORPORATION
OF SOUTH CAROLINA, INC.
(Registrant)
By: /s/ Jay C. Case
-------------------
Jay C. Case, Treasurer and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<S> <C> <C>
/s/ E. Hite Miller, Sr. Chairman of the Board 03/13/98
- ------------------------- ------------------
E. Hite Miller, Sr.
/s/ Frank B. Holding Vice Chairman of the Board 03/13/98
- ------------------------- ------------------
Frank B. Holding
/s/ Jim B. Apple President and Director 03/13/98
- ------------------------- ------------------
Jim B. Apple
/s/ Jay. C. Case Treasurer and Chief 03/13/98
- ------------------------- ------------------
Jay C. Case Financial Officer
/s/ Richard W. Blackmon Director 03/13/98
- ------------------------- ------------------
Richard W. Blackmon
/s/ George H. Broadrick Director 03/13/98
- ------------------------- ------------------
George H. Broadrick
/s/ T. E. Brogdon Director 03/13/98
- ------------------------- ------------------
T. E. Brogdon
/s/ Laurens W. Floyd Director 03/13/98
- ------------------------- ------------------
Laurens W. Floyd
- ------------------------- ------------------
William E. Hancock, III Director
/s/ Robert B. Haynes Director 03/13/98
- ------------------------- ------------------
Robert B. Haynes
/s/ Wycliffe E. Haynes Director 03/13/98
- ------------------------- ------------------
Wycliffe E. Haynes
/s/ Lewis M. Henderson Director 03/13/98
- ------------------------- ------------------
Lewis M. Henderson
/s/ Carmen P. Holding Director 03/13/98
- ------------------------- ------------------
Carmen P. Holding
<PAGE>
SIGNATURES TITLE DATE
---------- ----- ----
/s/ Dan H. Jordan Director 03/13/98
- ------------------------- ------------------
Dan H. Jordan
/s/ N. Welch Morrisette, Jr. Director 03/13/98
- ----------------------------- ------------------
N. Welch Morrisette, Jr.
/s/ E. Perry Palmer Director 03/13/98
- ------------------------- ------------------
E. Perry Palmer
/s/ William E. Sellers Director 03/13/98
- ------------------------- ------------------
William E. Sellers
/s/ Henry F. Sherrill Director 03/13/98
- ------------------------- ------------------
Henry F. Sherrill
Jack S. Stanley Director
- ------------------------- ------------------
</TABLE>
<PAGE>
FORM 10-K
- --------------------------------------------------------------------------------
EXHIBIT INDEX
Exhibit Number Exhibit
- -------------- -------
3.1 Articles of Incorporation of Registrant (incorporated herein
by reference to Exhibit 3.1 of the Registrant's 1994 Annual
Report on Form 10-K)
3.3 Bylaws of the Registrant as amended (incorporated herein by
reference to Exhibit 3.3 of the Registrant's 1997 Annual
Report on Form 10-K).
10.1a Term Loan Agreement (incorporated herein by reference to
Exhibit 10.1 of the Registrant's 1987 Annual Report on Form
10-K)
10.1b Credit Agreement between First-Citizens Bancorporation of
South Carolina and Wachovia Bank, N.A.
10.2 Retirement Agreement between T. E. Brogdon and the Bank
(incorporated herein by reference to Exhibit 10.2 of the
Registrant's 1988 Annual Report on Form 10-K)
10.3 Employment Contract between E. Hite Miller, Sr. and the Bank
(incorporated herein by reference to Exhibit 10.3 of the
Registrant's 1988 Annual Report on Form 10-K)
13. Registrant's 1997 Annual Report to Shareholders
22. Subsidiaries of Registrant (incorporated herein by reference
to Exhibit 22 of the Registrant's 1995 Annual Report on Form
10-K/A)
27. Financial Data Schedule (Electronic filing only)
99. Registrant's Definitive Proxy Statement for the Annual Meeting
to be held April 22, 1998.* *Pursuant to Rule 12b-23(a) (3),
this exhibit is not being filed.
$15,000,000
CREDIT AGREEMENT
dated as of
August 15, 1997
among
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
and
WACHOVIA BANK, N.A.
<PAGE>
CREDIT AGREEMENT
AGREEMENT dated as of August 15, 1997, among FIRST CITIZENS
BANCORPORATION OF SOUTH CAROLINA, INC., and WACHOVIA BANK, N.A.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. The terms as defined in this
Section 1.01 shall, for all purposes of this Agreement and any amendment hereto
(except as herein otherwise expressly provided or unless the context otherwise
requires), have the meanings set forth herein:
"Adjusted London Interbank Offered Rate" has the meaning set
forth in Section 2.05(c).
"Affiliate" of any Person means (i) any other Person which
directly, or indirectly through one or more intermediaries, controls such
Person, (ii) any other Person which directly, or indirectly through one or more
intermediaries, is controlled by or is under common control with such Person, or
(iii) except as hereinafter provided with regard to the Holding Family, any
other Person of which such Person owns, directly or indirectly, 20% or more of
the common stock or equivalent equity interests. As used herein, the term
"control" means possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a Person, whether through
the ownership of voting securities, by contract or otherwise. An "Affiliate" of
the Borrower shall not include any Person that is included within the definition
of the Holding Family.
"Agreement" means this Credit Agreement, together with all
amendments and supplements hereto.
"Allowance for Loan and Lease Losses" means, at any time, the
amount reserved with respect to First-Citizens Bank and Trust Company of South
Carolina for loan and lease losses as set forth in the Federal Reserve System
FRY-9C Report of Consolidated Financial Statements for Bank Holding Companies
most recently filed by the Borrower with the appropriate Authority.
"Applicable Margin" has the meaning set forth in Section
2.05(a).
"Authority" has the meaning set forth in Section 7.02.
"Bank" means Wachovia Bank, N.A., and its successors and
assigns.
<PAGE>
"Base Rate" means for any Base Rate Loan for any day, the rate
per annum equal to the higher as of such day of (i) the Prime Rate, and (ii)
one-half of one percent above the Federal Funds Rate for such day. For purposes
of determining the Base Rate for any day, changes in the Prime Rate and the
Federal Funds Rate shall be effective on the date of each such change.
"Base Rate Loan" means a Loan which bears or is to bear
interest at a rate based upon the Base Rate.
"Borrower" means First Citizens Bancorporation of South
Carolina, Inc., a South Carolina corporation, and its successors and permitted
assigns.
"Borrowing" means a borrowing hereunder consisting of a Loan
or Loans made to the Borrower by the Bank pursuant to Article II. A Borrowing is
a "Base Rate Borrowing" if such Loans are Base Rate Loans or a "Euro-Dollar
Borrowing" if such Loans are Euro-Dollar Loans.
"Capital Stock" means any nonredeemable capital stock of the
Borrower or any Consolidated Subsidiary (to the extent issued to a Person other
than the Borrower), whether common or preferred.
"CERCLA" means the Comprehensive Environmental Response
Compensation and Liability Act, 42 U.S.C. ss.9601 et seq. and its implementing
regulations and amendments.
"CERCLIS" means the Comprehensive Environmental Response
Compensation and Liability Information System established pursuant to CERCLA.
"Change of Law" has the meaning set forth in Section 7.02.
"Closing Date" means August 15, 1997.
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor Federal tax code. Any reference to any provision of the Code shall
also be deemed to be a reference to any successor provision or provisions
thereof.
"Commitment" means, $15,000,000, as such amount may be reduced
from time to time pursuant to Sections 2.07 and 2.08.
"Compliance Certificate" has the meaning set forth in Section
5.01(c).
"Consolidated Subsidiary" means at any date any Subsidiary or
other entity the accounts of which, in accordance with GAAP, would be
consolidated with those of the Borrower in its consolidated financial statements
as of such date.
"Consolidated Total Assets" means, at any time, the total
assets of the Borrower and its Consolidated Subsidiaries, determined on a
consolidated basis, as set forth or reflected on the most
2
<PAGE>
recent consolidated balance sheet of the Borrower and its Consolidated
Subsidiaries, prepared in accordance with GAAP.
"Controlled Group" means all members of a controlled group of
corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414 of the Code.
"Debt" of any Person means at any date, without duplication,
(i) all obligations of such Person for borrowed money, excluding: (a) any First
Citizens' Overnight Federal Funds borrowings; and (b) deposit accounts, escrow
accounts, certificate of deposit accounts, treasury tax and loan deposits and
other sums deposited with First-Citizens Bank and Trust Company of South
Carolina and other deposit taking Subsidiaries of the Borrower in the ordinary
course of their respective banking businesses, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (iv) all obligations of such Person as lessee under capital leases,
(v) all obligations of such Person to reimburse any bank or other Person in
respect of amounts payable under a banker's acceptance, (vi) all Redeemable
Preferred Stock of such Person (in the event such Person is a corporation),
(vii) all obligations (absolute or contingent) of such Person to reimburse any
bank or other Person in respect of amounts paid under a letter of credit or
similar instrument with an expiration date more than one year from such date,
(viii) all Debt of others secured by a Lien on any asset of such Person, whether
or not such Debt is assumed by such Person, and (ix) all Debt of others
Guaranteed by such Person.
"Debt Financing" shall mean (i) any transaction or series of
transactions for the incurrence by the Borrower or any Subsidiary of the
Borrower of any Debt or for the establishment of a commitment to make advances
which would constitute Debt of the Borrower or any Subsidiary of the Borrower,
which Debt is payable to a Person other than a bank or has a maturity date on or
after the Termination Date, (ii) an obligation incurred in a transaction or
series of transactions in which assets of the Borrower or any Subsidiary of the
Borrower are sold and leased back, or (iii) a sale of accounts of the Borrower
or any Subsidiary or other receivables of the Borrower or any Subsidiary or any
interest in such accounts or other receivables, other than a sale or transfer of
accounts or receivables attendant to a sale permitted hereunder of an operating
division.
"Default" means any condition or event which constitutes an
Event of Default or which with the giving of notice or lapse of time or both
would, unless cured or waived in writing, become an Event of Default.
"Default Rate" means, with respect to any Loan, on any day,
the sum of 2% plus the then highest interest rate (including the Applicable
Margin) which may be applicable to any Loans hereunder (irrespective of whether
any such type of Loans are actually outstanding hereunder).
"Dollars" or "$" means dollars in lawful currency of the
United States of America.
"Domestic Business Day" means any day except a Saturday,
Sunday or other day on which commercial banks in South Carolina are authorized
or required by law to close.
3
<PAGE>
"Environmental Authority" means any foreign, federal, state,
local or regional government that exercises any form of jurisdiction or
authority under any Environmental Requirement.
"Environmental Authorizations" means all licenses, permits,
orders, approvals, notices, registrations or other legal prerequisites for
conducting the business of the Borrower or any Subsidiary required by any
Environmental Requirement.
"Environmental Judgments and Orders" means all judgments,
decrees or orders arising from or in any way associated with any Environmental
Requirements, whether or not entered upon consent or written agreements with an
Environmental Authority or other entity arising from or in any way associated
with any Environmental Requirement, whether or not incorporated in a judgment,
decree or order.
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
governmental restrictions relating to the environment or to emissions,
discharges or releases of pollutants, contaminants, petroleum or petroleum
products, chemicals or industrial, toxic or hazardous substances or wastes into
the environment, including, without limitation, ambient air, surface water,
groundwater or land, or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, petroleum or petroleum products, chemicals or
industrial, toxic or hazardous substances or wastes or the clean-up or other
remediation thereof.
"Environmental Liabilities" means any liabilities, whether
accrued, contingent or otherwise, arising from and in any way associated with
any Environmental Requirements.
"Environmental Notices" means notice from any Environmental
Authority or by any other person or entity, of possible or alleged noncompliance
with or liability under any Environmental Requirement, including without
limitation any complaints, citations, demands or requests from any Environmental
Authority or from any other person or entity for correction of any violation of
any Environmental Requirement or any investigations concerning any violation of
any Environmental Requirement.
"Environmental Proceedings" means any judicial or
administrative proceedings arising from or in any way associated with any
Environmental Requirement.
"Environmental Releases" means releases as defined in CERCLA
or under any applicable state or local environmental law or regulation.
"Environmental Requirements" means any legal requirement
relating to health, safety or the environment and applicable to the Borrower,
any Subsidiary or the Properties, including but not limited to any such
requirement under CERCLA or any Environmental Law.
4
<PAGE>
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, or any successor law. Any reference to any
provision of ERISA shall also be deemed to be a reference to any successor
provision or provisions thereof.
"Euro-Dollar Business Day" means any Domestic Business Day on
which dealings in Dollar deposits are carried out in the London interbank
market.
"Euro-Dollar Loan" means a Loan which bears or is to bear
interest at a rate based upon the London Interbank Offered Rate.
"Euro-Dollar Reserve Percentage" has the meaning set forth in
Section 2.05(c).
"Event of Default" has the meaning set forth in Section 6.01.
"Facility Fee Payment Date" means the Closing Date and each
anniversary of the Closing Date.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upward, if necessary, to the next higher 1/100th of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Domestic
Business Day next succeeding such day, provided that (i) if the day for which
such rate is to be determined is not a Domestic Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next preceding
Domestic Business Day as so published on the next succeeding Domestic Business
Day, and (ii) if such rate is not so published for any day, the Federal Funds
Rate for such day shall be the average rate charged to Wachovia on such day on
such transactions as determined by Wachovia.
"First-Citizens Investment Policy" means the Statement of
Funds Management Policy, as in effect on the Closing Date, a copy of which is
attached hereto as Exhibit G, as such Funds Management Policy may be amended or
modified from time to time by the Board of Directors of the Borrower.
"First Citizens' Overnight Federal Funds" means money
purchased by First-Citizens Bank and Trust Company of South Carolina from any
other bank or financial institution on an overnight basis.
"Fiscal Quarter" means any fiscal quarter of the Borrower.
"Fiscal Year" means any fiscal year of the Borrower.
"GAAP" means generally accepted accounting principles applied
on a basis consistent with those which, in accordance with Section 1.02, are to
be used in making the calculations for purposes of determining compliance with
the terms of this Agreement.
5
<PAGE>
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to secure, purchase or pay (or advance or supply funds for the
purchase or payment of) such Debt or other obligation (whether arising by virtue
of partnership arrangements, by agreement to keep-well, to purchase assets,
goods, securities or services, to provide collateral security, to take-or-pay,
or to maintain financial statement conditions or otherwise) or (ii) entered into
for the purpose of assuring in any other manner the obligee of such Debt or
other obligation of the payment thereof or to protect such obligee against loss
in respect thereof (in whole or in part), provided that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of
business. The term "Guarantee" used as a verb has a corresponding meaning.
"Hazardous Materials" means, without limitation, (a) solid or
hazardous waste, as defined in the Resource Conservation and Recovery Act of
1976, 42 U.S.C. ss.6901 et seq. and its implementing regulations and amendments,
or in any applicable state or local law or regulation, (b) any "hazardous
substance", "pollutant" or "contaminant", as defined in CERCLA, or in any
applicable state or local law or regulation, (c) gasoline, or any other
petroleum product or by-product, including crude oil or any fraction thereof,
(d) toxic substances, as defined in the Toxic Substances Control Act of 1976, or
in any applicable state or local law or regulation and (e) insecticides,
fungicides, or rodenticides, as defined in the Federal Insecticide, Fungicide,
and Rodenticide Act of 1975, or in any applicable state or local law or
regulation, as each such Act, statute or regulation may be amended from time to
time.
"Holding Family" means, collectively: (i) Lewis R. Holding,
his spouse, his lineal descendants and spouses of his lineal descendants, (ii)
Frank B. Holding, his spouse, his lineal descendants and spouses of his lineal
descendants, and (iii) trusts exclusively for the benefit of any or all of such
lineal descendants and spouses of lineal descendants.
"Interest Period" means: (1) with respect to each Euro-Dollar
Borrowing, the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the first, second or third month thereafter, as
the Borrower may elect in the applicable Notice of Borrowing; provided that:
(a) any Interest Period (subject to clause (c) below)
which would otherwise end on a day which is not a Euro-Dollar
Business Day shall be extended to the next succeeding
Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case such Interest
Period shall end on the next preceding Euro-Dollar Business
Day;
(b) any Interest Period which begins on the last
Euro-Dollar Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the
appropriate subsequent calendar month) shall, subject to
clause (c) below, end on the last Euro-Dollar Business Day of
the appropriate subsequent calendar month; and
6
<PAGE>
(c) no Interest Period may be selected which begins
before the Termination Date and would otherwise end after the
Termination Date.
(2) with respect to each Base Rate Borrowing, the period
commencing on the date of such Borrowing and ending 30 days thereafter; provided
that:
(a) any Interest Period (subject to clause (b) below)
which would otherwise end on a day which is not a Domestic
Business Day shall be extended to the next succeeding Domestic
Business Day; and
(b) no Interest Period may be selected which begins
before the Termination Date and would otherwise end after the
Termination Date.
"Investment" means any investment in any Person, whether by
means of purchase or acquisition of obligations or securities of such Person,
capital contribution to such Person, loan or advance to such Person, making of a
time deposit with such Person, Guarantee or assumption of any obligation of such
Person or otherwise.
"Lending Office" means the Bank's office located at the
address set forth on the signature pages hereof (or identified on the signature
pages hereof as its Lending Office) or such other office as such Bank may
hereafter designate as its Lending Office by notice to the Borrower.
"Lien" means, with respect to any asset, any mortgage, deed to
secure debt, deed of trust, lien, pledge, charge, security interest, security
title, preferential arrangement which has the practical effect of constituting a
security interest or encumbrance, servitude or encumbrance of any kind in
respect of such asset to secure or assure payment of a Debt or a Guarantee,
whether by consensual agreement or by operation of statute or other law, or by
any agreement, contingent or otherwise, to provide any of the foregoing. For the
purposes of this Agreement, the Borrower or any Subsidiary shall be deemed to
own subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
" Loan" means a Base Rate Loan or a Euro-Dollar Loan and
"Loans" means Base Rate Loans or Euro-Dollar Loans, or any or all of them, as
the context shall require.
"Loan Documents" means this Agreement, the Note, any other
document evidencing, relating to or securing the Loans, and any other document
or instrument delivered from time to time in connection with this Agreement, the
Note or the Loans, as such documents and instruments may be amended or
supplemented from time to time.
"London Interbank Offered Rate" has the meaning set forth in
Section 2.05(c).
"Margin Stock" means "margin stock" as defined in Regulation
G, T, U or X of the Board of Governors of the Federal Reserve System, as in
effect from time to time, together with all official rulings and interpretations
issued thereunder.
7
<PAGE>
"Material Adverse Effect" means, with respect to any event,
act, condition or occurrence of whatever nature (including any adverse
determination in any litigation, arbitration, or governmental investigation or
proceeding), whether singly or in conjunction with any other event or events,
act or acts, condition or conditions, occurrence or occurrences, whether or not
related, a material adverse change in, or a material adverse effect upon, any of
(a) the financial condition, operations, business, properties or prospects of
the Borrower and its Consolidated Subsidiaries taken as a whole, (b) the rights
and remedies of the Bank under the Loan Documents, or the ability of the
Borrower to perform its obligations under the Loan Documents to which it is a
party, as applicable, or (c) the legality, validity or enforceability of any
Loan Document.
"Monthly Reduction" has the meaning set forth in Section
2.08(b).
"Multiemployer Plan" has the meaning set forth in Section
4001(a)(3) of ERISA.
"Net Income" means, as applied to any Person for any period,
the aggregate amount of net income of such Person, after taxes, for such period,
as determined in accordance with GAAP.
"Net Proceeds of Offering" means any and all proceeds (whether
cash or non-cash) or other consideration received by the Borrower or a
Subsidiary in respect of: (1) the issuance of Capital Stock (including, without
limitation, the conversion of any Debt into Capital Stock); and (2) any Debt
Financing incurred by such Borrower or Subsidiary, after deducting therefrom all
reasonable and customary costs and expenses incurred by the Borrower or such
Subsidiary directly in connection with such Debt Financing or the issuance of
such Capital Stock, as the case may be.
"Nonperforming Loans" means, at any time, the aggregate
principal amount of (i) all nonaccruing loans of First-Citizens Bank and Trust
Company of South Carolina, and (ii) all loans of First-Citizens Bank and Trust
Company of South Carolina that are 90 (or more)days past due; and (iii) all
loans of First-Citizens Bank and Trust Company of South Carolina that are
Restructured Loans, all determined with respect to First-Citizens Bank and Trust
Company of South Carolina on a basis consistent with Federal Reserve System
FRY-9C Report of Consolidated Financial Statements for Banking Holding Companies
most recently filed by the Borrower with the appropriate Authority.
"Note" means the promissory note of the Borrower,
substantially in the form of Exhibit A hereto, evidencing the obligation of the
Borrower to repay the Loans, together with all amendments, consolidations,
modifications, renewals and supplements thereto.
"Notice of Borrowing" has the meaning set forth in Section
2.02(a).
"Participant" has the meaning set forth in Section 8.06(b).
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Acquisition" means the acquisition of shares of
capital stock of any Person by the Borrower or any Subsidiary of the Borrower
if: (A) immediately after giving effect to such
8
<PAGE>
acquisition (i) such Person is a Consolidated Subsidiary; (ii) the Borrower
controls such Person directly or indirectly through a Subsidiary; and (iii) no
Default shall have occurred and be continuing; (B) the line or lines of business
engaged in by such Person are related to the lines of business engaged in by the
Borrower and its Subsidiaries on the Closing Date; and (C) such acquisition is
made on a negotiated basis with the approval of the Board of Directors of the
Person to be acquired.
"Person" means an individual, a corporation, a limited
liability company, a partnership (including without limitation, a joint
venture), an unincorporated association, a trust or any other entity or
organization, including, but not limited to, a government or political
subdivision or an agency or instrumentality thereof.
"Plan" means at any time an employee pension benefit plan
which is covered by Title IV of ERISA or is subject to the minimum funding
standards under Section 412 of the Code and is either (i) maintained by a member
of the Controlled Group for employees of any member of the Controlled Group or
(ii) maintained pursuant to a collective bargaining agreement or any other
arrangement under which more than one employer makes contributions and to which
a member of the Controlled Group is then making or accruing an obligation to
make contributions or has within the preceding five (5) plan years made
contributions.
"Prime Rate" means that interest rate so denominated and set
by Wachovia from time to time as an interest rate basis for borrowings. The
Prime Rate is but one of several interest rate bases used by Wachovia. Wachovia
lends at interest rates above and below the Prime Rate.
"Properties" means all real property owned, leased or
otherwise used or occupied by the Borrower or any Subsidiary, wherever located.
"Redeemable Preferred Stock" of any Person means any preferred
stock issued by such Person which is at any time prior to the Termination Date
either (i) mandatorily redeemable (by sinking fund or similar payments or
otherwise) or (ii) redeemable at the option of the holder thereof.
"Responsible Officer" means any officer of the Borrower,
including, without limitation, the President, Chief Financial Officer, Chief
Executive Officer, Chief Operating Officer, Treasurer, Assistant Treasurer and
General Counsel.
"Restructured Loans" means all loans (exclusive of loans
included in clauses (i) and (ii) of the definition of Nonperforming Loans
contained in this Agreement) the terms of which have been amended or modified
and that were formerly (i) nonaccruing; or (ii) 90 (or more) days past due,
determined with respect to First-Citizens Bank and Trust Company of South
Carolina on a basis consistent with the Federal Reserve System FR Y-9C Report of
Consolidated Financial Statements for Bank Holding Companies most recently filed
by the Borrower with the appropriate Authority.
"Stockholders' Equity" means, at any time, the shareholders'
equity of the Borrower and its Consolidated Subsidiaries, as set forth or
reflected on the most recent consolidated balance sheet of the Borrower and its
Consolidated Subsidiaries prepared in accordance with GAAP, but
9
<PAGE>
excluding only Redeemable Preferred Stock of the Borrower or any of its
Consolidated Subsidiaries.
"Subsidiary" means any corporation or other entity of which
securities or other ownership interests having ordinary voting power to elect a
majority of the board of directors or other persons performing similar functions
are at the time directly or indirectly owned by the Borrower.
"Taxes" has the meaning set forth in Section 2.11(c).
"Termination Date" means August 14, 2000.
"Third Parties" means all lessees, sublessees, licensees and
other users of the Properties, excluding those users of the Properties in the
ordinary course of the Borrower's business and on a temporary basis.
"Total Assets" of any Person means, at any time, the total
assets of such Person, as set forth or reflected or as should be set forth or
reflected on the most recent balance sheet of such Person, prepared in
accordance with GAAP.
"Total Gross Loans" means, at any time, the aggregate
principal amount of the total gross loans of First-Citizens Bank and Trust
Company of South Carolina determined on a basis consistent with the Federal
Reserve System FRY-9C Report of the Consolidated Financial Statements for Bank
Holding Companies most recently filed by the Borrower with the appropriate
Authority.
"Transferee" has the meaning set forth in Section 8.06(d).
"Unencumbered Total Assets" of any Person means, at any time,
Total Assets of such Person which are subject to any arrangement specified in 12
C.F.R. ss.221.2(g)(1).
"Unused Commitment" means at any date, with respect to the
Bank, an amount equal to its Commitment less the aggregate outstanding principal
amount of its Loans.
"Wachovia" means Wachovia Bank, N.A., a national banking
association and its successors.
"Wholly Owned Subsidiary" means any Subsidiary, all of the
shares of capital stock or other ownership interests of which (except directors'
qualifying shares) are at the time directly or indirectly owned by the Borrower.
SECTION 1.02. Accounting Terms, Regulatory Changes and
Determinations. (a) Unless otherwise specified herein, all terms of an
accounting character used herein shall be interpreted, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered hereunder shall be prepared in accordance with GAAP, applied on a
basis consistent (except for changes concurred in by the Borrower's independent
public accountants or otherwise required by a change in GAAP) with the most
recent audited consolidated financial statements of the Borrower and
10
<PAGE>
its Consolidated Subsidiaries delivered to the Bank, unless with respect to any
such change concurred in by the Borrower's independent public accountants or
required by GAAP, in determining compliance with any of the provisions of this
Agreement or any of the other Loan Documents: (i) the Borrower shall have
objected to determining such compliance on such basis at the time of delivery of
such financial statements, or (ii) the Bank shall so object in writing within 30
days after the delivery of such financial statements, in either of which events
such calculations shall be made on a basis consistent with those used in the
preparation of the latest financial statements as to which such objection shall
not have been made (which, if objection is made in respect of the first
financial statements delivered under Section 5.01 hereof, shall mean the
financial statements referred to in Section 4.04).
(b) All regulatory determinations and calculations made in
connection with: (i) the determination of Allowance for Loan and Lease Losses,
(ii) the calculation of the ratio of Allowance for Loan and Lease Losses to
Nonperforming Loans under Section 5.04, and (iii) the determination of the
status of First-Citizens Bank and Trust Company of South Carolina as well
capitalized under Section 5.20, shall be made in accordance with the laws,
rules, regulations and interpretations thereof by the governmental authorities
or agencies charged with the interpretation thereof, as in effect on the date of
such determination or calculation, as the case may be, unless with respect to
any change in any such law, rule, regulation or interpretation occurring after
the date of this Agreement: (1) the Borrower shall have objected to making such
determination or calculation on such basis at the time of delivery of the
Compliance Certificate for the applicable time period, or (2) the Bank shall so
object in writing within 30 days after the delivery of such Compliance
Certificate, in either of which events, such calculations and determinations
shall be made on the basis of the laws, rules, regulations and interpretations
in effect at the time of the latest Compliance Certificate as to which such
objection shall not have been made (which, if objection is made in respect of
the first Compliance Certificate delivered under Section 5.01 hereof, shall mean
the laws, rules, regulations and interpretations in effect on the date of this
Agreement).
SECTION 1.03. Use of Defined Terms. All terms defined in this
Agreement shall have the same meanings when used in any of the other Loan
Documents, unless otherwise defined therein or unless the context shall
otherwise require.
SECTION 1.04. Terminology. All personal pronouns used in this
Agreement, whether used in the masculine, feminine or neuter gender, shall
include all other genders and the singular shall include the plural and the
plural shall include the singular. Titles of Articles and Sections in this
Agreement are for convenience only, and neither limit nor amplify the provisions
of this Agreement.
SECTION 1.05. References. Unless otherwise indicated,
references in this Agreement to "Articles", "Exhibits", "Schedules", and
"Sections" are references to articles, exhibits, schedules and sections hereof.
11
<PAGE>
ARTICLE II
THE CREDITS
SECTION 2.01. Commitment to Make Loans. The Bank agrees, on
the terms and conditions set forth herein, to make Loans to the Borrower from
time to time before the Termination Date; provided that, immediately after each
such Loan is made, the aggregate outstanding principal amount of Loans by the
Bank shall not exceed the amount of its Commitment. Each Loan under this Section
shall be in an aggregate principal amount of at least $1,000,000 (except that
any such Loan may be in the aggregate amount of the Unused Commitment). Within
the foregoing limits, the Borrower may borrow under this Section, repay or, to
the extent permitted by Section 2.09, prepay Loans and reborrow under this
Section at any time before the Termination Date.
SECTION 2.02. Method of Borrowing Loans. (a) The Borrower
shall give the Bank notice in the form of Exhibit F hereto (a "Notice of
Borrowing") prior to 11:00 A.M. (Columbia, South Carolina time) on the Domestic
Business Day of a Base Rate Borrowing and at least three (3) Euro-Dollar
Business Days before each Euro-Dollar Borrowing, specifying:
(i) the date of such Borrowing, which shall be a
Domestic Business Day in the case of a Base Rate Borrowing or
a Euro-Dollar Business Day in the case of a Euro-Dollar
Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) whether the Loans comprising such Borrowing are
to be Base Rate Loans or Euro-Dollar Loans; and
(iv) in the case of a Euro-Dollar Borrowing, the
duration of the Interest Period applicable thereto, subject to
the provisions of the definition of Interest Period.
(b) Upon receipt of a Notice of Borrowing by the Bank, such
Notice of Borrowing shall not thereafter be revocable by the Borrower.
(c) Not later than 2:00 p.m. (Columbia, South Carolina time)
on the date of each Borrowing, unless the Bank determines that any applicable
condition specified in Article III has not been satisfied, the Bank shall
(except as provided in subsection (d) of this Section) make available such
Borrowing, in Federal or other funds immediately available in Columbia, South
Carolina, to the Borrower at the Bank's address referred to in or specified
pursuant to Section 8.01.
(d) If the Bank makes a new Loan hereunder on a day on which
the Borrower is to repay all or any part of an outstanding Loan from such Bank,
such Bank shall apply the proceeds of its new Loan to make such repayment and
only an amount equal to the difference (if any) between the amount being
borrowed and the amount being repaid shall be made available by the Bank to the
12
<PAGE>
Borrower as provided in subsection (c) of this Section, or remitted by the
Borrower to the Bank as provided in Section 2.11, as the case may be.
(e) Notwithstanding anything to the contrary contained in this
Agreement, no Euro- Dollar Borrowing may be made if there shall have occurred a
Default or an Event of Default, which Default or Event of Default shall not have
been cured or waived in writing.
(f) In the event that a Notice of Borrowing fails to specify
whether the Loans comprising such Borrowing are to be Base Rate Loans or
Euro-Dollar Loans, such Loans shall be made as Base Rate Loans. If the Borrower
is otherwise entitled under this Agreement to repay any Loans maturing at the
end of an Interest Period applicable thereto with the proceeds of a new
Borrowing, and the Borrower fails to repay such Loans using its own moneys and
fails to give a Notice of Borrowing in connection with such new Borrowing, a new
Borrowing shall be deemed to be made on the date such Loans mature in an amount
equal to the principal amount of the Loans so maturing, and the Loans comprising
such new Borrowing shall be Base Rate Loans.
(g) Notwithstanding anything to the contrary contained herein,
(i) there shall not be more than three (3) different Interest Periods
outstanding at the same time (for which purpose Interest Periods described in
different numbered clauses of the definition of the term "Interest Period" shall
be deemed to be different Interest Periods even if they are coterminous), and
(ii) the proceeds of any Base Rate Borrowing shall be applied first to repay the
unpaid principal amount of all Base Rate Loans (if any) outstanding immediately
before such Base Rate Borrowing.
SECTION 2.03. Note. (a) The Loans shall be evidenced by a
single Note payable to the order of the Bank for the account of its Lending
Office in an amount equal to the original principal amount of the Commitment.
(b) The Bank shall record, and prior to any transfer of its
Note shall endorse on the schedule forming a part thereof appropriate notations
to evidence, the date, amount and maturity of, and effective interest rate for,
each Loan made by it, the date and amount of each payment of principal made by
the Borrower with respect thereto and whether such Loan is a Base Rate Loan or
Euro-Dollar Loan, and such schedule shall constitute rebuttable presumptive
evidence of the principal amount owing and unpaid on the Bank's Note; provided
that the failure of the Bank to make, or any error in making, any such
recordation or endorsement shall not affect the obligation of the Borrower
hereunder or under the Note or the ability of the Bank to assign its Note. The
Bank is hereby irrevocably authorized by the Borrower so to endorse its Note and
to attach to and make a part of any Note a continuation of any such schedule as
and when required.
