FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended June 30, 1998 Commission File Number 0-11172
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
SOUTH CAROLINA 57-0738665
-------------- ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1230 MAIN STREET
COLUMBIA, SOUTH CAROLINA 29201
------------------------ -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (803) 733-3456
---------------
NO CHANGE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES [ X ] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at June 30, 1998
----- ----------------------------
VOTING COMMON STOCK, $5.00 PAR VALUE 891,748 SHARES
NON-VOTING COMMON STOCK, $5.00 PAR VALUE 36,409 SHARES
Page 1
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FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA AND SUBSIDIARIES
- --------------------------------------------------------------------------------
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
<S> <C>
CONSOLIDATED BALANCE SHEET - UNAUDITED (dollars in thousands)
JUNE 30, December 31, June 30,
1998 1997 1997
-------- ----------- --------
ASSETS
Cash and due from banks $96,354 $126,276 $103,765
Interest-bearing deposits in financial institutions 0 7,700 8,950
Investment securities:
Held-to-maturity 584,746 556,496 506,354
Available-for-sale 37,927 31,913 19,247
-------- ----------- --------
Total securities 622,673 588,409 525,601
Federal funds sold 0 11,900 21,800
Gross loans 1,506,088 1,428,437 1,347,074
Less: Reserve for loan losses (27,558) (26,135) (24,916)
-------- ----------- --------
Net loans 1,478,530 1,402,302 1,322,158
Other real estate owned 568 572 535
Other assets 123,393 113,318 105,955
-------- ----------- --------
TOTAL ASSETS $2,321,518 $2,250,477 $2,088,764
=========== =========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Demand $341,986 $346,934 $315,415
Time & Savings 1,563,427 1,532,486 1,468,839
--------- --------- ---------
Total deposits 1,905,413 1,879,420 1,784,254
Federal funds purchased 4,000 0 0
Securities sold under repurchase agreements 177,806 184,168 139,514
Long-term debt:
Company-obligated mandatorily redeemable capital securities
of subsidiary trust holding solely junior subordinated debentures
of the Company 50,000 0 0
Term loan 0 14,483 8,750
Other liabilities 15,014 13,988 12,953
--------- --------- ---------
TOTAL LIABILITIES 2,152,233 2,092,059 1,945,471
Stockholders' Equity:
Preferred stock 3,282 3,282 3,282
Non-voting common stock - $5.00 par value, authorized
1,000,000; issued and outstanding June 30, 1998,
December 31, 1997 and June 30, 1997 - 36,409 182 182 182
Voting common stock - $5.00 par value, authorized 2,000,000;
issued and outstanding June 30, 1998 - 891,748,
December 31, 1997 and June 30, 1997 - 892,813 4,459 4,464 4,464
Surplus 55,000 55,000 55,000
Undivided profits 93,789 82,287 70,304
Accumulated other comprehensive income 12,573 13,203 10,061
--------- --------- ---------
TOTAL STOCKHOLDERS' EQUITY 169,285 158,418 143,293
--------- --------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,321,518 $2,250,477 $2,088,764
=========== =========== ==========
</TABLE>
Page 2
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FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF INCOME - UNAUDITED
(DOLLARS IN THOUSANDS, EXCEPT FOR PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
<S> <C>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------------ -----------------------------------
1998 1997 % 1998 1997 %
---------- ---------- ---------- ---------- ---------- -----------
INTEREST INCOME AND FEES:
Loans $32,065 $29,109 10.15 $62,978 $56,557 11.35
United States Government obligations 8,360 6,815 22.67 16,109 13,209 21.95
Mortgage-backed securities 15 23 (34.78) 32 47 (31.91)
Tax-exempt securities 390 501 (22.16) 840 1,046 (19.69)
Other securities and federal funds sold 633 474 33.54 1,506 1,277 17.93
------- ------- ------- -------
