SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- ----- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
- ----- TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM______ TO_______.
Commission file number 0-15083
-------
CAROLINA FIRST CORPORATION
----------------------------------------------------
(Exact name of registrant as specified in its charter)
South Carolina 57-0824914
------------------------------ ------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
102 South Main Street, Greenville, South Carolina 29601
- ------------------------------------------------- ----------
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code (864) 255-7900
--------------
________________________________________________________________________
(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 ____
The number of outstanding shares of the issuer's $1.00 par value common stock as
of November 8, 1999 was 25,718,991.
<PAGE>
CONSOLIDATED BALANCE SHEETS
Carolina First Corporation and Subsidiaries
($ in thousands, except share data) (Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
------------------------------ ---------------
1999 1998 1998
------------ ------------- ---------------
<S> <C> <C> <C>
Assets
Cash and due from banks ........................................ $ 88,693 $ 93,145 $ 116,239
Interest-bearing bank balances ................................. 15,535 51,365 54,988
Federal funds sold and resale agreements ....................... 13,205 148,336 28,041
Securities
Trading .................................................... 4,026 2,514 3,543
Available for sale ........................................ 434,327 356,086 405,137
Held for investment (market value $52,421, $53,189 and
$52,940,respectively) ..................................... 52,586 51,767 52,077
----------- ----------- -----------
Total securities ..................................... 490,939 410,367 460,757
----------- ----------- -----------
Loans
Loans held for sale ....................................... 50,654 88,055 112,918
Loans held for investment ................................. 2,235,956 1,837,995 1,925,332
Less unearned income ................................. (6,529) (9,023) (8,064)
Less allowance for loan losses ....................... (22,180) (19,634) (20,266)
----------- ----------- -----------
Net loans ......................................... 2,257,901 1,897,393 2,009,920
----------- ----------- -----------
Premises and equipment, net .................................... 56,540 50,631 54,630
Accrued interest receivable .................................... 19,813 18,834 19,787
Intangible assets .............................................. 117,220 117,489 130,415
Other assets ................................................... 109,209 61,016 78,515
----------- ----------- -----------
$ 3,169,055 $ 2,848,576 $ 2,953,292
=========== =========== ===========
Liabilities and Shareholders' Equity
Liabilities
Deposits
Noninterest-bearing .................................. $ 321,886 $ 287,972 $ 332,531
Interest-bearing ..................................... 2,076,155 1,979,340 2,001,652
----------- ----------- -----------
Total deposits .................................. 2,398,041 2,267,312 2,334,183
Borrowed funds ............................................ 273,479 163,238 193,286
Subordinated notes ........................................ 25,715 25,586 25,618
Accrued interest payable .................................. 15,015 16,293 16,530
Other liabilities ......................................... 45,015 21,366 21,688
----------- ----------- -----------
Total liabilities .................................... 2,757,265 2,493,795 2,591,305
----------- ----------- -----------
Shareholders' Equity
Preferred stock-no par value; authorized 10,000,000 shares;
issued and outstanding none ........................... -- -- --
Common stock-par value $1 per share; authorized 100,000,000
shares; issued and outstanding 25,695,083, 24,508,829
and 24,785,621 shares, respectively .................. 25,695 24,509 24,786
Surplus ................................................... 306,340 298,307 301,215
Retained earnings ......................................... 54,055 33,251 38,113
Guarantee of employee stock ownership plan debt and
nonvested restricted stock ........................... (3,400) (3,182) (2,963)
Accumulated other comprehensive income, net of tax ........ 29,100 1,896 836
----------- ----------- -----------
Total shareholders' equity ........................... 411,790 354,781 361,987
----------- ----------- -----------
$ 3,169,055 $ 2,848,576 $ 2,953,292
=========== =========== ===========
</TABLE>
1
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
Carolina First Corporation and Subsidiaries
($ in thousands, except share data) (Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------ -------------------------------
1999 1998 1999 1998
------------------------------ -------------------------------
<S> <C> <C> <C> <C>
Interest Income
Interest and fees on loans .............. $ 50,639 $ 41,679 $ 146,657 $ 119,772
Interest and dividends on securities .... 6,384 6,065 18,164 17,171
Interest on short-term investments ...... 730 1,854 3,065 5,152
----------- ----------- ----------- -----------
Total interest income .............. 57,753 49,598 167,886 142,095
----------- ----------- ----------- -----------
Interest Expense
Interest on deposits .................... 23,394 21,835 68,426 63,764
Interest on borrowed funds .............. 3,257 2,599 8,928 7,369
----------- ----------- ----------- -----------
Total interest expense ............. 26,651 24,434 77,354 71,133
----------- ----------- ----------- -----------
Net interest income ................ 31,102 25,164 90,532 70,962
Provision for Loan Losses .................... 3,986 3,342 11,752 9,531
----------- ----------- ----------- -----------
Net interest income after
provision for loan losses .......... 27,116 21,822 78,780 61,431
----------- ----------- ----------- -----------
Noninterest Income
Service charges on deposit accounts ..... 3,045 2,290 8,304 6,747
Mortgage banking income ................. 918 1,002 2,532 3,277
Fees for investment services ............ 560 529 1,622 1,250
Loan securitization income .............. 43 887 1,646 920
Gain on sale of securities .............. 77 128 321 451
Gain on sale of credit cards ............ -- -- 2,362 --
Gain on disposition of equity
investments .......................... -- -- 15,471 --
Gain on sale of branches ................ 2,223 -- 2,223 --
Other ................................... 1,887 1,820 5,524 4,547
----------- ----------- ----------- -----------
Total noninterest income ........... 8,753 6,656 40,005 17,192
----------- ----------- ----------- -----------
Noninterest Expenses
Personel expense ........................ 11,263 8,852 34,582 25,507
Occupancy ............................... 1,979 1,699 5,728 4,740
Furniture and equipment ................. 1,936 1,297 5,123 3,605
Amortization of intangibles ............. 1,615 1,043 5,152 2,735
Charitable contribution to foundation ... -- -- 11,890 --
Merger-related costs .................... 3,151 -- 5,283 --
Y2K expenses ............................ 487 79 850 155
Other ................................... 6,715 5,256 20,315 13,901
----------- ----------- ----------- -----------
Total noninterest expenses ........ 27,146 18,226 88,923 50,643
----------- ----------- ----------- -----------
Income before income taxes ......... 8,723 10,252 29,862 27,980
Income taxes ............................ 2,993 3,831 9,857 10,381
----------- ----------- ----------- -----------
Net income ......................... $ 5,730 $ 6,421 $ 20,005 $ 17,599
=========== =========== =========== ===========
Net Income per Common Share:
Basic ................................... $ 0.22 $ 0.31 $ 0.80 $ 0.87
Diluted ................................. 0.22 0.30 0.78 0.86
Average Common Shares Outstanding:
Basic ................................... 25,519,678 20,816,324 25,143,098 20,159,386
Diluted ................................. 25,872,028 21,232,259 25,515,506 20,556,718
Cash Dividends Declared per Common Share ..... $ 0.09 $ 0.08 $ 0.27 $ 0.24
</TABLE>
2
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY AND COMPREHENSIVE INCOME
Carolina First Corporation and Subsidiaries
($ in thousands, except share data) (Unaudited)
<TABLE>
<CAPTION>
Retained Accumulated
Shares of Earnings Other
Common Preferred Common and Comprehensive
Stock Stock Stock Surplus Other* Income Total
---------- -------- ---------- ---------- ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1997 ................. 18,197,453 $ -- $ 18,197 $ 175,335 $ 17,128 $ 4,553 $ 215,213
Net income ................................ -- -- -- -- 17,599 -- 17,599
Other comprehensive income (loss),
net of tax:
Unrealized losses on securities:
Unrealized holding losses arising during
period, net of taxes of $1,460 ......... -- -- -- -- -- (2,555) --
Less: reclassification adjustment for
gains included in net income, net
of taxes of $60 ........................ -- -- -- -- -- (102) --
--------
Other comprehensive loss ................. -- -- -- -- -- (2,657) (2,657)
-------- ---------
Comprehensive income ...................... -- -- -- -- -- 14,942
---------
Cash dividends declared ($0.24 per
common share) ............................ -- -- -- -- (4,606) -- (4,606)
Common stock issued pursuant to:
Stock offering ............................ 2,242,115 -- 2,242 38,195 -- -- 40,437
Purchase accounting acquisition ........... 3,969,670 -- 3,970 62,919 -- -- 86,889
Dividend reinvestment plan ................ 41,787 -- 42 938 -- -- 980
Employee stock purchase plan .............. 6,509 -- 7 146 -- -- 153
Restricted stock plan ..................... 28,945 -- 29 594 -- -- 623
Exercise of stock options and stock
warrants ................................. 22,350 -- 22 109 -- -- 131
Miscellaneous ............................. -- -- -- 71 (52) -- 19
----------- ------ -------- --------- -------- -------- ---------
Balance, September 30, 1998 ................ 24,508,829 $ -- $ 24,509 $ 298,307 $ 30,069 $ 1,896 $ 354,781
=========== ====== ======== ========= ======== ======== =========
Balance, December 31, 1998 ................. 24,765,621 $ -- $ 24,786 $ 301,215 $ 35,150 $ 836 $ 361,987
Net income ................................ -- -- -- -- 20,005 -- 20,005
Other comprehensive income, net of tax:
Unrealized gains on securities:
Unrealized holding gains arising during
period, net of taxes of $15,576 ......... -- -- -- -- -- 28,471 --
Less: reclassification adjustment for
gains included in net income, net of
taxes of $18 ............................ -- -- -- -- -- (36) --
--------
Other comprehensive income ............... -- -- -- -- -- 28,435 28,435
-------- ---------
Comprehensive income ..................... -- -- -- -- -- 48,440
---------
Cash dividends declared ($0.27 per
common share) ........................... -- -- -- -- (6,599) -- (6,599)
Common stock issued pursuant to:
Repurchase of stock ..................... (40,000) -- (40) (816) -- -- (856)
Acquisition ............................. 505,851 -- 506 1,734 1,445 (171) 3,514
Dividend reinvestment plan .............. 43,314 -- 43 937 -- -- 980
Employee stock purchase plan ............ 8,371 -- 8 181 -- -- 189
Restricted stock plan ................... 44,735 45 1,046 -- -- 1,091
Exercise of stock options and stock
warrants ............................... 347,191 -- 347 2,043 -- -- 2,390
Miscellaneous ............................. -- -- -- -- 654 -- 654
----------- ------ -------- --------- -------- -------- ---------
Balance, September 30, 1999 ................ 25,695,083 $ -- $ 25,695 $ 306,340 $ 50,655 $ 29,100 $ 411,790
=========== ====== ======== ========= ======== ======== =========
</TABLE>
* Other includes guarantee of employee stock ownership plan debt and nonvested
restricted stock
3
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Carolina First Corporation and Subsidiaries
($ in thousands, except share data) (Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-------------------------------
1999 1998
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities
Net income ............................................ $ 20,005 $ 17,599
Adjustments to reconcile net income to net cash
(used for) provided by operations
Depreciation ....................................... 1,928 3,083
Amortization of intangibles ........................ 5,152 2,735
Charitable contribution to foundation .............. 11,890 --
Provision for loan losses .......................... 11,752 9,531
Gain on sale of credit cards ....................... (2,362) --
Gain on sale of securities ......................... (321) (451)
Gain on disposition of equity investments .......... (15,471) --
Gain on sale of branches .................... ...... (2,223) --
Trading account assets, net ........................ (215) 124
Originations of mortgage loans held for sale ....... (325,269) (368,843)
Sale of mortgage loans held for sale ............... 256,653 443,417
Other assets, net .................................. (22,109) (7,167)
Other liabilities, net ............................. 4,780 961
--------- ---------
Net cash (used for) provided by operating activities . (55,810) 100,989
--------- ---------
Cash Flows Investing Activities
Increase (decrease) in cash realized from
Interest-bearing bank balances ..................... 39,453 (16,662)
Federal funds sold and resale agreements ........... 7,311 (121,948)
Sale of securities available for sale .............. 92,920 34,499
Maturity of securities available for sale .......... 141,215 305,267
Maturity of securities held for investment ......... 7,747 7,867
Purchase of securities available for sale .......... (211,746) (398,446)
Purchase of securities held for investment ......... (8,256) (9,136)
Origination of loans, net .......................... (230,376) (175,509)
Capital expenditures, net .......................... (5,109) (4,564)
Acquisitions accounted for under the purchase method
of accounting .................................... 13,256 28,451
Proceeds from disposition of equity investments .... 4,389 --
Proceeds from sale of credit cards ................. 65,624 --
Net cash outflow from sale of branches ............. (35,160) (38,480)
--------- ---------
Net cash used for investing activities ................ (118,732) (388,661)
--------- ---------
Cash Flows from Financing Activities
Increase (decrease) in cash realized from
Change in deposit, net ............................. 69,966 254,622
Borrowed funds, net ................................ 80,193 4,208
Cash dividends paid ................................ (6,269) (4,121)
Issuance of common stock ........................... -- 40,437
Other common stock activity ........................ 3,106 1,786
--------- ---------
Net cash provided by financing activities ............. 146,996 296,932
--------- ---------
Net change in cash and due from banks .................... (27,546) 9,260
Cash and due from banks at beginning of period ........... 116,239 83,885
--------- ---------
Cash and due from banks at end of period ................. $ 88,693 $ 93,145
========= =========
</TABLE>
4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CAROLINA FIRST CORPORATION AND SUBSIDIARIES
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of these policies is included in the 1998 Annual Report to
Shareholders.