SECTION 2.04. Maturity of Loans. Each Loan shall mature, and
the principal amount thereof shall be due and payable, on the last day of the
Interest Period applicable to such Loan.
SECTION 2.05. Interest Rates. (a) "Applicable Margin" means
(i) for any Base Rate Loan, 0%; and (ii) for any Euro-Dollar Loan, 0.70%.
13
<PAGE>
(b) Each Base Rate Loan shall bear interest on the outstanding
principal amount thereof, for each day from the date such Loan is made until it
becomes due, at a rate per annum equal to the Base Rate for such day plus the
Applicable Margin. Such interest shall be payable for each Interest Period on
the last day thereof. Any overdue principal of and, to the extent permitted by
applicable law, overdue interest on any Base Rate Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the
Default Rate.
(c) Each Euro-Dollar Loan shall bear interest on the
outstanding principal amount thereof, for the Interest Period applicable
thereto, at a rate per annum equal to the sum of the Applicable Margin plus the
applicable Adjusted London Interbank Offered Rate for such Interest Period;
provided that if any Euro-Dollar Loan shall, as a result of clause (1)(c) of the
definition of Interest Period, have an Interest Period of less than one month,
such Euro-Dollar Loan shall bear interest during such Interest Period at the
rate applicable to Base Rate Loans during such period. Such interest shall be
payable for each Interest Period on the last day thereof and, if such Interest
Period is longer than three (3) months, at intervals of three (3) months after
the first day thereof. Any overdue principal of and, to the extent permitted by
applicable law, overdue interest on any Euro-Dollar Loan shall bear interest,
payable on demand, for each day until paid at a rate per annum equal to the
Default Rate.
The "Adjusted London Interbank Offered Rate" applicable to any
Interest Period means a rate per annum equal to the quotient obtained (rounded
upward, if necessary, to the next higher 1/100th of 1%) by dividing (i) the
applicable London Interbank Offered Rate for such Interest Period by (ii) 1.00
minus the Euro-Dollar Reserve Percentage.
The "London Interbank Offered Rate" applicable to any
Euro-Dollar Loan means for the Interest Period of such Euro-Dollar Loan the rate
per annum determined on the basis of the rate for deposits in Dollars of amounts
equal or comparable to the principal amount of such Euro-Dollar Loan offered for
a term comparable to such Interest Period, which rate appears on the display
designated as Page "3750" of the Telerate Service (or such other page as may
replace page 3750 of that service or such other service or services as may be
nominated by the British Banker's Association for the purpose of displaying
London Interbank Offered Rates for U.S. dollar deposits) determined as of 1:00
p.m. New York City time, two (2) Euro-Dollar Business Days prior to the first
day of such Interest Period.
"Euro-Dollar Reserve Percentage" means for any day that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement for a member bank of
the Federal Reserve System in respect of "Eurocurrency liabilities" (or in
respect of any other category of liabilities which includes deposits by
reference to which the interest rate on Euro-Dollar Loans is determined or any
category of extensions of credit or other assets which includes loans by a
non-United States office of any Bank to United States residents). The Adjusted
London Interbank Offered Rate shall be adjusted automatically on and as of the
effective date of any change in the Euro-Dollar Reserve Percentage.
14
<PAGE>
(d) The Bank shall determine each interest rate applicable to
the Loans hereunder, and its determination thereof shall be conclusive in the
absence of manifest error.
(e) After the occurrence and during the continuance of a
Default, the principal amount of the Loans (and, to the extent permitted by
applicable law, all accrued interest thereon) may, at the election of the Bank,
bear interest at the Default Rate.
SECTION 2.06. Fees. The Borrower shall pay to the Bank a fully
earned (when paid), nonrefundable facility fee on the amount of the Commitment
(determined on each Facility Fee Payment Date), for the period from and
including the Closing Date to and including the Termination Date, at a rate
equal to 0.10 of 1% per annum. Facility fees shall be nonrefundable (when paid)
and payable annually in advance on each Facility Fee Payment Date.
SECTION 2.07. Optional Termination or Reduction of Commitment.
The Borrower may, upon at least three (3) Domestic Business Days' notice to the
Bank, terminate at any time, or proportionately reduce from time to time by an
aggregate amount of at least $1,000,000, the Commitment. If the Commitment is
terminated in its entirety, all accrued fees (as provided under Section 2.06)
shall be payable on the effective date of such termination.
SECTION 2.08. Mandatory Reduction and Termination of
Commitment. (a) The Commitment shall terminate on the Termination Date and any
Loans then outstanding (together with accrued interest thereon) shall be due and
payable on such date.
(b) The Commitment of the Bank shall be reduced, within 10
days following the end of each calendar month (beginning on September 10, 1997
and continuing after the end of each calendar month thereafter) in an amount
(the "Monthly Reduction") equal to the Net Proceeds of Offering received by the
Borrower or any Subsidiary in the immediately preceding calendar month.
SECTION 2.09. Optional Prepayments. (a) The Borrower may, upon
at least one (1) Domestic Business Day's notice to the Bank, prepay any Base
Rate Loan in whole at any time, or from time to time in part in amounts
aggregating at least $1,000,000 (except that any such prepayment may be in the
outstanding amount of the Base Rate Loan), by paying the principal amount to be
prepaid together with accrued interest thereon to the date of prepayment.
(b) Except as provided in Section 7.02, the Borrower may not
prepay all or any portion of the principal amount of any Euro-Dollar Loan prior
to the last day of an Interest Period applicable thereto.
(c) Upon receipt of a notice of prepayment by the Bank
pursuant to this Section such notice shall not thereafter be revocable by the
Borrower.
SECTION 2.10. Mandatory Prepayments. On each date on which the
Commitment is reduced pursuant to Section 2.07 or Section 2.08, the Borrower
shall repay or prepay such principal amount of the outstanding Loans, if any
(together with interest accrued thereon and any amounts due under Section
7.05(a)), as may be necessary so that after such payment the aggregate unpaid
principal
15
<PAGE>
amount of the Loans does not exceed the amount of the Commitment as then
reduced. Each such payment or prepayment shall be applied to repay or prepay the
Loans of the Bank in direct order of maturity.
SECTION 2.11. General Provisions as to Payments. (a) The
Borrower shall make each payment of principal of, and interest on, the Loans and
of facility fees hereunder, not later than 11:00 A.M. (Columbia, South Carolina
time) on the date when due, in Federal or other funds immediately available in
Columbia, South Carolina, to the Bank at its address referred to in or specified
pursuant to Section 8.01.
(b) Whenever any payment of principal of, or interest on, the
Base Rate Loans or of fees shall be due on a day which is not a Domestic
Business Day, the date for payment thereof shall be extended to the next
succeeding Domestic Business Day. Whenever any payment of principal of, or
interest on, the Euro-Dollar Loans shall be due on a day which is not a
Euro-Dollar Business Day, the date for payment thereof shall be extended to the
next succeeding Euro-Dollar Business Day unless such Euro-Dollar Business Day
falls in another calendar month, in which case the date for payment thereof
shall be the next preceding Euro-Dollar Business Day. If the date for any
payment of principal is extended by operation of law or otherwise, interest
thereon shall be payable for such extended time.
(c) All payments of principal, interest and fees and all other
amounts to be made by the Borrower pursuant to this Agreement with respect to
any Loan or fee relating thereto shall be paid without deduction for, and free
from, any taxes, imposts, levies, duties, deductions, or withholdings of any
nature now or at anytime hereafter imposed by any governmental authority or by
any taxing authority thereof or therein excluding in the case of the Bank, (i)
taxes imposed on or measured by its net income, (ii) franchise taxes imposed on
it by the jurisdiction under the laws of which the Bank is organized or any
political subdivision thereof, and (iii) taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction of the Bank's applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, imposts, levies, duties, deductions or withholdings of any nature being
"Taxes"). In the event that the Borrower is required by applicable law to make
any such withholding or deduction of Taxes with respect to any Loan or fee or
other amount, the Borrower shall pay such deduction or withholding to the
applicable taxing authority, shall promptly furnish to the Bank in respect of
which such deduction or withholding is made all receipts and other documents
evidencing such payments and shall pay to the Bank additional amounts as may be
necessary in order that the amount received by the Bank after the required
withholding or other payment shall equal the amount the Bank would have received
had no such withholding or other payment been made. If no withholding or
deduction of Taxes is payable in respect of any Loan or fee relating thereto,
the Borrower shall furnish the Bank, at the Bank's request, a certificate from
each applicable taxing authority or an opinion of counsel acceptable to the
Bank, in either case stating that such payments are exempt from or not subject
to withholding or deduction of Taxes. If the Borrower fails to provide such
original or certified copy of a receipt evidencing payment of Taxes or
certificate(s) or opinion of counsel of exemption, the Borrower hereby agrees to
compensate the Bank for, and indemnify them with respect to, the tax
consequences of the Borrower's failure to provide evidence of tax payments or
tax exemption.
16
<PAGE>
In the event the Bank receives a refund of any Taxes paid by
the Borrower pursuant to this Section 2.11, it will pay to the Borrower the
amount of such refund promptly upon receipt thereof; provided, however, if at
any time thereafter it is required to return such refund, the Borrower shall
promptly repay to it the amount of such refund.
Without prejudice to the survival of any other agreement of
the Borrower hereunder, the agreements and obligations of the Borrower contained
in this Section 2.11 shall be applicable with respect to any Participant,
Assignee or other Transferee, and any calculations required by such provisions
(i) shall be made based upon the circumstances of such Participant, Assignee or
other Transferee, and (ii) constitute a continuing agreement which shall survive
the termination of this Agreement and the payment in full or cancellation of the
Note.
SECTION 2.12. Computation of Interest and Fees. Interest on
Base Rate Loans based on the Base Rate shall be computed on the basis of a year
of 360 days and paid for the actual number of days elapsed (including the first
day but excluding the last day). Interest on Euro-Dollar Loans shall be computed
on the basis of a year of 360 days and paid for the actual number of days
elapsed (including the first day but excluding the last day). Facility fees and
any other fees payable hereunder shall be computed on the basis of a year of 360
days and paid for the actual number of days elapsed (including the first day but
excluding the last day).
ARTICLE III
CONDITIONS TO BORROWINGS
SECTION 3.01. Conditions to Closing. On the Closing Date, the
Borrower shall satisfy each of the following conditions:
(a) receipt by the Bank from the Borrower of a duly executed
counterpart of this Agreement signed by the Borrower;
(b) receipt by the Bank of a duly executed Note for the
account of the Bank complying with the provisions of Section 2.03;
(c) receipt by the Bank of an opinion (together with any
opinions of local counsel relied on therein) of Sherrill & Roof, LLP, counsel
for the Borrower, dated as of the Closing Date, substantially in the form of
Exhibit B hereto and covering such additional matters relating to the
transactions contemplated hereby as the Bank may reasonably request;
(d) receipt by the Bank of a certificate, dated the Closing
Date, substantially in the form of Exhibit C hereto, signed by a principal
financial officer of the Borrower, to the effect that (i) no Default has
occurred and is continuing on the Closing Date and (ii) the representations and
warranties of the Borrower contained in Article IV are true on and as of the
Closing Date;
17
<PAGE>
(e) receipt by the Bank of all documents which the Bank may
reasonably request relating to the existence of the Borrower, the corporate
authority for and the validity of this Agreement and the Note, and any other
matters relevant hereto, all in form and substance satisfactory to the Bank,
including without limitation a certificate of incumbency of the Borrower, signed
by the Secretary or an Assistant Secretary of the Borrower, substantially in the
form of Exhibit D hereto, certifying as to the names, true signatures and
incumbency of the officer or officers of the Borrower authorized to execute and
deliver the Loan Documents, and certified copies of the following items: (i) the
Borrower's Certificate of Incorporation, (ii) the Borrower's Bylaws, (iii) a
certificate of the Secretary of State of the State of South Carolina as to the
good standing of the Borrower as a South Carolina corporation, and (iv) the
action taken by the Board of Directors of the Borrower authorizing the
Borrower's execution, delivery and performance of this Agreement, the Note and
the other Loan Documents to which the Borrower is a party; and
(f) receipt by the Bank of a Notice of Borrowing.
SECTION 3.02. Conditions to All Borrowings. The obligation of
the Bank to make a Loan on the occasion of each Borrowing is subject to the
satisfaction of the following conditions:
(a) receipt by the Bank of a Notice of Borrowing as required
by Section 2.02;
(b) the fact that, immediately before and after such
Borrowing, no Default shall have occurred and be continuing;
(c) the fact that the representations and warranties of the
Borrower contained in Article IV of this Agreement shall be true on and as of
the date of such Borrowing; and
(d) the fact that, immediately after such Borrowing the
aggregate outstanding principal amount of the Loans of the Bank will not exceed
the amount of its Commitment.
Each Borrowing hereunder shall be deemed to be a representation and warranty by
the Borrower on the date of such Borrowing as to the truth and accuracy of the
facts specified in clauses (b), (c) and (d) of this Section; provided that such
Borrowing shall not be deemed to be such a representation and warranty to the
effect set forth in Section 4.04(b) as to any event, act or condition having a
Material Adverse Effect which has theretofore been disclosed in writing by the
Borrower to the Bank if the aggregate outstanding principal amount of the Loans
immediately after such Borrowing will not exceed the aggregate outstanding
principal amount thereof immediately before such Borrowing.
18
<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 4.01. Corporate Existence and Power. The Borrower is a
corporation duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, is duly qualified to transact business
in every jurisdiction where, by the nature of its business, such qualification
is necessary, and has all corporate powers and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted.
SECTION 4.02. Corporate and Governmental Authorization; No
Contravention. The execution, delivery and performance by the Borrower of this
Agreement, the Note and the other Loan Documents (i) are within the Borrower's
corporate powers, (ii) have been duly authorized by all necessary corporate
action, (iii) require no action by or in respect of, or filing with, any
governmental body, agency or official, (iv) do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or by-laws of the Borrower or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Borrower or any of its Subsidiaries, and (v) do not result in the creation or
imposition of any Lien on any asset of the Borrower or any of its Subsidiaries.
SECTION 4.03. Binding Effect. This Agreement constitutes a
valid and binding agreement of the Borrower enforceable in accordance with its
terms, and the Note and the other Loan Documents, when executed and delivered in
accordance with this Agreement, will constitute valid and binding obligations of
the Borrower enforceable in accordance with their respective terms, provided
that the enforceability hereof and thereof is subject in each case to general
principles of equity and to bankruptcy, insolvency and similar laws affecting
the enforcement of creditors' rights generally.
SECTION 4.04. Financial Information. (a) The consolidated
balance sheet of the Borrower and its Consolidated Subsidiaries as of December
31, 1996, and the related consolidated statements of net earnings, shareholders'
equity and cash flows for the Fiscal Year then ended, reported on by Price
Waterhouse, LLP copies of which have been delivered to the Bank, and the
unaudited consolidated financial statements of the Borrower for the interim
period ended March 31, 1997, copies of which have been delivered to the Bank,
fairly present, in conformity with GAAP, the consolidated financial position of
the Borrower and its Consolidated Subsidiaries as of such dates and their
consolidated results of operations and cash flows for such periods stated.
(b) Since December 31, 1996, there has been no event, act,
condition or occurrence having a Material Adverse Effect.
SECTION 4.05. Litigation. There is no action, suit or
proceeding pending, or to the knowledge of the Borrower threatened, against or
affecting the Borrower or any of its Subsidiaries before any court or arbitrator
or any governmental body, agency or official which could have a
19
<PAGE>
Material Adverse Effect or which in any manner draws into question the validity
or enforceability of, or could impair the ability of the Borrower to perform its
obligations under, this Agreement, the Note or any of the other Loan Documents.
SECTION 4.06. Compliance with ERISA. (a) The Borrower and each
member of the Controlled Group have fulfilled their obligations under the
minimum funding standards of ERISA and the Code with respect to each Plan and
are in compliance in all material respects with the presently applicable
provisions of ERISA and the Code, and have not incurred any liability to the
PBGC or a Plan under Title IV of ERISA.
(b) Neither the Borrower nor any member of the Controlled
Group is or ever has been obligated to contribute to any Multiemployer Plan.
SECTION 4.07. Taxes. There have been filed on behalf of the
Borrower and its Subsidiaries all Federal, state and local income, excise,
property and other tax returns which are required to be filed by them and all
taxes due pursuant to such returns or pursuant to any assessment received by or
on behalf of the Borrower or any Subsidiary have been paid. The charges,
accruals and reserves on the books of the Borrower and its Subsidiaries in
respect of taxes or other governmental charges are, in the opinion of the
Borrower, adequate. United States income tax returns of the Borrower and its
Subsidiaries have been examined and closed through the Fiscal Year ended
December 31, 1993.
SECTION 4.08. Subsidiaries. Each of the Borrower's
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation, is duly qualified
to transact business in every jurisdiction where, by the nature of its business,
such qualification is necessary, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted. The Borrower has no Subsidiaries except those
Subsidiaries listed on Schedule 4.08, which accurately sets forth each such
Subsidiary's complete name and jurisdiction of incorporation.
SECTION 4.09. Not an Investment Company. Neither the Borrower
nor any of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
SECTION 4.10 Public Utility Holding Company Act. Neither the
Borrower nor any of its Subsidiaries is a "holding company," or a "subsidiary
company" of a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company," as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended.
SECTION 4.11. Ownership of Property; Liens. Each of the
Borrower and its Consolidated Subsidiaries has title to its properties
sufficient for the conduct of its business, and none of such property is subject
to any Lien except as permitted in Section 5.07.
SECTION 4.12. No Default. Neither the Borrower nor any of its
Consolidated Subsidiaries is in default under or with respect to any agreement,
instrument or undertaking to which
20
<PAGE>
it is a party or by which it or any of its property is bound which could have or
cause a Material Adverse Effect. No Default or Event of Default has occurred and
is continuing.
SECTION 4.13. Full Disclosure. All information heretofore
furnished by the Borrower to the Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all such information
hereafter furnished by the Borrower to the Bank will be, true, accurate and
complete in every material respect or based on reasonable estimates on the date
as of which such information is stated or certified. The Borrower has disclosed
to the Bank in writing any and all facts which could have or cause a Material
Adverse Effect.
SECTION 4.14. Environmental Matters. (a) Neither the Borrower
nor any Subsidiary is subject to any Environmental Liability which could have or
cause a Material Adverse Effect. Neither the Borrower nor any Subsidiary has
been designated by an Environmental Authority as a potentially responsible party
under CERCLA or under any state statute similar to CERCLA. None of the
Properties have been identified on any current (i) National Priorities List
under 40 C.F.R. ss. 300, (ii) CERCLIS list or (iii) any list arising from a
state statute similar to CERCLA.
(b) (i) To the best of the knowledge of the Responsible
Environmental Officers without an independent inquiry having
been conducted for the purposes of this Agreement, prior to
the Borrower or any Subsidiary of the Borrower owning,
leasing, occupying or otherwise using the Properties, no
Hazardous Materials were used, produced, manufactured,
processed, treated, recycled, generated, stored, disposed of,
managed or otherwise handled at, or shipped or transported to
or from the Properties or were otherwise present at, on, in or
under the Properties, or, at or from any adjacent site or
facility, except for Hazardous Materials, such as cleaning
solvents, pesticides and other materials used, produced,
manufactured, processed, treated, recycled, generated, stored,
disposed of, managed or otherwise handled in amounts as
required for the ordinary course of business and in compliance
with all applicable Environmental Requirements.
(ii) Except as disclosed on Schedule 4.14, after the
date that the Borrower or any Subsidiary of the Borrower has
first owned, leased, occupied or otherwise used any of the
Properties, no Hazardous Materials have been or are being
used, produced, stored, handled or are otherwise present at,
on, in or under the Properties, or, to the best of the
knowledge of the Responsible Environmental Officers without an
independent inquiry having been conducted for the purposes of
this Agreement, at or from any adjacent site or facility,
except for Hazardous Materials such as cleaning solvents,
pesticides and other materials used, produced, stored, handled
or otherwise present in amounts as required for the ordinary
course of business and in compliance with all applicable
Environmental Requirements.
(c) The Borrower, and each of its Subsidiaries, has procured
all material Environmental Authorizations necessary for the conduct of its
business, and is in compliance with all Environmental Requirements in connection
with the operation of the Properties and the Borrower's, and each of its
Subsidiary's, respective businesses, except as disclosed on Schedule 4.14
hereto.
21
<PAGE>
(d) As used in this Section 4.14:
(i) "Responsible Environmental Officers" means (i)
any officers or managers of the Borrower or a Subsidiary of
the Borrower who is (or with others are) the primary Person(s)
responsible for the environmental condition of the Properties
and the Properties' compliance with Environmental
Requirements; and (ii) the respective successors of the
foregoing Persons. On the Closing Date, the Borrower
represents that the Responsible Environmental Officer is Paul
E. Odom, Jr., Vice President;
(ii) "Properties" means all real property owned,
leased or to the best knowledge of the Responsible
Environmental Officers without an independent inquiry having
been conducted for the purposes of this Agreement, otherwise
used or occupied by the Borrower or any Subsidiary, wherever
located; provided, however, that with respect to Section
4.14(b) and the third sentence of Section 4.14(a) the term
"Properties" shall not include any real property that the
Borrower or any Subsidiary holds title to in its capacity
solely as trustee or in another fiduciary capacity.
(iii) A Material Adverse Effect shall be deemed to
have occurred: (1) with regard to an Environmental Liability
applicable to any single Property if such Environmental
Liability is in an amount equal to or greater than three
percent (3%) of Stockholders' Equity; or (2) if, at any time,
the total Environmental Liabilities applicable to the Borrower
and its Subsidiaries are in an aggregate amount equal to or
greater than three percent (3%) of Stockholders' Equity.
SECTION 4.15. Compliance with Laws. The Borrower and each
Subsidiary is in compliance with all applicable laws, including, without
limitation, all Environmental Laws, except where any failure to comply with any
such laws would not, alone or in the aggregate, have a Material Adverse Effect.
SECTION 4.16. Capital Stock. All Capital Stock, debentures,
bonds, notes and all other securities of the Borrower and its Subsidiaries
presently issued and outstanding are validly and properly issued in accordance
with all applicable laws, including, but not limited to, the "Blue Sky" laws of
all applicable states and the federal securities laws. The issued shares of
Capital Stock of the Borrower's Wholly Owned Subsidiaries are owned by the
Borrower free and clear of any Lien or adverse claim. At least a majority of the
issued shares of capital stock of each of the Borrower's other Subsidiaries
(other than Wholly Owned Subsidiaries) is owned by the Borrower free and clear
of any Lien or adverse claim.
SECTION 4.17. Margin Stock. Neither the Borrower nor any of
its Subsidiaries is engaged principally, or as one of its important activities,
in the business of purchasing or carrying any Margin Stock, and no part of the
proceeds of any Loan will be used to purchase or carry any Margin
22
<PAGE>
Stock in a manner which violates, or which is inconsistent with, the provisions
of Regulations G, T, U or X, or to extend credit to others for the purpose of
purchasing or carrying any Margin Stock in a manner which violates, or which is
inconsistent with, the provisions of Regulations G, T, U or X, or be used for
any purpose which violates, or which is inconsistent with, the provisions of
Regulations G, T, U or X.
SECTION 4.18. Insolvency. After giving effect to the execution
and delivery of the Loan Documents and the making of the Loans under this
Agreement, the Borrower will not be "insolvent" within the meaning of such term
as used in O.C.G.A. ss. 18-2-22 or as defined in ss. 101 of Title 11 of the
United States Code or Section 2 of the Uniform Fraudulent Transfer Act, or any
other applicable state law pertaining to fraudulent transfers, as each may be
amended from time to time, or be unable to pay its debts generally as such debts
become due, or have an unreasonably small capital to engage in any business or
transaction, whether current or contemplated.
ARTICLE V
COVENANTS
The Borrower agrees that, so long as the Bank has a Commitment
hereunder or any amount payable under the Note remains unpaid:
SECTION 5.01. Information. The Borrower will deliver to the
Bank:
(a) as soon as available and in any event within 90 days after
the end of each Fiscal Year, a consolidated balance sheet of the Borrower and
its Consolidated Subsidiaries as of the end of such Fiscal Year and the related
consolidated statements of net earnings, shareholders' equity and cash flows for
such Fiscal Year, setting forth in each case in comparative form the figures for
the previous fiscal year, all certified by Price Waterhouse, LLP or other
independent public accountants of nationally recognized standing, with such
certification to be free of exceptions and qualifications not acceptable to the
Bank;
(b) as soon as available and in any event within 45 days after
the end of each of the first three (3) Fiscal Quarters of each Fiscal Year, a
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
of the end of such Fiscal Quarter and the related statement of net earnings for
such Fiscal Quarter and for the portion of the Fiscal Year ended at the end of
such Fiscal Quarter and the related statement of cash flows for the portion of
the Fiscal Year ended at the end of such Fiscal Quarter, setting forth in each
case in comparative form the figures for the corresponding Fiscal Quarter and
the corresponding portion of the previous Fiscal Year, all certified (subject to
normal year-end adjustments) as to fairness of presentation, GAAP and
consistency by the chief financial officer or the chief accounting officer of
the Borrower;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate,
substantially in the form of Exhibit E (a "Compliance Certificate"), of the
chief financial officer or the chief accounting officer of the Borrower (i)
setting
23
<PAGE>
forth in reasonable detail the calculations required to establish whether the
Borrower was in compliance with the requirements of Sections 5.03 through 5.05,
inclusive, 5.07, 5.10, 5.20 and 5.21 on the date of such financial statements,
and (ii) stating whether any Default exists on the date of such certificate and,
if any Default then exists, setting forth the details thereof and the action
which the Borrower is taking or proposes to take with respect thereto;
(d) simultaneously with the delivery of each set of annual
financial statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements to the effect
that nothing has come to their attention to cause them to believe that any
Default existed on the date of such financial statements;
(e) within five (5) Domestic Business Days after the Borrower
becomes aware of the occurrence of any Default, a certificate of the chief
financial officer or the chief accounting officer of the Borrower stating that
it is a "Notice of Default" and setting forth the details thereof and the action
which the Borrower is taking or proposes to take with respect thereto;
(f) promptly upon the mailing thereof to the shareholders of
the Borrower generally, copies of all financial statements, reports and proxy
statements so mailed;
(g) promptly upon the filing thereof, copies of all
registration statements (other than the exhibits thereto and any registration
statements on Form S-8 or its equivalent) and annual, quarterly or monthly
reports which the Borrower shall have filed with the Securities and Exchange
Commission;
(h) if and when the Borrower or any member of the Controlled
Group (i) gives or is required to give notice to the PBGC of any "reportable
event" (as defined in Section 4043 of ERISA) with respect to any Plan which
might constitute grounds for a termination of such Plan under Title IV of ERISA,
or knows that the plan administrator of any Plan has given or is required to
give notice of any such reportable event, a copy of the notice of such
reportable event given or required to be given to the PBGC; (ii) receives notice
of complete or partial withdrawal liability under Title IV of ERISA, a copy of
such notice; or (iii) receives notice from the PBGC under Title IV of ERISA of
an intent to terminate or appoint a trustee to administer any Plan, a copy of
such notice;
(i) promptly after the Borrower knows of the commencement
thereof, notice of any litigation, dispute or proceeding involving a claim
against the Borrower and/or any Subsidiary for $5,000,000 or more;
(j) promptly after the sending or filing of the same, copies
of all call reports and other reports, including without limitation responses to
administrative enforcement actions, and modifications or amendments thereto,
that the Borrower or its Subsidiaries sends or files with any regulatory agency;
(k) promptly after each amendment or modification to the
First-Citizens Investment Policy, a copy of such amendment or modification; and
24
<PAGE>
(l) from time to time such additional information regarding
the financial position or business of the Borrower and its Subsidiaries as the
Bank, may reasonably request.
SECTION 5.02. Inspection of Property, Books and Records. The
Borrower will (i) keep, and will cause each Subsidiary to keep, proper books of
record and account in which full, true and correct entries in conformity with
GAAP shall be made of all dealings and transactions in relation to its business
and activities (except for each Subsidiary whose accounting matters are by
applicable law required to be treated in accordance with statutory accounting
principles, each of which Subsidiaries the Borrower shall cause to keep proper
books of record and account in which full, true and correct entries in
conformity with statutory accounting principles shall be made of all dealings
and transactions in relation to such Subsidiary's business and activities); and
(ii) permit, and will cause each Subsidiary to permit, representatives of any
Bank at such Bank's expense prior to the occurrence of an Event of Default, and
at the Borrower's expense after the occurrence of an Event of Default, to visit
and inspect any of their respective properties, to examine and make abstracts
from any of their respective books and records and to discuss their respective
affairs, finances and accounts with their respective officers, employees and
independent public accountants. The Borrower agrees to cooperate and assist in
such visits and inspections, in each case at such reasonable times and as often
as may reasonably be desired, provided that the Bank shall not conduct any
environmental investigation, sampling or testing of any Property, including the
air, land and water at, on or underlying the Property without the express
written authorization of the Borrower.
SECTION 5.03. Asset Quality. The ratio of: (A) the sum of: (i)
Nonperforming Loans, plus (ii) other real estate owned determined with respect
to First-Citizens Bank and Trust Company of South Carolina to (B) the sum of:
(i) Total Gross Loans, plus (ii) other real estate owned, determined with
respect to First-Citizens Bank and Trust Company of South Carolina, shall not at
any time exceed .01 to 1.0.
SECTION 5.04. Ratio of Allowance for Loan and Lease Losses to
Nonperforming Loans. The ratio of Allowance for Loan and Lease Losses to
Nonperforming Loans shall not at any time be less than 2.0 to 1.0.
SECTION 5.05. Debt. Neither the Borrower nor any Subsidiary of
the Borrower shall at any time incur, create, assume, or permit to exist any
Debt except: (1) the Loans; (2) Debt owing to the Borrower or another Subsidiary
of the Borrower; (3) Debt outstanding on the date of this Agreement in an
aggregate principal amount not exceeding $15,000,000; and (4) Debt, in addition
to Debt permitted under clauses (1), (2) and (3) of this Section, provided that
the aggregate outstanding principal amount of Debt of the Borrower and all
Subsidiaries of the Borrower permitted under this clause (4) shall not at any
time exceed $10,000,000 in the aggregate.
SECTION 5.06. Investments. Neither the Borrower nor any of its
Subsidiaries shall make Investments in any Person except Investments in (i)
Permitted Acquisitions and (ii) other Investments made in accordance with the
First-Citizens Investment Policy.
25
<PAGE>
SECTION 5.07. Negative Pledge. Neither the Borrower nor any
Consolidated Subsidiary will create, assume or suffer to exist any Lien on any
assets now owned or hereafter acquired by it, except:
(a) Liens existing on the date of this Agreement securing Debt
outstanding on the date of this Agreement in an aggregate principal amount not
exceeding $3,000,000;
(b) any Lien existing on any asset of any corporation at the
time such corporation becomes a Consolidated Subsidiary and not created in
contemplation of such event;
(c) any Lien on any asset securing Debt incurred or assumed
for the purpose of financing all or any part of the cost of acquiring or
constructing such asset, provided that such Lien attaches to such asset
concurrently with or within 18 months after the acquisition or completion of
construction thereof;
(d) any Lien on any asset of any corporation existing at the
time such corporation is merged or consolidated with or into the Borrower or a
Consolidated Subsidiary and not created in contemplation of such event;
(e) any Lien existing on any asset prior to the acquisition
thereof by the Borrower or a Consolidated Subsidiary and not created in
contemplation of such acquisition;
(f) Liens securing Debt owing by any Subsidiary to the
Borrower;
(g) any Lien arising out of the refinancing, extension,
renewal or refunding of any Debt secured by any Lien permitted by any of the
foregoing clauses of this Section, provided that (i) such Debt is not secured by
any additional assets, and (ii) the amount of such Debt secured by any such Lien
is not increased;
(h) Liens incidental to the conduct of its business or the
ownership of its assets which (i) do not secure Debt, and (ii) do not in the
aggregate materially detract from the value of its assets or materially impair
the use thereof in the operation of its business;
(i) Liens created by First-Citizens Bank and Trust Company of
South Carolina in the ordinary course of business and consistently with
practices existing on December 31, 1996, on any loan or other obligation owing
to First-Citizens Bank and Trust Company of South Carolina in favor of any
Federal Reserve Bank or the United States Treasury as collateral security
pursuant to Regulation A of the Board of Governors of the Federal Reserve System
and operating circular issued by such Federal Reserve Bank; and
(j) Liens not otherwise permitted by the foregoing clauses of
this Section securing Debt (other than indebtedness represented by the Note) in
an aggregate principal amount at any time outstanding not to exceed $10,000,000;
provided, however, neither the Borrower nor any Consolidated Subsidiary will
create, assume or suffer to exist any Lien on any shares of stock of
First-Citizens Bank and Trust Company of South Carolina now owned or hereafter
acquired.
26
<PAGE>
SECTION 5.08. Maintenance of Existence. The Borrower shall,
and shall cause each Subsidiary to, maintain its corporate existence and carry
on its business in substantially the same manner and in substantially the same
fields as such business is now carried on and maintained.