41,463 36,922 12.30 81,465 72,136 12.93
------- ------- ------- -------
INTEREST EXPENSE:
Deposits 14,975 13,984 7.09 29,684 27,194 9.16
Short-term borrowings 2,421 1,829 32.37 4,879 3,751 30.07
Long-term borrowings 1,145 184 522.28 1,507 373 304.02
------- ------- ------- -------
18,541 15,997 15.90 36,070 31,318 15.17
------- ------- ------- -------
Net interest income 22,922 20,925 9.54 45,395 40,818 11.21
Provision for loan losses 2,001 1,403 42.62 2,282 2,400 (4.92)
------- ------- ------- -------
Net interest income after
provision for loan losses 20,921 19,522 7.17 43,113 38,418 12.22
------- ------- ------- -------
NONINTEREST INCOME:
Service charges on deposit accounts 4,168 3,384 23.17 7,889 6,656 18.52
Fees for other customer services 2,443 2,153 13.47 4,737 4,106 15.37
Gain on sale of securities 28 48 (41.67) 28 48 (41.67)
Other 636 497 27.97 1,263 952 32.67
------- ------- ------- -------
7,275 6,082 19.62 13,917 11,762 18.32
------- ------- ------- -------
NONINTEREST EXPENSE:
Salaries and employee benefits 8,918 8,349 6.82 17,668 16,289 8.47
Net occupancy expense 710 682 4.11 1,458 1,342 8.64
Furniture and equipment expense 476 379 25.59 910 799 13.89
Depreciation expense 1,230 1,033 19.07 2,607 1,945 34.04
Amortization of intangibles 1,905 2,211 (13.84) 3,919 4,340 (9.70)
Other 6,328 5,370 17.84 12,096 10,407 16.23
------- ------- ------- -------
19,567 18,024 8.56 38,658 35,122 10.07
------- ------- ------- -------
Income before income taxes 8,629 7,580 13.84 18,372 15,058 22.01
Applicable income taxes 2,965 2,686 10.39 6,389 5,356 19.29
------- ------- ------- -------
NET INCOME $5,664 $4,894 15.73 $11,983 $9,702 23.51
======= ======= ======= =======
- --------------------------------------------------------------------------------------------------------------------------
NET INCOME PER COMMON SHARE - BASIC $6.01 $5.22 15.08 $12.81 $10.35 23.74
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING 928,819 929,222 (0.04) 929,024 929,222 (0.02)
</TABLE>
3
<PAGE>
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - UNAUDITED
(dollars in thousands)
<TABLE>
<CAPTION>
<S> <C>
Non- Accumulated Total
Voting Voting Other Stock-
Preferred Common Common Undivided Comprehensive holders'
Stock Stock Stock Surplus Profits Income Equity
-------- -------- --------- --------- --------- ------------- ----------
Balance at December 31, 1996 $3,282 $182 $4,464 $55,000 $60,688 $9,025 $132,641
Comprehensive income:
Net income 9,702
Change in unrealized gain
on investment securities
available-for-sale, net of taxes
of $558 1,036
Total comprehensive income 10,738
Preferred stock dividends (86) (86)
----- ----- ----- ------ ------ ------ -------
Balance at June 30, 1997 3,282 182 4,464 55,000 70,304 10,061 143,293
Comprehensive income:
Net income 12,068
Change in unrealized gain
on investment securities
available-for-sale, net of taxes
of $1,692 3,142
Total comprehensive income 15,210
Preferred stock dividends (85) (85)
----- ----- ----- ------ ------ ------ -------
Balance at December 31, 1997 3,282 182 4,464 55,000 82,287 13,203 158,418
Comprehensive income:
Net income 11,983
Change in unrealized loss
on investment securities
available-for-sale, net of taxes
of ($339) (630)
Total comprehensive income 11,353
Reacquired voting common stock (5) (396) (401)
Preferred stock dividends (85) (85)
------- ----- ------- -------- -------- -------- --------
Balance at June 30, 1998 $3,282 $182 $4,459 $55,000 $93,789 $12,573 $169,285
======= ===== ======= ======== ======== ======== ========
</TABLE>
Page 4
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FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS - UNAUDITED (dollars in thousands)
<TABLE>
<CAPTION>
<S> <C>
Six Months Ended
June 30,
--------------------------
1998 1997
--------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $11,983 $9,702
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 2,282 2,400
Depreciation and amortization 6,523 6,247