(2) STATEMENTS OF CASH FLOWS
Cash includes currency and coin, cash items in process of collection
and due from banks. Interest paid, net of interest capitalized,
amounted to approximately $78.9 million and $66.1 million for the nine
months ended September 30, 1999 and September 30, 1998, respectively.
Income tax payments of $4.1 million and $9.5 million were made for the
nine months ended September 30, 1999 and September 30, 1998,
respectively.
(3) BUSINESS COMBINATIONS
On April 23, 1999, the Company acquired all the outstanding shares of
Citizens First National Bank ("Citizens"), a national bank
headquartered in Crescent City, Florida in exchange for 507,931 shares
of the Company's common stock. At March 31, 1999, Citizens had total
assets, loans and deposits of approximately $59 million, $37 million
and $53 million, respectively. The transaction has been accounted for
as a pooling-of-interests combination; however, due to the
immateriality of the transaction in relation to the Company's
consolidated financial position and operating results, prior period
financial statements have not been restated.
On July 1, 1999, the Company issued 3,086,478 shares of common stock in
exchange for all the outstanding common stock of Citrus Bank, a Florida
state-chartered bank headquartered in Orlando, Florida. As of June 30,
1999, Citrus Bank had total assets, loans and deposits of approximately
$285 million, $196 million and $264 million, respectively. This
transaction has been accounted for as a pooling-of-interests
combination and, accordingly, the Company's consolidated financial
statements for all prior periods have been restated to include the
accounts and results of operations of Citrus Bank, except for cash
dividends declared per common share.
The results of operations previously reported by the separate
enterprises and the combined amounts presented in the accompanying
consolidated financial statements are summarized below.
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended Nine Months Ended
June 30, 1999 September 30, 1998 September 30, 1998
------------- ------------------ ------------------
($ in thousands)
<S> <C> <C> <C>
Net interest income:
The Company $53,044 $22,459 $64,035
Citrus Bank 6,386 2,705 6,927
------- ------- -------
Combined $59,430 $25,164 $70,962
======= ======= =======
Noninterest income:
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
The Company $30,137 $ 6,157 $15,853
Citrus Bank 1,115 499 1,339
------- ------- -------
Combined $31,252 $ 6,656 $17,192
======= ======= =======
Net income:
The Company $12,640 $ 5,639 $15,869
Citrus Bank 1,635 782 1,730
------- ------- -------
Combined $14,275 $ 6,421 $17,599
======= ======= =======
</TABLE>
On September 13, 1999, Carolina First Bank completed the sale of three
branch offices located in Abbeville, Hardeeville and Ridgeland, South
Carolina. In connection with the sale of these branches, the Company
recorded a gain of approximately $2.2 million, sold loans of
approximately $12.0 million and transferred deposits of approximately
$48.3 million.
(4) SECURITIES
The net unrealized gain on securities available for sale, net of tax
increased $28 million for the nine months ended September 30, 1999. The
Company began recording its investment in Net.B@nk, Inc. at market
value effective July 31, 1999, or one year prior to the termination of
restrictions on the sale of these securities.
(5) COMMON STOCK
Basic earnings per share are based on the weighted average number of
common shares outstanding during each period.
Diluted earnings per share are based on the weighted average number of
common shares outstanding during each period, including the assumed
exercise of dilutive stock options using the treasury stock method.
(6) COMMITMENTS AND CONTINGENT LIABILITIES
The Company is subject to various legal proceedings and claims that
arise in the ordinary course of its business. In the opinion of
management based on consultation with legal counsel, any outcome of
such pending litigation would not materially affect the Company's
consolidated financial position or results of operations.
On November 4, 1996, a derivative shareholder action was filed in
Greenville County Court of Common Pleas against the Company, the
majority of the Company's and Carolina First Bank's directors, and
certain executive and other officers. The named plaintiffs are the
Company by and through certain minority shareholders. The Company filed
a motion to dismiss with respect to all claims in this complaint, which
was granted in December 1997. Plaintiffs have appealed the grant of the
motion to dismiss. Plaintiffs allege as causes of action the following:
conversion of corporate opportunity; breach of fiduciary duty and
constructive fraud; civil conspiracy; and mutual mistake. The factual
basis upon which these claims are made generally involves the payment
to Company officers and other
6
<PAGE>
individuals of a bonus in stock held by the Company in Affinity
Technology Group, Inc. (as reward for their efforts in connection with
the Company's procurement of stock in Affinity Technology Group, Inc.),
statements to former shareholders of Midlands National Bank in
connection with the Company's acquisition of that bank, and alleged
mismanagement by certain executive officers involving financial
matters. The complaint seeks damages for the benefit of the Company
aggregating $41 million and rescission of the Affinity Technology
Group, Inc. bonus.
In an action brought by the same attorneys who brought the
above-mentioned derivative action, on December 31, 1996, certain
individuals filed a class action lawsuit against the Company, Carolina
First Bank, and a number of officers and directors of the Company and
Carolina First Bank. In connection with the judge's granting the motion
to dismiss in the above-referenced derivative action, the plaintiffs'
attorneys withdrew this lawsuit, without prejudice.
(7) BUSINESS SEGMENTS
The Company has five wholly-owned operating subsidiaries which are
evaluated regularly by the chief operating decision maker in deciding
how to allocate resources and assess performance. Three of these
subsidiaries qualify as separately reportable operating segments:
Carolina First Bank, Citrus Bank and Carolina First Mortgage Company
("CF Mortgage"). Carolina First Bank and CF Mortgage offer products and
services primarily to customers in South Carolina and the surrounding
areas, while Citrus Bank offers products and services primarily to
customers in northern and central Florida. Revenues for Carolina First
Bank and Citrus Bank are derived primarily from interest and fees on
loans, interest on investment securities and service charges on
deposits, while CF Mortgage's revenue is from mortgage banking income.
7
<PAGE>
The following table summarizes certain financial information concerning
the Company's reportable operating segments at and for the nine months
ended:
<TABLE>
<CAPTION>
CAROLINA FIRST CF CITRUS ELIMINATING
BANK MORTGAGE BANK OTHER* ENTRIES TOTAL
-----------------------------------------------------------------------------------------------------------------
SEPTEMBER 30, 1999
---------------------
Income Statement Data
<S> <C> <C> <C> <C> <C> <C>
Total revenue $ 160,831 $ 5,376 $ 20,704 $ 27,415 $ (6,435) $ 207,891
Net interest income 75,717 -- 11,422 3,393 -- 90,532
Provision for loan losses 10,558 -- 955 239 -- 11,752
Noninterest income 18,711 5,376 1,832 18,588 (4,502) 40,005
Mortgage banking
income (loss) (2,740) 5,255 2 15 -- 2,532
Noninterest expenses 57,837 4,289 10,409 20,890 (4,502) 88,923
Amortization 4,215 -- -- 937 -- 5,152
Net income 15,877 705 1,166 2,257 -- 20,005
Balance Sheet Data
Total assets $ 2,670,583 $ 7,063 $ 358,764 $ 604,925 $ (472,280) $ 3,169,055
Loans - net of
unearned income 1,961,933 -- 263,737 54,411 -- 2,280,081
Allowance for loan losses 16,375 -- 3,963 1,842 -- 22,180
Intangibles 100,655 -- 13 16,552 -- 117,220
Deposits 2,002,887 -- 329,817 80,515 (15,178) 2,398,041
SEPTEMBER 30, 1998
---------------------
Income Statement Data
Total revenue $ 137,415 $ 6,340 $ 12,568 $ 7,445 $ (4,481) $ 159,287
Net interest income 63,007 -- 6,927 1,028 -- 70,962
Provision for loan losses 6,211 -- 845 2,475 -- 9,531
Noninterest income 9,146 6,340 1,339 3,392 (3,025) 17,192
Mortgage banking
income (loss) (2,979) 6,256 -- -- -- 3,277
Noninterest expenses 40,677 3,435 4,646 4,910 (3,025) 50,643
Amortization 2,348 -- -- 387 -- 2,735
Net income 15,846 1,869 1,730 (1,846) -- 17,599
Balance Sheet Data
Total assets $ 2,491,259 $ 6,522 $ 215,902 $ 502,947 $ (368,054) $ 2,848,576
Loans - net of
unearned income 1,674,208 -- 159,628 83,191 -- 1,917,027
Allowance for loan losses 14,702 -- 2,007 2,925 -- 19,634
Intangibles 50,961 -- 13 66,515 -- 117,489
Deposits 2,018,507 -- 198,172 82,531 (31,898) 2,267,312
-----------------------------------------------------------------------------------------------------------------
*Other includes corporate related items and results of subsidiaries not
meeting the criteria for reportable operating segments, including the
Parent Company, Blue Ridge Finance Company, Inc., Carolina First Bank,
F.S.B., Resource Processing Group, Inc., CF Guaranty Reinsurance, Ltd., and
CF Technology.