SECTION 5.09. Dissolution. Neither the Borrower nor any of its
Subsidiaries shall suffer or permit dissolution or liquidation either in whole
or in part, except through corporate reorganization to the extent permitted by
Section 5.10.
SECTION 5.10. Consolidations, Mergers and Sales of Assets. The
Borrower will not, nor will it permit any Subsidiary to, consolidate or merge
with or into, or sell, lease or otherwise transfer all or any substantial part
of its assets to, any other Person, or discontinue or eliminate any business
line or segment, provided that (a) the Borrower or any of its Subsidiaries may
merge with another Person (other than the Borrower) if (i) such Person was
organized under the laws of the United States of America or one of its states,
(ii) the Borrower or its merging Subsidiary is the corporation surviving such
merger, and (iii) immediately after giving effect to such merger, no Default
shall have occurred and be continuing, (b) Subsidiaries of the Borrower may
merge with one another, and (c) the foregoing limitation on the sale, lease or
other transfer of assets and on the discontinuation or elimination of a business
line or segment shall not prohibit, during any Fiscal Quarter, a transfer of
assets or the discontinuance or elimination of a business line or segment (in a
single transaction or in a series of related transactions) unless the aggregate
assets to be so transferred or utilized in a business line or segment to be so
discontinued, when combined with all other assets transferred, and all other
assets utilized in all other business lines or segments discontinued, during
such Fiscal Quarter and the immediately preceding seven Fiscal Quarters,
constituted more than 5% of Consolidated Total Assets at the end of the eighth
Fiscal Quarter immediately preceding such Fiscal Quarter.
SECTION 5.11. Use of Proceeds. No portion of the proceeds of
the Loans will be used by the Borrower or any Subsidiary (i) in connection with,
either directly or indirectly, any tender offer for, or other acquisition of,
stock of any corporation with a view towards obtaining control of such other
corporation (other than in connection with an acquisition that constitutes a
Permitted Acquisition), or (ii) for any purpose in violation of (or in a manner
so as to cause the Bank to be in violation of) any applicable law or regulation,
including, without limitation, Regulations G, T, U and X. At no time will the
value of Margin Stock purchased or held by the Borrower exceed 25% of
Unencumbered Total Assets of the Borrower.
SECTION 5.12. Compliance with Laws; Payment of Taxes. The
Borrower will, and will cause each of its Subsidiaries and each member of the
Controlled Group to, comply with applicable laws (including but not limited to
ERISA), regulations and similar requirements of governmental authorities
(including but not limited to PBGC), except where the necessity of such
compliance is being contested in good faith through appropriate proceedings
diligently pursued. The Borrower will, and will cause each of its Subsidiaries
to, pay promptly when due all taxes, assessments, governmental charges, claims
for labor, supplies, rent and other obligations which, if unpaid, might become a
lien against the property of the Borrower or any Subsidiary, except liabilities
being contested in good faith by appropriate proceedings diligently pursued and
against which, if requested by the Borrower shall have set up reserves in
accordance with GAAP.
27
<PAGE>
SECTION 5.13. Insurance. The Borrower will maintain, and will
cause each of its Subsidiaries to maintain (either in the name of the Borrower
or in such Subsidiary's own name), with financially sound and reputable
insurance companies, insurance on all the Properties in at least such amounts
and against at least such risks as are usually insured against in the same
general area by companies of established repute engaged in the same or similar
business.
SECTION 5.14. Change in Fiscal Year. The Borrower will not
change its Fiscal Year without the consent of the Bank.
SECTION 5.15. Maintenance of Property. The Borrower shall, and
shall cause each Subsidiary to, maintain all of its properties and assets in
good condition, repair and working order, ordinary wear and tear excepted.
SECTION 5.16. Environmental Notices. The Borrower shall
furnish to the Bank prompt written notice of all Environmental Liabilities,
pending, threatened or anticipated, Environmental Proceedings, Environmental
Notices, Environmental Judgments and Orders, and Environmental Releases at, on,
in, under or in any way affecting the Properties (or any adjacent property as to
which the Borrower has actual knowledge), and all facts, events, or conditions
that
could lead to any of the foregoing.
SECTION 5.17. Environmental Matters. The Borrower and its
Subsidiaries will not, and will not permit any Third Party to, use, produce,
manufacture, process, treat, recycle, generate, store, dispose of, manage at, or
otherwise handle or ship or transport to or from the Properties any Hazardous
Materials except for Hazardous Materials such as cleaning solvents, pesticides
and other similar materials used, produced, manufactured, processed, treated,
recycled, generated, stored, disposed of, managed or otherwise handled in
amounts required for the ordinary course of business and in compliance with all
applicable Environmental Requirements.
SECTION 5.18. Environmental Release. The Borrower agrees that
upon the occurrence of an Environmental Release at or on any of the Properties
it will act immediately to investigate the extent of, and to take appropriate
remedial action to eliminate, such Environmental Release in accordance with any
and all Environmental Requirements.
SECTION 5.19. Ownership of First-Citizens Bank and Trust
Company of South Carolina. The Borrower shall not at any time own less than 100%
of the issued and outstanding capital stock of First-Citizens Bank and Trust
Company of South Carolina.
SECTION 5.20. Well-Capitalized Status. The Borrower shall
cause First-Citizens Bank and Trust Company of South Carolina to maintain, at
all times, a status of "well capitalized" determined in accordance with the FDIC
Capital Maintenance Regulations set forth at 12 C.F.R. ss.325.103.
SECTION 5.21. Return on Assets. The ratio of: (A) Net Income
of First-Citizens Bank and Trust Company of South Carolina, to (B) average
assets of First-Citizens Bank and Trust
28
<PAGE>
Company of South Carolina shall not at any time be less than seven and one-half
tenths of one percent (0.75%).
ARTICLE VI
DEFAULTS
SECTION 6.01. Events of Default. If one or more of the
following events ("Events of Default") shall have occurred and be continuing:
(a) the Borrower shall fail to pay when due any principal of
any Loan or shall fail to pay any interest on any Loan within five Domestic
Business Days after such interest shall become due, or shall fail to pay any fee
or other amount payable hereunder within five Domestic Business Days after such
fee or other amount becomes due; or
(b) the Borrower shall fail to observe or perform any covenant
contained in Sections 5.02(ii), 5.03 to 5.04, inclusive, 5.07 to 5.11,
inclusive, 5.20 or 5.21; or
(c) the Borrower shall fail to observe or perform any covenant
or agreement contained or incorporated by reference in this Agreement (other
than those covered by clause (a) or (b) above) for thirty (30) days after the
earlier of (i) the first day on which a Responsible Officer has knowledge of
such failure or (ii) written notice thereof has been given to the Borrower by
the Bank; or
(d) any representation, warranty, certification or statement
made or deemed made by the Borrower in Article IV of this Agreement or in any
certificate, financial statement or other document delivered pursuant to this
Agreement shall prove to have been incorrect or misleading in any material
respect when made (or deemed made); or
(e) the Borrower or any Subsidiary shall fail to make any
payment in respect of Debt, in an aggregate principal amount in excess of
$9,000,000, outstanding (other than the Note) when due or within any applicable
grace period; or
(f) any event or condition shall occur which results in the
acceleration of the maturity of Debt, in an aggregate principal amount in excess
of $9,000,000, outstanding of the Borrower or any Subsidiary or the mandatory
prepayment or purchase of such Debt by the Borrower (or its designee) or such
Subsidiary (or its designee) prior to the scheduled maturity thereof, or enables
(or, with the giving of notice or lapse of time or both, would enable) the
holders of such Debt or any Person acting on such holders' behalf to accelerate
the maturity thereof or require the mandatory prepayment or purchase thereof
prior to the scheduled maturity thereof, without regard to whether such holders
or other Person shall have exercised or waived their right to do so; or
29
<PAGE>
(g) the Borrower or any Subsidiary shall commence a voluntary
case or other proceeding seeking liquidation, reorganization or other relief
with respect to itself or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally, or shall admit in writing its
inability, to pay its debts as they become due, or shall take any corporate
action to authorize any of the foregoing; or
(h) an involuntary case or other proceeding shall be commenced
against the Borrower or any Subsidiary seeking liquidation, reorganization or
other relief with respect to it or its debts under any bankruptcy, insolvency or
other similar law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, and such involuntary case or other proceeding
shall remain undismissed and unstayed for a period of 60 days; or an order for
relief shall be entered against the Borrower or any Subsidiary under the federal
bankruptcy laws as now or hereafter in effect; or
(i) the Borrower or any member of the Controlled Group shall
fail to pay when due any material amount which it shall have become liable to
pay to the PBGC or to a Plan under Title IV of ERISA; or notice of intent to
terminate a Plan or Plans shall be filed under Title IV of ERISA by the
Borrower, any member of the Controlled Group, any plan administrator or any
combination of the foregoing; or the PBGC shall institute proceedings under
Title IV of ERISA to terminate or to cause a trustee to be appointed to
administer any such Plan or Plans or a proceeding shall be instituted by a
fiduciary of any such Plan or Plans to enforce Section 515 or 4219(c)(5) of
ERISA and such proceeding shall not have been dismissed within 30 days
thereafter; or a condition shall exist by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any such Plan or Plans must be
terminated; or
(j) one or more judgments or orders for the payment of money
in an aggregate amount in excess of $1,000,000 shall be rendered against the
Borrower or any Subsidiary and such judgment or order shall continue unsatisfied
and unstayed for a period of 30 days; or
(k) a federal tax lien shall be filed against the Borrower
under Section 6323 of the Code or a lien of the PBGC shall be filed against the
Borrower or any Subsidiary under Section 4068 of ERISA and in either case such
lien shall remain undischarged for a period of 25 days after the date of filing;
or
(l) (i) any Person or two or more Persons (other than the
Holding Family) acting in concert shall have acquired beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Securities Exchange Act of 1934) of 20% or more of the outstanding
shares of the voting stock of the Borrower, or (ii) as of any date a majority of
the Board of Directors of the Borrower consists of individuals who were not
either (A) directors of the Borrower as of the corresponding date of the
previous year, (B) selected or nominated to become directors by the Board of
Directors of the Borrower of which a majority consisted of individuals
30
<PAGE>
described in clause (A), or (C) selected or nominated to become directors by the
Board of Directors of the Borrower of which a majority consisted of individuals
described in clause (A) and individuals described in clause (B); or
(m) the Holding Family shall at any time fail to have
beneficial ownership (within the meaning of Rule 13d-3 of the Securities and
Exchange Commission under the Securities Exchange Act of 1934) of outstanding
shares of the voting stock of the Borrower possessing at least 50.1% of the
voting power of all outstanding shares of the voting stock of the Borrower; or
(n) the occurrence of any event, act or condition which the
Bank determines either does cause or has a reasonable probability of causing a
Material Adverse Effect,
then, and in every such event, the Bank shall (i) by notice to
the Borrower terminate the Commitment and it shall thereupon terminate, and (ii)
by notice to the Borrower declare the Note (together with accrued interest
thereon) and all other amounts payable hereunder and under the other Loan
Documents to be, and the Note (together with all accrued interest thereon) and
all other amounts payable hereunder and under the other Loan Documents shall
thereupon become, immediately due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by the
Borrower; provided that if any Event of Default specified in clause (g) or (h)
above occurs with respect to the Borrower, without any notice to the Borrower or
any other act by the Bank, the Commitment shall thereupon automatically
terminate and the Note (together with accrued interest thereon) and all other
amounts payable hereunder and under the other Loan Documents shall automatically
become immediately due and payable without presentment, demand, protest or other
notice of any kind, all of which are hereby waived by the Borrower.
Notwithstanding the foregoing, the Bank shall have available to it all other
remedies at law or equity.
ARTICLE VII
CHANGE IN CIRCUMSTANCES; COMPENSATION
SECTION 7.01. Basis for Determining Interest Rate Inadequate
or Unfair. If on or prior to the first day of any Interest Period:
(a) the Bank determines that deposits in Dollars (in the
applicable amounts) are not being offered in the relevant market for such
Interest Period, or
(b) the London Interbank Offered Rate, as determined by the
Bank will not adequately and fairly reflect the cost to the Bank of funding the
relevant type of Euro-Dollar Loans for such Interest Period,
the Bank shall forthwith give notice thereof to the Borrower, whereupon until
the Bank notifies the Borrower that the circumstances giving rise to such
suspension no longer exist, the obligation of the Bank to make the Euro-Dollar
Loans specified in such notice shall be suspended. Unless the Borrower
31
<PAGE>
notifies the Bank at least two (2) Domestic Business Days before the date of any
Euro-Dollar Borrowing for which a Notice of Borrowing has previously been given
that it elects not to borrow on such date, such Borrowing shall instead be made
as a Base Rate Borrowing.
SECTION 7.02. Illegality. If, after the date hereof, the
adoption of any applicable law, rule or regulation, or any change in any
existing or future law, rule or regulation, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof (any
such authority, bank or agency being referred to as an "Authority" and any such
event being referred to as a "Change of Law"), or compliance by the Bank (or its
Lending Office) with any request or directive (whether or not having the force
of law) of any Authority shall make it unlawful or impossible for the Bank (or
its Lending Office) to make, maintain or fund its Euro-Dollar Loans and the Bank
shall so notify the Borrower, whereupon until the Bank notifies the Borrower
that the circumstances giving rise to such suspension no longer exist, the
obligation of the Bank to make Euro-Dollar Loans shall be suspended. Before
giving any notice to the Borrower pursuant to this Section, the Bank shall
designate a different Lending Office if such designation will avoid the need for
giving such notice and will not, in the judgment of the Bank, be otherwise
disadvantageous to the Bank. If the Bank shall determine that it may not
lawfully continue to maintain and fund any of its outstanding Euro-Dollar Loans
to maturity and shall so specify in such notice, the Borrower shall immediately
prepay in full the then outstanding principal amount of each Euro-Dollar Loan of
the Bank, together with accrued interest thereon and any amount due the Bank
pursuant to Section 7.05(a). Concurrently with prepaying each such Euro-Dollar
Loan, the Borrower shall borrow a Base Rate Loan in an equal principal amount
from the Bank and the Bank shall make such a Base Rate Loan.
SECTION 7.03. Increased Cost and Reduced Return. (a) If after
the date hereof, a Change of Law or compliance by the Bank (or its Lending
Office) with any request or directive (whether or not having the force of law)
of any Authority:
(i) shall subject the Bank (or its Lending Office) to
any tax, duty or other charge with respect to its Euro-Dollar
Loans, its Note or its obligation to make Euro-Dollar Loans,
or shall change the basis of taxation of payments to the Bank
(or its Lending Office) of the principal of or interest on its
Euro-Dollar Loans or any other amounts due under this
Agreement in respect of its Euro-Dollar Loans or its
obligation to make Euro-Dollar Loans (except for changes in
the rate of tax on the overall net income of the Bank or its
Lending Office imposed by the jurisdiction in which the Bank's
principal executive office or Lending Office is located); or
(ii) shall impose, modify or deem applicable any
reserve, special deposit or similar requirement (including,
without limitation, any such requirement imposed by the Board
of Governors of the Federal Reserve System, but excluding with
respect to any Euro-Dollar Loan any such requirement included
in an applicable Euro-Dollar Reserve Percentage) against
assets of, deposits with or for the account of, or credit
extended by, the Bank (or its Lending Office); or
32
<PAGE>
(iii) shall impose on the Bank (or its Lending
Office) or on the London interbank market any other condition
affecting its Euro-Dollar Loans, its Note or its obligation to
make Euro-Dollar Loans;
and the result of any of the foregoing is to increase the cost to the Bank (or
its Lending Office) of making or maintaining any Euro-Dollar Loan, or to reduce
the amount of any sum received or receivable by the Bank (or its Lending Office)
under this Agreement or under its Note with respect thereto, by an amount deemed
by the Bank to be material, then, within 15 days after demand by the Bank, the
Borrower shall pay to the Bank such additional amount or amounts as will
compensate the Bank for such increased cost or reduction.
(b) If the Bank shall have determined that after the date
hereof the adoption of any applicable law, rule or regulation regarding capital
adequacy, or any change in any existing or future law, rule or regulation, or
any change in the interpretation or administration thereof, or compliance by the
Bank (or its Lending Office) with any request or directive regarding capital
adequacy (whether or not having the force of law) of any Authority, has or would
have the effect of reducing the rate of return on the Bank's capital as a
consequence of its obligations hereunder to a level below that which the Bank
could have achieved but for such adoption, change or compliance (taking into
consideration the Bank's policies with respect to capital adequacy) by an amount
deemed by the Bank to be material, then from time to time, within 15 days after
demand by the Bank, the Borrower shall pay to the Bank such additional amount or
amounts as will compensate the Bank for such reduction.
(c) The Bank will promptly notify the Borrower of any event of
which it has knowledge, occurring after the date hereof, which will entitle the
Bank to compensation pursuant to this Section and will designate a different
Lending Office if such designation will avoid the need for, or reduce the amount
of, such compensation and will not, in the judgment of the Bank, be otherwise
disadvantageous to the Bank. A certificate of the Bank claiming compensation
under this Section and setting forth the additional amount or amounts to be paid
to it hereunder shall be conclusive in the absence of manifest error. In
determining such amount, the Bank may use any reasonable averaging and
attribution methods.
(d) The provisions of this Section 7.03 shall be applicable
with respect to any Participant, Assignee or other Transferee, and any
calculations required by such provisions shall be made based upon the
circumstances of such Participant, Assignee or other Transferee.
SECTION 7.04. Base Rate Loans Substituted for Euro-Dollar
Loans. If (i) the obligation of the Bank to make or maintain Euro-Dollar Loans
has been suspended pursuant to Section 7.02 or (ii) the Bank has demanded
compensation under Section 7.03, and the Borrower shall, by at least five (5)
Euro-Dollar Business Days' prior notice to the Bank, have elected that the
provisions of this Section shall apply to the Bank, then, unless and until the
Bank notifies the Borrower that the circumstances giving rise to such suspension
or demand for compensation no longer apply:
(a) all Loans which would otherwise be made by the Bank as
Euro-Dollar Loans shall be made instead as Base Rate Loans, and
33
<PAGE>
(b) after each of its Euro-Dollar Loans has been repaid, all
payments of principal which would otherwise be applied to repay such Euro-Dollar
Loans shall be applied to repay its Base Rate Loans.
In the event that the Borrower shall elect that the provisions of this Section
shall apply to the Bank, the Borrower shall remain liable for, and shall pay to
the Bank as provided herein, all amounts due the Bank under Section 7.03 in
respect of the period preceding the date of conversion of the Bank's Loans
resulting from the Borrower's election.
SECTION 7.05. Compensation. Upon the request of the Bank,
delivered to the Borrower, the Borrower shall pay to the Bank such amount or
amounts as shall compensate the Bank for any loss, cost or expense incurred by
the Bank as a result of:
(a) any payment or prepayment (pursuant to Section 2.09,
Section 2.10, Section 7.02 or otherwise) of a Euro-Dollar Loan on a date other
than the last day of an Interest Period for such Euro-Dollar Loan;
(b) any failure by the Borrower to prepay a Euro-Dollar Loan
on the date for such prepayment specified in the relevant notice of prepayment
hereunder; or
(c) any failure by the Borrower to borrow a Euro-Dollar Loan
on the date for the Euro-Dollar Borrowing of which such Euro-Dollar Loan is a
part specified in the applicable Notice of Borrowing delivered pursuant to
Section 2.02;
such compensation to include, without limitation, an amount equal to the excess,
if any, of (x) the amount of interest which would have accrued on the amount so
paid or prepaid or not prepaid or borrowed for the period from the date of such
payment, prepayment or failure to prepay or borrow to the last day of the then
current Interest Period for such Euro-Dollar Loan (or, in the case of a failure
to prepay or borrow, the Interest Period for such Euro-Dollar Loan which would
have commenced on the date of such failure to prepay or borrow) at the
applicable rate of interest for such Euro-Dollar Loan provided for herein over
(y) the amount of interest (as reasonably determined by the Bank) the Bank would
have paid on deposits in Dollars of comparable amounts having terms comparable
to such period placed with it by leading banks in the London interbank market.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
transmission or similar writing) and shall be given to such party at its address
or telecopy number set forth on the signature pages hereof or such other address
or telecopy number as such party may hereafter specify for the purpose by notice
to each other party. Each such notice, request or other communication shall be
effective (i) if given by telecopier,
34
<PAGE>
when such telecopy is transmitted to the telecopy number specified in this
Section and the telecopy machine used by the sender provides a written
confirmation that such telecopy has been so transmitted or receipt of such
telecopy transmission is otherwise confirmed, (ii) if given by mail, 72 hours
after such communication is deposited in the mails with first class postage
prepaid, addressed as aforesaid, and (iii) if given by any other means, when
delivered at the address specified in this Section; provided that notices to the
Bank under Article II or Article VII shall not be effective until received.
SECTION 8.02. No Waivers. No failure or delay by the Bank in
exercising any right, power or privilege hereunder or under the Note or other
Loan Document shall operate as a waiver thereof and no single or partial
exercise thereof shall preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 8.03. Expenses; Documentary Taxes; Indemnification.
(a) The Borrower shall pay (i) all out-of-pocket expenses of the Bank, including
fees and disbursements of special counsel for the Bank, in connection with the
preparation of this Agreement and the other Loan Documents, any waiver or
consent hereunder or thereunder or any amendment hereof or thereof or any
Default or alleged Default hereunder or thereunder, and (ii) if a Default
occurs, all out-of-pocket expenses incurred by the Bank, including fees and
disbursements of counsel, in connection with such Default and collection and
other enforcement proceedings resulting therefrom, including out-of-pocket
expenses incurred in enforcing this Agreement and the other Loan Documents.
(b) The Borrower shall indemnify the Bank against any transfer
taxes, documentary taxes, assessments or charges made by any Authority by reason
of the execution and delivery of this Agreement or the other Loan Documents.
(c) The Borrower shall indemnify the Bank and each Affiliate
thereof and their respective directors, officers, employees and agents from, and
hold each of them harmless against, any and all losses, liabilities, claims or
damages to which any of them may become subject, insofar as such losses,
liabilities, claims or damages arise out of or result from any actual or
proposed use by the Borrower of the proceeds of any extension of credit by the
Bank hereunder or breach by the Borrower of this Agreement or any other Loan
Document or from investigation, litigation (including, without limitation, any
actions taken by the Bank to enforce this Agreement or any of the other Loan
Documents) or other proceeding (including, without limitation, any threatened
investigation or proceeding) relating to the foregoing, and the Borrower shall
reimburse the Bank, and each Affiliate thereof and their respective directors,
officers, employees and agents, upon demand, for any expenses (including,
without limitation, legal counsel fees) incurred in connection with any such
investigation or proceeding; but excluding any such losses, liabilities, claims,
damages or expenses incurred by reason of the gross negligence or willful
misconduct of the Person to be indemnified.
SECTION 8.04. Setoffs. The Borrower hereby grants to the Bank,
as security for the full and punctual payment and performance of the obligations
of the Borrower under this Agreement, a continuing lien on and security interest
in all deposits and other sums credited by or due from the Bank to the Borrower
or subject to withdrawal by the Borrower; and regardless of the adequacy of any
collateral or other means of obtaining repayment of such obligations, the Bank
may at any time upon
35
<PAGE>
or after the occurrence of any Event of Default, and without notice to the
Borrower, set off the whole or any portion or portions of any or all such
deposits and other sums against such obligations, whether or not any other
Person or Persons could also withdraw money therefrom. The Borrower agrees, to
the fullest extent it may effectively do so under applicable law, that any
holder of a participation in a Note, whether or not acquired pursuant to the
foregoing arrangements, may exercise rights of set-off or counterclaim and other
rights with respect to such participation as fully as if such holder of a
participation were a direct creditor of the Borrower in the amount of such
participation.
SECTION 8.05. Amendments and Waivers. Any provision of this
Agreement, the Note or any other Loan Documents may be amended or waived if, but
only if, such amendment or waiver is in writing and is signed by the Borrower
and the Bank.
SECTION 8.06. Successors and Assigns. (a) The provisions of
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns; provided that the Borrower
may not assign or otherwise transfer any of its rights under this Agreement.
(b) The Bank may at any time sell to one or more Persons (each
a "Participant") participating interests in any Loan owing to the Bank, any Note
held by the Bank, the Commitment hereunder or any other interest of the Bank
hereunder. In the event of any such sale by the Bank of a participating interest
to a Participant, the Bank's obligations under this Agreement shall remain
unchanged, the Bank shall remain solely responsible for the performance thereof,
the Bank shall remain the holder of the Note for all purposes under this
Agreement, and the Borrower shall continue to deal solely and directly with the
Bank in connection with the Bank's rights and obligations under this Agreement.
In no event shall the Bank (if it sells a participation) be obligated to the
Participant to take or refrain from taking any action hereunder except that the
Bank may agree that it will not (except as provided below), without the consent
of the Participant, agree to (i) the change of any date fixed for the payment of
principal of or interest on the related Loan or Loans, (ii) the change of the
amount of any principal, interest or fees due on any date fixed for the payment
thereof with respect to the related Loan or Loans, (iii) the change of the
principal of the related Loan or Loans, (iv) any change in the rate at which
either interest is payable thereon or (if the Participant is entitled to any
part thereof) facility fee is payable hereunder from the rate at which the
Participant is entitled to receive interest or facility fee (as the case may be)
in respect of such participation, (v) the release or substitution of all or any
substantial part of the collateral (if any) held as security for the Loans, or
(vi) the release of any guaranty given to support payment of the Loans. The Bank
selling a participating interest in any Loan, Note, Commitment or other interest
under this Agreement shall, within ten (10) Domestic Business Days of such sale,
provide the Borrower with written notification stating that such sale has
occurred and identifying the Participant and the interest purchased by such
Participant The Borrower agrees that each Participant shall be entitled to the
benefits of Article VII with respect to its participation in Loans outstanding
from time to time.
(c) The Bank may at any time assign to one or more banks or
financial institutions (each an "Assignee") all, or a proportionate part of all,
of its rights and obligations under this Agreement, the Note and the other Loan
Documents, and such Assignee shall assume all such rights and obligations,
pursuant to an Assignment and Acceptance in the form attached hereto as Exhibit
H,
36
<PAGE>
executed by such Assignee, and such transferor Bank (and, in the case of (i) an
Assignee that is not then a Bank or an Affiliate of a Bank; and (ii) an
assignment not made during the existence of an Event of Default, by the
Borrower); provided that (i) no interest may be sold by the Bank pursuant to
this paragraph (c) unless the Assignee shall agree to assume ratably equivalent
portions of the transferor Bank's Commitment, (ii) the amount of the Commitment
being assigned pursuant to such assignment shall be equal to $5,000,000 (or any
larger multiple of $1,000,000), (iii) no interest may be sold by a Bank pursuant
to this paragraph (c) to any Assignee that is not then a Bank or an Affiliate of
a Bank without the consent of the Borrower, which consent shall not be
unreasonably withheld, provided that the Borrower's consent shall not be
necessary with respect to any assignment made during the existence of an Event
of Default; and (iv) a Bank may not, at any one time, have more than two (2)
Assignees that are not then a Bank (or an Affiliate of such a Bank). Upon (A)
execution of the Assignment and Acceptance by such transferor Bank, such
Assignee, and (if applicable) the Borrower, (B) delivery of an executed copy of
the Assignment and Acceptance to the Borrower, and (C) payment by such Assignee
to such transferor Bank of an amount equal to the purchase price agreed between
such transferor Bank and such Assignee, such Assignee shall for all purposes be
a Bank party to this Agreement and shall have all the rights and obligations of
a Bank under this Agreement to the same extent as if it were an original party
hereto with a Commitment as set forth in such instrument of assumption, and the
transferor Bank shall be released from its obligations hereunder to a
corresponding extent, and no further consent or action by the Borrower or, the
Bank shall be required. Upon the consummation of any transfer to an Assignee
pursuant to this paragraph (c), the transferor Bank and the Borrower shall make
appropriate arrangements so that, if required, a new Note is issued to each of
such Assignee and such transferor Bank.
(d) Subject to the provisions of Section 8.07, the Borrower
authorizes the Bank to disclose to any Participant, Assignee or other transferee
(each a "Transferee") and any prospective Transferee any and all financial and
other information in the Bank's possession concerning the Borrower which has
been delivered to the Bank by the Borrower pursuant to this Agreement or which
has been delivered to the Bank by the Borrower in connection with the Bank's
credit evaluation prior to entering into this Agreement.
(e) No Transferee shall be entitled to receive any greater
payment under Section 7.03 than the transferor Bank would have been entitled to
receive with respect to the rights transferred, unless such transfer is made
with the Borrower's prior written consent or by reason of the provisions of
Section 7.02 or 7.03 requiring the Bank to designate a different Lending Office
under certain circumstances or at a time when the circumstances giving rise to
such greater payment did not exist.
(f) Anything in this Section 8.06 to the contrary
notwithstanding, the Bank may assign and pledge all or any portion of the Loans
and/or obligations owing to it to any Federal Reserve Bank or the United States
Treasury as collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and Operating Circular issued by such
Federal Reserve Bank, provided that any payment in respect of such assigned
Loans and/or obligations made by the Borrower to the assigning and/or pledging
Bank in accordance with the terms of this Agreement shall satisfy the Borrower's
obligations hereunder in respect of such assigned Loans and/or obligations to
37
<PAGE>
the extent of such payment. No such assignment shall release the assigning
and/or pledging Bank from its obligations hereunder.
SECTION 8.07. Confidentiality. The Bank agrees to exercise its
best efforts to keep any information delivered or made available by the Borrower
to it which is clearly indicated to be confidential information, confidential
from anyone other than persons employed or retained by the Bank who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans; provided, however, that nothing herein shall prevent
the Bank from disclosing such information (i) to any other Bank, (ii) upon the
order of any court or administrative agency, (iii) upon the request or demand of
any regulatory agency or authority having jurisdiction over the Bank, (iv) which
has been publicly disclosed, (v) to the extent reasonably required in connection
with any litigation to which the Bank or their respective Affiliates may be a
party, (vi) to the extent reasonably required in connection with the exercise of
any remedy hereunder, (vii) to the Bank's legal counsel, Affiliates and
independent auditors, and (viii) to any actual or proposed Participant, Assignee
or other Transferee of all or part of its rights hereunder which has agreed in
writing to be bound by the provisions of this Section 8.07.
SECTION 8.08. Survival of Certain Obligations. Sections
7.03(a), 7.03(b), 7.05 and 8.03, and the obligations of the Borrower thereunder,
shall survive, and shall continue to be enforceable notwithstanding, the
termination of this Agreement and the Commitment and the payment in full of the
principal of and interest on all Loans.
SECTION 8.09. South Carolina Law. This Agreement and the Note
shall be construed in accordance with and governed by the law of the State of
South Carolina.
SECTION 8.10. Severability. In case any one or more of the
provisions contained in this Agreement, the Note or any of the other Loan
Documents should be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions contained
herein and therein shall not in any way be affected or impaired thereby and
shall be enforced to the greatest extent permitted by law.
SECTION 8.11. Interest. In no event shall the amount of
interest due or payable hereunder or under the Note exceed the maximum rate of
interest allowed by applicable law, and in the event any payment of interest
exceeding such rate is inadvertently made to the Bank by the Borrower or
inadvertently received by the Bank, then such excess sum shall be credited as a
payment of principal unless the Borrower shall notify the Bank in writing that
it elects to have such excess sum returned forthwith. It is the express intent
hereof that the Borrower not pay and the Bank not receive, directly or
indirectly in any manner whatsoever, interest in excess of that which may
legally be paid by the Borrower under applicable law.
SECTION 8.12. Interpretation. No provision of this Agreement
or any of the other Loan Documents shall be construed against or interpreted to
the disadvantage of any party hereto by any court or other governmental or
judicial authority by reason of such party, having or being deemed to have
structured or dictated such provision.
38
<PAGE>
SECTION 8.13. Consent to Jurisdiction. The Borrower and the
Bank (a) submit to personal jurisdiction in the State of South Carolina, the
courts thereof and the United States District Courts sitting therein, for the
enforcement of this Agreement, the Note and the other Loan Documents, (b) waives
any and all personal rights under the law of any jurisdiction to object on any
basis (including, without limitation, inconvenience of forum) to jurisdiction or
venue within the State of South Carolina for the purpose of litigation to
enforce this Agreement, the Note or the other Loan Documents, and (c) agrees
that service of process may be made upon it in the manner prescribed in Section
8.01 for the giving of notice to it. Nothing herein contained, however, shall
prevent the Bank or the Borrower from bringing any action or exercising any
rights against any security and against the parties hereto personally, and
against any assets of such parties, within any other state or jurisdiction.
SECTION 8.14. Counterparts. This Agreement may be signed in
any number of counterparts, each of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
[Remainder of this page intentionally left blank]
39
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed, under seal, by their respective authorized
officers as of the day and year first above written.
FIRST CITIZENS BANCORPORATION
OF SOUTH CAROLINA, INC.