Amortization/(accretion) of investment securities 240 (140)
Provision for deferred income taxes (13,504) (12,441)
Gains on sales of premises and equipment (60) (5)
Increase in interest income accrued, not collected (2,164) (364)
Increase in accrued interest payable 416 405
Originations of loans held for resale (69,608) (31,167)
Proceeds from sales of loans held for resale 69,029 36,123
(Gains)/losses on sales of loans held for resale (240) 98
Decrease in other assets 12,467 10,548
Increase/(decrease) in other liabilities 610 (124)
--------------------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 17,974 21,282
==========================
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans (77,691) (80,624)
Proceeds from maturities of investment securities, held to maturity 34,523 129,163
Purchases of investment securities, held to maturity (62,998) (167,579)
Purchases of investment securities, available-for-sale (6,998) 0
Net decrease in interest bearing deposits in financial institutions 7,700 2,350
Decrease /(increase) in federal funds sold 11,900 (21,800)
Proceeds from sales of premises and equipment 901 321
Purchases of premises and equipment (13,448) (4,351)
Decrease/(increase) in other real estate owned 4 (17)
Net decrease in intangible assets (451) (48)
Purchase of institutions, net of cash acquired 0 57,588
--------------------------
NET CASH USED IN INVESTING ACTIVITIES (106,558) (84,997)
==========================
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 25,993 58,349
(Decrease)increase in federal funds purchased and securities sold
under agreements to repurchase (2,362) 6,623
Net increase in long term borrowing 52,000 0
Principal repayments on long-term debt (16,483) (1,250)
Cash dividends paid (85) (86)
Reacquired common stock (401) 0
--------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 58,662 63,636
==========================
DECREASE IN CASH AND DUE FROM BANKS (29,922) (79)
CASH AND DUE FROM BANKS AT BEGINNING OF PERIOD 126,276 103,844
--------------------------
CASH AND DUE FROM BANKS AT END OF PERIOD $96,354 $103,765
==========================
</TABLE>
Page 5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of First Citizens Bancorporation of South Carolina, Inc.
("Bancorporation"), significant accounting policies is set forth in Note 1 to
the Consolidated Financial Statements in Bancorporation's Annual Report on Form
10-K for 1997. The significant accounting policies used during the current
quarter are unchanged from those disclosed in the 1997 Annual Report, except for
the following:
In June 1997, the Financial Accounting Standards Board (FASB") issued Statement
of Financial Accounting Standards ("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 Bancorporation has adopted
SFAS No. 131 effective January 1, 1998. Provisions of this statement dictate
that segmented information need not be applied to the interim financial
statements in the initial year of application; therefore, Bancorporation's
statements do not reflected segmented reporting.
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. Bancorporation has adopted SFAS No. 132 effective January 1,
1998.
On June 15, 1998, FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities". SFAS No. 133 requires that all derivative
instruments be recorded on the balance sheet at their fair value. Changes in the
fair value of derivatives are recorded each period in current earnings or other
comprehensive income depending on whether a derivative is designated as part of
a hedge transaction and, if it is, the type of hedge transaction. Bancorporation
anticipates due to non-use of derivative instruments, the adoption of SFAS No.
133 will not have any significant effect on the results of operations.
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 has 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.
Actual expense for the first six months of 1998 is $122.