</TABLE>
8
<PAGE>
(8) MANAGEMENT'S OPINION
The financial statements in this report are unaudited. In the opinion
of management, all adjustments necessary to present a fair statement of
the results for the interim periods have been made. All such
adjustments are of a normal, recurring nature.
(9) SUBSEQUENT EVENTS
On October 18, 1999, Carolina First Bank completed the sale of one
branch office located in Johnston, South Carolina. At September 30,
1999, this branch had approximately $6.4 million in deposits and
approximately $1.4 million in loans.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS SHOULD BE READ IN CONJUNCTION
WITH THE CONSOLIDATED FINANCIAL STATEMENTS AND RELATED NOTES AND WITH THE
STATISTICAL INFORMATION AND FINANCIAL DATA APPEARING IN THIS REPORT AS WELL AS
THE ANNUAL REPORT OF CAROLINA FIRST CORPORATION (THE "COMPANY") ON FORM 10-K FOR
THE YEAR ENDED DECEMBER 31, 1998. RESULTS OF OPERATIONS FOR THE NINE MONTH
PERIOD ENDED SEPTEMBER 30, 1999 ARE NOT NECESSARILY INDICATIVE OF RESULTS TO BE
ATTAINED FOR ANY OTHER PERIOD.
FORWARD-LOOKING STATEMENTS
Statements included in this report which are not historical in nature
are intended to be, and are hereby identified as, "forward-looking statements"
for purposes of the safe harbor provided by Section 21E of the Securities
Exchange Act of 1934, as amended (the "Act"). In addition, certain statements in
future filings by the Company with the Securities and Exchange Commission, in
press releases and in oral and written statements made by or with the approval
of the Company which are not statements of historical fact constitute
forward-looking statements within the meaning of the Act. The Company cautions
readers that forward-looking statements, including without limitation, those
relating to the Company's future business prospects, plans, objectives, future
economic performance, revenues, working capital, liquidity, capital needs,
interest costs, income or loss, income or loss per share, dividends and other
financial items are subject to certain risks and uncertainties that could cause
actual results to differ materially from those indicated in the forward-looking
statements due to several important factors herein identified, among others, and
other risks and factors identified from time to time in the Company's reports
filed with the Securities and Exchange Commission.
The risks and uncertainties that may affect the operations,
performance, development and results of the Company's business include, but are
not limited to, the following: risks from changes in economic, monetary policy
and industry conditions; changes in interest rates and deposit rates; inflation;
risks inherent in making loans including repayment risks and value of
collateral; adequacy of the allowance for loan losses and the assessment of
problem loans; fluctuations in consumer spending; the demand for the Company's
products and services; dependence on senior management; technological changes;
ability to increase market share and control expenses; acquisitions; changes in
accounting policies and practices; costs and effects of litigation;
recently-enacted or proposed legislation; and year 2000 readiness.
Such forward-looking statements speak only as of the date on which such
statements are made. The Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement is made to reflect the occurrence of unanticipated events.
OVERVIEW
The Company, a South Carolina corporation headquartered in Greenville,
South Carolina, is a financial institution holding company, which commenced
banking operations in December 1986, and currently conducts business through 68
locations in South Carolina and 13 locations in northern and central Florida.
The Company operates through the following subsidiaries: Carolina
10
<PAGE>
First Bank, a South Carolina state-chartered commercial bank; Citrus Bank, a
Florida state-chartered commercial bank; Carolina First Mortgage Company ("CF
Mortgage"), a mortgage banking company; Carolina First Bank, F.S.B., a Federal
savings bank which offers Bank CaroLine (an Internet bank); and Blue Ridge
Finance Company, Inc. ("Blue Ridge"), a consumer finance company. Through its
subsidiaries, the Company provides a full range of banking services, including
mortgage, trust and investment services, designed to meet substantially all of
the financial needs of its customers.
Net income for the third quarter of 1999 was $5.7 million, compared
with $6.4 million for the third quarter of 1998. Third quarter 1999 earnings
included three nonrecurring items: a $809,000 after-tax gain on sale of
branches, a $288,000 after-tax loss on disposition of obsolete equipment
(included in other noninterest income) and $2.3 million of after-tax
merger-related costs. Earnings per diluted share for the three months ended
September 30, 1999 were $0.22 per diluted share, compared with $0.30 for the
prior year period. Earnings per diluted share for the third quarter 1999
included three nonrecurring items: a $0.03 per diluted share after-tax gain on
sale of branches, a $0.01 per diluted share after-tax loss on disposition of
obsolete equipment and $0.09 per diluted share of after-tax merger-related
costs. The decrease in earnings per diluted share was partially due to a 22%
increase in average common shares outstanding, principally from the completion
of bank mergers. Net income for the first nine months of 1999 increased 14% to
$20.0 million compared with $17.6 million for the same period in 1998. Earnings
per diluted share for the nine months ended September 30, 1999 were $0.78
compared with $0.86 for the prior year period. At September 30, 1999, the
Company had approximately $3.2 billion in assets, $2.3 billion in loans, $2.4
billion in deposits and $411.8 million in shareholders' equity. At September 30,
1999, the Company's ratio of nonperforming assets to loans and other real estate
owned was 0.45%.
On April 23, 1999, the Company acquired all the outstanding shares of
Citizens First National Bank ("Citizens"), a national bank headquartered in
Crescent City, Florida in exchange for 507,931 shares of the Company's common
stock. At March 31, 1999, Citizens had total assets, loans and deposits of
approximately $59 million, $37 million and $53 million, respectively, and
operated through four branch locations. The transaction has been accounted for
as a pooling-of-interests combination; however, due to the immateriality of the
transaction in relation to the Company's consolidated financial position and
operating results, prior period financial statements have not been restated.
On April 30, 1999, the Company sold its consumer credit card
receivables totaling approximately $112 million to First USA, N.A. The sale
resulted in a gain of approximately $2.4 million and a reduction in the
allowance for loan losses of approximately $3.0 million (see "BALANCE SHEET
REVIEW-Allowance for Loan Losses"). The credit cards sold included approximately
$58 million owned by the Company's off-balance-sheet credit card trust. In
connection with the sale, the Company's credit card trust was terminated
effective May 17, 1999. The Company continued to service these credit cards
until the end of August 1999. In addition, the Company entered into a
partnership agreement with an affiliate of the purchaser to offer credit card
products to its retail customers.
On July 1, 1999, the Company issued 3,086,478 shares of common stock
for all the outstanding common stock of Citrus Bank, a Florida state-chartered
commercial bank headquartered in Orlando. As of June 30, 1999, Citrus Bank had
total assets, loans and deposits of approximately $285 million, $196 million and
$264 million, respectively, and operated through eight locations. This
transaction has been accounted for as a pooling-of-interests combination and,
accordingly, the Company's consolidated financial statements for all prior
periods have been restated to include the accounts and results of operations of
Citrus Bank, except for cash dividends
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declared per common share.
On July 1, 1999, Citizens was merged into Citrus Bank, and all of the
Company's Florida bank branches currently operate as branches of Citrus Bank.
During July 1999, Citrus Bank opened a de novo office in Jacksonville, Florida.
On September 13, 1999, Carolina First Bank completed the sale of three
branch offices located in Abbeville, Hardeeville and Ridgeland, South Carolina.
In connection with the sale of these branches, the Company recorded a gain of
approximately $2.2 million, sold loans of approximately $12.0 million and
transferred deposits of approximately $48.3 million.
EQUITY INVESTMENTS
INVESTMENT IN NET.B@NK, INC.
At September 30, 1999, the Company owned 2,415,000 shares of Net.B@nk,
Inc. ("Net.B@nk") common stock, or approximately 8.4% of the outstanding shares.
Net.B@nk owns and operates Net.B@nk, FSB, a FDIC-insured federal savings bank
that provides banking services to consumers utilizing the Internet. Under the
terms of the Office of Thrift Supervision's regulatory ruling on Net.B@nk in
1997, certain affiliates of Net.B@nk, including the Company, may not sell their
shares in Net.B@nk until July 31, 2000. Effective July 31, 1999, or one year
prior to the termination of the restriction, the Company began recording its
investment in Net.B@nk at market value. As of September 30, 1999, the Company's
investment in Net.B@nk, which is included in securities available for sale, had
a pre-tax market value of approximately $53 million. In prior periods, these
shares were recorded at the Company's book basis, which was approximately
$671,000 as of September 30, 1999. The Company's shares of NetB@nk common stock
are "restricted" securities, as that term is defined in federal securities laws.
On January 8, 1999, the OTS granted the Company permission to sell or
transfer 1,110,000 shares (adjusted for the stock split) in order to reduce its
ownership to less than 10%. In January 1999, the Company contributed 870,000
shares (adjusted for the stock split) of Net.B@nk common stock to Carolina First
Foundation, a non-profit corporation organized for charitable purposes, which
established an endowment to fund future charitable contributions. In February
1999, the Company contributed capital in the form of 90,000 shares (adjusted for
the stock split) of Net.B@nk common stock to its wholly-owned subsidiary,
Carolina First Guaranty Reinsurance, Ltd., a company engaged in the reinsurance
of credit insurance to customers of the Company's banking subsidiaries. On
February 10, 1999, the Company and Carolina First Guaranty Reinsurance, Ltd.
sold 150,000 shares (adjusted for the stock split) and 90,000 shares (adjusted
for the stock split), respectively, of Net.B@nk's common stock at a net price of
$14.46 (adjusted for the stock split) per share in connection with Net.B@nk's
secondary public offering. In addition, Carolina First Foundation sold 870,000
shares (adjusted for the stock split) of Net.B@nk common stock at a net price of
$14.46 per share (adjusted for the stock split).
INVESTMENT IN AFFINITY TECHNOLOGY GROUP, INC.
At September 30, 1999, the Company (through its subsidiary CF
Investment Company) owned 2,528,366 shares of common stock of Affinity
Technology Group, Inc. ("Affinity") and a warrant to purchase an additional
3,471,340 shares for approximately $0.0001 per share ("Affinity Warrant").
12
<PAGE>
These Affinity shares and the shares represented by the Affinity
Warrant constitute approximately an 18% ownership interest in Affinity. The
investment in Affinity's common stock, which is included in securities available
for sale and has a basis of approximately of $160,000, was recorded at its
market value of approximately $2.0 million. The Affinity Warrant was not
reported on the Company's balance sheet as of September 30, 1999.