ATTEST: By: /s/ Jay C. Case
___________________________ (SEAL)
Jay C. Case, Treasurer
/s/ E. Warner Wells and Chief Financial Officer
_______________________ First Citizens Bancorporation of South Carolina, Inc.
E. Warner Wells, 1230 Main Street (29201)
Corporate Secretary Post Office Box 29
Columbia, South Carolina 29202
Attention: Jay C. Case, Executive Vice President
[CORPORATE SEAL] and Chief Financial Officer
Telecopy number: (803) 733-2763
Telephone number: (803) 733-3456
[Remainder of this page intentionally left blank]
40
<PAGE>
WACHOVIA BANK, N.A.
By: /s/ Terry L. Akins
___________________________ (SEAL)
Title: Senior Vice President
Lending Office
--------------
Wachovia Bank, N.A.
Financial Institutions Division
101 Greystone Boulevard, #144
Columbia, South Carolina 29226
Attention: James B. Brant, Senior Vice President
Telecopy number: (803) 988-4231
Telephone number: (803) 988-4230
[Remainder of this page intentionally left blank]
41
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Nature of Business
First Citizens Bancorporation of South Carolina, Inc. ("Bancorporation"),
is a one-bank holding company headquartered in Columbia, South Carolina, with
assets of $2.25 billion at December 31, 1997. Its wholly-owned subsidiary is
First-Citizens Bank and Trust Company of South Carolina ("Bank"), which
provides a broad range of banking services through 130 offices in 84
communities throughout the state. The Bank's subsidiary is Wateree Life
Insurance Company of South Carolina, a credit life insurance company.
Throughout this report, "Bancorporation" refers to First Citizens
Bancorporation of South Carolina, Inc., and its wholly-owned subsidiary,
First-Citizens Bank and Trust Company of South Carolina. The "Bank" refers only
to First-Citizens Bank and Trust Company of South Carolina. "First Citizens
Bank" is used in marketing the Bank.
First Citizens Bancorporation of South Carolina, Inc.
P. O. Box 29
1230 Main Street
Columbia, South Carolina 29202
Annual Meeting
The Annual Meeting of Stockholders of First Citizens Bancorporation of
South Carolina, Inc. will be held at 2:30 p.m. on Wednesday, April 22, 1998 at
1314 Park Street, Columbia, South Carolina.
Contents
<TABLE>
<S> <C>
Market and Dividend Information Regarding Common and Preferred Stock IFC
Financial Highlights ................................................ 1
To Our Stockholders ................................................. 2
Management's Discussion and Analysis ................................ 3
Report of Management ................................................ 19
Report of Independent Accountants ................................... 19
Consolidated Financial Statements ................................... 20
Official Organization Section ....................................... 36
</TABLE>
Market and Dividend Information
Regarding Common and Preferred Stock
There is a limited over-the-counter market for Bancorporation's voting
common stock. The stock is not listed on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"). Quotations are published in South
Carolina newspapers circulated in Bancorporation's major metropolitan markets
and may be obtained through securities brokers having offices in South Carolina.
Local broker-dealers, Interstate/Johnson Lane and Scott & Stringfellow, effect
agency transactions in Bancorporation's voting common stock from time to time.
There is no trading market for any class of Bancorporation's preferred
stock or for its non-voting common stock. All trading activity for those classes
of Bancorporation's stock is in privately negotiated transactions.
The following ranges of high and low bid prices for Bancorporation's voting
common stock were supplied by one of the broker-dealers making a market in such
security. The prices represent quotations between broker-dealers, which do not
include markups, markdowns or commissions, and may not represent actual
transactions.
<TABLE>
<CAPTION>
1997 1996
------------------------- -------------------------
High Low High Low
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
1st quarter ......... $ 201.00 $ 180.00 $ 123.00 $ 115.00
2nd quarter ......... 222.00 201.00 136.00 123.00
3rd quarter ......... 246.00 222.00 152.00 136.00
4th quarter ......... 335.00 246.00 180.00 152.00
</TABLE>
The approximate numbers of record holders of Bancorporation's voting common
stock and non-voting common stock at December 31, 1997 were 1,124 and 4,
respectively.
Holders of the voting and non-voting common stock of Bancorporation are
entitled to such dividends as may be declared from time to time by the Board of
Directors from funds legally available. However, Bancorporation has adopted a
policy of paying no cash dividends on its voting and non-voting common stock.
This policy reflects the desire of the Board of Directors to maintain
Bancorporation risk-based capital ratios through the retention of earnings.
Certain regulatory requirements restrict the payment of dividends and extensions
of credit from banking subsidiaries to bank holding companies. As Bancorporation
has a policy of paying no cash dividends on common stock, these restrictions
have not historically affected Bancorporation's ability to meet its obligations.
Additional restrictions relating to capital requirements and dividends are
discussed on page 14 of "Management's Discussion and Analysis" and in Note 12 of
"Notes to Consolidated Financial Statements."
THIS ANNUAL REPORT HAS NOT BEEN REVIEWED OR CONFIRMED FOR ACCURACY OR RELEVANCE
BY THE FEDERAL DEPOSIT INSURANCE CORPORATION
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Financial Highlights
(Dollars in thousands - except per share data)
<TABLE>
<CAPTION>
Change
in One
1997 1996 Year (%)
-------------- -------------- ---------
<S> <C> <C> <C>
For The Year:
Net income $ 21,770 $ 18,954 14.86
Net income per common share 23.24 20.02 16.08
Preferred dividends paid 171 171 -
Financial Ratios:
Net interest margin 4.54% 4.62%
Return on average assets 1.05 1.04
Return on average stockholders' equity 15.02 15.52
Reserve for loan losses to year-end loans 1.83 1.85
Reserve for loan losses to year-end
nonperforming loans (coverage ratio) 956.98 770.44
Net loan losses to average loans .12 .19
Equity to assets at year-end 7.04 6.81
At Year-end:
Assets $2,250,477 $1,947,699 15.55
Earning assets 2,036,446 1,766,530 15.28
Loans 1,428,437 1,269,779 12.49
Core deposits 1,745,084 1,539,415 13.36
Deposits 1,879,420 1,661,072 13.15
Stockholders' equity 158,418 132,641 19.43
Averages:
Assets $2,082,086 $1,831,195 13.70
Earning assets 1,918,921 1,691,031 13.48
Investment securities 538,086 470,617 14.34
Loans 1,343,256 1,191,431 12.74
Deposits 1,751,791 1,570,015 11.58
Interest-bearing liabilities 1,627,301 1,440,619 12.96
Stockholders' equity 144,961 122,110 18.71
Risk-Based Capital Ratios:
Tier 1 9.13% 8.90%
Total 10.49 10.39
Number of (At Year-end):
Common shares outstanding 929,222 929,222 -
Weighted Average common shares outstanding 929,222 938,320 (0.97)
Preferred shares outstanding 68,132 68,132 -
Banking offices 130 123 5.69
ATMs 118 104 13.46
Full-time equivalent employees 1,074 1,009 6.44
Book Value per Common Share: $ 166.95 $ 139.21 19.93
</TABLE>
1
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
To Our Stockholders:
Once again, we are pleased to report a year of market expansion and
earnings growth for 1997.
During the year, First Citizens Bank expanded into five new communities
through the acquisition of operating branches in Sumter, Abbeville, Laurens,
Jonesville and Beaufort, while the purchase of another operating branch in
Chester bolstered the bank's growing presence in the northern central part of
the state.
Continued investment in branch locations resulted in the opening of de novo
facilities in Anderson, Powdersville and Greenwood. Consolidation of branches
with overlapping market areas in Boiling Springs, Bishopville and New Ellenton
led to new offices for those communities.
In addition, we made a meaningful investment in the business district of
Ridge Spring by completely renovating our bank building which has served as an
architectural landmark in that community for over seventy-nine years.
Net income for 1997 was $21.7 million, up 14.86% from $18.9 million
reported in 1996. This improvement was due primarily to a $227.9 million
increase in average earning assets for 1997, as well as to our continued
emphasis upon maximizing noninterest income and controlling noninterest expense.
Deposits increased by 13.15% to $1.879 billion, while loans grew by 12.49%
to $1.428 billion. Our loan growth reflected our ongoing strategy to serve the
credit needs of our consumer, professional and small business markets. Net loan
losses to average loans improved to .12%, versus .19% for 1996, while the loan
loss reserve, as a percentage of gross loans outstanding, was 1.83%, as compared
to 1.85% for 1996.
We invite you to review the section entitled "Management's Discussion and
Analysis" for additional information on our financial performance.
We took a major step in October 1997 to expand our service delivery system
by introducing PC Banking, our "real time" personal computer banking product for
consumers.
Our Small Business Banking initiative became functional during 1997 with
the introduction of a streamlined loan approval unit and redesigned products for
small business customers. These programs leverage the service capability of our
branch lenders to address the needs of small businesses.
Similarly, our Financial Services Division was reorganized during 1997 to
provide more competitive treasury management services to corporate and municipal
customers.
In 1998, we will continue an intense effort started in 1997 to prepare all
of our automated systems for the year 2000 date problem. Beyond the significant
internal resources and attention applied to this project, we have engaged an
outside party to provide additional planning, coordination and review of this
critical undertaking.
To maintain the strong momentum of our sales culture during 1998, we will
support our bankers' selling effectiveness with more training and a new
automated branch information system.
Without a material downturn in the economy, the year 1998 will present
opportunities for continuing our growth and profitability trends. Our long-term
commitment to asset quality remains intact, and we will maintain our record of
appropriately meeting the financial needs of our customers.
We particularly appreciate the efforts and flexibility of our employees.
They seize the challenge of succeeding in a highly competitive marketplace.
We also recognize the support of our customers, stockholders, directors and
advisory board members as we deliver personal service and relationship banking
to the people of South Carolina.
/s/E. Hite Miller, Sr. /s/ Jim B. Apple
E. Hite Miller, Sr. Jim B. Apple
2
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Management's Discussion and Analysis
INTRODUCTION
First Citizens Bancorporation of South Carolina, Inc. ("Bancorporation"),
is a one-bank holding company headquartered in Columbia, South Carolina.
Bancorporation's wholly-owned subsidiary, First-Citizens Bank and Trust Company
of South Carolina ("Bank"), provides commercial banking and related financial
products and services throughout South Carolina.
The following discussion and analysis should be read in conjunction with
the financial information and the consolidated financial statements of
Bancorporation (including the notes thereto) contained elsewhere in this
document. To the extent that any statement below (or elsewhere in this document)
is not a statement of historical fact and could be considered a forward-looking
statement, actual results could differ materially from those in the
forward-looking statement.
The Bank's deposits are insured by the Federal Deposit Insurance
Corporation ("FDIC") to the maximum of one hundred thousand dollars for each
depositor. The FDIC and the South Carolina State Board of Financial Institutions
have regulatory responsibilities for the Bank. Bancorporation is subject to
regulation as a bank holding company by the Board of Governors of the Federal
Reserve System and its voting common stock is registered with the Securities and
Exchange Commission.
Management's Discussion and Analysis should be read in conjunction with the
consolidated financial statements and the supplementary financial data beginning
on page 20. Reference should also be made to the accompanying detailed
historical information presented elsewhere in this report. All dollar amounts in
tables and schedules, except per share amounts, throughout this report are
stated in thousands. Average balances are average daily balances.
[Bar Graph appears here with the following plot points]
RETURN ON AVERAGE ASSETS
(Percent)
1993 1994 1995 1996 1997
.88 .63 .76 1.04 1.05
[Bar Graph appears here with the following plot points]
RETURN ON AVERAGE STOCKHOLDER'S EQUITY
(Percent)
1993 1994 1995 1996 1997
16.57 10.69 12.04 15.52 15.02
[Bar Graph appears here with the following plot points]
BOOK VALUE PER COMMON SHARE
(Dollars)
1993 1994 1995 1996 1997
85.62 100.41 115.32 139.21 166.95
3
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Table 1: Five-Year Summary of Selected Financial Data (Dollars in thousands -
except per share data)
<TABLE>
<CAPTION>
Five-Year
Compound
1997 1996 1995 1994 1993 Growth Rate (%)
------------- ------------- ------------- -------------- ------------- ----------------
<S> <C> <C> <C> <C> <C> <C>
Summary of Operations:
Interest income ........................ $ 151,137 $ 134,217 $ 118,015 $ 99,769 $ 100,139 7.67
Interest expense ....................... 65,474 57,552 53,527 40,821 38,426 6.73
---------- ---------- ---------- ---------- ----------
Net interest income .................... 85,663 76,665 64,488 58,948 61,713 8.43
Provision for loan losses .............. 4,241 4,574 2,686 2,558 3,927 .38
---------- ---------- ---------- ---------- ----------
Net interest income after provision
for loan losses ...................... 81,422 72,091 61,802 56,390 57,786 8.97
---------- ---------- ---------- ---------- ----------
Service charges and fees ............... 24,730 21,465 19,704 18,667 18,724 6.48
Investment securities gains ............ 51 792 - - - (47.93)
---------- ---------- ---------- ---------- ----------
Total noninterest income ............... 24,781 22,257 19,704 18,667 18,724 5.02
---------- ---------- ---------- ---------- ----------
Salaries and employee benefits ......... 32,752 28,697 28,298 27,638 26,542 5.79
Other expense .......................... 39,906 36,376 33,873 32,601 30,899 6.02
---------- ---------- ---------- ---------- ----------
Total noninterest expense .............. 72,658 65,073 62,171 60,239 57,441 5.92
---------- ---------- ---------- ---------- ----------
Income before income taxes and
cumulative effect of a change in
accounting principle ................. 33,545 29,275 19,335 14,818 19,069 13.40
Applicable income taxes ................ 11,775 10,321 6,777 4,969 6,286 15.27
---------- ---------- ---------- ---------- ----------
Income before cumulative effect of
a change in accounting principle ..... 21,770 18,954 12,558 9,849 12,783 12.46
Cumulative effect on prior years (to
12/31/92) of changing to a
different method of accounting for
income taxes ......................... - - - - 221 -
---------- ---------- ---------- ---------- ----------
Net income ............................. $ 21,770 $ 18,954 $ 12,558 $ 9,849 $ 13,004 12.46
========== ========== ========== ========== ==========
Earnings per common share:
Income before cumulative effect of
a change in accounting principle ..... $ 23.24 $ 20.02 $ 13.13 $ 10.24 $ 13.34 13.01
Cumulative effect on prior years (to
12/31/92) of changing to a
different method of accounting for
income taxes ......................... - - - - .23 -
---------- ---------- ---------- ---------- ----------
Net income ............................. $ 23.24 $ 20.02 $ 13.13 $ 10.24 $ 13.57 13.01
========= ========= ========= ========= =========
Book value per common share ............ $ 166.95 $ 139.21 $ 115.32 $ 100.41 $ 85.62 18.30
========= ========= ========= ========= =========
Weighted average common shares
outstanding .......................... 929,222 938,320 943,533 944,799 945,533 ( .36)
======= ======= ======= ======= =======
Ratios (averages):
Loans to deposits ...................... 76.68% 75.89% 70.60% 65.73% 63.45%
Net loan losses to loans ............... .12 .19 .11 .15 .30
Net interest margin .................... 4.54 4.62 4.38 4.27 4.75
Stockholders' equity to:
Total assets ......................... 6.96 6.67 6.31 5.94 5.33
Deposits ............................. 8.28 7.78 7.25 6.71 5.99
Return on assets ....................... 1.05 1.04 .76 .63 .88
Return on stockholders' equity ......... 15.02 15.52 12.04 10.69 16.57
Selected Average Balances:
Assets ................................. $2,082,086 $1,831,195 $1,652,266 $1,551,997 $1,472,592 8.68
Earning assets ......................... 1,918,921 1,691,031 1,508,486 1,414,375 1,331,670 9.12
Investment securities .................. 538,086 470,617 471,425 485,745 474,136 4.15
Loans .................................. 1,343,256 1,191,431 1,014,818 902,889 831,335 11.25
Deposits ............................... 1,751,791 1,570,015 1,437,442 1,373,612 1,310,207 7.42
Stockholders' equity ................... 144,961 122,110 104,245 92,161 78,469 17.38
</TABLE>
4
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
NET INTEREST INCOME (Dollars in thousands)
Net interest income represents the principal source of earnings for
Bancorporation. Net interest income is the amount by which interest income
exceeds interest expense. Taxable equivalent net interest income totaled
$87,087, in 1997 compared with $78,119 in 1996. The growth in net interest
income in 1997 was the result of growth in average earning assets due to
acquisitions and promotional activities. The yield on average earning assets
also benefited from a continuing shift in the mix of earning assets from
securities to higher yields on commercial and consumer loans. Loan yields were
8.84% versus 5.87% blended yields for all other earning assets.
The weighted average yield on average interest-earning assets in 1997 was
7.95%, 7 basis points lower than in 1996. Income on average interest-earning
assets increased $16,890 or 12.45%.
The weighted average rate on average interest-bearing liabilities in 1997
was 4.02%, 3 basis points higher than in 1996. Interest on interest-bearing
liabilities increased $7,922 or 13.76%.
Net interest income to average earning assets (net interest margin) is a
primary measure used in evaluating the effectiveness of the management of
earning assets and liabilities funding. The net interest margin decreased 8
basis points to 4.54% in 1997 from 4.62% in 1996.
[Graph appears here with the following plot points]
AVERAGE LOANS
(Dollars in Millions)
1993 1994 1995 1996 1997
831 903 1,015 1,191 1,343
[Graph appears here with the following plot points]
AVERAGE EARNING ASSETS
(Dollars in millions)
1993 1994 1995 1996 1997
1,332 1,414 1,508 1,691 1,919
[Graph appears here with the following plot points]
AVERAGE DEPOSITS
(Dollars in millions)
1993 1994 1995 1996 1997
1,310 1,374 1,437 1,570 1,752
[Graph appears here with the following plot points]
AVERAGE ASSETS
(Dollars in millions)
1993 1994 1995 1996 1997
1,473 1,552 1,652 1,831 2,082
5
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Table 2: Comparative Average Balance Sheets (Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
-----------------------------------------------------------------------
1997 1996
----------------------------------- -----------------------------------
Average Interest Average Average Interest Average
Balance Rev/Exp* Rate (%) Balance Rev/Exp* Rate (%)
------------- ---------- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans** ...................... $1,343,256 $118,779 8.84 $1,191,431 $104,685 8.79
Taxable investment
securities .................. 502,412 28,588 5.69 431,751 26,095 6.04
Non-taxable investment
Securities .................. 35,674 3,061 8.58 38,866 3,202 8.24
Federal funds sold ........... 28,167 1,503 5.34 17,147 895 5.22
Other earning assets ......... 9,412 630 6.69 11,836 794 6.71
---------- -------- ---------- --------
Total interest-earning
assets .................... 1,918,921 152,561 7.95 1,691,031 135,671 8.02
---------- -------- ---------- --------
Noninterest-earning
assets:
Cash and due from banks 81,052 67,395
Premises and equipment 54,155 47,858
Other, less reserve for
loan losses ................. 27,958 24,911
---------- ----------
Total noninterest-earning
assets .................... 163,165 140,164
---------- ----------
TOTAL ASSETS ................. $2,082,086 $1,831,195
========== ==========
Interest-bearing
liabilities:
Deposits ..................... $1,456,862 $ 56,844 3.90 $1,315,306 $ 51,170 3.89
Federal funds purchased
and securities sold
under agreements to
repurchase .................. 159,275 7,762 4.87 114,619 5,523 4.82
Long-term debt ............... 11,164 868 7.77 10,694 859 8.03
---------- -------- ---------- --------
Total interest-bearing
liabilities ............... 1,627,301 65,474 4.02 1,440,619 57,552 3.99
---------- -------- ---- ---------- -------- ----
Net interest spread .......... 3.93 4.03
==== ====
Noninterest-bearing
liabilities:
Demand deposits .............. 294,929 254,709
Other liabilities ............ 14,895 13,757
---------- ----------
Total noninterest-bearing
liabilities ............... 309,824 268,466
---------- ----------
Stockholders' equity ......... 144,961 122,110
---------- ----------
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY ...................... $2,082,086 $1,831,195
========== ==========
Net interest income .......... $ 87,087 $ 78,119
======== ========
Interest income to
earning assets .............. 7.95 8.02
Interest expense to
earning assets .............. 3.41 3.40
---- ----
Net interest income to
earning assets .............. 4.54 4.62
==== ====
<CAPTION>
Year Ended December 31,
----------------------------------
1995
----------------------------------
Average Interest Average
Balance Rev/Exp* Rate (%)
------------- ---------- ---------
<S> <C> <C> <C>
Interest-earning assets:
Loans** ...................... $1,014,818 $ 91,011 8.97
Taxable investment
securities .................. 433,695 24,110 5.56
Non-taxable investment
Securities .................. 37,730 3,097 8.21
Federal funds sold ........... 9,009 520 5.77
Other earning assets ......... 13,234 885 6.69
---------- --------
Total interest-earning
assets .................... 1,508,486 119,623 7.93
---------- --------
Noninterest-earning
assets:
Cash and due from banks 78,579
Premises and equipment 42,028
Other, less reserve for
loan losses ................. 23,173
----------
Total noninterest-earning
assets .................... 143,780
----------
TOTAL ASSETS ................. $1,652,266
==========
Interest-bearing
liabilities:
Deposits ..................... $1,210,281 $ 48,026 3.97
Federal funds purchased
and securities sold
under agreements to
repurchase .................. 82,649 4,504 5.45
Long-term debt ............... 12,417 997 8.03
---------- --------
Total interest-bearing
liabilities ............... 1,305,347 53,527 4.10
---------- -------- ----
Net interest spread .......... 3.83
====
Noninterest-bearing
liabilities:
Demand deposits .............. 227,161
Other liabilities ............ 15,513
----------
Total noninterest-bearing
liabilities ............... 242,674
----------
Stockholders' equity ......... 104,245
----------
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY ...................... $1,652,266
==========
Net interest income .......... $ 66,096
========
Interest income to
earning assets .............. 7.93
Interest expense to
earning assets .............. 3.55
----
Net interest income to
earning assets .............. 4.38
====
</TABLE>
* Interest income includes a taxable equivalent adjustment using the
incremental statutory federal income tax rate as applicable.
** Nonaccrual loans are included in the average loan balances. Income on such
loans is generally recognized on a cash basis.
6
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Table 3: Taxable Equivalent Rate/Volume Variance Analysis (Dollars in
thousands)
<TABLE>
<CAPTION>
1997 Compared to 1996
Change Due To**
1997 1996 1995 Rate Volume
----------- ----------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C>
Interest Income*
Loans ......................... $118,779 $104,685 $ 91,011 $ 673 $13,421
Investment securities:
Taxable ...................... 28,588 26,095 24,110 (1,528) 4,021
Non-taxable .................. 3,061 3,202 3,097 133 (274)
-------- -------- -------- -------- -------
Total investment
securities .................. 31,649 29,297 27,207 (1,395) 3,747
Other earning assets .......... 630 794 885 (2) (162)
Federal funds sold and
securities purchased
under agreements to
resell ....................... 1,503 895 520 20 588
-------- -------- -------- ---------- -------
Total earning assets ......... 152,561 135,671 119,623 (704) 17,594
-------- -------- -------- ---------- -------
Interest Expense
NOW accounts ................. 7,847 6,999 7,362 (70) 918
Market rate accounts ......... 9,234 8,224 8,139 539 471
Other accounts ............... 443 481 501 5 (43)
Certificates of deposit in
excess of $100
thousand ..................... 6,791 5,938 5,302 (25) 878
Other certificates of
deposit ...................... 32,529 29,528 26,722 (376) 3,377
-------- -------- -------- ---------- -------
Total deposits ............... 56,844 51,170 48,026 73 5,601
Federal funds purchased
and securities sold under
agreements to
repurchase ................... 7,762 5,523 4,504 64 2,175
Long-term debt ................ 868 859 997 (28) 37
-------- -------- -------- ---------- -------
Total interest-bearing
liabilities ................. 65,474 57,552 53,527 109 7,813
-------- -------- -------- ---------- -------
Net interest income ........... $ 87,087 $ 78,119 $ 66,096 $ (813) $ 9,781
======== ======== ======== ======== =======
<CAPTION>
1997 Compared
to 1996 1996 Compared to 1995
Change Due To**
Net Increase Net Increase
(Decrease) Rate Volume (Decrease)
-------------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Interest Income*
Loans ......................... $14,094 $ (1,844) $15,518 $13,674
Investment securities:
Taxable ...................... 2,493 2,102 (117) 1,985
Non-taxable .................. (141) 11 94 105
------- -------- ------- -------
Total investment
securities .................. 2,352 2,113 (23) 2,090
Other earning assets .......... (164) 3 (94) (91)
Federal funds sold and
securities purchased
under agreements to
resell ....................... 608 (50) 425 375
------- -------- ------- -------
Total earning assets ......... 16,890 222 15,826 16,048
------- -------- ------- -------
Interest Expense
NOW accounts ................. 848 (818) 455 (363)
Market rate accounts ......... 1,010 (14) 99 85
Other accounts ............... (38) (16) (4) (20)
Certificates of deposit in
excess of $100
thousand ..................... 853 (275) 911 636
Other certificates of
deposit ...................... 3,001 (459) 3,265 2,806
------- -------- -------- -------
Total deposits ............... 5,674 (1,582) 4,726 3,144
Federal funds purchased
and securities sold under
agreements to
repurchase ................... 2,239 (521) 1,540 1,019
Long-term debt ................ 9 - (138) (138)
------- -------- -------- -------
Total interest-bearing
liabilities ................. 7,922 (2,103) 6,128 4,025
------- -------- -------- -------
Net interest income ........... $ 8,968 $ 2,325 $ 9,698 $12,023
======= ======== ======= =======
</TABLE>
*Interest income includes a taxable equivalent adjustment using the incremental
statutory federal income tax rate as applicable.
** Rate-volume changes have been allocated to each category based on the
percentage of each to the total change.
INVESTMENT SECURITIES (Dollars in thousands)
As of December 31, 1997, the investment portfolio totaled $588,409,
compared to $485,451 as of December 31, 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 88.84% and
87.84% of U.S. Government obligations at December 31, 1997 and 1996,
respectively. The remainder of the investment portfolio primarily consists of
municipal notes and bonds.
Average investment securities as a percent of average earning assets
increased from 27.83% as of December 31, 1996 to 28.04% as of December 31, 1997
with substantially all the increase occurring in investments in U. S. Government
obligations. Investment securities remain the second largest component of
interest-earning assets.
The weighted average maturity of U.S. Government obligations held in the
portfolio was 12.0 months at December 31, 1997, as compared to 11.8 months at
December 31, 1996. At year-end, the market value of the held-to-maturity
portfolio was $1,801 above book value, consisting of unrealized gains of $1,845
and unrealized losses of $44.
Investments in debt securities are classified as held-to-maturity and
reported at cost adjusted for amortization and accretion of premiums and
discounts, respectively. Equity securities are classified as available-for-sale
and reported at fair value with the change in unrealized gains and losses, net
of tax, included in stockholders' equity. For the year ended December 31, 1997,
Bancorporation recorded a $13,203 increase in stockholders' equity ($20,313, net
of tax effect of $7,110) on equity securities classified as available-for-sale
and carried at estimated fair value. The equity securities classified as
available-for-sale are principally comprised of 167,600 shares of Class A and
45,900 shares of Class B common stock of First Citizens BancShares, Inc.,
Raleigh, North Carolina. These two issues accounted for 69.04% of the total
dollar amount of equity securities.
7
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Table 4: Investment Securities Analysis (Dollars in thousands)
<TABLE>
<CAPTION>
1997 1996 1995
------------------------------------ ----------------------- -----------------------
Taxable
Book Market Equivalent Book Market Book Market
Value Value Yield*(%) Value Value Value Value
----------- ----------- ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
U. S. Government obligations:
Within one year ....................... $259,201 $259,532 5.83 $228,451 $228,837 $210,875 $212,199
One to five years ..................... 263,514 264,546 5.98 197,985 198,255 196,198 198,726
-------- -------- -------- -------- -------- --------
Total ................................. 522,715 524,078 5.91 426,436 427,092 407,073 410,925
State and political subdivisions:
Within one year ....................... 4,854 4,866 7.20 4,087 4,092 4,445 4,454
One to five years ..................... 7,876 7,981 7.73 11,233 11,395 13,927 14,131
Five to ten years ..................... 11,896 12,166 8.83 14,889 15,195 21,249 21,755
Over ten years ........................ 8,038 8,079 9.98 9,535 9,601 3,131 3,555
-------- -------- -------- -------- -------- --------
Total ................................. 32,664 33,092 8.61 39,744 40,283 42,752 43,895
Other securities:
Within one year ....................... 145 143 6.36 100 100 - -
One to five years ..................... 411 407 6.72 746 737 918 924
Five to ten years ..................... 50 48 9.15 69 68 195 194
Over ten years ........................ 511 529 5.49 703 714 858 852
-------- -------- -------- -------- -------- --------
Total ................................. 1,117 1,127 6.22 1,618 1,619 1,971 1,970
-------- -------- -------- -------- -------- --------
Total interest-earning investments ..... 556,496 558,297 6.06 467,798 468,994 451,796 456,790
Stock and other investments ............ 31,913 31,913 17,653 17,653 13,185 13,185
-------- -------- -------- -------- -------- --------
Total portfolio ....................... $588,409 $590,210 6.06 $485,451 $486,647 $464,981 $469,975
======== ======== ======== ======== ======== ========
</TABLE>
*Taxable equivalent yield was calculated using the incremental statutory
federal income tax rate as applicable.
LOANS (Dollars in thousands)
Loans comprise the major portion of earning assets of Bancorporation, with
average loans accounting for 70.00% and 70.46% of average earning assets as of
December 31, 1997 and 1996, respectively. Gross loans increased $158,658 or
12.49% to $1,428,437 as of December 31, 1997, from $1,269,779 as of December 31,
1996. Of the total increase, $11,707 represented loans obtained in acquisitions.
The remaining loan growth of $146,951 represents an internal growth rate for
loans of 11.57% for 1997. Demand for all loan types was strong in 1997. Most of
the increase in loans was attributable to an increase in loans secured by 1-4
family residential properties, which increased $61,968 or 11.16%, followed by
commercial real estate loans, which increased $35,720 or 15.08% in 1997. The
portfolio mix did not change significantly in 1997 and no major change is
expected in 1998. Bancorporation desires to make business loans for productive
purposes where the business has adequate capital and management expertise to
succeed. Consumer loans are granted for many purposes, provided that
underwriting criteria are met. The ability and willingness of the borrower to
repay debt are primary factors in granting credit. Repayment ability is
established by review of past and future cash flow coverage for businesses or
debt-to-income ratio for consumers. The willingness of the borrower to repay
debt is reviewed through trade credit for businesses and credit bureau reports
and other traditional methods for consumers. Collateral guarantees,
loan-to-value ratios, and terms of loans, are based on industry and/or
regulatory standards depending on loan purpose and the composition of collateral
provided.
8
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Table 5: Distribution of Loans (Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------
1997 1996
----------------------- -----------------------
% of % of
Total Total
Balance Loans Balance Loans
------------- --------- ------------- ---------
<S> <C> <C> <C> <C>
Type of Loan:
Real estate loans:
Construction and land
development .................... $ 23,837 1.67 $ 18,228 1.44
Secured by 1-4 family
residential properties ......... 617,117 43.20 555,149 43.72
Commercial ..................... 272,520 19.08 236,800 18.65
Loans for purchasing and
carrying securities ............ 817 .06 681 .05
Loans to farmers ................ 7,917 .55 6,806 .54
Commercial and Industrial
loans .......................... 128,584 9.00 102,404 8.06
Loans to individuals for
household, family and
other personal
expenditures ................... 356,612 24.97 337,589 26.59
Other loans, all
attributable to domestic
operations ..................... 21,033 1.47 12,122 .95
---------- ------ ---------- ------
Total .......................... $1,428,437 100.00 $1,269,779 100.00
========== ====== ========== ======
<CAPTION>
December 31,
--------------------------------------------------------------------
1995 1994 1993
----------------------- ---------------------- ---------------------
% of % of % of
Total Total Total
Balance Loans Balance Loans Balance Loans
------------- --------- ----------- ---------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Type of Loan:
Real estate loans:
Construction and land
development .................... $ 16,334 1.47 $ 7,888 .84 $ 18,952 2.15
Secured by 1-4 family
residential properties ......... 459,283 41.22 388,997 41.51 345,624 39.23
Commercial ..................... 200,088 17.96 173,690 18.54 163,690 18.58
Loans for purchasing and
carrying securities ............ 614 .06 484 .05 469 .05
Loans to farmers ................ 6,338 .57 5,843 .62 5,271 .60
Commercial and Industrial
loans .......................... 92,641 8.31 84,900 9.06 86,039 9.77
Loans to individuals for
household, family and
other personal
expenditures ................... 332,817 29.86 269,693 28.79 253,874 28.82
Other loans, all
attributable to domestic
operations ..................... 6,144 .55 5,530 .59 7,084 .80
---------- ------ -------- ------ -------- ------
Total .......................... $1,114,259 100.00 $937,025 100.00 $881,003 100.00
========== ====== ======== ====== ======== ======
</TABLE>
Table 6: Maturities and Rate Sensitivity of Selected Loans - December 31, 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
Over 1 Over
1 Year through 5
Total or less 5 Years Years
------------- ----------- -------------- -----------
<S> <C> <C> <C> <C>
Type of Loan:
Construction and land development ..................... $ 23,837 $ 19,018 $ 4,819 $ -
Commercial, financial and agricultural ................ 430,871 109,849 243,223 77,799
Real estate, individual and other ..................... 973,729 107,959 792,958 72,812
---------- -------- ----------- --------
Total ................................................. $1,428,437 $236,826 $ 1,041,000 $150,611
========== ======== =========== ========
Rate Sensitivity for Selected Loans (over one year):
Predetermined rate .................................... $ 953,112 $ 849,735 $103,377
Floating or adjustable rate ........................... 238,499 191,265 47,234
---------- ----------- --------
Total ................................................. $1,191,611 $ 1,041,000 $150,611
========== =========== ========
</TABLE>
9
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
PROVISION AND RESERVE FOR LOAN LOSSES (Dollars in thousands)
The provision for loan losses totaled $4,241 for the year ended December
31, 1997, exceeding net charge-offs of $1,589. The provision decreased by $333
or 7.28% from the provision for the year ended December 31, 1996.