Page 6
<PAGE>
MANAGEMENT'S OPINION
The preceding financial statements and the notes thereto are unaudited; however,
in the opinion of management, all adjustments comprising all normal recurring
accruals necessary for a fair presentation of financial statements have been
included. Certain amounts in prior periods have been reclassified to conform to
the 1998 presentation.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- --------------------------------------------------------------------------------
SUMMARY (dollars in thousands)
<TABLE>
<CAPTION>
Quarter Ended Six months ended
June 30, June 30,
------------------------- -----------------------
SELECTED AVERAGE BALANCES: 1998 1997 1998 1997
- -------------------------- ---- ---- ---- ----
<S> <C> <C> <C> <C>
Total assets $2,327,745 $2,034,822 $2,296,541 $2,011,913
Gross loans 1,472,238 1,329,859 1,452,337 1,304,793
Short-term borrowed funds 196,325 150,036 200,731 155,521
Long-term debt 55,735 8,868 37,759 9,250
Noninterest bearing deposits 325,916 292,568 322,207 284,400
Total deposits 1,889,619 1,720,572 1,876,207 1,694,413
Stockholders' equity 170,030 141,394 166,151 138,636
QUALITY DATA:
Nonperforming assets 3,334 3,262 3,334 3,262
Net chargeoffs 749 584 859 967
Reserve for loan losses 27,558 24,916 27,558 24,916
Gross loans 1,506,088 1,347,074 1,506,088 1,347,074
RATIOS:
Return on assets .97% .95% 1.04% .96%
Return on equity 13.26% 13.85% 14.42% 14.00%
Nonperforming assets to gross loans .22% .25% .22% .25%
Annualized net chargeoffs to gross
loans .20% .18% .11% .15%
Reserve for loan losses to gross
loans 1.83% 1.85% 1.83% 1.85%
Reserve for loan losses times
nonperforming assets 8.27X 7.64X 8.27X 7.64x
</TABLE>
INVESTMENT SECURITIES (dollars in thousands)
As of June 30, 1998, the investment portfolio was $622,673 compared to $525,601
for the same period in 1997. 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 89.55% U.S. Government
obligations as of June 30, 1998 as compared to 89.34% for the same period in
1997. The remainder of the investment portfolio primarily consists of municipal
bonds owned by First-Citizens Bank and Trust Company of South Carolina ("Bank")
and equity securities owned by Bancorporation.
Page 7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
- --------------------------------------------------------------------------------
LOANS
Growth in loans was attributed primarily to strong loan demand due to favorable
interest rates. The loan portfolio mix did not change significantly and no major
change is expected in 1998. The growth was funded by an increase in core
deposits, short-term borrowings and long-term borrowing.
CAPITAL RATIOS
June 30,
------------------------
1998 1997
---- ----
Tier I leverage ratio 8.21% 5.76%
Risk based capital ratio total 14.39% 10.38%
Tier I 12.98% 8.95%
Tier II 1.41% 1.43%
Regulatory agencies divide capital into Tier I, consisting of stockholders'
equity less ineligible intangible assets, and Tier II, consisting of the
allowable portion of the reserve for loan losses and certain long-term debt.
Capital adequacy is measured by applying both capital levels to the Bank's
risk-adjusted assets and off-balance sheet items. Regulatory requirements
presently specify that Tier I capital should exclude the market appreciation or
depreciation of securities available-for-sale arising from valuation adjustments
under SFAS No. 115. In addition to these capital ratios, regulatory agencies
have established a Tier I leverage ratio which measures Tier I capital to
average assets less ineligible intangible assets.
Regulatory guidelines require a minimum total capital to risk-adjusted assets
ratio of 8 percent (with 50 percent consisting of tangible common stockholders'
equity) and a minimum Tier I leverage ratio of 3 percent. Banks which meet or
exceed a Tier I ratio of 6 percent, a total risk based capital ratio of 10
percent and a Tier I leverage ratio of 5 percent are considered well-capitalized
by regulatory standards.
Included in the Tier I calculation are Trust Preferred Securities issued by a
new subsidiary, FCB/SC Capital Trust I. The new subsidiary was formed on March
12, 1998 as a statutory business trust and has issued and sold $50 million in
Trust Preferred securities, the proceeds of which were used to purchased a like
amount of 8.25% junior subordinated deferrable interest debentures from
Registrant. These securities have a 30-year maturity, with distribution thereon
payable semi-annually at an annual rate of 8.25%.
NET INTEREST INCOME (dollars in thousands)
The increase in net interest income in the second quarter was due to growth in
interest-earning assets, primarily commercial and residential mortgage loans.