The Company's shares in Affinity and the shares issuable upon the
exercise of the Affinity Warrant are "restricted" securities, as that term is
defined in federal securities laws.
INVESTMENTS IN COMMUNITY BANKS
As of September 30, 1999, the Company had equity investments in the
following community banks located in the Southeast: CNB, Inc.; Capital Bank;
Carolina Bank; Community Capital Corporation; FirstSpartan Financial
Corporation; Florida Banks, Inc.; Heritage Bancorp, Inc.; High Street Banking
Company; People's Community Capital Corp.; and Trinity Bank. In each case, the
Company owns less than 5% of the community bank's outstanding common stock. The
Company has made these investments to develop correspondent banking
relationships and to promote community banking in the Southeast.
CF INVESTMENT COMPANY
In September 1997, the Company's subsidiary, CF Investment Company,
became licensed through the Small Business Administration to operate as a Small
Business Investment Company. CF Investment Company is a wholly-owned subsidiary
of Blue Ridge. CF Investment Company's principal focus is investing in companies
that have a bank-related technology or service the Company and its subsidiaries
can use. As of September 30, 1999, CF Investment Company had invested
approximately $2.5 million (principally in the form of loans) in companies
specializing in electronic document management and Internet-related services. In
March 1999, CF Investment Company sold its investment in Corporate Solutions
International, a company that develops automated credit decision systems, for a
pre-tax gain of approximately $412,000.
EARNINGS REVIEW
NET INTEREST INCOME
The largest component of the Company's net income is Carolina First
Bank`s net interest income. Net interest income is the difference between the
interest earned on assets and the interest paid for the liabilities used to
support such assets. Fully tax-equivalent net interest income adjusts the yield
for assets earning tax-exempt income to a comparable yield on a taxable basis.
Average earning assets and the net interest margin exclude the net unrealized
gain on sale of securities available for sale because this gain is not included
in net income.
Fully tax-equivalent net interest income increased $19.8 million, or
28%, to $91.2 million in the first nine months of 1999 from $71.4 million in the
first nine months of 1998. The increase resulted from a higher level of average
earning assets and a higher net interest margin. Average earning assets
increased $483.9 million, or 22%, to approximately $2.6 billion in the first
nine months of 1999 from $2.2 billion in the first nine months of 1998. This
increase resulted from acquisitions completed in the second half of 1998,
accounted for using the purchase method of
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accounting, and internal loan growth. Average loans, net of unearned income,
were $2.2 billion in the first nine months of 1999, compared with $1.7 billion
in the first nine months of 1998. Average investment securities were $412.4
million and $376.8 million in the first nine months of 1999 and 1998,
respectively.
The net interest margin of 4.61% for the first nine months of 1999 was
higher than the margin of 4.42% for the first nine months of 1998. The net
interest margin of 4.58% for the third quarter of 1999 was comparable to the
margins of 4.58% and 4.69% for the first and second quarters of 1999,
respectively. The higher net interest margin in 1999 resulted from lower deposit
costs, partially offset by lower earning asset yields.
During the first half of 1999, the Company kept deposit rates
relatively stable and lowered costs by repricing certificates of deposits
downward upon maturity. During the third quarter of 1999, however, interest
rates began to rise, causing the Company to increase rates on certain deposit
products. In addition, in September 1999, the Company introduced Bank CaroLine,
an Internet bank offered as a service of Carolina First Bank, F.S.B. Deposit
rates for Bank CaroLine are generally higher than those offered by the Company's
other subsidiary banks to reflect the lower cost structure associated with
operating on the Internet. Accordingly, as deposits build for Bank CaroLine, the
Company expects the cost of deposits on a consolidated basis to increase.
The yield on earning assets was lower in 1999 as a result of the second
quarter sale of the credit card loans, which were higher-yielding earning assets
(see "OVERVIEW"). This decrease was partially offset by increases in the prime
interest rate during the third quarter of 1999. Approximately 53% of the
commercial loan portfolio is variable and immediately repriced upward with the
increases in the prime interest rate.
PROVISION FOR LOAN LOSSES
The provision for loan losses increased to $11.8 million for the first
nine months of 1999 compared with $9.5 million for the first nine months of
1998. The higher 1999 provision for loan losses reflected the higher level of
outstanding loans, which increased 19%. As a percentage of average loans, the
net charge-off ratio was 0.45% for the first nine months of 1999, compared with
0.70% for the same period last year. The net charge-off ratio decreased
significantly to 0.27% in the third quarter of 1999 from 0.65% and 0.56% for the
first and second quarters of 1999, respectively. This decrease was partially
attributable to the sale of the credit card portfolio completed on April 30,
1999.
Management currently anticipates significant loan growth will continue
in 1999. New market areas, such as northern and central Florida, are expected to
contribute to 1999 portfolio growth. Management intends to closely monitor
economic trends and the potential effect on the banking subsidiaries' loan
portfolios. In addition, management is discussing Year 2000 readiness with loan
customers to assess the related loan collection risk.
NONINTEREST INCOME
Noninterest income increased to $40.0 million in the first nine months
of 1999 from $17.2 million in the first nine months of 1998. Noninterest income
in 1999 included two nonrecurring items: a $2.2 million pre-tax gain on sale of
branches and a $465,000 pre-tax loss on disposition
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<PAGE>
of obsolete equipment. During the first quarter of 1999, a nonrecurring pre-tax
gain of approximately $15.1 million (primarily offset by a contribution to the
Carolina First Foundation) was recorded which related to the sale of Net.B@nk
stock (see "EQUITY INVESTMENTS-Investment in Net.B@nk, Inc."). In addition, a
pre-tax gain of approximately $412,000 was recorded relating to the sale of
Corporate Solutions International stock (see "EQUITY INVESTMENTS-CF Investment
Company). During the second quarter of 1999, a pre-tax gain on the sale of
credit cards of approximately $2.4 million was recorded (see "OVERVIEW"). The
increase in noninterest income excluding the nonrecurring items was primarily
attributable to higher service charges on deposit accounts, loan securitization
income and other income.
Service charges on deposit accounts, the largest contributor to
noninterest income, rose 23% to $8.3 million in the first nine months of 1999
from $6.7 million for the same time period in 1998. Average deposits for the
same period increased 23%. The increase in service charges was attributable to
attracting new transaction accounts and improved collection of fees. Effective
July 1, 1999, certain deposit service charges were increased to reflect
competitive pricing.
Mortgage banking income includes origination fees, gains from the sale
of loans and servicing fees (which are net of the related amortization for the
mortgage servicing rights and subservicing payments). Mortgage banking income in
the first nine months of 1999 decreased to $2.5 million compared with $3.3
million in the first nine months of 1998.
Income from originations and sales of mortgage loans, including sales
of loans originated by Carolina First Bank, totaled $2.9 million in the first
nine months of 1999 compared with $3.1 million in 1998. The decrease in 1999
resulted from lower gains on the sale of loans, primarily due to a lower volume
of sales. Mortgage loans totaling approximately $112.4 million and $251.2
million were sold in the first nine months of 1999 and 1998, respectively.
Mortgage originations totaled approximately $325.3 million in the first nine
months of 1999 and $368.8 million in the first nine months of 1998.
CF Mortgage's mortgage servicing operations consist of servicing loans
that are owned by Carolina First Bank and subservicing loans, to which the
rights to service are owned by Carolina First Bank or other non-affiliated
financial institutions. At September 30, 1999, CF Mortgage was servicing or
subservicing 18,523 loans having an aggregate principal balance of approximately
$1.6 billion. In the first nine months of 1999, fees related to the servicing
portfolio from non-affiliated companies were offset by the related amortization
for the mortgage servicing rights and subservicing payments for a loss of
$243,000 compared to income of $144,000 in the first nine months of 1998. The
servicing income does not include the benefit of interest-free escrow balances
related to mortgage loan servicing activities.
Fees for investment services in the first nine months of 1999 of $1.6
million were 30% above the $1.3 million earned in the same period of 1998. At
September 30, 1999 and 1998, the market value of assets administered by Carolina
First Bank's trust department totaled approximately $314.2 million and $302.5
million, respectively. The increase in fees and the market value of administered
assets resulted from the generation of new business in personal trust and
employee benefits. In addition, fees collected by Carolina First Securities,
Inc. ("CF Securities"), a subsidiary of Carolina First Bank, contributed to the
increase. CF Securities offers a complete line of investment products and
services, including mutual funds, stocks, bonds and annuities.
During the first nine months of 1999, the Company had income of $1.7
million from its interests in the credit card and commercial real estate loan
trusts, compared with $920,000 in the first nine months of 1998. Loan
securitization income is net of charge-offs associated with the
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loans in the trusts. Loan securitization income related to credit cards
increased to $1.4 million (which included $560,000 in fees for servicing trust
credit cards and lower credit card charge-offs) in the first nine months of 1999
compared with $946,000 in the first nine months of 1998. With the sale of the
Company's credit cards and the termination of the credit card trust on May 17,
1999, loan securitization income related to credit cards ceased during the
second quarter of 1999. The commercial real estate loan trust showed income of
$221,000 during the first nine months of 1999 compared with a loss of $26,000 in
the first nine months of 1998.
Other noninterest income was $6.0 million in the first nine months of
1999 compared with $4.5 million in the first nine months of 1998. Approximately
$511,000 of the increase was due to the establishment of a bank-owned life
insurance program initiated during the second quarter of 1999. The remaining
increase was due to higher debit card income, lease fee income due to higher
terminations from a more aged portfolio and merchant processing fees.
NONINTEREST EXPENSES
Noninterest expenses increased to $88.9 million in the first nine
months of 1999 from $50.6 million in the first nine months of 1998. Noninterest
expenses in the first quarter of 1999 included a nonrecurring charitable
contribution in the form of Net.B@nk common stock, valued at approximately $12
million, which was made to the Carolina First Foundation (see "EQUITY
INVESTMENTS-Investment in Net.B@nk, Inc."). During 1999, approximately $5.3
million was recorded for merger-related costs. Intangible amortization increased
in the first nine months of 1999 as a result of the three mergers completed in
the last half of 1998. The remaining increase included operational costs
associated with acquired branches, new markets and additional automated teller
machines ("ATMs").
Salaries and wages and employee benefits increased to $34.6 million in
the first nine months of 1999 from $25.5 million in the first nine months of
1998. Full-time equivalent employees increased to 989 at September 30, 1999 from
864 at September 30, 1998. The staffing cost increases were primarily due to the
costs of expanding in existing and new markets (including the 1998 mergers) and
back office support functions to support growth.
Occupancy and furniture and equipment expenses increased $2.6 million,
or 30%, to $10.9 million in the first nine months of 1999 from $8.3 million in
the first nine months of 1998. This increase resulted principally from
additional costs associated with the branches acquired through acquisitions in
1998 and the operating costs associated with additional ATMs. Occupancy and
furniture and equipment expenses are expected to increase in 2000 related to
lease payments associated with three new buildings and plans for a new core
operating system (see "LIQUIDITY").