Bancorporation manages credit risk through a variety of methods including
credit scoring, loan type parameters and underwriting. In addition, credit
management is centralized using a standardized system of controls and subjecting
the portfolio to detailed credit reviews by individuals independent of the
lending function. In establishing an appropriate level of reserve, the financial
condition of the individual borrower is assessed and a determination of the
value and adequacy of the underlying collateral and loss and delinquency trends
are considered. Management of Bancorporation believes that the reserve for loan
losses of $26,135 provides adequate coverage against potential loss exposure as
of December 31, 1997, although no assurance can be given that the ongoing
evaluation of the portfolio in light of economic conditions will not warrant
additional provision. Improved conditions within Bancorporation's loan and
commitments portfolio, including reduced delinquencies and continued economic
improvement, led to a reduction in the reserve to 1.83% of gross loans from
1.85% as of December 31, 1997 and 1996, respectively. Coverage ratios of
nonperforming loans were 956.98% for 1997 and 770.44% for 1996.
Net charge-offs for the year ended December 31, 1997, totaled $1,589, or
.12% of average loans, a decrease of $655 from $2,244, or .19% of average loans
in 1996. Recoveries represented 51.72% of gross loans charged off versus 33.09%
for the year ended December 31, 1996.
Bancorporation maintains the reserve for loan losses to absorb possible
losses inherent in the loan portfolio. The reserve consists of three elements:
(i) reserves established on specific loans, (ii) reserves based on historical
loan loss experience, and (iii) reserves based on economic conditions in
Bancorporation's individual markets. The specific reserve element is based on a
regular analysis of all loans and commitments over a fixed dollar amount where
the internal credit rating is at or below a predetermined classification. The
historical loan loss element represents a projection of future credit losses as
determined by estimates and analyses that examine loss experience and trends in
the portfolio. The general economic condition element is determined by
management and is based on knowledge of specific economic and individual markets
served and how those markets might affect the collectibility of loans and the
marketability of loan collateral. Bancorporation is committed to early
recognition of possible loan problems and to maintaining an adequate loan loss
reserve.
Table 7: Reserve for Loan Losses (Dollars in thousands)
<TABLE>
<CAPTION>
1997 1996 1995 1994 1993
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Beginning loan loss reserve ................. $23,483 $21,153 $19,249 $18,061 $16,589
Charge-offs:
Commercial, financial and agricultural ..... 64 186 35 - -
Real estate - mortgage ..................... 563 506 421 607 1,587
Commercial loans to individuals ............ 621 1,002 462 362 356
Installment loans to individuals ........... 2,037 1,660 1,036 1,181 1,259
All other loans ............................ 6 - - - -
------- ------- ------- ------- -------
Total charge-offs .......................... 3,291 3,354 1,954 2,150 3,202
Recoveries:
Commercial, financial and agricultural ..... 37 20 - 10 5
Real estate - mortgage ..................... 920 498 294 265 238
Commercial loans to individuals ............ 347 239 190 167 195
Installment loans to individuals ........... 398 353 391 338 309
------- ------- ------- ------- -------
Total recoveries ........................... 1,702 1,110 875 780 747
------- ------- ------- ------- -------
Total net charge-offs ...................... 1,589 2,244 1,079 1,370 2,455
Provision for loan losses ................... 4,241 4,574 2,686 2,558 3,927
Reserves related to acquisitions ............ - - 297 - -
------- ------- ------- ------- -------
Ending loan loss reserve .................... $26,135 $23,483 $21,153 $19,249 $18,061
======= ======= ======= ======= =======
</TABLE>
10
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Table 8: Allocation of Reserve for Loan Losses (Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------------------
1997 1996 1995
------------------- ------------------- ---------------------
% of % of % of
Loans Loans Loans
to to to
Total Total Total
Reserve Loans Reserve Loans Reserve Loans
--------- --------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C>
Real estate-construction ......... $ 100 1.67 $ 100 1.44 $ 100 1.47
Real estate-mortgage ............. 8,402 62.28 7,255 62.37 7,508 59.18
Installment loans to Individuals 6,595 24.97 2,579 26.59 2,562 29.86
Commercial, financial and
agricultural .................... 2,124 11.08 1,814 9.60 1,581 9.49
Unallocated ...................... 8,914 - 11,735 - 9,402 -
------- ------ ------- ------ -------- ------
Total ........................... $26,135 100.00 $23,483 100.00 $ 21,153 100.00
======= ====== ======= ====== ======== ======
<CAPTION>
December 31,
--------------------------------------------
1994 1993
---------------------- ---------------------
% of % of
Loans Loans
to to
Total Total
Reserve Loans Reserve Loans
----------- ---------- ----------- ---------
<S> <C> <C> <C> <C>
Real estate-construction ......... $ 16 .84 $ 9 2.15
Real estate-mortgage ............. 3,719 60.05 5,096 57.81
Installment loans to Individuals 1,792 28.79 1,855 28.82
Commercial, financial and
agricultural .................... 1,015 10.32 1,257 11.22
Unallocated ...................... 12,707 - 9,844 -
-------- ------ -------- ------
Total ........................... $ 19,249 100.00 $ 18,061 100.00
======== ====== ======== ======
</TABLE>
Table 9: Analysis of Asset Quality (Dollars in thousands)
<TABLE>
<CAPTION>
1997 1996 1995
-------------------- -------------------- --------------------
% of % of % of
Total Total Total
Balance Loans Balance Loans Balance Loans
--------- ---------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Risk Elements:
Nonaccrual loans ................... $2,653 .19 $2,920 .23 $3,323 .30
Restructured loans ................. 78 .01 128 .01 569 .05
------ ------ ------ ------ ------ ------
Total nonperforming loans ......... 2,731 .20 3,048 .24 3,892 .35
Loans past due 90 days ............. 1,497 .10 2,261 .18 1,747 .16
------ ------ ------ ------ ------ ------
Total ............................. $4,228 .30 $5,309 .42 $5,639 .51
====== === ====== === ====== ===
Nonperforming Assets:
Commercial, financial and
agricultural ...................... $ 463 .03 $ 559 .04 $ 951 .09
Consumer ........................... 26 .00 83 .01 38 .00
Real estate ........................ 2,242 .16 2,406 .19 2,903 .26
------ ------ ------ ------ ------ ------
Total nonperforming loans ......... 2,731 .19 3,048 .24 3,892 .35
Other real estate owned ............ 572 .04 518 .04 473 .04
------ ------ ------ ------ ------ ------
Total ............................. $3,303 .23 $3,566 .28 $4,365 .39
====== === ====== === ====== ===
Asset Quality Ratios:
Reserve to year-end loans .......... 1.83% 1.85% 1.90%
Net chargeoffs to average
loans ............................. .12 .19 .11
Coverage ratio ..................... 956.98 770.44 543.50
<CAPTION>
1994 1993
-------------------- --------------------
% of % of
Total Total
Balance Loans Balance Loans
--------- ---------- --------- ----------
<S> <C> <C> <C> <C>
Risk Elements:
Nonaccrual loans ................... $2,865 .31 $2,323 .26
Restructured loans ................. 1,323 .14 2,094 .24
------ ------ ------ ------
Total nonperforming loans ......... 4,188 .45 4,417 .50
Loans past due 90 days ............. 827 .09 1,016 .12
------ ------ ------ ------
Total ............................. $5,015 .54 $5,433 .62
====== === ====== ===
Nonperforming Assets:
Commercial, financial and
agricultural ...................... $ 238 .03 $ 305 .03
Consumer ........................... 106 .01 85 .01
Real estate ........................ 3,844 .41 4,027 .46
------ ------ ------ ------
Total nonperforming loans ......... 4,188 .45 4,417 .50
Other real estate owned ............ 270 .03 410 .05
------ ------ ------ ------
Total ............................. $4,458 .48 $4,827 .55
====== === ====== ===
Asset Quality Ratios:
Reserve to year-end loans .......... 2.05% 2.05%
Net chargeoffs to average
loans ............................. .15 .30
Coverage ratio ..................... 459.62 408.90
</TABLE>
Any loans classified by the Bank or regulatory examiners as loss, doubtful,
substandard or special mention that have not been disclosed hereunder or under
the "Loans" or "Asset Quality" narrative discussions do not (1) represent or
result from trends or uncertainties that management expects will materially
impact future operating results, liquidity or capital resources, or (2)
represent material credits about which management is aware of any information
that causes management to have serious doubt as to the ability of such borrowers
to comply with the loan repayment terms.
Interest income related to nonaccrual and restructured loans that would
have been recognized if such loans were current in accordance with their
original contractual terms did not differ materially from the amounts actually
recognized.
Based upon an ongoing assessment of risk elements in the portfolio and
factors affecting credit quality, it is management's opinion that there are
currently no significant unidentified potential problem credits. However,
factors affecting a borrower's repayment ability may change due to changing
economic conditions and other factors that may affect loan quality.
11
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
FUNDING SOURCES (Dollars in thousands)
Bancorporation's primary source of funds is its deposit base. Average
deposits increased 11.58% to $1,751,791 as of December 31, 1997 from $1,570,015
as of December 31, 1996. As of December 31, 1997, deposits increased $218,348 or
13.15%. Acquisitions during 1997 accounted for $102,934 or 47.14% of deposit
growth.
Core deposits financed loan and investment activity. Core deposits are
defined as noninterest-bearing demand, savings, NOW, money market accounts and
certificates of deposit under one hundred thousand dollars. As of December 31,
1997, $1,745,084 or 92.85% of total deposits of $1,879,420 were considered core
deposits. As of December 31, 1996, $1,539,415 or 92.68% of total deposits of
$1,661,072 were considered core deposits.
Purchased funds, which consist of large time deposits and short-term
borrowings, are another source of funds. As of December 31, 1997, large time
deposits increased $12,679 or 10.42% to $134,336 as compared to $121,657 as of
December 31, 1996. Short-term borrowings, which consist of federal funds
purchased and securities sold under agreements to repurchase, averaged $159,276
in 1997 compared to $114,619 in 1996, an increase of 38.96%.
Table 10: Time Deposits of $100 Thousand and Over (Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
-------------------------------------------
1997 1996 1995
------------- -------------- --------------
<S> <C> <C> <C>
3 months or less ........................ $ 74,785 $ 66,274 $ 65,576
Over 3 months through 6 months .......... 22,330 22,741 17,113
Over 6 months through 12 months ......... 22,628 24,642 12,456
Over 12 months .......................... 14,593 8,000 9,868
--------- ---------- ----------
Total .................................. $ 134,336 $ 121,657 $ 105,013
========= ========== ==========
Percent of Total Deposits ............... 7.15% 7.32% 7.02%
</TABLE>
Table 11: Deposit Analysis (Dollars in thousands)
<TABLE>
<CAPTION>
Year ended December 31,
---------------------------------------------------------------------------
1997 1996 1995
------------------------ ------------------------ -----------------------
Average Average Average Average Average Average
Balance Rate (%) Balance Rate (%) Balance Rate (%)
------------- ---------- ------------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C> <C>
Demand deposits .......................... $ 294,929 - $ 254,709 - $ 226,267 -
NOW accounts ............................. 412,241 1.90 364,023 1.92 340,342 2.16
Market rate savings ...................... 281,386 3.28 267,027 3.08 263,819 3.09
Regular and premium savings .............. 17,438 2.54 19,133 2.51 19,287 2.60
Time deposits of $100 Thousand & over .... 127,452 5.33 110,979 5.35 93,953 5.64
Other time deposits ...................... 618,345 5.26 554,144 5.33 492,880 5.42
---------- ---------- ----------
Total ................................... $1,751,791 $1,570,015 $1,436,548
========== ========== ==========
</TABLE>
Table 12: Federal Funds Purchased and Securities Sold Under Agreements to
Repurchase Analysis (Dollars in thousands)
<TABLE>
<CAPTION>
1997 1996 1995
---------------------- ---------------------- ----------------------
Amount Rate (%) Amount Rate (%) Amount Rate (%)
----------- ---------- ----------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
At Year-end*:
Federal funds purchased ............................ - - - - $ 20,600 6.13
Securities sold under agreements to repurchase ..... $184,168 5.04 $ 132,891 4.67 97,907 4.66
-------- --------- ---------
Total .............................................. $184,168 5.04 $ 132,891 4.67 $ 118,507 4.91
======== ========= =========
Average for the Year:
Federal funds purchased ............................ $ 1,192 6.02 $ 1,482 5.37 $ 3,835 6.22
Securities sold under agreements to repurchase ..... 158,084 4.86 113,137 4.81 78,814 5.41
-------- --------- ---------
Total .............................................. $159,276 4.87 $ 114,619 4.82 $ 82,649 5.45
======== ========= ========= ====
Maximum Month-end Balance:
Federal funds purchased ............................ $ 17,300 $ 7,300 $ 20,600
Securities sold under agreements to repurchase ..... 184,168 139,030 97,907
</TABLE>
*The interest rate shown is the weighted average rate at year-end and differs
from the average rate during the year.
12
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
NONINTEREST INCOME (Dollars in thousands)
Total noninterest income increased 11.34% to $24,781 for the year ended
December 31, 1997, compared to $22,257 for the year ended December 31, 1996.
Growth in the current year was primarily due to an increase in service charges
on deposit accounts as the result of growth in the number of deposit accounts,
the repricing of charges and an increased emphasis on collecting service fees.
In addition, gain on sale of securities decreased $741 to $51 in 1997 as
compared to $792 for 1996.
Table 13: Noninterest Income (Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------------------------------------------
% % %
Change Change Change
1997 97/96 1996 96/95 1995 95/94
---------- ---------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Service charges on deposit accounts .............. $14,426 19.09 $12,114 13.62 $10,662 2.47
Commission and fees from fiduciary activities .... 1,298 35.49 958 20.96 792 (4.12)
Fees for other customer services ................. 2,149 ( 7.77) 2,330 ( 0.85) 2,350 3.94
Mortgage servicing ............................... 2,186 8.27 2,019 2.28 1,974 16.12
Bankcard discount ................................ 2,789 19.49 2,334 13.74 2,052 14.57
Insurance premiums earned ........................ 1,474 31.02 1,125 ( 4.82) 1,182 29.61
Gain on sale of securities ....................... 51 (93.56) 792 100.00 - -
Other............................................. 408 (30.26) 585 (15.46) 692 (2.23)
------- ------- -------
Total ........................................... $24,781 11.34 $22,257 12.96 $19,704 5.56
======= ======= =======
</TABLE>
NONINTEREST EXPENSE (Dollars in thousands)
Total noninterest expense for the year ended December 31, 1997 increased
$7,585 or 11.66% to $72,658, as compared to an increase of $2,902 or 4.67% to
$65,073 for the year ended December 31, 1996. Most of the increase is
attributable to an increase in goodwill amortization related to new branch
acquisitions and a related increase in salaries and employee benefits.
Table 14: Noninterest Expense (Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------------------------------------
% % %
Change Change Change
1997 97/96 1996 96/95 1995 95/94
---------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Salaries and employee benefits ........ $32,752 14.13 $28,697 1.41 $28,298 2.39
Net occupancy expense of premises ..... 4,684 15.65 4,050 13.16 3,579 7.16
Furniture and equipment expense ....... 4,580 21.26 3,777 ( 1.59) 3,838 (19.99)
Stationery and supplies ............... 1,464 4.13 1,406 19.56 1,176 5.47
FDIC insurance assessments ............ 200 (77.01) 870 (50.11) 1,744 (42.25)
Telephone ............................. 1,479 7.80 1,372 8.89 1,260 ( 3.52)
Amortization of intangibles ........... 8,650 20.61 7,172 26.33 5,677 37.52
Bankcard processing fees .............. 2,823 20.80 2,337 14.28 2,045 11.20
Data processing fees .................. 5,690 7.97 5,270 15.60 4,559 5.02
Other.................................. 10,336 2.11 10,122 1.27 9,995 14.69
------- ------- -------
Total ................................ $72,658 11.66 $65,073 4.67 $62,171 3.21
======= ======= =======
</TABLE>
INTANGIBLE ASSETS (Dollars in thousands)
As of December 31, 1997, intangible assets totaled $20,527, representing a
$1,081 net increase over $19,446 as of December 31, 1996. Amortization expense
related to intangible assets was $8,650 or 20.61% higher than $7,172 for the
year ended December 31, 1996. The increase was due to goodwill amortization
expense associated with additional acquisitions during 1997 and a full year's
amortization for acquisitions made in 1996.
13
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Table 15: Intangible Assets (Dollars in thousands)
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------------------------------
1997 1996 1995
-------------------------- ------------------------ -----------------------
Balance Amortization Balance Amortization Balance Amortization
----------- -------------- --------- -------------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Intangible Assets:
Goodwill ...................... $ 17,813 $6,181 $14,926 $4,143 $ 9,801 $2,423
Deposit based premium ......... 596 1,681 2,277 1,957 4,234 1,960
Mortgage servicing rights ..... 2,118 788 2,243 1,072 2,675 1,294
-------- ------ ------- ------ ------- ------
Total ........................ $ 20,527 $8,650 $19,446 $7,172 $16,710 $5,677
======== ====== ======= ====== ======= ======
</TABLE>
CAPITAL ADEQUACY
The Federal Reserve Board and the Federal Deposit Insurance Corporation
have issued risk-based capital guidelines for United States banking
corporations. The objective of these efforts is to provide a uniform capital
measurement that is more sensitive to variations in risk profiles of banking
corporations.
Regulatory agencies define capital as 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 comparing both capital levels to
Bancorporation'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. 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 of total capital to risk-adjusted
assets ratio of 8 percent with at least 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 capital ratio of 10
percent and a Tier I leverage ratio of 5 percent are considered well-capitalized
by regulatory standards.
Bancorporation's Tier 1 capital ratio at year-end was 9.13% compared to
8.90% in 1996. The total risk-based capital ratio was 10.49% compared to 10.39%
in 1996. Both of these measures compare favorably with the regulatory minimums
of 4.00% for Tier 1 and 8.00% for total risk-based capital. Based on the
guidelines above, Bancorporation was well-capitalized. Refer to Note 17 "Capital
Matters" for further analysis of risk-based requirements.
Table 16: Capital Adequacy (Dollars in thousands-except per share data)
<TABLE>
<CAPTION>
December 31,
-----------------------------------------------------------------------
1997 1996 1995 1994 1993
------------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Total Stockholders' Equity:
Year-end ............................. $ 158,418 $ 132,641 $ 112,086 $ 98,025 $ 84,237
Average .............................. 144,961 122,110 104,245 92,161 78,469
Book value per common share .......... 166.95 139.21 115.32 100.41 85.62
Tier 1 capital ratio ................. 9.13% 8.90% 8.62% 8.95% 8.49%
Total risk-based capital ratio ....... 10.49 10.39 10.35 11.04 10.85
Internal Capital Generation:
Return on average equity ............. 15.02% 15.52% 12.04% 10.69% 16.57%
Earnings retention rate .............. 99.21 99.10 98.64 98.26 98.67
Internal capital generation rate*..... 14.90 15.38 11.88 10.50 16.35
</TABLE>
* Return on Average Equity x Earnings Retention Rate = Internal Capital
Generation Rate
INCOME TAXES (Dollars in thousands)
Applicable income taxes increased $1,454 or 14.09% for the year. Income
taxes computed at the statutory rate are reduced primarily by the interest
earned on state and municipal debt securities and obligations (which are exempt
from Federal taxes) which results in substantial interest savings for local
governments and their constituents.
LIQUIDITY (Dollars in thousands)
The role of Bancorporation's Asset/Liability Management Committee ("ALCO")
is to monitor Bancorporation's liquidity position, exposure to interest rate
risk and pricing policies. Liquidity involves the ability to meet cash flow
requirements which arise primarily from withdrawal of deposits, extensions of
credit, payment of operating expenses and repayment of purchased funds. Funds
are provided primarily through earnings from operations, expansion of the
deposit base, borrowing in the money market, the maturity of investment assets
and repayment of loans.
Bancorporation has historically maintained strong liquidity through
increases in core deposits and investment maturities. Core deposits were
$1,745,084, or 92.85% of total deposits, slightly up from $1,539,415 or 92.68%
as of December 31, 1996. The
14
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
weighted average maturity of U.S. Government obligations, which make up 88.84%
of the investment portfolio as of December 31, 1997, remains relatively short at
12.0 months.
The FDIC has standard guidelines as to what it considers adequate liquidity
in a Bank's portfolio. The liquidity ratio (net cash and short-term and
marketable assets as a percentage of net deposits and short-term liabilities) is
used as the measure with a desired range of 20.00% to 25.00%. Bancorporation's
liquidity ratio at year-end was 22.80%. Bancorporation is currently reviewing
its ability to raise additional capital for general corporate purposes or future
acquisitions.
MARKET RISK MANAGEMENT (Dollars in thousands)
Management of interest rate risk involves maintaining an appropriate
balance between interest-sensitive assets and interest-sensitive liabilities
(interest rate sensitivity gap) and reducing Bancorporation's risk of major
changes in net interest income in periods of rapidly changing interest rates. A
negative gap (interest-sensitive liabilities greater than interest-sensitive
assets) in periods when interest rates are declining will tend to increase net
interest income. Conversely, a negative gap in periods when interest rates are
rising will tend to reduce net interest income. The net cumulative gap position
reflects Bancorporation's sensitivity to interest rate changes over time. This
calculation is a static measure and is not a prediction of net interest income.
Gap analysis is the simplest representation of Bancorporation's interest rate
sensitivity. It cannot reveal the impact of factors such as administered rates
(e.g., the prime lending rate), pricing strategies on its consumer and business
deposits, and changes in the balance sheet mix.
The objective of the asset/liability management process is to manage and
control the sensitivity of Bancorporation's income to changes in market interest
rates. This process is under the direction of the ALCO, comprised of senior bank
executives and one outside director. The Committee seeks to maximize earnings
while ensuring that the risks to those earnings from adverse movements in
interest rates are kept within specified limits deemed acceptable by
Bancorporation. Accordingly, the Committee conducts comprehensive simulations of
net interest income under a variety of market interest rate scenarios. These
simulations provide the Committee with an estimate of earnings at risk given
changes in interest rates. While the Committee sees the opportunities and
benefits of utilizing derivative financial instruments such as, primarily
interest rate swaps, caps and floors, to improve the gap, the Committee has
elected not to use such instruments given the risk inherent in such instruments.
As indicated in the interest rate sensitivity table below, the twelve-month
cumulative gap, representing the total net assets and liabilities that are
projected to reprice over the next twelve months, was liability sensitive in the
amount of $270.0 million at December 31, 1997. However, this negative position
remained within the acceptable parameters, of plus or minus 20% at 360 days, as
listed in Bancorporation's Statement of Funds Policy. This Statement is guided
by asset quality, liquidity and earnings, and describes Bancorporation's policy
with respect to sources and uses of funds, dividends and limitations on
interbank liabilities. The responsibility for funds management resides with the
Chief Financial Officer with overall guidance provided by the Chairman and
President. Management continues to seek ways to balance the gap position and
reduce exposure to interest rate fluctuations. Closely monitoring the volume of
new fixed rate commercial loans and promotion of our home equity line product
have produced positive results in this effort and management will continue to
pursue these alternatives in 1998.
Table 17: Interest-Sensitivity Analysis as of December 31, 1997 (Dollars in
thousands)
<TABLE>
<CAPTION>
1-30 31-90 91-180 181-365 Non-Rate
Days Days Days Days Sensitive and
Sensitive Sensitive Sensitive Sensitive Over One Year Total
----------- ------------- ------------- ------------- --------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Earning Assets:
Loans ...................................... $393,146 $ 44,095 $ 64,573 $ 111,087 $ 815,536 $1,428,437
Investment securities ...................... 61,994 47,636 67,396 129,834 281,549 588,409
Temporary investments ...................... 7,700 - - - - 7,700
-------- ---------- ---------- ---------- ---------- ----------
Total earning assets ...................... 462,840 91,731 131,969 240,921 1,097,085 2,024,546
======= ====== ======= ======= ========= =========
Interest-Bearing Liabilities:
Savings and core time deposits ............. 146,156 157,049 267,001 321,511 506,433 1,398,150
Time deposits of $100 thousand and over..... 4,178 70,607 22,330 22,628 14,593 134,336
Short-term debt ............................ 184,168 - - - - 184,168
Long-term debt ............................. - - 625 1,250 12,608 14,483
-------- ---------- ---------- ---------- ---------- ----------
Total interest-bearing liabilities ........ 334,502 227,656 289,956 345,389 533,634 1,731,137
Other sources - net ........................ - - - - 293,409 293,409
-------- ---------- ---------- ---------- ---------- ----------
Total sources - net ........................ $334,502 $ 227,656 $ 289,956 $ 345,389 $ 827,043 $2,024,546
======== ========== ========== ========== ========== ==========
Interest-sensitivity gap ................... 128,338 (135,925) (157,987) (104,468) 270,042 -
Cumulative interest-sensitive gap .......... $128,338 $ (7,587) $ (165,574) $ (270,042) - -
======== ========== ========== ==========
</TABLE>
In January 1997, the Securities and Exchange Commission adopted new rules
that require more comprehensive disclosures of accounting policies for
derivatives as well as enhanced quantitative and qualitative disclosures of
market risk for derivatives and other financial instruments. The market risk
disclosures must be presented for most financial instruments, which must be
classified into two portfolios: financial instruments entered into for trading
purposes and all other financial instruments (non-trading purposes).
Bancorporation holds no derivative financial instruments and does not maintain a
trading portfolio.
15
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Table 18 summarizes the expected maturities and weighted average effective
yields and interest rates associated with Bancorporation's financial
instruments. Cash and cash equivalents, federal funds sold, federal funds
purchased and securities sold under agreements to repurchase are excluded from
Table 18 as their respective carrying values approximate fair values. These
financial instruments generally expose Bancorporation to insignificant market
risk as they have either no stated maturities or an average maturity of less
than 30 days and carry interest rates that approximate market. For further
information on the fair value of financial instruments, see Note 16 to the
consolidated financial statements.
Table 18: Market Risk Disclosure (Dollars in thousands)
<TABLE>
<CAPTION>
Estimated
Fair Value
1998 1999 2000 2001 2002 Thereafter Year-end 1997
-------------- ------------- ------------ ------------ ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment securities:
Fixed rate amount .............. $ 296,113 $ 265,406 $ 2,030 $ 2,394 $ 1,971 $ 20,495 $ 595,744
Weighted average yield ......... 5.86% 5.99% 7.36% 8.16% 7.68% 9.20% -
Interest-bearing deposits
in financial institutions:
Variable rate amount ........... $ 2,500 $ 2,500 $ 2,700 - - - $ 7,857
Weighted average yield ......... 6.55% 6.55% 6.55% - - - -
Loans:
Fixed rate amount .............. $ 347,337 $ 205,194 $211,728 $195,157 $156,740 $126,738 $1,342,315
Weighted average yield ......... 8.72% 8.40% 8.29% 8.23% 8.26% 8.62% -
Variable rate amount ........... $ 74,083 $ 20,830 $ 15,705 $ 14,170 $ 9,822 $ 50,933 $ 190,456
Weighted average yield ......... 9.04% 9.33% 9.21% 9.18% 9.21% 8.12% -
Deposits:
Fixed rate amount .............. $1,011,703 $ 111,070 $107,544 $ 99,534 $ 97,863 $451,706 $1,944,571
Weighted average rate .......... 4.44% 3.07% 3.00% 2.83% 2.78% 2.19% -
Long-term debt:
Variable rate amount ........... $ 2,500 $ 2,500 $ 9,483 - - - $ 16,095
Weighted average rate .......... 8.15% 8.15% 6.99% - - - -
</TABLE>
EARNINGS AND BALANCE SHEET ANALYSIS - 1996 COMPARED TO 1995 (Dollars in
thousands)
Net income was $18,954 for the year ended December 31, 1996, up 50.93% from
$12,558 earned for the year ended December 31, 1995. Earnings per share was
$20.02 compared to $13.13 in 1995. Return on average assets was 1.04% in 1996
compared to .76% for 1995.
Net interest income was $76,665 for the year ended December 31, 1996
increasing 18.88% from $64,488 for the year ended December 31, 1995. The net
interest margin increased for the year ended December 31, 1996 to 4.62% from
4.38% for the year ended December 31, 1995. The increase in net interest income
was due to the increase in net interest margin coupled with greater growth in
average earning assets of 12.10% compared to growth in average interest-bearing
liabilities of 10.36%
The provision for loan losses was $4,574 in 1996 compared to the 1995
provision of $2,686. The reserve for loan losses totaled $23,483, equaling 1.85%
of gross loans and 770.44% of nonperforming loans compared to 1.90% and 543.50%
as of December 31, 1995.
Average loans increased 17.40% to $1,191,431 as of December 31, 1996 up
from $1,014,818 as of December 31, 1995. The majority of growth occurred in the
consumer loan portfolio, mostly in one-to-four family residential loans.
Investment securities averaged $470,617 as of December 31, 1996 decreasing by
$808 or .17% as of December 31, 1995. Average temporary investments in federal
funds increased to $17,147 as of December 31, 1996 from $9,009 as of December
31, 1995 and represented 1.01% and .60% of average earning assets in 1996 and
1995, respectively.
Total deposits averaged $1,570,015 as of December 31, 1996, an increase of
$132,573 or 9.22% as of December 31, 1995. Core deposits increased $148,489 or
10.68% to $1,539,415 as of December 31, 1996. The majority of the growth
occurred in demand deposits, NOW accounts and certificates of deposits.
Noninterest income increased 12.96% to $22,257 for the year ended December
31, 1996 compared to $19,704 for the year ended December 31, 1995. Most of the
increase in noninterest income was due to an increase in service charges on
deposit accounts as the result of growth in the number of deposit accounts and
the repricing of charges, along with an increase in net securities transactions
of $792. Noninterest expense for the year ended December 31, 1996 amounted to
$65,073 representing a 4.67% increase over the year ended December 31, 1995.
Intangible assets totaled $19,446 in 1996 which represents a $2,736 increase
from $16,710 as of December 31, 1995.
The average leverage capital ratio was 6.02% as of December 31, 1996, up
from 5.64% as of December 31, 1995. Total equity capital equaled 6.81% of total
assets as of December 31, 1996 compared to 6.40% as of December 31, 1995.
16
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
ACCOUNTING AND REGULATORY MATTERS
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 is effective for transactions on or after January 1, 1997,
establishes a new framework for accounting for transfers, sales and servicing of
financial assets and extinguishments of liabilities. Effective January 1, 1997,
Bancorporation adopted SFAS No. 125. Bancorporation now recognizes each of the
components of the financial instruments it controls, derecognizes the components
of the assets it has surrendered control over, and derecognizes liabilities
which it has paid or which have been legally released. The effects of adopting
SFAS No. 125 are not material to the consolidated financial statements.
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
establishes standards for computing and presenting earnings per share ("EPS") by
replacing the presentation of primary EPS with a presentation of basic EPS. In
addition SFAS No. 128 requires dual presentation of basic and diluted EPS on the
face on the income statement and requires a reconciliation of the numerator and
denominator of the diluted EPS calculation. Bancorporation has adopted SFAS No.
128 as of December 31, 1997 and it has had no effect on the current or prior
periods presented.
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income", which requires that changes in the amounts of comprehensive income
items, currently reported as separate components of equity, be shown in a
financial statement, displayed as prominently as other financial statements. The
most common components of other comprehensive income include foreign currency
translation adjustments, minimum pension liability adjustments and/or unrealized
gains and losses on available-for-sale securities. SFAS No. 130 does not require
a specific format for the new financial statement, but does require that an
amount representing total comprehensive income be reported.
Bancorporation plans to adopt SFAS No. 130 in 1998.