Page 8
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<TABLE>
<CAPTION>
<S> <C>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
- -------------------------------------------------------------------------------------------------
NET INTEREST INCOME (CONTINUED):
TAXABLE EQUIVALENT RATE/VOLUME VARIANCE ANALYSIS* (dollars in thousands)
QUARTER ENDED JUNE 30,
----------------------
Average Volume Interest Average Rate Variance Due To
-------------- -------- ------------ ---------------
1998 1997 1998 1997 1998 1997 Rate Volume Variance
---- ---- ---- ---- ---- ---- ---- ------ --------
INTEREST-EARNING ASSETS:
$1,472,238 $1,329,859 $32,179 $29,351 8.77 8.85 Loans ($294) $3,122 $2,828
613,726 486,838 8,452 6,897 5.52 5.68 Taxable investment securities (196) 1,751 1,555
27,279 35,867 601 772 8.81 8.61 Non-taxable investment securities 18 (189) (171)
32,373 17,733 439 238 5.44 5.38 Federal funds sold 2 199 201
7,023 9,568 117 177 6.68 7.42 Other earning assets (17) (43) (60)
---------- ---------- ------- ------- ----- ----- ------
2,152,639 1,879,865 41,788 37,435 7.79 7.99 Total interest-earning assets (487) 4,840 4,353
---------- ---------- ------- ------- ----- ----- ------
NONINTEREST-EARNING ASSETS:
82,785 76,712 Cash and due from banks
66,822 52,270 Premises and equipment
25,499 25,975 Other, less reserve for loan losses
------- -------
175,106 154,957 Total noninterest-earning assets
------- -------
$2,327,745 $2,034,822 TOTAL ASSETS
=========== ===========
INTEREST-BEARING LIABILITIES:
$1,563,703 $1,428,004 $14,975 $13,985 3.84 3.93 Deposits ($313) $1,303 $990
Federal funds purchased and securities
196,325 150,036 2,421 1,829 4.95 4.89 sold under agreements to repurchase 19 573 592
55,735 8,868 1,145 184 8.24 8.32 Long-term debt (4) 965 961
------- ------- ------ ------ ----- ----- ------
1,815,763 1,586,908 18,541 15,998 4.10 4.04 Total interest-bearing liabilities (298) 2,841 2,543
------- ------- ------ ------ ----- ----- ------
NONINTEREST-BEARING LIABILITIES:
325,916 292,568 Demand deposits
16,036 13,952 Other liabilities
------- -------
341,952 306,520 Total noninterest-bearing liabilities
------- -------
170,030 141,394 Stockholders' equity
------- -------
TOTAL LIABILITIES AND
$2,327,745 $2,034,822 STOCKHOLDERS' EQUITY
=========== ===========
3.69 3.95 Interest rate spread
==== ====
$23,247 $21,437 4.33 4.57 Net Interest Margin ($189) $1,999 $1,810
======== ======== ===== ==== ====== ======= ======
* Interest income and yields are presented on a fully taxable equivalent basis
using the federal income tax rate and state tax rates, as applicable.