Amortization of intangibles increased to $5.2 million in the first nine
months of 1999 from $2.7 million in the first nine months of 1998. The increase
is due to the acquisitions completed in 1998. This level of amortization is
expected to continue.
In connection with the mergers completed in the last year, the Company
incurred merger-related costs of approximately $5.3 million, the majority of
which had been paid as of September 30, 1999. Table 1 shows the breakdown of
these expenses.
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TABLE 1
MERGER-RELATED COSTS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C>
Severance payments and contracts $ 971,000
System conversion costs and write-off of obsolete equipment 1,326,000
Professional fees 1,898,000
Legal fees 309,000
Other 779,000
-------
Total $ 5,283,000
- -------------------------------------------------------------------------------------------
</TABLE>
Other noninterest expenses increased $6.4 million to $20.3 million in
the first nine months of 1999 from $13.9 million in the first nine months of
1998. The overall increase in other noninterest expenses was principally
attributable to the overhead and operating expenses associated with higher
lending and deposit activities. The largest items of other noninterest expense
were telephone, professional fees, other outside service fees, advertising and
stationery, supplies, printing.
COMPARISON FOR THE QUARTERS ENDED SEPTEMBER 30, 1999 AND SEPTEMBER 30, 1998
Net income for the third quarter of 1999 was $5.7 million, compared
with $6.4 million for the third quarter of 1998. Third quarter 1999 earnings
included three nonrecurring items: a $809,000 after-tax gain on sale of
branches, a $288,000 after-tax loss on disposition of obsolete equipment
(included in other noninterest income) and $2.3 million of after-tax
merger-related costs. Earnings per diluted share for the three months ended
September 30, 1999 were $0.22 per diluted share, compared with $0.30 for the
prior year period. Earnings per diluted share for the third quarter 1999
included three nonrecurring items: a $0.03 per diluted share after-tax gain on
sale of branches, a $0.01 per diluted share after-tax loss on disposition of
obsolete equipment and $0.09 per diluted share of after-tax merger-related
costs. The decrease in earnings per diluted share was partially due to a 22%
increase in average common shares outstanding, principally from the completion
of bank mergers.
Net interest income increased $5.9 million to $31.1 million for the
three months ended September 30, 1999 from $25.2 million for the comparable
period in 1998. This increase was attributable to a higher level of average
earning assets and a higher net interest margin. Earning assets averaged $2.7
billion and $2.3 billion in the third quarters of 1999 and 1998, respectively.
The third quarter 1999 net interest margin increased to 4.58%, compared with
4.41% for the third quarter of 1998. The higher net interest margin in the third
quarter of 1999 resulted from lower deposit costs partially offset by lower
earning asset yields (see "EARNINGS REVIEW - Net Interest Income").
Noninterest income increased to $8.8 million for the third quarter of
1999 compared with $6.7 million for the third quarter of 1998. Noninterest
income for the three months ended September 30, 1999 included two nonrecurring
items: a $2.2 million pre-tax gain on sale of branches and a $465,000 pre-tax
loss on disposition of obsolete equipment. Service charges on deposit accounts
increased to $3.1 million in the third quarter of 1999 compared with $2.3
million in the third quarter of 1998. This increase was due to attracting new
transaction accounts and improved collection results. Loan securitization income
was $43,000 in the third quarter of 1999 compared with $887,000 for the third
quarter of 1998. With the termination of the credit card trust during the third
quarter of 1999, loan securitization income related to credit cards ceased.
Other noninterest income for the third quarter of 1999 increased $532,000
primarily due to the establishment of a bank-owned life insurance program during
the second quarter of 1999 and increased merchant processing fees.
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Noninterest expenses, excluding merger-related costs of $3.2 million,
increased to $24.0 million for the three months ended September 30, 1999 from
$18.2 million for the three months ended September 30, 1998. Personnel expense
increased from $8.9 million for the third quarter of 1998 to $11.3 million for
the third quarter of 1999 due to mergers and the hiring of additional employees
as a result of expansion in existing and new markets. Occupancy and furniture
and equipment expense increased $919,000 to $3.9 million during third quarter
1999 from $3.0 million during third quarter 1998. Amortization of intangibles
increased from $1.0 million in the third quarter of 1998 to $1.6 million in the
third quarter of 1999 as a result of mergers completed in the second half of
1998. Other noninterest expenses increased $1.5 million from third quarter 1998
to third quarter 1999, largely because of increases in telephone, professional
fees, advertising and credit card processing expenses.
YEAR 2000
The Company recognizes a business risk in computerized systems when the
calendar rolls over into the new century. Some computer programs, particularly
older ones, use two digits rather than four digits for dates. Such programs may
recognize "00" as the year 1900 rather than the year 2000 causing interest
calculations to be incorrect or possibly causing the program or computer system
on which it runs to cease functioning altogether. This problem may occur in any
system containing a computer chip, even a telephone system. This problem is
commonly called the "Year 2000 Problem." All computer systems used by the
Company in its day-to-day operations could be affected.
Management has established a committee (the "Y2K Project Team") which
has identified affected systems and is currently working to ensure that this
event will not disrupt operations. A full-time staff member has been assigned to
the Y2K Project Team to assist in record keeping and disseminating information.
The Y2K Project Team reports regularly to the Audit Committee of the Company's
Board of Directors who report to the entire Board of Directors each quarter on
Year 2000 compliance. At its June 1998 meeting, the Company's Board of Directors
approved a Year 2000 Project Plan and the membership of the Y2K Project Team.
The Company's Year 2000 efforts include comprehensive testing of all
hardware and software to ensure that computer systems do not negatively affect
operations. Software applications testing began during the second quarter of
1998. The Company's current core banking software, mortgage software and
operating systems have been vendor-certified as Year 2000 compliant and have
been tested extensively in a User Group environment. The results of User Group
testing have been provided for the Company to review. In-house testing of
mission critical software and hardware was conducted in the first quarter of
1999 and substantially completed on March 31, 1999 in accordance with FDIC
guidelines. These applications include core banking; mortgage servicing,
origination and secondary marketing software; ACH software; and core operating
system software and hardware. In addition, a professional third party accounting
firm has conducted an independent review of core banking software proxy testing
results. All third-party providers of non-information technology systems,
including elevators, alarm systems and utilities, have been contacted. The
Company continues to perform due diligence in seeking information from all
vendors regarding their Year 2000 initiatives. Testing and certification for
remaining non-mission critical applications were completed on September 30, 1999
in accordance with regulatory requirements.
The current estimated cost to the Company for all Year 2000 activities
is $3.4 million, the
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majority of which will be capitalized. For the first nine months of 1999,
approximately $850,000 of Y2K expenses was included in other noninterest
expenses. Incomplete or untimely compliance would have a material adverse effect
on the Company, the dollar amount of which cannot be accurately quantified
because of the inherent variables and uncertainties involved.
The Company has included contingency and business resumption plans in
its Year 2000 compliance efforts. The Company has identified several potential
replacements in the event that current software is not functional in the year
2000. All internal testing and review of mission critical software has shown to
be Year 2000 compliant. Quality assurance review of testing results is ongoing.
In the event the Company encounters operational difficulty (due to
telecommunications or electrical failures) and cannot process data at the
Columbia Operations Center on January 1, 2000, the Company has an agreement with
an outside provider to use its off-site facilities to operate core banking
systems for the purpose of business resumption.
Year 2000 surveys have been sent to all commercial loan customers with
relationships greater than $1 million to assist in assessing their Year 2000
compliance. In addition, an analysis has been performed on the entire loan
portfolio based on Standard Industry Codes to determine if the Company has any
concentrations of loans in industries that are considered high risk due to Year
2000 exposure. In the fourth quarter of 1998, the Company hosted customer
seminars to educate customers in the Company's major markets. Ongoing branch
employee training and customer awareness initiatives will continue throughout
the remainder of the year. In addition, a cash availability plan has been
developed to gauge customer demand for extra cash toward the close of the year.
This plan will undergo regular reviews to adapt to changing demands.
BALANCE SHEET REVIEW
LOANS
The Company's loan portfolio consists of commercial mortgage loans,
commercial loans, consumer loans and one-to-four family residential mortgage
loans. A substantial majority of these borrowers are located in South Carolina
and Florida with concentrations in the Company's market areas. The Company has
no foreign loans or loans for highly leveraged transactions. The loan portfolio
does not contain any industry concentrations of credit risk exceeding 10% of the
portfolio. At September 30, 1999, the Company had total loans outstanding of
$2.3 billion that equaled approximately 94% of the Company's total deposits and
approximately 71% of the Company's total assets. The composition of the
Company's loan portfolio at September 30, 1999 follows: commercial and
commercial mortgage 53%, residential mortgage 29%, consumer 12%, construction 5%
and lease receivables 1%. Following the sale of the credit card portfolio,
credit cards constituted only a fraction of the Company's loan portfolio.
The Company's loans increased $360.5 million, or 19%, to approximately
$2.3 billion at September 30, 1999 from $1.9 billion at September 30, 1998 and
increased $248.0 million from approximately $2.0 billion at December 31, 1998.
Approximately $112.4 million of residential mortgage loans were sold in the
first nine months of 1999 excluding loans originated by correspondents. In
addition, approximately $53.6 million of credit card balances were sold during
the second quarter of 1999. Adjusting for the 1999 loan sales, internal loan
growth was approximately $378.6 million, or an annualized rate of 24.9%, during
the first nine months of 1999.
The Company had loans to 100 borrowers having principal amounts ranging
from $2 million to $5 million, which accounted for $320.2 million, or 14%, of
the Company's loan portfolio at
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September 30, 1999. The Company had loans to 30 borrowers having principal
amounts in excess of $5 million, which loans accounted for $222.3 million, or
10%, of the Company's loan portfolio at September 30, 1999. At September 30,
1998, the Company had loans to 86 borrowers with principal amounts ranging from
$2 million to $5 million, which accounted for $266.6 million, or 14%, of the
Company's loan portfolio. The Company had loans to 24 borrowers having principal
amounts in excess of $5 million, which loans accounted for $161.6 million, or
8.5%, of the Company's loan portfolio at September 30, 1998. Any material
deterioration in the quality of any of these larger loans could have a
significant impact on the Company's earnings.
For the first nine months of 1999, the Company's loans averaged $2.2
billion with a yield of 9.13%, compared with $1.7 billion and a yield of 9.44%
for the same period in 1998. Selling the credit card portfolio in the second
quarter of 1999 lowered the average loan yield. This decrease was partially
offset by increases in variable rate loans related to third quarter 1999 prime
interest rate increases. The interest rates charged on loans vary with the
degree of risk and the maturity and amount of the loan. Competitive pressures,
money market rates, availability of funds and government regulations also
influence interest rates.
ALLOWANCE FOR LOAN LOSSES
Management maintains an allowance for loan losses that it believes is
adequate to cover probable losses that are inherent in the loan portfolio.