In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments of
an Enterprise and Related Information", which establishes new standards for
business segment reporting. Requirements of SFAS No. 131 include reporting of
(a) financial and descriptive information about reportable operating segments,
(b) a measure of segment profit or loss, certain specific revenue and expense
items and segment assets with reconciliations of such amounts to
Bancorporation's financial statements and (c) information regarding revenues
derived from Bancorporation's products and services, information about major
customers and information related to geographic areas. SFAS No. 131 is effective
for fiscal years beginning after December 15, 1997 and thus will be adopted by
Bancorporation in 1998.
In February 1998, the FASB issued SFAS No. 132 "Employers' Disclosures
about Pensions and Other Postretirement Benefits", an amendment of SFAS Nos. 87,
88 and 106. SFAS No. 132 revises employers' disclosures about pensions and other
postretirement benefit plans. It does not change the measurement or recognition
of those plans. The statement is effective for fiscal years beginning after
December 15, 1997 and will be adopted by Bancorporation in 1998. The effects of
adoption are not expected to be material.
YEAR 2000 (Dollars in thousands)
Bancorporation has recognized the challenges posed by the Year 2000 issues
and has completed preliminary work to inventory computer systems, software and
equipment containing embedded microchips and performed a risk assessment.
Bancorporation has hired an outside consultant to further identify, test and
evaluate all systems, service providers and vendors to assure Year 2000
compliance. Bancorporation has established a task force to work with the
consultant in reviewing non-mainframe systems and equipment, project planning,
risk management and contingency planning. The Year 2000 budget for 1998 is $535.
An equal amount or more is expected in 1999, when all testing is scheduled to be
completed.
17
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
SELECTED UNAUDITED QUARTERLY FINANCIAL DATA (Dollars in thousands - except per
share data)
<TABLE>
<CAPTION>
First Quarter Second Quarter
-------------------------------------- -------------------------------------
1997 1996 1995 1997 1996 1995
------------ ------------ ------------ ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Interest income and fees ........ $ 35,292 $ 32,198 $ 26,965 $ 37,097 $ 32,686 $ 28,762
Interest expense ................ (15,321) (14,246) (12,297) (15,998) (13,925) (13,316)
--------- --------- --------- --------- --------- ---------
Net interest income ............. 19,971 17,952 14,668 21,099 18,761 15,446
Provision for loan losses ....... (997) (1,020) (404) (1,403) (1,290) (1,467)
Noninterest income .............. 5,601 4,872 4,790 5,909 5,270 4,912
Noninterest expense ............. (17,097) (15,212) (15,818) (18,025) (15,702) (15,680)
--------- --------- --------- --------- --------- ---------
Income before income taxes ...... 7,478 6,592 3,236 7,580 7,039 3,211
Applicable income taxes ......... (2,670) (2,432) (1,087) (2,686) (2,387) (1,063)
--------- --------- --------- --------- --------- ---------
Net income ...................... $ 4,808 $ 4,160 $ 2,149 $ 4,894 $ 4,652 $ 2,148
========= ========= ========= ========= ========= =========
Net income per common share ..... $ 5.13 $ 4.38 $ 2.23 $ 5.22 $ 4.90 $ 2.23
========= ========= ========= ========= ========= =========
</TABLE>
<TABLE>
<CAPTION>
Third Quarter Fourth Quarter
------------------------------------- --------------------------------------
1997 1996 1995 1997 1996 1995
----------- ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Interest income and fees ........ $ 38,877 $ 34,389 $ 30,186 $ 39,871 $ 34,944 $ 31,416
Interest expense ................ (16,829) (14,574) (13,782) (17,326) (14,807) (14,132)
--------- --------- --------- --------- --------- ---------
Net interest income ............. 22,048 19,815 16,404 22,545 20,137 17,284
Provision for loan losses ....... (448) (1,513) (1,316) (1,393) (751) 501
Noninterest income .............. 6,424 5,571 5,186 6,847 6,544 5,502
Noninterest expense ............. (18,280) (17,167) (15,354) (19,256) (16,992) (15,319)
--------- --------- --------- --------- --------- ---------
Income before income taxes ...... 9,744 6,706 4,920 8,743 8,938 7,968
Applicable income taxes ......... (3,409) (2,354) (1,704) (3,010) (3,148) (2,923)
--------- --------- --------- --------- --------- ---------
Net income ...................... $ 6,335 $ 4,352 $ 3,216 $ 5,733 $ 5,790 $ 5,045
========= ========= ========= ========= ========= =========
Net income per common share ..... $ 6.77 $ 4.59 $ 3.37 $ 6.12 $ 6.15 $ 5.30
========= ========= ========= ========= ========= =========
</TABLE>
18
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Report of Management
The consolidated financial statements of First Citizens Bancorporation of
South Carolina, Inc. and other financial information presented in the annual
report were prepared by management which is responsible for the integrity of the
information presented. The statements have been prepared in conformity with
generally accepted accounting principles appropriate in the circumstances and
include amounts that are based on management's best estimates and judgments.
Bancorporation's independent accountants, Price Waterhouse LLP, are engaged
to provide an objective, independent review as to the fairness of reported
operating results and financial condition. They have an understanding of
Bancorporation's accounting and financial controls and conduct such tests and
related procedures as they deem appropriate to arrive at an opinion on the
fairness of the financial statements. Their opinion is included as a part of
this annual report. Management has made available to Price Waterhouse LLP all
Bancorporation's financial records and related data, as well as the minutes of
stockholders' and directors' meetings. Management believes that its
representations made to Price Waterhouse LLP during the audit were valid and
appropriate.
Bancorporation maintains accounting and control systems which management
believes provide reasonable assurance that financial records are adequate and
can be relied upon to permit the preparation of financial statements in
conformity with generally accepted accounting principles and that assets are
protected from unauthorized use or disposition. Management recognizes the
limitations inherent in any system of internal control, as the cost of controls
should not exceed the benefits derived. Management believes Bancorporation's
system provides an appropriate balance and is adequate to accomplish the
objectives discussed herein.
In order to monitor compliance with its system of controls, Bancorporation
maintains an internal audit program that assesses the effectiveness of internal
controls and recommends possible improvements thereto. Management has considered
the internal auditors' and Price Waterhouse LLP's recommendations concerning
Bancorporation's system of internal control and has taken actions that are
believed to respond appropriately to these recommendations.
The Audit Committee of the Board of Directors meets regularly with
management, the internal auditors and the independent accountants to review
audit scopes, audit reports, and fee arrangements of the independent
accountants. Both internal auditors and independent accountants have access to
the Audit Committee without any management present in the discussions.
Independent accountants are recommended by the Audit Committee for selection by
the Board of Directors.
The management of Bancorporation is committed to a philosophy of high
ethical standards in the conduct of its business. Written policies covering
conflicts of interest, community affairs, and other subjects are formulated in a
Code of Conduct, which is uniformly applicable to all officers and employees of
Bancorporation.
Report of Independent Accountants
[Price Waterhouse LLP Logo appears here]
TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF FIRST CITIZENS BANCORPORATION OF
SOUTH CAROLINA, INC.
In our opinion, the accompanying consolidated statement of condition and
the related consolidated statements of income, of changes in stockholders'
equity and of cash flows present fairly, in all material respects, the financial
position of First Citizens Bancorporation of South Carolina, Inc. and its
subsidiary at December 31, 1997 and 1996, and the results of their operations
and their cash flows for each of the three years in the period ended December
31, 1997, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of Bancorporation's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PRICE WATERHOUSE LLP
/s/ Price Waterhouse LLP
Columbia, South Carolina
January 12, 1998
19
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Consolidated Statement of Condition
(Dollars in thousands-except par value)
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1996
------------- -------------
<S> <C> <C>
Assets
Cash and due from banks (Note 2) ......................................................... $ 126,276 $ 103,844
---------- ----------
Interest-bearing deposits in financial institutions ...................................... 7,700 11,300
Investment securities (Note 3):
Held-to-maturity, at amortized cost (fair value of $558,297 in 1997 and $468,994 in 556,496 467,798
1996)
Available-for-sale, at fair value (amortized cost of $11,600 in 1997 and $3,769 in 1996) 31,913 17,653
---------- ----------
Total investment securities ............................................................. 588,409 485,451
Federal funds sold ....................................................................... 11,900 -
Gross loans (Note 4) ..................................................................... 1,428,437 1,269,779
Less: Reserve for loan losses (Note 5) .................................................. (26,135) (23,483)
---------- ----------
Net loans ................................................................................ 1,402,302 1,246,296
Premises and equipment (Note 6) .......................................................... 59,788 50,487
Other real estate owned .................................................................. 572 518
Interest receivable ...................................................................... 14,561 13,022
Intangible assets (Note 7) ............................................................... 20,527 19,446
Other assets ............................................................................. 18,442 17,335
---------- ----------
Total Assets ........................................................................... $2,250,477 $1,947,699
========== ==========
Liabilities and Stockholders' Equity
Deposits (Note 8):
Demand .................................................................................. $ 346,934 $ 283,590
Time and savings ........................................................................ 1,532,486 1,377,482
---------- ----------
Total deposits ........................................................................... 1,879,420 1,661,072
Securities sold under agreements to repurchase ........................................... 184,168 132,891
Long-term debt (Note 11) ................................................................. 14,483 10,000
Other liabilities ........................................................................ 13,988 11,095
---------- ----------
Total Liabilities ...................................................................... 2,092,059 1,815,058
---------- ----------
Commitments and contingencies (Note 14)
Stockholders' Equity (Note 12):
Preferred stock ......................................................................... 3,282 3,282
Non-voting common stock - $5.00 par value, authorized 1,000,000; issued and outstanding
1997 and 1996 - 36,409 .................................................................. 182 182
Voting common stock - $5.00 par value, authorized 2,000,000; issued and outstanding 1997
and 1996 - 892,813 ....................................................................... 4,464 4,464
Surplus ................................................................................. 55,000 55,000
Undivided profits ....................................................................... 82,287 60,688
Unrealized gain on investment securities available-for-sale, net of taxes ............... 13,203 9,025
---------- ----------
Total Stockholders' Equity ............................................................. 158,418 132,641
---------- ----------
Total Liabilities and Stockholders' Equity ............................................. $2,250,477 $1,947,699
========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
20
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Consolidated Statement of Income
(Dollars in thousands-except per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1997 1996 1995
------------- ------------- ------------
<S> <C> <C> <C>
Interest income:
Interest and fees on loans .............................. $ 118,427 $ 104,351 $ 90,486
Interest on investment securities:
Taxable ................................................. 28,575 26,080 24,093
Non-taxable ............................................. 1,990 2,082 2,013
Interest-bearing deposits in financial institutions ..... 642 809 903
Federal funds sold....................................... 1,503 895 520
--------- --------- ---------
151,137 134,217 118,015
Interest expense:
Deposits (Note 8) ....................................... 56,844 51,170 48,026
Short-term borrowings ................................... 7,762 5,523 4,504
Long-term debt (Note 11) ................................ 868 859 997
--------- --------- ---------
65,474 57,552 53,527
Net interest income ...................................... 85,663 76,665 64,488
Provision for loan losses (Note 5) ....................... 4,241 4,574 2,686
--------- --------- ---------
Net interest income after provision for loan losses ...... 81,422 72,091 61,802
Noninterest income:
Service charges on deposit accounts ..................... 14,426 12,114 10,662
Commission and fees from fiduciary activities ........... 1,298 958 792
Fees for other customer services ........................ 2,149 2,330 2,350
Mortgage servicing ...................................... 2,186 2,019 1,974
Bankcard discount and fees .............................. 2,789 2,334 2,052
Insurance premiums earned ............................... 1,474 1,125 1,182
Gain on sale of investment securities ................... 51 792 -
Other ................................................... 408 585 692
--------- --------- ---------
24,781 22,257 19,704
Noninterest expense:
Salaries and employee benefits (Note 13) ................ 32,752 28,697 28,298
Net occupancy expense of premises (Note 6) .............. 4,684 4,050 3,579
Furniture and equipment expense (Note 6) ................ 4,580 3,777 3,838
Stationery and supplies ................................. 1,464 1,406 1,176
FDIC insurance assessments .............................. 200 870 1,744
Telephone ............................................... 1,479 1,372 1,260
Amortization of intangibles (Note 7) .................... 8,650 7,172 5,677
Bankcard processing fees ................................ 2,823 2,337 2,045
Data processing fees .................................... 5,690 5,270 4,559
Other ................................................... 10,336 10,122 9,995
--------- --------- ---------
72,658 65,073 62,171
Income before income taxes ............................... 33,545 29,275 19,335
Applicable income tax expense (Note 9) ................... 11,775 10,321 6,777
--------- --------- ---------
Net income ............................................... $ 21,770 $ 18,954 $ 12,558
========= ========= =========
Net income per common share - Basic (Note 1) ............. $ 23.24 $ 20.02 $ 13.13
========= ========= =========
Weighted average common shares outstanding ............... 929,222 938,320 943,533
======= ======= =======
</TABLE>
The accompanying notes are an integral part of these financial statements.
21
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Consolidated Statement of Changes in Stockholders' Equity (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, 1994 .............. $3,282 $ 254 $4,464 $55,000 $ 30,765 $ 4,260 $ 98,025
Net income ................................ 12,558 12,558
Preferred stock dividends ................. (171) (171)
Change in unrealized gain on investment
securities available-for-sale, net of tax 1,674 1,674
------- --------
Balance at December 31, 1995 .............. 3,282 254 4,464 55,000 43,152 5,934 112,086
Net income ................................ 18,954 18,954
Preferred stock dividends ................. (171) (171)
Reacquired non-voting common stock ........ (72) (1,247) (1,319)
Change in unrealized gain on investment
securities available-for-sale, net of tax 3,091 3,091
------- --------
Balance at December 31, 1996 .............. 3,282 182 4,464 55,000 60,688 9,025 132,641
Net income ................................ 21,770 21,770
Preferred stock dividends ................. (171) (171)
Change in unrealized gain on investment
securities available-for-sale, net of tax 4,178 4,178
------- --------
Balance at December 31, 1997 .............. $3,282 $ 182 $4,464 $55,000 $ 82,287 $13,203 $158,418
====== ===== ====== ======= ======== ======= ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
22
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Consolidated Statement of Cash Flows
(Dollars in thousands)
<TABLE>
<CAPTION>
Year Ended December 31,
--------------------------------------
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income ........................................................................... $ 21,770 $ 18,954 $ 12,558
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses ............................................................ 4,241 4,574 2,686
Depreciation and amortization ........................................................ 13,289 10,843 9,389
Accretion of investment securities ................................................... (94) (228) (393)
Deferred income tax benefit .......................................................... (1,706) (2,025) (1,827)
Gains on sales of premises and equipment ............................................. - (126) (202)
Decrease (increase) in interest income receivable .................................... 36 1,203 (1,959)
Decrease in accrued interest payable ................................................. (69) (502) (2,162)
Origination of mortgage loans held-for-resale ........................................ (74,178) (65,199) (51,193)
Proceeds from sales of mortgage loans held-for-resale ................................ 79,142 60,650 51,075
Gains on sales of mortgage loans held-for-resale ..................................... (219) (174) (470)
Gains on sale of securities .......................................................... (51) (792) -
Increase in other assets ............................................................. (3,195) (515) (2,325)
Increase (decrease) in other liabilities ............................................. 1,385 (1,845) 48
---------- ---------- ----------
Net Cash Provided By Operating Activities ............................................ 40,351 24,818 15,225
Cash Flows From Investing Activities:
Net increase in loans ................................................................ (153,256) (130,565) (165,110)
Proceeds from maturities of investment securities, held-to-maturity .................. 248,963 47,200 255,581
Purchases of investment securities, held-to-maturity ................................. (337,516) (62,975) (226,690)
Proceeds from sale of securities, available-for-sale ................................. - 1,048 -
Purchases of investment securities, available-for-sale ............................... (7,863) - -
Net decrease in interest-bearing deposits ............................................ 3,600 1,375 1,275
Federal funds sold ................................................................... (11,900) - -
Proceeds from sales of premises and equipment ........................................ 1,135 970 528
Purchases of premises and equipment .................................................. (14,011) (10,044) (6,202)
(Increase) decrease in other real estate owned ....................................... (54) (45) 267
Increase in intangible assets ........................................................ (663) (446) (4,887)
Purchase of institutions, net of cash acquired ....................................... 82,788 65,326 (628)
---------- ---------- ----------
Net Cash Used By Investing Activities ................................................ (188,777) (88,156) (145,866)
Cash Flows From Financing Activities:
Net increase in deposits ............................................................. 115,269 67,096 88,999
Increase in federal funds purchased and securities sold under agreements to
repurchase ........................................................................... 51,277 14,384 42,591
Increase in long-term debt ........................................................... 6,983 - -
Payments on long-term debt ........................................................... (2,500) (1,700) (1,700)
Cash dividends paid .................................................................. (171) (171) (171)
Reacquired common stock .............................................................. - (1,319) -
---------- ---------- ----------
Net Cash Provided By Financing Activities ............................................ 170,858 78,290 129,719
Increase (decrease) in cash and due from banks ........................................ 22,432 14,952 (922)
Cash and due from banks at beginning of year .......................................... 103,844 88,892 89,814
---------- ---------- ----------
Cash and due from banks at end of year ................................................ $ 126,276 $ 103,844 $ 88,892
========== ========== ==========
Supplemental disclosures of cash flow information:
Interest paid ........................................................................ $ 64,090 $ 57,302 $ 51,366
========== ========== ==========
Income taxes paid .................................................................... $ 13,599 $ 12,640 $ 8,793
========== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
23
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC. AND SUBSIDIARY
("Bancorporation")
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC. ("Parent")
FIRST-CITIZENS BANK AND TRUST COMPANY OF SOUTH CAROLINA AND SUBSIDIARY ("Bank")
Notes To Consolidated Financial Statements
- --------------------------------------------------------------------------------
Note 1 - Summary of Significant Accounting Policies (Dollars in thousands)
Nature of Operations:
First Citizens Bancorporation of South Carolina, Inc. is a bank holding
company whose principal subsidiary is First-Citizens Bank and Trust Company of
South Carolina ("First Citizens"). First Citizens is chartered under the laws of
South Carolina to engage in general banking business. Founded in 1964, First
Citizens offers a complete array of services in commercial banking through its
130 offices in 84 communities in South Carolina. First Citizens provides a full
range of financial services including accepting deposits, corporate cash
management, discount brokerage, IRA plans, trust services and secured and
unsecured loans. Trust services provide estate planning, estate and trust
administration, IRA trust and personal investment, pension and profit sharing
accounts. First Citizens originates and services mortgage loans and provides
financing for small businesses.
The accounting and reporting policies of First Citizens Bancorporation of
South Carolina, Inc. and its subsidiary, First-Citizens Bank and Trust Company
of South Carolina, reflect industry practices and conform to generally accepted
accounting principles in all material respects.
Reclassification:
Certain amounts in prior years have been reclassified to conform to the
1997 presentation.
Principles of Consolidation:
The consolidated financial statements include the accounts of First
Citizens Bancorporation of South Carolina, Inc., its wholly-owned subsidiary,
First-Citizens Bank and Trust Company of South Carolina, and its wholly-owned
subsidiary, Wateree Life Insurance Company, collectively "Bancorporation". All
significant intercompany accounts and transactions have been eliminated.
Assets held by the Bank in trust or in other fiduciary capacities are not
assets of the Bank and are not included in the accompanying consolidated
financial statements.
Significant Estimates:
In preparing the consolidated financial statements, management is required
to make estimates based on available information which can affect the reported
amounts of assets and liabilities as of the balance sheet date and revenues and
expenses for the related periods. Because of the inherent uncertainties
associated with any estimation process and due to possible future changes in
market and economic conditions, it is possible that actual future results could
differ significantly from the amounts reflected in the consolidated financial
statements.
Acquisitions:
Six branch locations were acquired throughout the year from other financial
institutions. Bancorporation acquired deposits of $102,934, loans of $11,707 and
goodwill of $9,068 in connection with acquisitions in 1997. In 1996, seven
branch locations were acquired from other financial institutions. Deposits of
$97,701, loans of $22,352 and goodwill of $9,268 were transferred to
Bancorporation in connection with these acquisitions.
Investment Securities:
Statement of Financial Accounting Standards ("SFAS") No. 115, "Accounting
for Certain Investments in Debt and Equity Securities", requires that equity
securities and debt securities, unless they are intended to be held to maturity,
with readily determinable market values be carried at fair value. Bancorporation
defines held-to-maturity securities as debt securities, which management has the
positive intent and ability to hold to maturity. Held-to-maturity securities are
stated at cost, adjusted for amortization of premiums and accretion of
discounts. Available-for-sale securities are defined as equity securities and
debt securities not classified as trading securities or held-to-maturity
securities. Available-for-sale securities are recorded at fair value with
unrealized holding gains and losses, net of deferred taxes, reported as a
separate component of stockholders' equity. Bancorporation determines the
appropriate classification of debt securities at the time of purchase. The cost
of securities is based on the specific identification method.
Loans and Reserve for Loan Losses:
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan", requires
loans to be measured for impairment when it is probable that all amounts,
including principal and interest, will not be collected in accordance with the
contractual terms of the loan agreement. It generally requires impairment to be
measured on the basis of discounted expected cash flows. Bancorporation defines
impaired loans as nonaccrual loans.
Loans are recorded at their principal amount outstanding. Interest is
accrued and recognized in operating income based upon the principal amount
outstanding. Loan origination fees and direct loan origination costs are
deferred and amortized over the estimated lives of the related loans as an
adjustment to yield. Unamortized net deferred loan origination costs included in
loans at December 31, 1997 and 1996 were $303 and $406, respectively.
In many lending transactions, collateral is obtained to provide an
additional measure of security. Generally, the cash flow and earnings power of
the borrower represent the primary source of repayment and collateral is
considered as an additional safeguard on an acceptable risk. The need for
collateral is determined on a case-by-case basis after considering the current
and prospective credit worthiness of the borrower, terms of the lending
transaction and economic conditions.
The accrual of interest is generally discontinued, except for installment
and credit card loans, when substantial doubt exists as to the collectability of
principal and interest or when a loan is 90 days past due as to interest or
principal. Generally, accrual of income on installment and credit card loans is
discontinued and the loans are charged off after a delinquency of 120 days for
unsecured loans and 180 days for secured loans and credit card loans.
24
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Loans or the portion thereof considered uncollectable are charged to the
reserve for loan losses. The reserve for loan losses is maintained at a level
which is considered adequate to provide for losses inherent in the loan
portfolio based upon management's evaluation of known and inherent risk
characteristics, the fair value of underlying collateral, recent loan loss
experience, current economic conditions and other pertinent factors. A provision
for loan losses is charged to operations based on management's periodic
evaluation of these risks. As the reserve is based on management's estimate of
future losses, actual losses may vary from the current estimate.
Mortgage Banking Activities:
Mortgage loans held for sale are stated at the lower of aggregate cost or
market, net of discounts and deferred loan fees and are included in net loans in
the Consolidated Statement of Condition. Nonrefundable deferred origination fees
and costs and discount points collected at loan closing, net of commitment fees
paid, are deferred and recognized at the time of sale of the mortgage loans.
Gain or loss on sales of mortgage loans is recognized based upon the difference
between the selling price and the carrying amount of the mortgage loans sold.
Other fees earned during the loan origination process are also included in net
gain or loss on sales of mortgage loans.
Capitalized Mortgage Servicing Rights ("MSRs") are included in intangible
assets in the Consolidated Statement of Condition and are amortized based on a
method which approximates the proportion of current net servicing revenues to
the total estimated net servicing revenues expected to be recognized over the
average estimated remaining lives of the underlying loans. Capitalized MSRs are
assessed for impairment based on their fair values.
In June 1996, FASB issued SFAS No. 125 "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities". This
statement became effective for transactions on or after January 1, 1997
establishing a new framework for accounting for transfers, sales and servicing
of financial assets and extinguishments of liabilities. The statement required
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. The affect of adopting SFAS No. 125 was not material to the consolidated
financial statements.
Premises and Equipment:
Bank premises and equipment are reported at cost less accumulated
depreciation. Depreciation is included in noninterest expense over the estimated
useful lives of the assets (generally five to twenty five years for buildings
and improvements, and three to seven years for furniture and equipment).
Leasehold improvements are capitalized and amortized to noninterest expense over
the terms of the leases or the estimated useful lives of the improvements,
whichever is shorter. Depreciation and amortization are calculated using
straight-line and accelerated methods. Maintenance, repairs and minor
improvements are included in noninterest expense as incurred. Major improvements
are capitalized. Gains or losses upon retirement or other dispositions are
included in the results of operations.
Other Real Estate Owned:
Other real estate owned consists of real property acquired through
foreclosure or deed-in-lieu of foreclosure and is carried at the lower of (1)
the recorded amount of the loan for which the foreclosed property previously
served as collateral, or (2) the current fair value of the property, minus
estimated selling costs.
Subsequent to foreclosure, gains or losses on the sales or the periodic
revaluation of other real estate owned are credited or charged to expense. Net
costs of maintaining and operating foreclosed properties are expensed as
incurred.
Intangible Assets:
Goodwill and deposit based premiums are recorded when Bancorporation
consummates branch acquisitions, based on the difference between the purchase
price and the fair value of the assets acquired. Goodwill and deposit based
premium amounts are amortized over the expected lives of the related assets
using the straight-line method of amortization.
Securities Sold Under Agreements to Repurchase:
Securities sold under agreements to repurchase represent overnight
borrowings with the Bank's customers and are secured by investment securities.
The average rate on these borrowings was 4.86%, 4.81% and 5.41% for 1997, 1996
and 1995, respectively.
Income Taxes:
The consolidated financial statements have been prepared on the accrual
basis. When income and expenses are recognized in different periods for
financial and tax reporting purposes and for purposes of computing income taxes
currently payable, deferred taxes are provided on such temporary differences.
Deferred tax assets and liabilities are recognized for the expected future tax
consequences of events that have been recognized in the financial statements or
tax returns. Deferred tax assets and liabilities are measured using the enacted
tax rates expected to apply to taxable income in the years in which those
temporary differences are expected to be realized or settled.
Pension Plan:
The Bank provides a noncontributory defined benefit pension plan covering
substantially all Bank employees. Costs of the plan are funded annually on an
actuarial basis to provide the trust fund with assets sufficient to meet the
obligation of future benefits to be paid to the plan members. The annual
contribution is sufficient to fund the normal plan costs on a current basis and
to fund the initial past service liability over forty years.
Earnings Per Share:
Earnings per share are computed by dividing net income less preferred
dividends by the weighted average number of voting and non-voting common shares
outstanding. Bancorporation adopted SFAS No. 128, "Earnings Per Share", which
establishes standards for computing and presenting earnings per share ("EPS") by
replacing the presentation of primary EPS with a presentation of basic EPS. As
Bancorporation has no dilutive securities, there is no difference between
diluted and basic EPS.
25
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
- --------------------------------------------------------------------------------
Note 2 - Cash and Due From Banks (Dollars in thousands)
The Bank is required to maintain reserve balances with the Federal Reserve,
or in vault cash. As of December 31, 1997, the average required reserve balance
was $29,559. Of this amount, $26,243 was met by vault cash and $3,316 was held
with the Federal Reserve. Also, at December 31, 1997, approximately $7,170 in
cash and due from bank balances was restricted in use as a compensating balance
with another financial institution.
- --------------------------------------------------------------------------------
Note 3 - Investment Securities (Dollars in thousands)
Securities with an aggregate par value totaling $383,140 as of December 31,
1997 were pledged to secure public funds deposits, securities sold under
agreements to repurchase, and for other purposes as required by law.
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- ------------ ------------ ----------
<S> <C> <C> <C> <C>
Held-to-Maturity At December 31, 1997:
U. S. Government obligations:
Within 1 year .................................. $259,201 $ 363 $ (32) $259,532
After 1 year but within 5 years ................ 263,514 1,032 - 264,546
-------- ------- ------ --------
Total .......................................... 522,715 1,395 (32) 524,078
State and political subdivisions:
Within 1 year .................................. 4,854 12 - 4,866
After 1 year but within 5 years ................ 7,876 105 - 7,981
After 5 years but within 10 years .............. 11,896 274 (4) 12,166
After 10 years ................................. 8,038 41 - 8,079
-------- ------- ------- --------
Total .......................................... 32,664 432 (4) 33,092
Other securities:
Within 1 year .................................. 145 - (2) 143
After 1 year but within 5 years ................ 411 - (4) 407
After 5 years but within 10 years .............. 50 - (2) 48
After 10 years ................................. 511 18 - 529
-------- ------- ------- --------
Total .......................................... 1,117 18 (8) 1,127
-------- ------- -------- --------
Total Held-to-Maturity At December 31, 1997 ... $556,496 $ 1,845 $ (44) $558,297
======== ======= ======= ========
Available-for-Sale at December 31, 1997:
Marketable equity securities .................... $ 11,600 $20,313 $ - $ 31,913
-------- ------- ------- --------
Total Available-for-Sale At December 31, 1997 . $ 11,600 $20,313 $ - $ 31,913
======== ======= ======= ========
Held-to-Maturity at December 31, 1996:
U. S. Government obligations:
Within 1 year .................................. $228,451 $ 473 $ (87) $228,837
After 1 year but within 5 years ................ 197,985 541 (271) 198,255
-------- ------- ------- --------
Total .......................................... 426,436 1,014 (358) 427,092
State and political subdivisions:
Within 1 year .................................. 4,087 5 - 4,092
After 1 year but within 5 years ................ 11,233 162 - 11,395
After 5 years but within 10 years .............. 14,889 306 - 15,195
After 10 years ................................. 9,535 68 (2) 9,601
-------- ------- -------- --------
Total .......................................... 39,744 541 (2) 40,283
Other securities:
Within 1 year .................................. 100 - - 100
After 1 year but within 5 years ................ 746 - (9) 737
After 5 years but within 10 years .............. 69 - (1) 68
After 10 years ................................. 703 14 (3) 714
-------- ------- -------- --------
Total .......................................... 1,618 14 (13) 1,619
-------- ------- ------- --------
Total Held-to-Maturity at December 31, 1996 ... $467,798 $ 1,569 $(373) $468,994
======== ======= ======= ========
Available-for-Sale at December 31, 1996:
Marketable equity securities .................... $ 3,769 $13,884 $ - $ 17,653
-------- ------- ------- --------
Total Available-for-Sale at December 31, 1996 . $ 3,769 $13,884 $ - $ 17,653
======== ======= ======= ========
</TABLE>
26
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
- --------------------------------------------------------------------------------
Note 4 - Loans (Dollars in thousands)
Gross loans are composed of the following:
<TABLE>
<CAPTION>
December 31,
---------------------------
1997 1996
------------- -------------
<S> <C> <C>
Real estate - construction ................. $ 23,837 $ 18,228
Real estate - mortgage ..................... 889,637 791,949
Installment loans to individuals ........... 356,612 337,589
Commercial, financial and agricultural ..... 158,351 122,013
---------- ----------
Total ..................................... $1,428,437 $1,269,779
========== ==========
</TABLE>
- --------------------------------------------------------------------------------
Note 5 - Reserve For Loan Losses (Dollars in thousands)
At December 31, 1997 and 1996, loans that were considered to be impaired
under SFAS No. 114 totaled $5,228 and $5,309, respectively.
Activity in the reserve for loan losses is summarized as follows:
<TABLE>
<CAPTION>
December 31,
--------------------------------
1997 1996 1995
---------- ---------- ----------
<S> <C> <C> <C>
Balance at beginning of year ....................... $ 23,483 $ 21,153 $ 19,249
Loans charged off .................................. (3,291) (3,354) (1,954)
Recoveries on loans previously charged off ......... 1,702 1,110 875
Provision for loan losses .......................... 4,241 4,574 2,686
Reserves related to acquisitions ................... - - 297
-------- -------- --------
Balance at end of year ............................. $ 26,135 $ 23,483 $ 21,153
======== ======== ========
</TABLE>
- --------------------------------------------------------------------------------
Note 6 - Premises and Equipment (Dollars in thousands)
Premises and equipment are summarized as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------
1997 1996
------------ ------------
<S> <C> <C>
Land ............................................ $ 17,978 $ 13,862
Buildings and improvements ...................... 41,312 37,182
Furniture and equipment ......................... 27,574 24,907
Leasehold improvements .......................... 1,109 724
Construction in progress ........................ 8,541 7,155
--------- ---------
Total .......................................... 96,514 83,830
Less: Accumulated depreciation and amortization . (36,726) (33,343)
--------- ---------
Total premises and equipment ................... $ 59,788 $ 50,487
========= =========
</TABLE>
Expenses related to depreciation and amortization of $4,577 in 1997, $3,666
in 1996 and $3,712 in 1995 are included in noninterest expense.