Page 9
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
- -------------------------------------------------------------------------------------------------
NET INTEREST INCOME (CONTINUED):
TAXABLE EQUIVALENT RATE/VOLUME VARIANCE ANALYSIS* (DOLLARS IN THOUSANDS)
SIX MONTHS ENDED JUNE 30,
-------------------------
Average Volume Interest Average Rate Variance Due To
-------------- -------- ------------ ---------------
1998 1997 1998 1997 1998 1997 Rate Volume Variance
---- ---- ---- ---- ---- ---- ---- ------ --------
INTEREST-EARNING ASSETS:
$1,452,337 $1,304,793 $63,211 $56,983 8.78 8.81 Loans ($249) $6,477 $6,228
589,500 470,977 16,297 13,384 5.57 5.73 Taxable investment securities (388) 3,301 2,913
29,628 37,662 1,293 1,610 8.73 8.55 Non-taxable investment securities 34 (351) (317)
41,096 31,139 1,110 804 5.45 5.21 Federal funds sold 35 271 306
7,360 10,227 240 343 6.58 6.76 Other earning assets (9) (94) (103)
----- ------ --- --- ---- ---- -------------------- --- ---- -----
2,119,921 1,854,798 82,151 73,124 7.81 7.95 Total interest-earning assets (577) 9,604 9,027
NONINTEREST-EARNING ASSETS:
85,707 78,746 Cash and due from banks
64,386 51,546 Premises and equipment
26,527 26,823 Other, less reserve for loan losses
------ ------
176,620 157,115 Total noninterest-earning assets
------- -------
$2,296,541 $2,011,913 TOTAL ASSETS
========== ==========
INTEREST-BEARING LIABILITIES:
$1,554,000 $1,410,013 $29,684 $27,195 3.85 3.89 Deposits ($283) $2,772 $2,489
Federal funds purchased and securities
200,731 155,521 4,879 3,750 4.90 4.86 sold under agreements to repurchase 21 1,108 1,129
37,759 9,250 1,507 373 8.05 8.13 Long-term debt (13) 1,147 1,134
------ ----- ----- --- ---- ----- -----
1,792,490 1,574,784 36,070 31,318 4.06 4.01 Total interest-bearing liabilities (275) 5,027 4,752
------ ------ ----- ----- -----
NONINTEREST-BEARING LIABILITIES:
322,207 284,400 Demand deposits
15,693 14,093 Other liabilities
------ ------
337,900 298,493 Total noninterest-bearing liabilities
------- -------
166,151 138,636 Stockholders' equity
------- -------
TOTAL LIABILITIES AND
$2,296,541 $2,011,913 STOCKHOLDERS' EQUITY
=========== ===========
3.75 3.94 Interest rate spread
==== ====
$46,081 $41,806 4.38 4.54 Net interest margin ($302) $4,577 $4,275
======= ======= ==== ==== ===== ====== ======
</TABLE>
* Interest income and rates are presented on a fully taxable equivalent basis
using the federal income tax rate and state tax rates, as applicable.
Page 10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
- --------------------------------------------------------------------------------
PROVISION AND RESERVE FOR LOAN LOSSES (dollars in thousands)
The provision for loan losses reflects management's assessment of the adequacy
of the reserve for loan losses to absorb potential losses inherent in the loan
portfolio due to a decline in credit conditions or change in risk profile.
Factors considered in this assessment include growth and mix of the loan
portfolio, current and anticipated economic conditions and historical credit
loss experience.
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ------------------
RESERVE FOR LOAN LOSSES: 1998 1997 1998 1997
---- ---- ---- ----
Balance at beginning of period $26,306 $24,097 $26,135 $23,483
Provision for loan losses 2,001 1,403 2,282 2,400
------ ------ ------ ------
Chargeoffs (974) (1,025) (1,683) (1,643)
Recoveries 225 441 824 676
------ ------ ------ ------
Net chargeoffs (749) (584) (859) (967)
------ ------ ------ ------
Balance at end of period $27,558 $24,916 $27,558 $24,916
------- ------- ------- -------
Nonperforming assets $ 3,334 $ 3,262 $ 3,334 $3,262
Annualized net chargeoffs to:
Average loans .20% .18% .11% .15%
Loans at end of period .20% .18% .11% .14%
Reserve for loan losses 10.87% 9.38% 6.23% 7.76%
NONINTEREST INCOME AND EXPENSE (dollars in thousands)
Total noninterest income increased $1,213 or 20.10% and $2,175 or 18.57%,
respectively, for the quarter and six months ended June 30, 1998. Most of the
increase was due to an increase in service charges on deposit accounts.
Total noninterest expense was up $1,543 or 8.56% and $3,536 or 10.07%,
respectively, for the quarter and six months ended June 30, 1998. Most of the
increase was due to the growth in the number of branches and related increases
in salaries, employee benefits and other operating expenses.
Page 11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
Registrant and its subsidiaries are not parties to, nor is any of their property
the subject of, any material or other pending legal proceeding, other than
ordinary routine proceedings incidental to their business.
Item 2. Changes in Securities.
Not Applicable.
Item 3. Defaults upon Senior Securities.