However, management's judgment is based upon a number of assumptions which are
believed to be reasonable, but which may or may not prove valid. Thus, there can
be no assurance that charge-offs in future periods will not exceed the allowance
for loan losses or that additional increases in the allowance for loan losses
will not be required.
The allowance for loan losses is established through charges in the
form of a provision for loan losses. Loan losses and recoveries are charged or
credited directly to the allowance. The amount charged to the provision for loan
losses by the Company is based on management's judgment as to the amount
required to maintain an allowance adequate to provide for probable losses that
are inherent in the Company's loan portfolio. The level of this allowance is
dependent upon the total amount of past due loans, general economic conditions
and management's assessment of probable losses inherent in the loan portfolio.
The allowance for loan losses totaled $22.2 million, or 1.0% of loans
held for investment net of unearned income at September 30, 1999, compared with
$19.6 million, or 1.07% of loans held for investment net of unearned income at
September 30, 1998. At December 31, 1998, the allowance for loan losses was
$20.3 million, or 1.06% of loans held for investment net of unearned income.
During the second quarter of 1999, the allowance for loan losses was decreased
$3.0 million as a consequence of the sale of the credit cards. The amount of the
decrease was the portion of the allowance that was allocated to the credit card
portfolio prior to the sale.
Table 2 presents changes in the allowance for loan losses.
20
<PAGE>
TABLE 2
ANALYSIS OF ALLOWANCE FOR LOAN LOSSES
(dollars in thousands)
<TABLE>
<CAPTION>
At and for
At and for the nine months the year ended
ended September 30, December 31,
-------------------------- ---------------
1999 1998 1998
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Balance at beginning of period $ 20,266 $ 17,369 $ 17,369
Allowance of acquired companies 410 1,679 1,822
Allowance adjustment for credit card sale (2,977) -- --
Provision for loan losses 11,752 9,531 12,724
Charge-offs:
Credit cards 1,503 3,278 4,309
Bank loans, leases & Blue Ridge 6,618 6,731 8,466
Recoveries 850 1,064 1,126
- -------------------------------------------------------------------------------------------------------------------
Net charge-offs 7,271 8,945 11,649
- -------------------------------------------------------------------------------------------------------------------
Allowance at end of period $ 22,180 $ 19,634 $ 20,266
===================================================================================================================
</TABLE>
At September 30, 1999, the recorded investment in loans that were
considered to be impaired under Statement of Financial Accounting Standards 114,
"Accounting by Creditors for Impairment of a Loan," was $6.8 million. The
related allowance for these impaired loans was $2.7 million. The average
recorded investment and foregone interest on impaired loans during the nine
months ended September 30, 1999 was approximately $1.6 million and $86,000,
respectively. For the nine months ended September 30, 1999, the Company
recognized interest income on impaired loans of $492,000.
SECURITIES
At September 30, 1999, the Company's total investment portfolio had a
book value of $445.1 million and a market value of $490.8 million for an
unrealized net gain of approximately $45.7 million. Securities (i.e., securities
held for investment, securities available for sale and trading securities)
averaged $412.4 million in the first nine months of 1999, 9% above the average
of $376.8 million in the first nine months of 1998. The increase in the
securities balance was primarily attributable to the recording of the Company's
investment in Net.B@nk at market value during the third quarter of 1999. The
average portfolio yield decreased to 6.13% in the first nine months of 1999 from
6.31% in the first nine months of 1998. The portfolio yield decreased as a
result of decreasing short-term rates in the fourth quarter of 1998. This
decline was slightly offset by a change in the mix of securities. As securities
matured, they were reinvested in higher yielding agencies and mortgage-backed
securities. The composition of the investment portfolio as of September 30, 1999
follows: treasuries and agencies 45%, mortgage-backed securities 27%, other
securities 18%, and states and municipalities 10%. At September 30, 1999,
securities totaled $491.0 million, up $80.6 million from the $410.4 million
invested as of the third quarter end 1998 and up $30.2 million from the December
31, 1998 balance of $460.8 million.
At September 30, 1999, securities available for sale included the
following equity investments: 2,528,366 shares of common stock of Affinity
(recorded at its pre-tax market value of approximately $2.0 million) and
2,415,000 shares of common stock of Net.B@nk (recorded at its pre-tax market
value of approximately $53 million). Effective July 31, 1999, the Company began
recording the Net.B@nk shares at market value (see "EQUITY INVESTMENTS -
Investment in Net.B@nk, Inc."). The Affinity Warrant, which entitles the Company
to purchase an additional 3,471,340 shares of common stock at a purchase price
of $0.0001 per share, was not included in securities at September 30, 1999.
INTANGIBLE ASSETS AND OTHER ASSETS
21
<PAGE>
The intangible assets balance at September 30, 1999 of $117.2 million
was attributable to goodwill of $108.4 million and core deposit balance premiums
of $8.8 million. The intangible assets balance at September 30, 1998 of $117.5
million was attributable to goodwill of $105.6 million, core deposit balance
premiums of $8.2 million and credit card intangibles of $3.7 million.
At September 30, 1999, other assets included other real estate owned of
$2.0 million and mortgage servicing rights of $22.1 million. At September 30,
1998, other assets included other real estate owned of $2.6 million, which was
primarily attributable to one-to-four family residential mortgages associated
with the acquisition of Poinsett, and mortgage servicing rights of $25.7
million.
INTEREST-BEARING LIABILITIES
During the first nine months of 1999, interest-bearing liabilities
averaged $2.3 billion, compared with $1.9 billion in the first nine months of
1998. This increase resulted principally from acquisitions and internal deposit
growth related to account promotions and sales efforts. The average interest
rates were 4.54% and 4.99% in the first nine months of 1999 and 1998,
respectively. At September 30, 1999, interest-bearing deposits comprised
approximately 87% of total deposits and 87% of interest-bearing liabilities.
The Company's primary source of funds for loans and investments is its
deposits, which are gathered through the banking subsidiaries' branch network.
Deposits grew 6% to $2.4 billion at September 30, 1999 from $2.3 billion at
September 30, 1998. During this period, the Company added approximately $51
million from the October 1998 purchase of Colonial Bank and approximately $53
million from the April 1999 purchase of Citizens. In September 1999, the Company
sold approximately $48 million in deposits related to the sale of three branch
offices. The lower deposit growth rate reflects the Company's focus on reducing
the cost of deposits. During the first nine months of 1999, total
interest-bearing deposits averaged $2.1 billion with a rate of 4.43%, compared
with $1.7 billion with a rate of 4.88% in the first nine months of 1998. During
the first nine months of 1999, deposit pricing remained very competitive, a
pricing environment which the Company expects to continue. Average
noninterest-bearing deposits, which increased 20% during the year, remained
comparable at 13% of average total deposits for the first nine months of 1999
and 1998.
In September 1999, the Company introduced an Internet bank, Bank
CaroLine, which is offered as a service of Carolina First Bank, F.S.B. Bank
CaroLine serves customers exclusively through the web and phone support. Deposit
rates for Bank CaroLine are generally higher than the rates offered by the
Company's other subsidiary banks due to lower operating costs. Deposits gathered
through Bank CaroLine will be deployed by purchasing commercial and consumer
loans generated by the Company's subsidiary banks. At September 30, 1999, total
deposits for Bank CaroLine were not significant.
During the first quarter of 1999, the Company opened a branch in the
Cayman Islands. The branch is a "shell" branch of Carolina First Bank, and
accordingly, involved minimal start-up costs. The primary function of the branch
is to obtain deposits from the Eurocurrency interbank markets, which will be
utilized in funding Carolina First Bank's domestic loan portfolio. The bank
views this branch primarily as a vehicle for entrance into a funds market in
which it is not currently active.
Time deposits of $100,000 or more represented 15% of total deposits at
September 30,
22
<PAGE>
1999 and 14% of total deposits at September 30, 1998. The Company's large
denomination time deposits are generally from customers within the local market
areas of its banks and, therefore, have a greater degree of stability than is
typically associated with this source of funds. The Company does not pursue
brokered deposits; however, the Company acquired an immaterial amount of
brokered deposits through its Colonial Bank acquisition.
In the first nine months of 1999, average borrowed funds, which
includes repurchase agreements and Federal Home Loan Bank ("FHLB") advances,
totaled $184.6 million compared with $130.9 million for the same period in 1998.
This increase was primarily attributable to a rise in average FHLB advances to
$65.1 million in the first nine months of 1999 from $13.9 million in the first
nine months of 1998. Advances from the FHLB increased to $139.4 million as of
September 30, 1999 from $35.3 million at September 30, 1998. At December 31,
1998, FHLB advances totaled $35.1 million. This increase was primarily due to
additional borrowings from FHLB to fund increased loan activity and to purchase
corporate bonds for leveraging purposes. FHLB advances are a source of funding
which the Company uses depending on the current level of deposits and
management's willingness to raise deposits through market promotions.
CAPITAL RESOURCES AND DIVIDENDS
Total shareholders' equity amounted to $411.8 million, or 13% of total
assets, at September 30, 1999, compared with $354.8 million, or 13% of total
assets, at September 30, 1998. At December 31, 1998, total shareholders' equity
totaled $362.0 million, or 12% of total assets. The increase in total
shareholders' equity since September 30, 1998 resulted principally from the
issuance of $17.2 million in capital related to acquisitions and the retention
of earnings less cash dividends paid and stock repurchased. In addition, the
recording of the Company's investment in NetB@nk at market value during the
third quarter of 1999 added $34.6 million to the Company's unrealized gain on
securities, which is a component of shareholders' equity. In the fourth quarter
of 1998, the Company repurchased 394,874 shares of common stock, which decreased
shareholders' equity $9.8 million, in connection with the acquisition of First
National. In the first quarter of 1999, the Company repurchased 40,000 shares of
common stock. In March 1999, the Company rescinded its share repurchase program
due to the planned purchase of Citizens and Citrus Bank.
Book value per share at September 30, 1999 and 1998 was $16.03 and
$14.48, respectively. Recording the Company's NetB@nk investment at market value
during the third quarter of 1999 added approximately $1.39 to book value.
Tangible book value per share at September 30, 1999 and 1998 was $11.46 and
$9.68, respectively. Tangible book value was below book value as a result of the
purchase premiums associated with branch acquisitions and the acquisitions of CF
Mortgage, RPGI and five banks (all of which were accounted for as purchases).
At September 30, 1999, the Company and its subsidiary banks were in
compliance with each of the applicable regulatory capital requirements and
exceeded the well capitalized requirements. The table below sets forth various
capital ratios for the Company and its subsidiary banks.