27
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
- --------------------------------------------------------------------------------
Note 7 - Intangible Assets (Dollars in thousands)
Intangible assets include the following:
<TABLE>
<CAPTION>
Deposit Mortgage
Based Servicing
Goodwill Premiums Rights Total
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balance at December 31, 1995 ......... $ 9,801 $ 4,234 $ 2,675 $ 16,710
Additions ........................... 9,268 - 640 9,908
Amortization ........................ (4,143) (1,957) (1,072) (7,172)
-------- -------- -------- --------
Balance at December 31, 1996 ......... 14,926 2,277 2,243 19,446
-------- -------- -------- --------
Additions ........................... 9,068 - 663 9,731
Amortization ........................ (6,181) (1,681) (788) (8,650)
-------- -------- -------- --------
Balance at December 31, 1997 ......... $ 17,813 $ 596 $ 2,118 $ 20,527
======== ======== ======== ========
</TABLE>
- --------------------------------------------------------------------------------
Note 8 - Deposits (Dollars in thousands)
Deposits and related interest expense are summarized as follows:
<TABLE>
<CAPTION>
Deposits Interest Expense
December 31, Year Ended December 31,
--------------------------- -----------------------------
1997 1996 1997 1996 1995
------------- ------------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Demand ................................................ $ 346,934 $ 283,590 - - -
Savings:
NOW accounts ......................................... 453,291 388,673 $ 7,847 $ 6,999 $ 7,362
Market Rate accounts ................................. 281,679 268,070 9,234 8,224 8,139
Other ................................................ 16,239 18,125 443 481 501
Time:
Certificates of deposit in excess of $100 thousand.... 134,336 121,657 6,791 5,938 5,302
Other certificates of deposit ........................ 646,941 580,957 32,529 29,528 26,722
---------- ---------- ------- ------- -------
Total ................................................ $1,879,420 $1,661,072 $56,844 $51,170 $48,026
========== ========== ======= ======= =======
</TABLE>
- --------------------------------------------------------------------------------
Note 9 - Income Tax Expense (Dollars in thousands)
The components of consolidated income tax expense are as follows:
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------
1997 1996 1995
---------- ---------- -----------
<S> <C> <C> <C>
Taxes currently payable:
Federal .......................... $ 12,570 $ 11,546 $ 8,065
State ............................ 911 800 539
-------- -------- --------
13,481 12,346 8,604
Deferred income taxes:
Federal .......................... (1,835) (2,121) (1,904)
State ............................ 129 96 77
-------- -------- --------
(1,706) (2,025) (1,827)
-------- -------- --------
Total Income Tax Expense ......... $ 11,775 $ 10,321 $ 6,777
======== ======== ========
</TABLE>
28
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
The significant components of Bancorporation's deferred tax liabilities and
assets recorded pursuant to SFAS No. 109, and included in "Other assets" in the
Consolidated Statement of Condition, are as follows:
<TABLE>
<CAPTION>
December 31,
-----------------------------
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
Deferred tax liabilities:
Tax depreciation over book ........................................... $ 534 $ 366 $ 309
Interest income, accretion recorded for book, not tax until realized . 202 156 171
Deferred loan fees and costs ......................................... 106 142 325
Pension costs for tax greater than book .............................. 1,461 1,132 853
Prepaid FDIC insurance premium ....................................... 47 37 46
Mark-to-market of equity securities .................................. 7,110 4,858 2,075
Other, net ........................................................... 399 334 247
------- ------- ------
Total deferred tax liabilities ....................................... 9,859 7,025 4,026
Deferred tax assets:
Allowance for loan losses ............................................ 9,124 8,157 7,285
Tax net operating loss carryforwards ................................. 431 589 723
Employee severance and retirement benefits ........................... 133 215 365
Book amortization over tax ........................................... 4,101 2,697 1,236
Other, net ........................................................... 504 347 253
------- ------- ------
Gross deferred tax assets ............................................ 14,293 12,005 9,862
Less deferred tax asset valuation allowance .......................... - - (135)
------- ------- ------
Total deferred tax assets ............................................ 14,293 12,005 9,727
------- ------- ------
Net deferred tax asset ............................................... $ 4,434 $ 4,980 $5,701
======= ======= ======
</TABLE>
Total income tax expense differs from the amount of income tax determined
by applying the U. S. statutory federal income tax rate (35%) to pretax income
as a result of the following differences:
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------
1997 1996 1995
---------- ---------- ---------
<S> <C> <C> <C>
Tax expense at statutory rate ......................... $11,741 $10,246 $6,767
Increase (decrease) in taxes resulting from:
Non-taxable interest on investments .................. (819) (832) (925)
State income taxes, net of federal income tax benefit 676 896 616
Other, net ........................................... 177 11 319
------- ------- ------
$11,775 $10,321 $6,777
======= ======= ======
</TABLE>
29
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
- --------------------------------------------------------------------------------
Note 10 - Mortgage Servicing Activity (Dollars in thousands)
Bancorporation's mortgage servicing portfolio approximated $634,876 and
$575,100 at December 31, 1997 and 1996, respectively. Fiduciary funds of
approximately $4,800 and $6,400 at December 31, 1997 and 1996, respectively, are
segregated in trust accounts on deposit with Bancorporation. Loans serviced for
unrelated third parties are not included in the accompanying consolidated
financial statements.
Bancorporation has issued mortgage-backed securities guaranteed by GNMA
under the provisions of the National Housing Act. The issuance of these
securities, and the simultaneous placement of the related mortgages in trust,
have been accounted for as sales of the related mortgages. The outstanding
balances of the securities and the related mortgages held in trust, $12,300 and
$15,200 at December 31, 1997 and 1996, respectively, are not considered to be
assets or liabilities of Bancorporation and, accordingly, are not included in
the consolidated financial statements.
- --------------------------------------------------------------------------------
Note 11 - Long-Term Debt (Dollars in thousands)
The outstanding balance of the term loan was $7,500 and $10,000 at December
31, 1997 and 1996, respectively. The term loan agreement is with an unrelated
financial institution and provides an interest rate indexed to prime with a
floor of 7.25% and a ceiling of 12.00%, provided Bancorporation complies with
the provisions and covenants of the term loan agreement. At December 31, 1997,
Bancorporation was in compliance with such provisions and covenants and the rate
on the term loan was 8.15%. As described in Note 2, Bancorporation maintains a
compensating balance with another financial institution related to this loan.
A committed unsecured revolving line of credit was established in 1997 with
an unrelated financial institution and provides an interest rate indexed to the
London Interbank Offered Rate ("LIBOR") plus 70 basis points. This line of
credit contains certain restrictive covenants including limits on indebtedness,
encumbrances, dividends and minimum net worth. Bancorporation was in compliance
with the covenants at December 31, 1997. The line of credit outstanding at
December 31, 1997 was $6,983. The line of credit expires and is payable on
August 14, 2000.
Principal maturities of the term loan and line of credit for years
subsequent to December 31, 1997 are as follows:
<TABLE>
<S> <C>
1998 ........... $ 2,500
1999 ........... 2,500
2000 ........... 9,483
-------
Total .......... $14,483
=======
</TABLE>
- --------------------------------------------------------------------------------
Note 12 - Stockholders' Equity (Dollars in thousands, except per share data)
Each share of voting common stock and preferred stock is entitled to one
vote on all matters on which stockholders vote. In certain cases, South Carolina
law provides for class voting of shares and for voting rights for non-voting
shares. Dividend rights of each series of preferred stock are cumulative and
upon liquidation each preferred stockholder is entitled to payment of par value
for each share owned before any distribution to holders of common stock.
Each series of preferred stock may be redeemed by Bancorporation (all or
any part thereof), at its option, at par or stated value. Par value and
dividends paid for each series of preferred stock are scheduled as follows:
<TABLE>
<CAPTION>
Par or Stated Value
---------------------------------------- Cash
Total at December 31, Authorized and Outstanding Dividend
--------------------- ------------------------------ Per Share 1997
Series Share 1997 1996 1995 1997 1996 1995 1996 and 1995
- -------- ------- -------- -------- -------- -------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
A $ 50 $ 415 $ 415 $ 415 8,305 8,305 8,305 $ 2.50
B 50 590 590 590 11,810 11,810 11,810 2.50
C 20 136 136 136 6,794 6,794 6,794 2.00
E 200 105 105 105 525 525 525 10.00
F 50 1,612 1,612 1,612 32,221 32,221 32,221 2.50
G 50 424 424 424 8,477 8,477 8,477 2.50
------ ------ ------
$3,282 $3,282 $3,282
====== ====== ======
</TABLE>
The Bank must obtain written approval from the South Carolina Board of
Financial Institutions prior to payment of dividends. Bancorporation's dividends
may be restricted by the requirements of the term loan agreement described in
Note 11 which requires that the Bank maintain a regulatory leverage capital
ratio of 4.00%. At December 31, 1997, the Bank's leverage capital ratio was
6.28%.
30
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
- --------------------------------------------------------------------------------
Note 13 - Employee Benefits (Dollars in thousands)
The Bank has a noncontributory defined benefit pension plan which covers
substantially all of its employees. Retirement benefits under the plan are based
on an employee's length of service and highest average annual compensation for
five consecutive years during the last ten years of employment. Contributions to
the plan are based upon the projected unit credit actuarial funding method and
are limited to the amounts that are currently deductible for tax reporting
purposes.
The following table sets forth the plan's status at December 31:
<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligations, including vested benefits ........... $ 18,213 $ 16,775
========= =========
Projected benefit obligation for service rendered to date ............. $ (23,298) $ (21,459)
Plan assets at fair value, primarily U. S. Government obligations ..... 27,575 22,731
--------- ---------
Projected benefit obligation in excess of plan assets ................. 4,277 1,272
Unrecognized prior service cost ...................................... 1,019 1,220
Unrecognized net (gain) loss ......................................... (2,025) 173
--------- ---------
Pension asset recorded in Consolidated Statement of Condition ......... $ 3,271 $ 2,665
========= =========
</TABLE>
The following table sets forth the components of pension expense recognized
in Bancorporation's consolidated financial statements:
<TABLE>
<CAPTION>
1997 1996 1995
----------- ----------- -----------
<S> <C> <C> <C>
Service costs ......................... $ 1,038 $ 989 $ 1,058
Interest costs ........................ 1,651 1,512 1,471
Return on plan assets ................. (3,873) (2,067) (2,318)
Net amortization and deferral ......... 2,050 571 1,165
-------- -------- --------
Net pension expense .................. $ 866 $ 1,005 $ 1,376
======== ======== ========
</TABLE>
The weighted average discount rate used in determining the actuarial
present value of the projected benefit obligation was 7.75% for December 31,
1997 and 1996, respectively. The rate of increase in future compensation used
was 5.00% for December 31, 1997 and 1996, respectively. The related expected
long-term rate of return on plan assets was 8.50% for 1997 and 1996.
The Bank has a contributory savings plan covering full-time employees who
elect to participate. The Bank matches 100% of the employees' contribution of
up to 3% of compensation and 50% of the employees' contribution of 4% to 6% of
compensation. The matching funds contributed by the Bank are 100% vested
immediately. Matching contributions provided by the Bank were $900 in 1997,
$795 in 1996 and $742 in 1995 and are included in salaries and employee
benefits expense. Bancorporation does not presently offer any postretirement
benefits other than pensions.
- --------------------------------------------------------------------------------
Note 14 - Commitments, Contingencies and Financial Instruments With Off-Balance
Sheet Risk (Dollars in thousands)
Bancorporation does not hold any derivative financial instruments.
Financial instruments with off-balance sheet risk include commitments to extend
credit, standby letters of credit and commitments on mortgage loans
held-for-resale (See Note 16). Generally, Bancorporation charges a fee to the
customer to extend these commitments as part of its normal banking activities.
These fees are initially deferred and included in loans in the Consolidated
Statement of Condition. Ultimately, such fees are recorded as an adjustment of
yield over the related loan's life or, if the commitment expires unexercised,
recognized in income upon expiration of the commitment.
A summary of the significant financial instruments with off-balance sheet
risk is as follows:
<TABLE>
<CAPTION>
Contract Amount at
December 31,
-----------------------
1997 1996
----------- -----------
<S> <C> <C>
Commitments to extend credit ................... $284,718 $268,476
Letters of credit and financial guarantees ..... 2,503 1,988
-------- --------
Total ......................................... $287,221 $270,464
======== ========
</TABLE>
Commitments to extend credit are agreements to lend to a borrower as long
as there are no violations of any conditions established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected to
expire without being drawn upon, the total commitments do not necessarily
represent future cash requirements. Bancorporation evaluates each borrower's
credit worthiness on a case-by-case basis using the same credit policies for
on-balance sheet financial instruments. The amount of collateral obtained, if
deemed necessary upon extension of credit, is based on management's credit
evaluation of the borrower. Collateral held varies, but may include accounts
receivable, inventory, property, plant and equipment, and income producing
property.
Letters of credit and financial guarantees are conditional commitments
issued by Bancorporation to guarantee the performance of a borrower to a third
party. The evaluations of credit worthiness, consideration of need for
collateral, and credit risk involved in issuing letters of credit is essentially
the same as that involved in extending loans to borrowers.
31
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Most of Bancorporation's business activity is with customers located in
South Carolina. A significant economic downturn in South Carolina could have a
material adverse impact on the operations of Bancorporation. As of December 31,
1997, Bancorporation had no other significant concentrations of credit risk in
the loan portfolio.
Bancorporation is a defendant in litigation arising out of normal banking
activities. In the opinion of management and Bancorporation's counsel, the
ultimate resolution of these matters will not have a material effect on
Bancorporation's financial position or results of operations.
Substantially all furniture and equipment and most premises used to conduct
operations are owned by Bancorporation. Bancorporation leases (only under
operating leases) certain premises, land upon which branch facilities are
located, and land used for parking. The leases expire over the next 21 years,
and most contain renewal options from 5 to 25 years. Certain leases provide for
periodic rate negotiation or escalation. The leases generally provide for
payment of property taxes, insurance and maintenance costs by Bancorporation.
Future minimum rental payments required under Bancorporation's noncancellable
leases are aggregated as follows:
<TABLE>
<S> <C>
1998 ......................... $ 453
1999 ......................... 399
2000 ......................... 357
2001 ......................... 231
2002 ......................... 153
Later years .................. 251
------
Total ...................... $1,844
======
</TABLE>
Rental expense, including month-to-month leases, reported in noninterest
expense was $528, $404 and $353 for the years ended December 31, 1997, 1996 and
1995, respectively. There are no contingent rentals, and the expense was offset
by sublease rental income of $850, $926 and $700 for the years ended December
31, 1997, 1996 and 1995, respectively.
- --------------------------------------------------------------------------------
Note 15 - Related Party Transactions (Dollars in thousands)
Bancorporation has had, and expects to have in the future, transactions in
the ordinary course of business with its directors, officers, principal
stockholders and their associates on substantially the same terms (including
interest rates and collateral on loans) as those prevailing for comparable
transactions with others. However, subject to the completion of length of
service requirements and credit approval, all employees (except executive
officers) are eligible to receive reduced interest rates on extensions of
credit. These transactions do not involve more than the normal risk of
collectability.
Aggregate balances and activity related to extensions of credit to
officers, directors, principal stockholders and their associates were as
follows:
<TABLE>
<CAPTION>
1997
---------
<S> <C>
Balance at beginning of year .......... $5,875
New loans and additions ............... 555
Payments and other deductions ......... (490)
------
Balance at end of year ................ $5,940
======
</TABLE>
During 1996, Bancorporation renewed a contract with First-Citizens Bank &
Trust Company, Raleigh, North Carolina for the purpose of out-sourcing data
processing services to include items processing, deposits, loans, general
ledger statement rendering, postage reimbursement and other miscellaneous
functions. Total expenses incurred under this contract totaled $6,306, $5,757
and $5,511 for the years ended December 31, 1997, 1996 and 1995, respectively.
The current contract expires December 31, 1997 and another contract will be
negotiated in early 1998. Bancorporation has a correspondent banking
relationship with First-Citizens Bank & Trust Company, Raleigh, North Carolina,
which also acts as an investment custodian. Fees paid for this service were
minimal for 1997, 1996 and 1995.
- --------------------------------------------------------------------------------
Note 16 - Disclosure of Fair Value of Financial Instruments (Dollars in
thousands)
SFAS No. 107, "Disclosure About Fair Value of Financial Instruments"
extends existing fair value disclosure practices for some instruments by
requiring entities to disclose the fair value of financial instruments, both
assets and liabilities, recognized and not recognized in the balance sheet.
For Bancorporation, approximately 95% of its assets and liabilities are
considered financial instruments, as defined in SFAS No. 107. Many of
Bancorporation's financial instruments, however, lack an available trading
market as characterized by a willing buyer and willing seller engaging in an
exchange transaction. It is not the intent of Bancorporation to liquidate and
therefore realize the difference between market value and carrying value and,
even if it were, there is no assurance that the estimated market values could be
realized. Therefore, significant estimates and present value calculations were
used by Bancorporation for the purposes of this disclosure. Such estimates
involve judgments as to economic conditions, risk characteristics and future
expected loss experience of various financial instruments and other factors that
cannot be determined with precision. Thus the information presented is not
particularly relevant to predicting Bancorporation's future earnings or cash
flow.
Following is a description of the methods and assumptions used to estimate
the fair value of each class of Bancorporation's financial instruments:
Cash and short-term investments:
The carrying value is a reasonable estimation of fair value.
32
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Investment securities:
Fair value is based upon quoted market prices, if available. If a quoted
market price is not available, fair value is estimated using quoted market
prices for similar securities.
Loans:
For certain homogeneous categories of loans such as residential mortgages,
fair value is estimated using the quoted market prices for securities backed by
similar loans, adjusted for differences in loan characteristics. The fair value
for other types of loans is estimated by discounting the expected future cash
flows using Bancorporation's current interest rates at which loans would be made
to borrowers with similar credit risk. The fair value of nonaccruing loans was
estimated by discounting expected future cash flows utilizing rates of returns,
adjusted for credit risk and servicing cost commensurate with a portfolio of
nonaccruing loans.
Deposits:
The fair value of demand deposits, savings accounts and certain money
market deposits is the amount payable on demand at the reporting date. The fair
value of fixed-maturity certificates of deposit is estimated using the rates
currently offered for deposits of similar remaining maturities.
Federal funds purchased and securities sold under agreements to repurchase: The
carrying value is a reasonable estimation of fair value.
Long-term debt:
Rates currently available to Bancorporation for debt with similar terms and
remaining maturities are used to estimate fair value of existing debt.
Commitments to extend credit and standby letters of credit:
The fair value of commitments and letters of credit is based on fees
currently charged for similar agreements or on the estimated cost to terminate
them with the counterparties at the reporting date.
SFAS No. 107 requires entities to disclose the fair value of off-balance
sheet financial instruments for which it is practical to estimate fair value.
The fair values of commitments to extend credit and standby letters of credit
are generally based upon fees charged to enter into similar agreements, taking
into account the remaining terms of the agreements and the counterparties'
credit standing. The estimated fair value of the Bank's off-balance sheet
commitments is nominal since the committed rates approximate current rates
offered for commitments with similar rate and maturity characteristics and since
the estimated credit risk associated with such commitments is not significant.
The carrying amounts and estimated fair values of Bancorporation's
financial instruments are as follows:
<TABLE>
<CAPTION>
December 31, 1997 December 31, 1996
------------------------- -------------------------
Estimated Estimated
Carrying Fair Carrying Fair
Amount Value Amount Value
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Financial assets:
Cash and federal funds sold ................................... $ 138,176 $ 138,176 $ 103,844 $ 103,844
Interest-bearing deposits in financial institutions ........... 7,700 7,857 11,300 12,603
Investment securities ......................................... 588,409 595,744 485,451 499,751
Loans ......................................................... 1,428,437 1,532,771 1,269,779 1,421,021
Financial liabilities:
Deposits ...................................................... 1,879,420 1,944,571 1,661,072 1,754,946
Federal funds purchased and securities sold under agreements to
repurchase .................................................... 184,168 184,168 132,891 132,891
Long-term debt ................................................ 14,483 16,095 10,000 10,752
</TABLE>
- --------------------------------------------------------------------------------
Note 17 - Capital Matters (Dollars in thousands)
Bancorporation is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum capital
requirements can initiate certain mandatory, and possibly additional
discretionary, actions by regulators that, if undertaken, could have a direct
material effect on Bancorporation's consolidated financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, Bancorporation must meet specific capital guidelines that involve
quantitative measures of Bancorporation's assets, liabilities and certain
off-balance sheet items as calculated under regulatory accounting practices.
Bancorporation's capital amounts and classification are also subject to
qualitative judgments by the regulators about components, risk weightings and
other factors.
Quantitative measures established by regulation to ensure capital adequacy
require Bancorporation to maintain minimum amounts and ratios of Total and Tier
I capital to risk weighted assets, and of Tier I capital to average assets.
Management believes, as of December 31, 1997, that Bancorporation meets all
capital adequacy requirements to which it is subject.
To be categorized as well-capitalized, Bancorporation must maintain minimum
Total risk-based and Tier I risk-based ratios as set forth in the following
table. There are no conditions or events subsequent to December 31, 1997, that
would change Bancorporation's category.
33
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
<TABLE>
<CAPTION>
To Be Well
Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
----------------------- ----------------------- ----------------------
Amount Ratio (%) Amount Ratio (%) Amount Ratio (%)
----------- ----------- ----------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
As of December 31, 1997:
Total capital to risk weighted assets
Bancorporation ...................... $146,453 10.49 $111,665 > 8.00 $139,581 >10.00
- -
Bank ................................ 145,855 10.65 109,605 > 8.00 137,006 >10.00
- -
Tier I capital to risk weighted assets
Bancorporation ...................... 127,398 9.13 55,833 > 4.00 83,749 >6.00
- -
Bank ................................ 128,618 9.39 54,802 > 4.00 82,204 >6.00
- -
Tier I capital to average assets
Bancorporation ...................... 127,398 6.21 86,568 > 4.00 108,210 >5.00
- -
Bank ................................ 128,618 6.28 85,600 > 4.00 107,000 >5.00
- -
As of December 31, 1996:
Total capital to risk weighted assets
Bancorporation ...................... $126,846 10.39 $ 97,656 > 8.00 $122,070 >10.00
- -
Bank ................................ 126,881 10.52 96,461 > 8.00 120,576 >10.00
- -
Tier I capital to risk weighted assets
Bancorporation ...................... 108,606 8.90 48,828 > 4.00 73,242 >6.00
- -
Bank ................................ 111,705 9.26 48,230 > 4.00 72,346 >6.00
- -
Tier I capital to average assets
Bancorporation ...................... 108,606 6.02 72,199 > 4.00 90,248 >5.00
- -
Bank ................................ 111,705 6.19 72,126 > 4.00 90,157 >5.00
- -
</TABLE>
34
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
- --------------------------------------------------------------------------------
Note 18 - Bancorporation (Parent Company only) Information (Dollars in
thousands)
Bancorporation's principal asset is its investment in its wholly-owned
subsidiary, the Bank, and its principal source of income is dividends from the
Bank. The approval of the South Carolina State Board of Financial Institutions
is required for any dividends declared by a state bank.
Bancorporation's condensed balance sheet and the related condensed
statements of income and of cash flows are as follows:
BALANCE SHEET DATA
<TABLE>
<CAPTION>
December 31,
-----------------------
1997 1996
----------- -----------
<S> <C> <C>
Assets:
Cash ............................................... $ 1,063 $ 1,177
Investment in the Bank ............................. 147,026 128,907
Other assets ....................................... 32,020 17,776
-------- --------
Total Assets ....................................... $180,109 $147,860
======== ========
Liabilities and Stockholders' Equity:
Long-term debt ..................................... $ 14,482 $ 10,000
Other liabilities .................................. 7,209 5,221
Stockholders' equity ............................... 158,418 132,639
-------- --------
Total Liabilities and Stockholders' Equity ......... $180,109 $147,860
======== ========
</TABLE>
INCOME STATEMENT DATA
<TABLE>
<CAPTION>
Year Ended December 31,
-------------------------------------
1997 1996 1995
------------ ------------ -----------
<S> <C> <C> <C>
Income:
Dividend income from the Bank ................................................. $ 3,963 $2,249 $ 6,201
Other ......................................................................... 341 1,036 296
-------- ------ -------
4,304 3,285 6,497
Expenses:
Interest ...................................................................... 868 859 997
Other ......................................................................... 79 22 29
-------- ------ -------
947 881 1,026
-------- ------ -------
Income before equity in undistributed earnings of the Bank and income taxes ... 3,357 2,404 5,471
Equity in undistributed earnings of the Bank .................................. 18,120 16,549 6,751
-------- ------ -------
Income before income taxes ..................................................... 21,477 18,953 12,222
Applicable income tax benefit .................................................. (293) (1) (336)
-------- --------- -------
Net income ..................................................................... $ 21,770 $18,954 $12,558
======== ======== =======
</TABLE>
CASH FLOWS DATA
<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ----------
<S> <C> <C> <C>
Cash Flows From Operating Activities:
Net income ............................................... $ 21,770 $ 18,954 $ 12,558
Adjustments to reconcile net income to net
cash used in (provided by) operating activities:
Equity in undistributed earnings of the Bank ............ (18,120) (16,549) (6,751)
Decrease (increase) in other assets ..................... (7,815) 318 (28)
Increase (decrease) in other liabilities ................ (261) 190 (16)
--------- --------- --------
Net Cash Used In (Provided By) Operating Activities ..... (4,426) 2,913 5,763
Cash Flows From Financing Activities:
Repayments of term loan ................................. (2,500) (1,700) (1,700)
Purchase of stock ....................................... 0 (1,319) (3,882)
Cash dividends paid ..................................... (171) (171) (171)
Increase in long-term debt .............................. 6,983 - -
--------- --------- --------
Net Cash Used In (Provided By) Financing Activities ..... 4,312 (3,190) (5,753)
--------- --------- --------
Increase (decrease) in cash ............................... (114) (277) 10
Cash at beginning of year ................................. 1,177 1,454 1,444
--------- --------- --------
Cash at end of year ....................................... $ 1,063 $ 1,177 $ 1,454
========= ========= ========
Supplemental disclosure of cash flow information:
Interest paid ............................................ $ 851 $ 888 $ 1,018
========= ========= ========
</TABLE>
35
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
First Citizens
Bancorporation
Board of Directors
(Directors of First Citizens Bank
are identical to those of First Citizens
Bancorporation)
Jim Apple* **
President
First Citizens Bancorporation of South Carolina, Inc.
President
First Citizens Bank and Trust Company of
South Carolina, Columbia
Richard W. Blackmon* **
Owner
Richard Blackmon Construction Company,
Lancaster
George H. Broadrick***
Retired, Charlotte, NC
Thomas E. Brogdon
Consultant
First Citizens Bank and Trust Company of
South Carolina, Lancaster
Laurens W. Floyd***
President
Dillon Provision Company, Inc., Dillon
William E. Hancock, III
President
Hancock Buick Company, Columbia
Robert B. Haynes
Vice President and Secretary
C. W. Haynes and Company, Inc., Columbia
Wycliffe E. Haynes
Vice President and Treasurer
C. W. Haynes and Company, Inc., Columbia
Lewis M. Henderson***
Tourville, Simpson and Henderson, CPAs,
Columbia
Carmen P. Holding
Atlanta, GA
Frank B. Holding* **
Vice Chairman
First Citizens Bancorporation of South Carolina, Inc.
Vice Chairman
First Citizens Bank and Trust Company of
South Carolina
Executive Vice Chairman
First Citizens BancShares, Inc.
Executive Vice Chairman
First Citizens Bank and Trust Company,
Smithfield, NC
Dan H. Jordan
Farmer, Nichols
E. Hite Miller, Sr.* **
Chairman
First Citizens Bancorporation of South Carolina, Inc.
Chairman
First Citizens Bank and Trust Company of
South Carolina, Columbia
N. Welch Morrisette, Jr.
Retired, Columbia
E. Perry Palmer
President
E. P. Palmer Corporation
Palmer Memorial Chapel, Columbia
William E. Sellars*
President
C. W. Haynes and Company, Inc., Columbia
Henry F. Sherrill*
Attorney-at-Law, Columbia
Jack A. Stanley***
Retired, Lake View
* Member of the Executive Committee, First Citizens Bancorporation and First
Citizens Bank
** Member of the Investment Committee, First Citizens Bank
*** Member of the Audit Committee, First Citizens Bancorporation and First
Citizens Bank
First Citizens Bancorporation
Executive Officers
E. Hite Miller, Sr.
Chairman/Chief Executive Officer
Frank B. Holding
Vice Chairman
Jim B. Apple
President/Chief Operating Officer
Jay C. Case
Treasurer/Chief Financial Officer
E. W. Wells
Secretary
Directors of Wateree
Life Insurance Company
Jay C. Case
President
Wateree Life Insurance Company
Treasurer and Chief Financial Officer
First Citizens Bancorporation of South Carolina, Inc.
Executive Vice President and Controller
First Citizens Bank and Trust Company of South Carolina
Frank B. Holding
Vice Chairman
First Citizens Bank and Trust Company of South Carolina
C. W. Jones
Senior Vice President
First Citizens Bank and Trust Company of South Carolina
Linda C. Kidd
Vice President
First Citizens Bank and Trust Company of South Carolina
William E. Sellars
President
C. W. Haynes and Company, Inc.
Officers of Wateree Life
Insurance Company
Jay C. Case
President
Ed L. Prosser
Vice President
Linda C. Kidd
Vice President/Treasurer
Carol W. Stevens
Secretary
Organization of First Citizens Bank
Executive Officers
E. Hite Miller, Sr.
Chairman
Frank B. Holding
Vice Chairman
Jim B. Apple
President
Jay C. Case
Executive Vice President/Controller
Charles S. McLaurin, III
Executive Vice President/Retail Banking
William K. Brumbach, Jr.
Senior Vice President/Trust Director
Charles D. Cook
Senior Vice President/Commercial Lending Director
Ed L. Prosser
Senior Vice President/Consumer Lending Director
Janis B. Summers
Senior Vice President/Mortgage Lending Director
Mike E. Toole
Audit and Security Services Director
E. W. Wells
Senior Vice President/Secretary
DEPARTMENT HEADS AND
GROUP EXECUTIVES
Auditing
Mike E. Toole
Audit and Security Services Director
Central Operations
J. Ronald Black
Senior Vice President/Central Operations Director
Commercial Loan
Charles D. Cook
Senior Vice President/Commercial Lending Director
Commercial Credit Review
Richard O. Westfall
Senior Vice President/Credit Review Director
Community Banking
James A. Bennett
Senior Vice President/Community Banking Director
Compliance
K. Gail Askins-Cole
Senior Vice President/Compliance Director
Consumer Loan
Ed L. Prosser
Senior Vice President/Consumer Lending Director
Controller
Jay C. Case
Executive Vice President/Controller
Corporate Secretary
E. W. Wells
Senior Vice President/Corporate Secretary
Executive Projects
Laura W. Messer
Senior Vice President/Executive Projects/Analysis
Financial Services
James R. Stevens
Senior Vice President/Financial Services Director
Group Executives
David Barnett
Senior Vice President
Bernard L. Duke
Senior Vice President
Jerry M. Williams
Senior Vice President
Human Resources
Carnie P. Hipp, Jr.
Senior Vice President/Human Resources Director
Marketing
Jan C. Burt
Senior Vice President/Marketing Director
Mortgage Group
Janis B. Summers
Senior Vice President/Mortgage Lending Director
Retail Banking Executive
Charles S. McLaurin, III
Executive Vice President/Retail Banking Executive
Trust
William K. Brumbach, Jr.
Senior Vice President/Trust Director
36
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Advisory Board
Members
Abbeville
Paul L. Agnee
Attorney-at-Law
S. M. Beaty, III, Owner
Beaty Oil Company
Dr. Bobby L. Crosby, Director
Abbeville Career Center
Steve A. Jackson, Director
Harris Funeral Home
John A. McAllister, Owner
McAllister and Son Furniture
Dr. Heidi E. Rodillo, Cardiologist
Robert M. Speer, Vice President
Flexible Technologies, Inc.
James A. Timmerman, III, Vice President
First Citizens Bank and Trust Company
of South Carolina
Aiken
James Gallman, Sr., Director
Aiken/Barnwell Regional Head Start
Thomas L. Hallman, Assistant to Chancellor
University of South Carolina, Aiken
Richard Heath, President
Satcher Motors Company
Joe E. Lewis, Vice President
First Citizens Bank and Trust Company
of South Carolina
William C. Jackson, III, President
Jackson Petroleum Company, Inc.
Arthur W. Rich, Attorney-at-Law
Holly H. Woltz, Veterinarian
Anderson
John B. Buice, Jr., Vice President
First Citizens Bank and Trust Company
of South Carolina
A. Joe Dean, Jr., Dermatologist
Anderson Skin and Cancer Clinic
Patrick B. Harris, Retired
Thomas P. Hughes, Agent
Mass. Mutual Insurance
William H. Moorhead, Attorney-at-Law
Jones, Spitz, Moorhead, and Baird, PA
Dr. William V. Tomlinson, Doctor of Oncology
Susan M. Tuten, CPA
Barnwell
Thomas M. Boulware, Attorney-at-Law
Brown, Jefferies, and Boulware
Bobby G. Creech, Owner
Staffore's Department Store
Robert C. Harris, Retired Owner
Barnwell People Sentinel Newspaper
Claudia W. Peeples, Executive Director
Barnwell County United Way
Terry E. Richardson, Jr., Attorney-at-Law
Ness, Motley, Loadholt, Richardson
& Poole
Norman E. Weare, Executive Director
Barnwell County Developmental
Commission
John J. Sanders, Vice President
First Citizens Bank and Trust Company
of South Carolina
Beech Island
J. E. Brannon, Retired
R. Austin Brown, Jr., President/Owner
Georgia Carolina Heating & Air
Conditioning
Joan L. Kight, Agent
State Farm Insurance Co.