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
The annual Meeting of Shareholders of Registrant was held on April 22, 1998. At
the meeting, Shareholders voted to fix the number of Directors at 18 for 1998,
and the 18 Nominees named in Registrant's Proxy Statement, dated March 20, 1998,
were elected as Directors for a term of 1 year. No other matters were voted on
at the meeting, and there was no solicitation in opposition to management's
Nominees listed in the Proxy Statement.
Item 5. Other Information.
On July 13, 1998, Bancorporation's principal subsidiary, First-Citizens Bank and
Trust Company of South Carolina ("FCB/SC"), entered into an inter-agency
agreement with First-Citizens Bank & Trust Company, Raleigh, North Carolina
("FCB/NC"), whereby customers of FCB/SC now can make deposits, cash checks, and
make loan payments at branches of FCB/NC, and vice versa. Although the two banks
have similar names and are affiliates, they are separate entities, each with its
own respective holding company.
On July 22, 1998, the Board of Directors approved resolutions that authorized
management of Bancorporation to purchase from time to time, through private or
open market transactions, shares of Bancorporation's outstanding capital stock.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
11 Statement Re Computation of Earnings Per Share
27 Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended June 30, 1998.
Page 12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST CITIZENS BANCORPORATION
OF SOUTH CAROLINA, INC.
(Registrant)
Dated: 7/30/98 By: /s/ Jay C. Case
------------- ----------------------------------
Jay C. Case, Executive Vice President
(Chief Financial Officer)
Page 13
ITEM 6. (A)
EXHIBIT 11
STATEMENT RE COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN THOUSANDS, EXCEPT FOR EARNINGS PER SHARE)
<TABLE>
<CAPTION>
QUARTER ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------ ---------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income $5,664 $4,894 $11,983 $9,702
Less: Preferred stock dividend 43 43 85 86
------- ------- ------- -------
Net income applicable to common stock $ 5,621 $ 4,851 $11,898 $9,616
Weighted average common shares
outstanding 928,819 929,222 929,024 929,222
Earnings per common share $6.01 $5.22 $12.81 $10.35
</TABLE>
Page 14
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
FORM 10-Q
</LEGEND>
<CIK> 0000708848
<NAME> FIRST CITIZENS
<MULTIPLIER> 1,000
<S> <C>
<FISCAL-YEAR-END> Dec-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<PERIOD-TYPE> 3-MOS
<CASH> 96,354
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 37,927
<INVESTMENTS-CARRYING> 584,746
<INVESTMENTS-MARKET> 624,158
<LOANS> 1,506,088
<ALLOWANCE> (27,558)
<TOTAL-ASSETS> 2,321,518
<DEPOSITS> 1,905,413
<SHORT-TERM> 177,806
<LIABILITIES-OTHER> 15,014
<LONG-TERM> 50,000
<COMMON> 4,641
0
3,282
<OTHER-SE> 161,362
<TOTAL-LIABILITIES-AND-EQUITY> 2,321,518
<INTEREST-LOAN> 62,978
<INTEREST-INVEST> 16,981
<INTEREST-OTHER> 1,506
<INTEREST-TOTAL> 81,465
<INTEREST-DEPOSIT> 29,684
<INTEREST-EXPENSE> 36,070
<INTEREST-INCOME-NET> 45,395
<SECURITIES-GAINS> 28
<LOAN-LOSSES> 2,282
<EXPENSE-OTHER> 38,658
<INCOME-PRETAX> 18,372
<INCOME-PRE-EXTRAORDINARY> 18,372
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,983
<EPS-PRIMARY> 12.81
<EPS-DILUTED> 12.81
<YIELD-ACTUAL> 7.81
<LOANS-NON> 2,700
<LOANS-PAST> 1,728
<LOANS-TROUBLED> 66
<LOANS-PROBLEM> 20,088
<ALLOWANCE-OPEN> 26,135
<CHARGE-OFFS> 1,683
<RECOVERIES> 824
<ALLOWANCE-CLOSE> 27,558
<ALLOWANCE-DOMESTIC> 27,558
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 10,524
</TABLE>