23
<PAGE>
TABLE 3
CAPITAL RATIOS
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
<S> <C> <C> <C>
As of Well Capitalized Adequately Capitalized
9/30/99 Requirement Requirement
The Company:
Total Risk-based Capital 12.67% n/a n/a
Tier 1 Risk-based Capital 10.71 n/a n/a
Leverage Ratio 8.69 n/a n/a
Carolina First Bank:
Total Risk-based Capital 10.43% 10.0% 8.0%
Tier 1 Risk-based Capital 9.66 6.0 4.0
Leverage Ratio 7.97 5.0 4.0
Carolina First Bank, F.S.B.:
Total Risk-based Capital 16.34% 10.0% 8.0%
Tier 1 Risk-based Capital 15.07 6.0 4.0
Leverage Ratio 7.19 5.0 4.0
Citrus Bank:
Total Risk-based Capital 11.02% 10.0% 8.0%
Tier 1 Risk-based Capital 9.77 6.0 4.0
Leverage Ratio 7.73 5.0 4.0
</TABLE>
The Company and its subsidiaries are subject to certain regulatory
restrictions on the amount of dividends they are permitted to pay. The Company
has paid a cash dividend each quarter since the initiation of cash dividends on
February 1, 1994. The Company presently intends to pay a quarterly cash dividend
on the Common Stock; however, future dividends will depend upon the Company's
financial performance and capital requirements.
MARKET RISK
Market risk is the risk of loss from adverse changes in market prices
and rates. The Company's market risk arises principally from interest rate risk
inherent in its lending, deposit and borrowing activities. Management actively
monitors and manages its interest rate risk exposure. Although the Company
manages other risks, such as credit quality and liquidity risk, in the normal
course of business, management considers interest rate risk to be its most
significant market risk and could potentially have the largest material effect
on the Company's financial condition and results of operations. Other types of
market risks, such as foreign currency exchange risk and commodity price risk,
do not arise in the normal course of the Company's business activities.
Achieving consistent growth in net interest income is the primary goal
of the Company's asset/liability function. The Company attempts to control the
mix and maturities of assets and liabilities to achieve consistent growth in net
interest income despite changes in market interest rates. The Company seeks to
accomplish this goal while maintaining adequate liquidity and capital. The
Company's asset/liability mix is sufficiently balanced so that the effect of
interest rates moving in either direction is not expected to be significant over
time.
The Company's Asset/Liability Committee uses a simulation model to
assist in achieving consistent growth in net interest income while managing
interest rate risk. The model takes into account interest rate changes as well
as changes in the mix and volume of assets and liabilities. The model simulates
the Company's balance sheet and income statement under several different rate
scenarios. The model's inputs (such as interest rates and levels of loans and
deposits) are
24
<PAGE>
updated on a monthly basis in order to obtain the most accurate forecast
possible. The forecast presents information over a twelve-month period. It
reports a base case in which interest rates remain flat and reports variations
that occur when rates increase and decrease 200 basis points. According to the
model as of September 30, 1999, the Company is positioned so that net interest
income will increase $7.0 million if interest rates rise in the next twelve
months and will decrease $4.1 million if interest rates decline in the next
twelve months. Computation of prospective effects of hypothetical interest rate
changes are based on numerous assumptions, including relative levels of market
interest rates and loan prepayments, and should not be relied upon as indicative
of actual results. Further, the computations do not contemplate any actions the
Company could undertake in response to changes in interest rates.
As of September 30, 1999, there was no significant change from the
interest rate risk sensitivity analysis for various changes in interest rates
calculated as of December 31, 1998. The foregoing disclosures related to the
market risk of the Company should be read in conjunction with the Company's
audited consolidated financial statements, related notes and management's
discussion and analysis of financial condition and results of operations for the
year ended December 31, 1998 included in the Company's 1998 Annual Report on
Form 10-K.
The static interest sensitivity gap position, while not a complete
measure of interest sensitivity, is also reviewed periodically to provide
insights related to the static repricing structure of assets and liabilities. At
September 30, 1999, on a cumulative basis through twelve months, rate-sensitive
liabilities exceeded rate-sensitive assets, resulting in a liability sensitive
position of $582.9 million. This liability sensitive position is largely
attributable to assuming that the Company's deposit transaction accounts, which
totaled $896.2 million at September 30, 1999, will reprice within one year. This
assumption may or may not hold true as the Company believes its transaction
accounts are generally not price sensitive.
LIQUIDITY
Liquidity management involves meeting the cash flow requirements of the
Company both at the holding company level as well as at the subsidiary level.
The holding company and non-banking subsidiaries of the Company require cash for
various operating needs, including general operating expenses, payment of
dividends to shareholders, interest on borrowing, extensions of credit at Blue
Ridge, business combinations and capital infusions into subsidiaries. The
primary source of liquidity for the Company's holding company is dividends from
the banking and non-banking subsidiaries.
The Company's banking subsidiaries have cash flow requirements
involving withdrawals of deposits, extensions of credit and payment of operating
expenses. The principal sources of funds for liquidity purposes for the banking
subsidiaries are customers' deposits, principal and interest payments on loans,
loan sales or securitizations, securities available for sale, maturities of
securities, temporary investments and earnings. The subsidiary banks' liquidity
is also enhanced by the ability to acquire new deposits through the established
branch network of 63 branches in South Carolina and 13 branches in Florida as of
September 30, 1999. The liquidity ratio is an indication of a bank's ability to
meet its short term funding obligations. At September 30, 1999, the liquidity
ratios for Carolina First Bank, Carolina First Bank, F.S.B., and Citrus Bank
were approximately 14.6%, 25.8% and 26.0%, respectively. The liquidity needs of
the banking subsidiaries are a factor in developing their deposit pricing
structure; deposit pricing may be altered to retain or grow deposits if deemed
necessary. Carolina First Bank, Carolina First Bank, F.S.B. and Citrus Bank have
access to borrowing from the FHLB and maintain unused short-term lines of
25
<PAGE>
credit from unrelated banks. At September 30, 1999, unused borrowing capacity
from the FHLB totaled approximately $87.0 million with an outstanding balance of
$139.4 million. At September 30, 1999, the banking subsidiaries had unused
short-term lines of credit totaling approximately $55.0 million (which are
withdrawable at the lender's option). Management believes that these sources are
adequate to meet its liquidity needs.
The Company has entered into lease agreements for three new buildings
located in Columbia and Greenville, South Carolina, with payments anticipated to
begin during the fourth quarter of 1999 and first half of 2000. Aggregate annual
lease payments associated with these buildings are expected to total
approximately $5.7 million. In addition, the Company anticipates related
leasehold improvements of approximately $13.3 million and capitalized furniture
and equipment of approximately $6.0 million.
The Company is reviewing proposals for a new core operating system to
provide the infrastructure for existing and future growth plans. The associated
investment is expected to total approximately $6.0 million for capitalized
expenses and $1.1 million for annual service agreements. The Company expects to
enter into an agreement during the fourth quarter of 1999 and begin the system
conversion during the first quarter of 2000.
ASSET QUALITY
Prudent risk management involves assessing risk and managing it
effectively. Certain credit risks are inherent in making loans, particularly
commercial, real estate and consumer loans. The Company attempts to manage
credit risks by adhering to internal credit policies and procedures. These
policies and procedures include a multi-layered loan approval process, officer
and customer limits, periodic documentation examination and follow-up procedures
for any exceptions to credit policies. Loans are assigned a grade and those that
are determined to involve more than normal credit risk are placed in a special
review status. Loans that are placed in special review status are required to
have a plan under which they will be either repaid or restructured in a way that
reduces credit risk. The Loan Committee of the Board of Directors reviews loans
in this special review status monthly.
Nonperforming assets as a percentage of loans and foreclosed property
totaled 0.45% and 0.26% as of September 30,1999 and 1998, respectively.
Nonperforming assets increased to $10.1 million as of September 30,1999 from
$4.6 million at June 30,1999 primarily due to the transfer of a $4.0 million
loan to nonaccrual status during the quarter. This loan is a 3.2% participation
in a shared national credit, the only such participation in the loan portfolio.
It is not delinquent and, in management's judgment, repayment in full is
possible. However, recent developments justify this change in status, and
reserves sufficient to absorb any anticipated loss have been allocated to the
loan.
In connection with this syndicated national credit, Carolina First Bank
has filed a lawsuit in August 1999 in U.S. District Court in the Southern
District of New York against Banque Paribas, the lead bank on this syndicated
credit. This lawsuit seeks, among other things, an order requiring Banque
Paribas to purchase Carolina First Bank's participation in this credit. Carolina
First Bank's claim is based on agreements between Carolina First Bank and Banque
Paribas which require Carolina First Bank's participation to be purchased under
certain circumstances, which Carolina First Bank believes has occurred. Although
Carolina First Bank believes it should prevail in this lawsuit, the outcome
cannot be predicted.
26
<PAGE>
As demonstrated by the following analytical measures of asset quality,
management believes the Company has effectively managed its credit risk. Net
loan charge-offs, including credit card receivables, totaled $7.3 million and
$8.9 million in the first nine months of 1999 and 1998, respectively, or 0.45%
and 0.70%, respectively, as an annualized percentage of average loans. Excluding
credit card receivables, annualized net loan charge-offs as a percentage of
average loans were 0.26% and 0.46% during the first nine months of 1999 and
1998, respectively.
TABLE 4
NONPERFORMING ASSETS AND PAST DUE LOANS
($ in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
-------------------------- -------------
1999 1998 1998
----------- ------------ -------------
<S> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------
Nonaccrual loans $ 6,818 $ 875 $ 870
Restructured loans 1,283 1,283 1,283
- ------------------------------------------------------------------------------------------------------
Total nonperforming loans 8,101 2,158 2,153
Other real estate 2,025 2,560 3,168
- ------------------------------------------------------------------------------------------------------
Total nonperforming assets $ 10,126 $ 4,718 $ 5,321
======================================================================================================
Nonperforming assets as a % of
loans and foreclosed property 0.45% 0.26% 0.28%
Net loan charge-offs as a % of
average loans (annualized) 0.45 0.70 0.66
Accruing loans past due 90 days 5,458 4,514 7,080
Allowance for loan losses to
nonperforming loans 2.74x 9.10x 9.41x
======================================================================================================
</TABLE>
INDUSTRY DEVELOPMENTS
Certain recently-enacted and proposed legislation could have an effect
on both the costs of doing business and the competitive factors facing the
financial institutions industry. The Company is unable at this time to assess
the impact of this legislation on its financial condition or operations.
27
<PAGE>
PART II
ITEM 1 LEGAL PROCEEDINGS
The Company is subject to various legal proceedings and claims that
arise in the ordinary course of its business. In the opinion of
management based on consultation with legal counsel, any outcome of
such pending litigation would not materially affect the Company's
consolidated financial position or results of operations.
On November 4, 1996, a derivative shareholder action was filed in
Greenville County Court of Common Pleas against the Company, the
majority of the Company's and Carolina First Bank's directors and
certain executive and other officers. The named plaintiffs are the
Company by and through certain minority shareholders. The Company filed
a motion to dismiss with respect to all claims in this complaint, which
was granted in December 1997. Plaintiffs have appealed the grant of the
motion to dismiss. Plaintiffs allege as causes of action the following:
conversion of corporate opportunity; breach of fiduciary duty and
constructive fraud; civil conspiracy; and mutual mistake. The factual
basis upon which these claims are made generally involves the payment
to Company officers and other individuals of a bonus in stock held by
the Company in Affinity Technology Group, Inc. (as reward for their
efforts in connection with the Company's procurement of stock in
Affinity Technology Group, Inc.), statements to former shareholders of
Midlands National Bank in connection with the Company's acquisition of
that bank, and alleged mismanagement by certain executive officers
involving financial matters. The complaint seeks damages for the
benefit of the Company aggregating $41 million and rescission of the
Affinity Technology Group, Inc. bonus.