Steven M. Phillips, Vice President
First Citizens Bank and Trust Company
of South Carolina
Belton E. Weeks, III, Attorney-at-Law
Associate Municipal Judge
Bishopville
John C. Bell, Jr. Retired
Grady Allen Brown
SC House of Representatives
Owner
Town and Country Barber Shop
Grady and Sons Furniture
Ennis R. Bryant, Principal
Bishopville High School
C. Ronald Payne, Owner
Payne and Kennedy, Inc.
James R. Segars, Jr., Attorney-at-Law
Stuckey, Fata and Segars
Bruce C. Snipes, Assistant Vice President
First Citizens Bank and Trust Company
of South Carolina
Robert D. Walden, Retired
R. Travis Windham, Owner
Windham Insurance Agency
Boiling Springs
Penny S. Guinn, Assistant Vice President
First Citizens Bank and Trust Company
of South Carolina
Leonard F. Holden, Owner & Operator
Boiling Springs TV & Appliance
Dr. Buddy Jennings, Superintendent
School District 2
Edith Martin, Retired
Martha Rost, Operator
Boiling Springs Tax & Payroll Service
Charleston
Joseph E. Koval, President
Wulbern-Koval Company, Inc.
Robert C. Lane, President
Lane Enterprises
Dwight L Moody, Jr., Vice President
First Citizens Bank and Trust Company
of South Carolina
Thomas P. Nolen, Vice President
First Citizens Bank and Trust Company
of South Carolina
A. M. Quattlebaum, President
Carolina Trade Zone
Dr. B. Owen Ravenel, Jr., DDS
Morris D. Rosen, Attorney-at-Law
T. D. Sanders, Retired
John A. Stuhr, President
J. Henry Stuhr, Inc.
Dr. Gwendolyn Todd-Jones, MD, Owner
Low Country Pediatrics and Adolescents
Colonel G. Kenneth Webb, Retired
Cheraw
Ida Mae Burch, Councilwoman
Chesterfield County Council
Co-Owner
Cheraw Packing Plant, Inc.
James C. Crawford, Jr., President
B. C.Moore and Sons, Inc.
M. B. Godbold, Jr., CLU, LUTCF
Jefferson Pilot Life Insurance Co.
C. Anthony Harris, Jr., Attorney-at-Law
Harris, McLeod
SC House of Representative
C. H. McBride, Retired
Brian J. Mickleberry, Vice President
First Citizens Bank and Trust Company
of South Carolina
Edwin W. Robeson, Bennett Motor Company Dan L. Tillman, Jr., President
Dan L. Tillman and Sons Insurance
Agency
Chester
Frank R. Armstrong, Retired
C. Larry Haynes, Vice President
First Citizens Bank and Trust Company
of South Carolina
William C. Keels, Attorney
Strickland & Keels PA
Brenda T. McBrayer, Assistant Vice President
First Citizens Bank and Trust Company
of South Carolina
Lewis R. Ryan, Jr., Chairman
United Contractors, Inc.
Dr. John D. Sherer, DMD
Arthur D. Underwood, Owner
Underwood and Son Plumbing
Royce N. Whitesides, Owner
One Hour Martinizing
Walter R. Whitman, Owner
MCON Construction Co., Inc.
Chesterfield
William E. Hough, Owner
Hough Insurance Agency
Emsley A. Laney, Jr., Retired
Harold P. McLain, Retired
John F. McLeod, Jr., Retired
Elizabeth M. Rivers, Owner
J. C. Rivers Farms, Inc.
T. F. Sowell, Retired
Johnnie S. Thurman, Retired
C. S. Watson, Owner
Watson Brothers
Clemson
James L. Bowers, Personnel Director
Maxfli Golf
Gaston Gage, Jr., Owner
Gage Realty Company
Palmetto Appraisal Services
William B. Harley, Vice President
First Citizens Bank and Trust Company
of South Carolina
Kenneth R. Kelley, Owner
Kelley's Gulf Service
Randall M. Newton, Attorney-at-Law
Lewis H. Patterson, State Farm Agent
H. Mitchell Reynolds, Textile Consultant Revman
Revman Industries
Dr. John E. Ross, DDS
Catherine J. Smith, Retired
William S. Ware, Jr., President
Ware Properties
James N. Workman, President
Trehel Corporation
Clio
A. M. Calhoun, Retired
Lila S. McColl, Jr., Retired
Derry W. McCormick, Vice President
First Citizens Bank and Trust Company
of South Carolina
Charles A. Thomas, Postmaster
US Postal Service, Clio
37
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Columbia
Donald F. Barton, President
Barton-Cureton, Inc.
Robert T. Bone, Jr., Vice President
First Citizens Bank and Trust Company
of South Carolina
Marvin M. Brownstein, Owner
Brownstein Investments
Georgia T. Cooper, General Manager
The Palmetto Club
Richard Davis, Consultant
B. L. Duke, Senior Vice President
First Citizens Bank and Trust Company
of South Carolina
Dr. Walter G. Edwards, Jr., MD
Columbia Nephrology Association
Frank A. Floyd, Chairman
Intermark Management Corporation
Robert H. Lovvorn, Jr., CLU
Chartered Financial Consultant
George M. Lusk, Senior Assistant Controller
General, State of South Carolina
Russell A. McCoy, Jr., Consultant
State Development Board
Sterling Sharpe, ESPN
Ann Ready Smith, Volunteer
Dr. Bart J. Witherspoon, Jr., MD
Pitts Medical Associates, PA
Conway
William F. Brown, Jr., Retired
Vivian Chestnut, Conway City Council
William F. Davis, General Manager
Pee Dee Farms Corporation
Conway Shopping Center
Robert M. Floyd, Jr., President
Robert Floyd and Associates Insurance
John C. Griggs, Jr., Vice President
First Citizens Bank and Trust Company
of South Carolina
Charles A. Hinson, Sales and Marketing
Waccamaw Land & Timber Company
Ronald R. Ingle, President
Coastal Carolina University
L. Morgan Martin, Attorney-at-Law
Dennis L. Smith, Farmer and Owner
Lands Inn
Ralph Stroman, Attorney-at-Law
Hubert C. Watson, Owner
Garden City Furniture Company
George L. Williams, Sr., Retired
Cowpens
Paul Dean Abbott, Sr., AAA Fruit Markets
Abbott Farms, Abbott Sign Company
Edward N. Brigman, Sr., Brigman Realty Co.
Charles C. Grant
Grant Textile
Joseph L. Ponder, Joe Ponder's Used
Cars, Inc.
Woodrow W. Potter
Potter and Son Mercantile Co.
Darlington
Marion Sidney Belk, President
Belk Funeral Home, Inc.
Lois G. Davis, Retired
William L. Fleming, President/CEO
Marlboro Electric Cooperative
John H. Martin, III, Vice President
First Citizens Bank and Trust Company
of South Carolina
John M. Milling, Attorney-at-Law
Milling Law Firm, PA
Dillon
Horace Arnette, President
The Arnette Company
Laurens Floyd, President
Dillon Provision Company, Inc.
Dr. Kenneth Huggins, Veterinarian and Owner
Dillon Animal Hospital
Marion H. "Son" Kinon, Retired Circuit Judge
SC House Representatives
Fitzgerald Lytch, Owner and Operator
Lytch Sign Service
Charles S. McLaurin, III, Executive Vice President
First Citizens Bank and Trust Company
of South Carolina
Suzanne Bell McLaurin, Owner
G. H. Bell & Son Jewelers
Dr. John M. Parham, Jr. DDS
Eastover
Lloyd Douglas, Owner
Richland Supply
Edna W. Scott, Owner
Scott's Bar-B-Que
Robert G. Woods, Assistant Vice President
First Citizens Bank and Trust Company
of South Carolina
Elgin
Sara B. Emanuel, Retired
Francis E. James, Kershaw County Magistrate
Andrew T. Moak, Owner
Hammy's Bar-B-Que
Alex B. Robinson, Retired
Roger L. Ross, President and Owner
Ross Trucking Company, Inc.
John W. Wells, Attorney-at-Law
Florence
D. Leroy Bailey, Jr., Vice President
First Citizens Bank and Trust Company
of South Carolina
David V. Barr, Vice President
Florence/Darlington Tech
Joseph M. Commander, III, Administrator
Commander Nursing Center
Kenneth W. Jackson, Real Estate Broker
Re-Max Professionals
William T. Jarrell, President
Jarrell Oil Company, Inc.
James N. Maurer, President
WYNN AM/FM Radio Station
M. Glenn Odom, Attorney-at-Law
Dr. Clyde T. Padgett, Jr., DDS
Padgett and Allen
Dr. J. Howard Stokes, Jr., Ophthalmologist
Stokes Regional Eye Center
Fort Mill
Martin Bouler, Telephone Technician
Fort Mill Telephone Company
Wendy Havnaer, Director
Leroy Springs Recreational Complex
Ron Lordo, Vice President
Springs Industries
David J. Macaulay, Vice President
First Citizens Bank and Trust Company
of South Carolina
Al Steele, Real Estate Development
Tom Thomasson, Business Office Manager
Fort Mill Telephone Company
Georgetown
Cephis Anderson, Owner
Anderson Furniture Company
Landy W. Avant, Jr., President Georgetown Auto
Georgetown Auto Parts, Inc.
Owner
Landy's Cleaners
Clayton M. Bull, Manager of Gas Operations
South Carolina Electric and Gas
Company
Peter L.M. DiVenere, Owner
DiVenere Home Center
Wendell E. Hinson, Part Owner
Apache Family Campground
Roy C. Jacobs, Jr., President
R. C. Jacobs Plumbing Heating and Air
Conditioning
John A. Joseph, Jr., Dentist
Robert R. Martin, Jr., Vice President
First Citizens Bank and Trust Company
of South Carolina
Gregory Smith, Owner
Dunes Realty of Litchfield
Great Falls
Evelyn M. Dantzler, Retired
John (Jack) P. Davis, Vice President
First Citizens Bank and Trust Company
of South Carolina
W. Ralph Garris, Director of Development
USC
W. D. Jordan, Retired
Henry S. Montgomery, Retired
Daniel C. Peach, Jr., President
Peach Furniture Company
T. Michael Stevenson, Owner
Stevenson-Weir Oil Company
Lawrence E. Stroud, Cattle Farmer
Greenville
L. W. Brummer, Business Management
Consultant
Nathaniel E. Cain, President
Carolina Air Care
E. D. Dixon, Retired
Robert Frantz, President
Frantz-Harder and Associates, Inc.
Edward E. Garvin, Executive Vice President
South Carolina Steel Corporation
Frank P. Hammond, Jr., Principal
Hammond Tarelton Properties
Donald L. Kiser, Vice President
First Citizens Bank and Trust Company
of South Carolina
William H. Orders, Chairman
Orders Distributing Co., Inc.
Joseph M. Pazdan, Principal
Pazdan Smith Group Architects
Ralph A. Price, President
Eastern Business Forms, Inc.
Alan M. Robinson, Partner
Cherry Bekaert and Holland, LLP
Stanley Sedran, President and Treasurer
Sedran Furs, Inc.
Greenwood
C. Sidney Abney, Vice President
First Citizens Bank and Trust Company
of South Carolina
Len Bornemann, Executive Director
Greenwood Area Chamber of Commerce
Ruple Harley, Jr., Harley Funeral Home
George E. Jones, President
J & W Taxi Cab Company
Irmo
H. Parker Evatt, Director of Operations
Private Correctional Assistance Center
David M. Herndon, Retired
James C. Holcombe, Vice President
First Citizens Bank and Trust Company
of South Carolina
J. A. Leitner, Retired
C. Robert Moseley, President
Irmo Insurance Agency, Inc.
38
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Johnston/Ridge Spring
Harry S. Bell, Retired, President
SC Farm Bureau Foundation
E. Phillips Boatwright, Retired
James D. Davis, Partner
Davis Funeral Home
Assistant Principal
Ridge Spring-Monetta High School
R. Wendell Derrick, Partner & Manager
Derrick Equipment, Inc
Anne Eidson Dukes, Retired
Lewis F. Holmes, Peach Farmer
Lewis F. Holmes Farms
G. William Rauton, Jr., Cattle & Soy Bean Farmer
James H. Satcher, Jr., Auto Dealer
Jim Satcher Motors
John C. Timmerman, Vice President
First Citizens Bank and Trust Company
of South Carolina
Maynard S. Watson, Retired
Larry Yonce, President
J.W. Yonce & Sons
Kershaw
Johnnie W. Connell, Retired
Walter D. Goodman, Retired
Dr. Robert S. Hegler, DDS
Dr. John R. Howell, Jr., DDS
Carl F. Phillips, Owner
The Phillips Agency
Jack W. Robinson, President
Mineral Mining Corporation
Edgar R. Taylor, Retired
Nancy L. Taylor, Assistant Vice President
First Citizens Bank and Trust Company
of South Carolina
Lake View
Larry K. Abraham, Retired Sgt. Major
US Army
Supervisor, Dillon County Jail
William F. Bullock, Farmer
John C. Rogers, President and Owner
Lake View Farm Center
Lake View Home and Garden Center
Jimmy L. Smith, President
Carpostan Industries, Inc.
J. A. Stanley, Secretary and Treasurer
Carpostan Industries, Inc
Ann S. Wallace, President
Wallace-Green Oil and Gas Company
Lancaster
Charles R. Bailey, Jr., President
Slaughter Machinery Co., Inc.
Richard W. Blackmon, Owner
Blackmon Construction Company
T. E. Brogdon, Consultant
First Citizens Bank and Trust Company
of South Carolina
H. Allen Cauthen, Jr., Consultant
Southern Energy, Inc.
Troy Elmore, Manager
Lancaster County Natural Gas Co.
Don T. Gardner, Vice President
First Citizens Bank and Trust Company
of South Carolina
William L. Harper, Retired
Francis M. Hough, Retired
L. H. Rowell, Retired
R. Lewis Surls, Jr., Retired
Jerry M. Williams, Senior Vice President
First Citizens Bank and Trust Company
of South Carolina
Michael G. Williams, Partner-Owner
Mike Willimas Builders
Landrum
James B. Cantrell, Retired
A. B. Chesnutt, Chesnutt Insulation Associates
H. Lloyd Howard, Attorney-at-Law
John F. Lawrence, Editor
Landurm News Leader
E. Hite Miller, Jr., Vice President
First Citizens Bank and Trust Company
of South Carolina
John L. Petty, Petty Funeral Home
Robert E. Walker, SC House of Representative
Landrum Insurance Agency
Paul D. Walters, Dentist
Dr. R. Bradford Whitney, MD
Whitney, Smith & Epstein, MD's PC
Lexington
Carolyn Brooks, Owner
Harman-Bennett Company
Stanford W. Dawsey, Vice President
First Citizens Bank and Trust Company
of South Carolina
James W. Johns
James Johns & Associates
J. Thomas Ledbetter, Senior Director
Pirelli Cable Corporation
James B. McFarland, Builder
Associated Realty
William E. Payne, Jr., Agent
Allstate Insurance Company
Byron D. Sistare, Sr., Appraiser
Sistare Appraisal Services
Phillip M. Spangler, Owner
Four Corners Art & Framing
Lugoff
Charles B. Baxley, Attorney-at-Law
William E. Gore, Jr., Vice President
First Citizens Bank and Trust Company
of South Carolina
Jean M. Larkin, Owner
Frogden Farms
C. Harold Varn, Jr., Dentist
J. Mack Willetts, President
Town and Country
Russell E. Wright, CPA, Owner.
Russell E. Wright, CPA
Lyman
Rita N. Allison, SC House of Representative
Special Program Coordinator
Springs Industries
Robert N. Fogel, Mayor
Town of Lyman
Tony G. Gillespie, Sales Representative
Wolf Gordon, Inc.
William J. Groce, Consultant
Town of Lyman
Willie Murphy, Sr., Senior Development
Technician
Cryovac
Simone N. Pace, Sales Director
Mary Kay Cosmetics
Terry K. Phillips, Vice President
First Citizens Bank and Trust Company
of South Carolina
Marion
Cheryl Allread, Assistant Superintendent
Marion School District One
James A. Blake, Retired
Marion School District One
Gaynell G. Dingle, Owner
Gaynell Dingle, CPA
Thomas E. Fuller, Executive Director
Marion County Medical Center
Richard M. Lane, Vice President
First Citizens Bank and Trust Company
of South Carolina
Joseph W. Lear, Plant Manager
Sara Lee Hosiery
Warren H. Wells, Owner
MI Professional Management
Myrtle Beach
Martin A. Bellamy
Broker-in-Charge/Residential Projects
Manager
Burroughs & Chapin Co., Inc.
John D. Brown, Jr., Vice President
First Citizens Bank and Trust Company
of South Carolina
Robert M. Grissom, Consultant
Coastal Carolina University
Ralph G. Lewis, President/Broker-in-Charge
Century 21-Seacoast Realty, Inc.
P. Wayne Mumford, Attorney/Partner
McCutchen, Mumford and Vaught, PA
Barry R. Sivery, Controller/Senior Financial Officer
Burroughs & Chapin Company, Inc.
Clifford H. Tall, Attorney
Law Offices of Clifford Tall
Dr. Thomas A. Whitaker, MD, Ophthalmologist/
Partner
Eastern Carolina Regional Eye Center
Crain E. Woods, Councilman
City of Myrtle Beach
Nichols
Gerald M. Bane, Assistant Vice President
First Citizens Bank and Trust Company
of South Carolina
James A. Battle, Jr., Vice President and Treasurer
J. R. Battle and Company
James M. Devers, Jr., President
Nichols Farm Supply, Inc.
James M. Devers, III, Vice President
Nichols Farm Supply, Inc.
President
D & R Sunny Mart Convenience Store
Owner
D & D Car Washes & Laundromat
D. H. Jordan, Retired Farmer
Randy F. Lovett, Tobacco Farmer
Big L Warehouse
North Charleston
Alvie R. Evans, President
Evans Development Corp.
G. Phillip Murphy, Real Estate Developer/Owner
Phil-Jo Construction Company
G. Phillip Murphy Realty
James A. Rock, President
Byroc Insulation Supply, Inc.
Pacolet
B. Rodgers Berry, Owner
R&R Farms
Catherine G. Dunnaway, Assistant Vice President
First Citizens Bank and Trust Company
of South Carolina
John Earl Hogan, Retired
Joanne G. Jumper, College Professor
Anderson College
Lanny F. Littlejohn, Sr. President
Littlejohn Lumber & Building Supplies,
Inc.
Louise Rochester, Post Mistress
Pacolet Mills Post Office
Otis Smith, Sr., Retired
Pageland
Thomas F. Agerton, Owner
Pageland Auto Parts
Dr. Billy C. Blakeney, MD, Physician
C. Hamilton Hutto, Vice President
First Citizens Bank and Trust Company
of South Carolina
Perry L. Mungo, President
P. F. And Perry L. Mungo, Inc.
Roddy W. Outen, President
Jefferson Barns, Inc.
Henry David Pigg, III, Owner
Pigg and Catoe Farm
Ogden C. Sutton, President
Sutton Funeral Home, Inc.
Carl M. Trucker, III, President
C. M. Tucker Lumber Company
39
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
Rock Hill
Winston R. Kelley, District Manager
Catawba Area of Duke Power Co.
Judy A. Pinner, President
Preferred Billing and Management Service
Dr. E. Neal Powell, MD
Rock Hill Orthopaedic Clinic, PA
J. Gary Simrill, Consultant
Arrow Moving and Storage, Inc.
SC House of Representative
Dennis J. Stuber, Vice President
First Citizens Bank and Trust Company
of South Carolina
Joseph T. Williams, III, Vice President
Williams Motors
Salem
Joseph J. Antonette, Retired
Lawrence J. Bloomer, Manager
Keowee Division Crescent Land and Timber
Judy Hines, Owner
Talk of the Town Beauty Salon
Saluda
Ted L. Coleman, Farmer
Big Creek Hill Farms
Lester F. Hembel, Retired
Fred M. Parkman, President
Parkman's Pharmacy, Inc.
Ralph N. Riley, Owner
Riley Family Practice Associates, PA
William H. Rushton, Jr., Vice President
First Citizens Bank and Trust Company
of South Carolina
C. David Sawyer, Jr., Family Court Judge
J. Claude Wheeler, Jr., Dairy and Beef Cattle
Farmer
P. S. White, Jr., Attorney-at-Law
Sharon
William B. Arthur, Vice President
First Citizens Bank and Trust Company
of South Carolina
James Charles Bankhead, Jr., Retired
John I. Chason, Retired
Phillip D. Faulkner, Assistant Vice President
First Citizens Bank and Trust Company
of South Carolina
Jay Gorley, President/Owner
Northwestern, Inc.
W. Park Thomson, Retired
W. L. Whitesides, Jr., Whitesides Company
William S. Wilkerson, III, President
John L. Gaddy Enterprises, Inc.
Spartanburg
Wallace W. Brawley, Consultant
First Citizens Bank and Trust Company
of South Carolina
Howard B. Carlisle, III, Chairman of the Board
Printpak Industries, Inc.
Marvin Dupre Cole, Residential Builder and
Realtor
Imperial Developers
J. Howard Henderson, President
Copac, Inc.
Roland Jones, Attorney-at-Law
Ward Law Firm
Matz Lischerong, Founder and President
Primaknit, Inc. and Litex International
Pamela R. McCulley, Artist
Gaines H. Mason, Jr., Vice President
First Citizens Bank and Trust Company
of South Carolina
W. C. (Cliff) Neal, Vice President
Stevco Knit Fabrics Company
M. R. Price, Secretary/Treasurer
Price's Store for Men
Charles A. Spann, Sr., Retired
Dr. Joe R. Utley, M. D., Foothills Cardiothoracic
Bruce B. White, President
Fiber and Yarn Associates
St. George
Thomas O. Berry, Jr., Attorney-at-Law
Jerome S. Bilton, President
Jim Bilton Ford
James L. Hodges, Pharmacist
Cash Discount Drugs
Richard J. Rhode, Surveyor and Owner
Rhodes Land Surveying
D. Carl Walters, Jr., Vice President
First Citizens Bank and Trust Company
of South Carolina
Thomas J. Wamer, Funeral Director
Bryant Funeral Home
Summerville
William C. Collins, Editor & Publisher
Summerville Journal Scene
Todd M. Davenport, Stockbroker
Edward D. Jones Agency
Peggy O. McDaniel, Assistant Vice President
First Citizens Bank and Trust Company
of South Carolina
William M. Reeves, Jr., Headmaster
Pinewood Preparatory School
Michaele Rogers, Doris Dean Realty
R. Blanton Rosebrock, Vice President
First Citizens Bank and Trust Company
of South Carolina
Steve M. Sabback, Branch Manager
First Citizens Bank and Trust Company
of South Carolina
P. Frank Smith, Retired
R. Milton Thomas, III, Commercial Broker
Prudential Carolina Realty
Diane F. Wilson, People Places and Quilts
Trenton
E. Hite Miller, Sr., Chairman
First Citizens Bank and Trust Company
of South Carolina
Grace H. Satcher, Assistant Vice President
First Citizens Bank and Trust Company
of South Carolina
Julius M. Vann, Retired
West Columbia
Dr. R. B. Antley, Optometrist and Partner
Eye Associates of Cayce-West Columbia
Steven C. Cogburn, Jr., President and Owner
Cogburn's Restaurant
Kirk P. Robinson, Branch Officer
First Citizens Bank and Trust Company
of South Carolina
Russell B. Shealy, President Russell B. Shealy
Russell B. Shealy and Assoc.
Dr. Walter P. Witherspoon, Jr., Orthodontist
Westminster
Sammy W. Dickson, Manager of Finance
Blue Ridge Electric Cooperative
Jerry L. Smith, Pharmacist
James M. Stone, Poultry/Agriculture Producer
Whitmire
Dr. R. L. Bledsoe, Dentist
Tony A. Henderson, Management
Cone Mills
Janie A. Lusk, Branch Officer/Branch Manager
First Citizens Bank and Trust Company
of South Carolina
Cheryl Nichols, Nichols Tire Company
Rev. Dolphus Rayford, Minister
John F. Roche, Jr., Pharmacist
Roche Pharmacy
Williston
A. D. Gantt, Retired Physician
Freddie Houston, Sr., Supervisor
Owens Corning
Thomas R. Jackson, Retired Former President
Anderson Oil Company
Q. A. Kennedy, III, Retired
Lonnie E. McAlister, Owner
Faye's Jewelry
Frank M. Mizell, Vice President
First Citizens Bank and Trust Company
of South Carolina
Thomas R. Rivers, Mayor of Williston
Owner
Rivers Pharmacy
Jessie M. Schumpert, Mayor of Elko
Woodruff
William W. Baxley, Vice President
First Citizens Bank and Trust Company
of South Carolina
Dr. James M. Coker, Woodruff Eye Clinic
James M. Gibert, President
Gibert Co., Inc. (Gibert Realty Co.)
Dr. J. Elwyn James, Physician/Surgeon
James Wilmot Clinic
W. Rallie Liston, Principal
Woodruff High School
Perry C. Ouzts, Retired
G. Curtis Walker
B. J. Workman Memorial Hospital
Rand Wilson, Owner
Rand Wilson Insurance Agency
York
William B. Arthur, Vice President
First Citizens Bank and Trust Company
of South Carolina
Manning E. Biggers, President and Owner
Faith Realty Company, Inc.
Charles Bradford, Attorney-at-Law
Bradford and Bradford, PA
Dr. Thomas G. Dickson, Veterinarian
Dr. Gregory Greiner, Dentist
William M. Miller, President
Miller Insurance Services
William Perkins, Pharmacist
Eckerd Drugs
Ronald Wylie, Self-Employed
Health-Aid, Inc.
40
<PAGE>
Communities Served
Abbeville
James A. Timmerman, III
Vice President/City Executive
Aiken
Joe E. Lewis
Vice President/City Executive
Anderson
John B. Buice, Jr.
Vice President/Area Executive
Ballentine
Richard Pascal, Jr.
Assistant Vice President/Manager
Barnwell
John J. Sanders
Vice President/Area Executive
Beaufort
Douglas E. Henderson
Vice President/City Executive
Beech Island
Carol L. Albion
Branch Officer/Supervisor
Belvedere
Steven M. Phillips
Vice President/City Executive
Bennettsville
Laurie M. Norton
Manager
Bishopville
Bruce C. Snipes
Assistant Vice President/City Executive
Boiling Springs
Penny S. Guinn
Assistant Vice President/Manager
Calhoun Falls
Donald M. Rochelle
Assistant Vice President/Manager
Cayce
C. Brian McLane, Sr.
Assistant Vice President/Manager
Central
Jo Lynn McFadden
Assistant Vice President/Manager
Charleston
Dwight L Moody, Jr.
Vice President/Area Executive
Cheraw
Brian J. Mickleberry
Vice President/City Executive
Chester
C. Larry Haynes
Vice President/City Executive
Chesterfield
No Officer in Charge
Clemson
William B. Harley, Jr.
Vice President/City Executive
Clio
Derry W. McCormick
Vice President/City Executive
Columbia
Bernard L. Duke
Senior Vice President/Group Executive
Conway
John C. Griggs, Jr.
Vice President/City Executive
Cowpens
Linda D. Porter
Manager
Darlington
John H. Martin, III
Vice President/City Executive
Dillon
Charles S. McLaurin, III
Executive Vice President/
Retail Banking Executive
Eastover
Robert G. Woods
Assistant Vice President/Manager
Elgin
No Officer in Charge
Forest Acres
G. Eddie Wingard
Vice President/Commercial Lender
Fort Mill
David Macaulay
Vice President/City Executive
Florence
D. Leroy Bailey, Jr.
Vice President/Area Executive
Georgetown
Robert R. Martin, Jr.
Vice President/City Executive
Great Falls
John P. Davis
Vice President/Manager
Greenville
Donald L. Kiser
Vice President/City Executive
Greenwood
C. Sidney Abney
Vice President/City Executive
Hickory Grove
No Officer in Charge
Irmo
Lisa A. Moseley
Assistant Vice President/Manager
Jackson
L. Walker Padgett, Jr.
Vice President/Manager
Joanna
Wanda M. Prater
Branch Officer/Supervisor
Johnston
John C. Timmerman
Vice President/City Executive
Jonesville
Patricia V. Morrison
Manager
Kershaw
Nancy L. Taylor
Assistant Vice President/City Executive
Lake View
Edna R. Miller
Assistant Vice President/Manager
Lancaster
Don T. Gardner
Vice President/City Executive
Landrum
John W. Killough
Vice President/Manager
Laurens
Melanie Young
Assistant Manager
Lexington
Stanford W. Dawsey
Vice President/City Executive
Liberty
Y. Floyd Cousins
Assistant Vice President/Manager
Lugoff
William E. Gore, Jr.
Vice President/Manager
Lyman
Terry K. Phillips
Vice President/Manager
Marion
Richard M. Lane
Vice President/City Executive
Mauldin
Ted G. Sanders
Vice President/Manager
Moncks Corner
Dorothy C. Gatlin
Vice President/City Executive
Mount Pleasant
Andrew B. Thomas
Branch Officer/Commercial/Consumer Lender
Myrtle Beach
John D. Brown
Vice President/City Executive
New Ellenton
Dorothy E. Creech
Manager
Nichols
Gerald M. Bane
Vice President/City Executive
North
Betty H. Williamson
Branch Officer/Manager
North Charleston
Willard S. Hewitt
Vice President/Branch Coordinator
Pacolet
Catherine G. Dunnaway
Assistant Vice President/Manager
Pageland
C. Hamilton Hutto
Vice President/City Executive
Pawleys Island
Raymond O. Yonkers
Vice President/Manager
Powdersville
Celia M. Thompson
Vice President/Manager
Richburg/Lewisville
Russell L. Workman
Assistant Vice President/Manager
Ridge Spring
Donna J. Wise
Assistant Vice President/Supervisor
Rock Hill
Dennis J. Stuber
Vice President/Area Executive
Salem
No Officer in Charge
Saluda
William H. Rushton, Jr.
Vice President/City Executive
Sharon
Phillip D. Faulkner
Assistant Vice President/Manager
Six Mile
No Officer in Charge
Socastee
Charles S. Page
Assistant Vice President/Manager
South of the Border
Catherine B. Baxley
Branch Officer/Supervisor
Spartanburg
Gaines H. Mason, Jr.
Vice President/City Executive
Summerville
R. Blan Rosebrock
Vice President/City Executive
Sumter
Richard M. Knowlton, Jr.
Vice President/City Executive
St. George
D. Carl Walters, Jr.
Vice President/City Executive
Tega Cay
Christina L. Hines
Manager
Trenton
No Officer in Charge
Ware Shoals
David A. Estes
Assistant Vice President/Manager
West Columbia
Kirk P. Robinson
Branch Officer/Manager
Westminister
Paul A. Busey
Branch Officer/Manager
Whitmire
Janie A. Lusk
Branch Officer/Manager
Williston
Frank M. Mizell
Vice President/City Executive
Woodruff
William W. Baxley
Vice President/Manager
York
William B. Arthur
Vice President/City Executive
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
FORM 10-K
</LEGEND>
<CIK> 0000708848
<NAME> FIRST CITIZENS
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 126,276
<INT-BEARING-DEPOSITS> 7,700
<FED-FUNDS-SOLD> 11,900
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 31,913
<INVESTMENTS-CARRYING> 556,496
<INVESTMENTS-MARKET> 558,228
<LOANS> 1,428,437
<ALLOWANCE> (26,135)
<TOTAL-ASSETS> 2,250,477
<DEPOSITS> 1,879,420
<SHORT-TERM> 184,168
<LIABILITIES-OTHER> 13,988
<LONG-TERM> 14,483
0
3,282
<COMMON> 4,646
<OTHER-SE> 150,490
<TOTAL-LIABILITIES-AND-EQUITY> 2,250,477
<INTEREST-LOAN> 118,427
<INTEREST-INVEST> 31,207
<INTEREST-OTHER> 1,503
<INTEREST-TOTAL> 151,137
<INTEREST-DEPOSIT> 56,844
<INTEREST-EXPENSE> 65,474
<INTEREST-INCOME-NET> 85,663
<LOAN-LOSSES> 4,241
<SECURITIES-GAINS> 51
<EXPENSE-OTHER> 72,658
<INCOME-PRETAX> 33,545
<INCOME-PRE-EXTRAORDINARY> 33,545
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,770
<EPS-PRIMARY> 23.24
<EPS-DILUTED> 23.24
<YIELD-ACTUAL> 7.95
<LOANS-NON> 2,653
<LOANS-PAST> 1,497
<LOANS-TROUBLED> 78
<LOANS-PROBLEM> 21,012
<ALLOWANCE-OPEN> 23,483
<CHARGE-OFFS> 3,291
<RECOVERIES> 1,702
<ALLOWANCE-CLOSE> 26,135
<ALLOWANCE-DOMESTIC> 26,135
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 8,914
</TABLE>