In an action brought by the same attorneys who brought the
above-mentioned derivative action, on December 31, 1996, certain
individuals filed a class action lawsuit against the Company, Carolina
First Bank, and a number of officers and directors of the Company and
Carolina First Bank. In connection with the judge's granting the motion
to dismiss in the above-referenced derivative action, the plaintiffs'
attorneys withdrew this lawsuit, without prejudice.
ITEM 2 CHANGE IN SECURITIES
None.
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS
None.
28
<PAGE>
PART II
(CONTINUED)
ITEM 5 OTHER INFORMATION
None.
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.1 Amended and Restated Noncompetition, Severance and Employment Agreement
dated as of May 21, 1999, by and between Mack I. Whittle, Jr. and
Carolina First Corporation.
10.2 Amended and Restated Noncompetition, Severance and Employment Agreement
dated as of May 21, 1999, by and between William S. Hummers III and
Carolina First Corporation.
10.3 Amended and Restated Noncompetition, Severance and Employment Agreement
dated as of October 5, 1999, by and between John DuBose and Carolina
First Corporation.
10.4 Change in Control Agreement dated as of November 2, 1998, by and
between Michael W. Sperry and Carolina First Corporation.
11.1 Computation of Basic and Diluted Earnings Per Share.
12.1 Computation of Earnings to Fixed Charges Ratio.
27.1 Financial Data Schedules
(b) Reports on Form 8-K
The Company filed current reports on Form 8-K dated July 16,1999
and August 16, 1999.
29
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
Carolina First Corporation
/s/William S. Hummers III
----------------------------------
William S. Hummers III
Executive Vice President
30
Exhibit 10.1
NOTICE: THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT
TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT
AMENDED AND RESTATED NONCOMPETITION,
SEVERANCE AND EMPLOYMENT AGREEMENT
Between
CAROLINA FIRST CORPORATION and MACK I. WHITTLE, JR.
This Amended and Restated Noncompetition, Severance and Employment
Agreement (this "Agreement") is made and entered into as of this 21st day of
May, 1999 by and between Mack I. Whittle, Jr., an individual (the "Executive"),
and Carolina First Corporation, a South Carolina corporation and financial
institution holding company headquartered in Greenville, South Carolina (the
"Company"). As used herein, the term "Company" shall include the Company and any
and all of its subsidiaries where the context so applies.
W I T N E S S E T H
WHEREAS the Company's Board of Directors (the "Board") believes that
the Executive has been instrumental in the success of the Company since its
inception in 1986;
WHEREAS the Company desires to continue to employ the Executive as
Chief Executive Officer of the Company and in such other capacities as the
Executive is currently employed as of the date hereof;
WHEREAS the terms hereof are consistent with the executive compensation
objectives of the Company as established by the Board;
WHEREAS the Executive is willing to accept the employment contemplated
herein under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. Employment. Subject to the terms and conditions hereof, the Company
hereby employs the Executive and Executive hereby accepts such employment as the
Chief Executive Officer of the Company having such duties and responsibilities
as are set forth in Section 3 below.
2. Definitions. For purposes of this Agreement, the following terms
shall have the meanings specified below.
<PAGE>
"Change in Control" shall mean:
(i) The acquisition, directly or indirectly, by any Person
(other than (A) any employee plan established by the Company, (B) the
Company or any of its affiliates (as defined in Rule 12b-2 promulgated
under the Exchange Act), (C) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (D) a
corporation owned, directly or indirectly, by stockholders of the
Company in substantially the same proportions as their ownership of the
Company), of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from
the Company) representing an aggregate of 20% or more of the combined
voting power of the Company's then outstanding voting securities;
(ii) During any period of up to two consecutive years,
individuals who, at the beginning of such period, constitute the Board
cease for any reason to constitute at least a majority thereof,
provided that any person who becomes a director subsequent to the
beginning of such period and whose nomination for election is approved
by at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination for election was previously so approved (other than a
director (A) whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election of
the directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the Exchange Act, or (B) who was designated by a
Person who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) hereof) shall be
deemed a director as of the beginning of such period;
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation other than (A)
a merger or consolidation that would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of any Company, at
least 51% of the combined voting power of the voting securities of the
Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or becomes the
beneficial owner (as defined in clause (i) above), directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company) representing 25% or more of the combined
voting power of the Company's then outstanding voting securities; or
(C) a plan of complete liquidation of the Company or an agreement for
the sale or disposition of the Company of all or substantially all of
the Company's assets; or
(iv) The occurrence of any other event or circumstance which
is not covered by (i) through (iii) above which the Board determines
affects control of the Company and, in order to implement the purposes
of this Agreement as set forth above, adopts a resolution
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that such event or circumstance constitutes a Change in Control for
the purposes of this Agreement.
"Cause" shall mean:
(i) In the absence of a Change in Control: (a) fraud; (b)
embezzlement; (c) conviction of the Executive of any felony; (d) a
material breach of, or the wilful failure or refusal by the Executive
to perform and discharge the Executive's duties, responsibilities and
obligations under this Agreement; (e) any act of moral turpitude or
wilful misconduct by the Executive intended to result in personal
enrichment of the Executive at the expense of the Company, or any of
its affiliates or which has a material adverse impact on the Business
or reputation of the Company or any of its affiliates (such
determination to be made by the Board in its reasonable judgment); (f)
intentional material damage to the property or Business of the Company;
(g) gross negligence; or (h) the ineligibility of the Executive to
perform his duties because of a ruling, directive or other action by
any agency of the United States or any state of the United States
having regulatory authority over the Company.
(ii) After a Change in Control: (a) material criminal fraud,
(b) gross negligence, (c) material dereliction of duties, (d)
intentional material damage to the property or business of the Company,
or (e) the commission of a material felony, in each case, as determined
in the reasonable discretion of the Board, but only if (1) the
Executive has been provided with written notice of any assertion that
there is a basis for termination for cause which notice shall specify
in reasonable detail specific facts regarding any such assertion, (2)
such written notice is provided to the Executive a reasonable time
before the Board meets to consider any possible termination for cause,
(3) at or prior to the meeting of the Board to consider the matters
described in the written notice, an opportunity is provided to the
Executive and his counsel to be heard before the Board with respect to
the matters described in the written notice, (4) any resolution or
other Board action held with respect to any deliberation regarding or
decision to terminate the Executive for cause is duly adopted by a vote
of a majority of the entire Board of the Company at a meeting of the
Board called and held and (5) the Executive is promptly provided with a
copy of the resolution or other corporate action taken with respect to
such termination. No act or failure to act by the Executive shall be
considered wilful unless done or omitted to be done by him not in good
faith and without reasonable belief that his action or omission was in
the best interests of the Company. The unwillingness of the Executive
to accept any or all of a change in the nature or scope of his
position, authorities or duties, a reduction in his total compensation
or benefits, a relocation that he deems unreasonable in light of his
personal circumstances, or other action by or request of the Company in
respect of his position, authority, or responsibility that he
reasonably deems to be contrary to this Agreement, may not be
considered by the Board to be a failure to perform or misconduct by the
Executive.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute, rule or regulation of similar effect.
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"Confidential Information" shall mean all business and other
information relating to the business of the Company, including without
limitation, technical or nontechnical data, programs, methods, techniques,
processes, financial data, financial plans, product plans, and lists of actual
or potential customers, which (i) derives economic value, actual or potential,
from not being generally known to, and not being readily ascertainable by proper
means by, other Persons, and (ii) is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy or confidentiality. Such
information and compilations of information shall be contractually subject to
protection under this Agreement whether or not such information constitutes a
trade secret and is separately protectable at law or in equity as a trade
secret. Confidential Information does not include confidential business
information which does not constitute a trade secret under applicable law two
years after any expiration or termination of this Agreement.
"Disability" or "Disabled" shall mean the Executive's inability as a
result of physical or mental incapacity to substantially perform his duties for
the Company on a full-time basis, with or without accommodation, for a period of
six (6) months.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Involuntary Termination" shall mean the termination of Executive's
employment by the Executive following a Change in Control which, in the sole
judgment of the Executive, is due to (i) a change of the Executive's
responsibilities, position (including status as Chief Executive Officer of the
Company, its successor or ultimate parent entity, office, title, reporting
relationships or working conditions) authority or duties (including changes
resulting from the assignment to the Executive of any duties inconsistent with
his positions, duties or responsibilities as in effect immediately prior to the
Change in Control); or (ii) a change in the terms or status (including the
rolling ten year termination date) of this Agreement; or (iii) a reduction in
the Executive's compensation or benefits; or (iv) a forced relocation of the
Executive outside the Greenville metropolitan area; or (v) a significant
increase in the Executive's travel requirements.
"Person" shall mean any individual, corporation, bank, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or other entity.
"Voluntary Termination" shall mean the termination by Executive of
Executive's employment following a Change in Control which is not the result of
any of clauses (i) through (v) set forth in the definition of Involuntary
Termination above.
3. Duties. During the term hereof, the Executive shall have such duties
and authority as are typical of the chief executive officer of a company such as
the Company, including, without limitation, those specified in the Company's
Bylaws. Executive agrees that during the Term hereof, he will devote his full
time, attention and energies to the diligent performance of his duties.
Executive shall not, without the prior written consent of the Company, at any
time during the Term hereof (i) accept employment with, or render services of a
business, professional or commercial nature to, any Person other than the
Company, (ii) engage in any venture or activity which the Company may in good
faith consider to be competitive with or adverse to the business of the Company
or of any affiliate of the Company, whether alone, as a partner, or as an
officer, director,
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employee or shareholder or otherwise, except that the ownership of not more than
5% of the stock or other equity interest of any publicly traded corporation or
other entity shall not be deemed a violation of this Section, or (iii) engage in
any venture or activity which the Board may in good faith consider to interfere
with Executive's performance of his duties hereunder.
4. Term. Unless earlier terminated as provided herein, the Executive's
employment hereunder shall be for a rolling term of ten years (the "Term")
commencing on the date hereof. This Agreement shall be deemed to extend each day
for an additional day automatically and without any action on behalf of either
party hereto until Executive turns fifty-five; upon Executive's fifty-fifth
birthday, such "Term" shall be converted to a fixed term of ten years and shall
expire (without any action on behalf of either party hereto) on Executive's
sixty-fifth birthday; this Agreement shall terminate upon the expiration of such
Term. Either party may, by notice to the other, cause this Agreement to cease to
extend automatically and, upon such notice, the "Term" of this Agreement shall
be the ten years following the date of such notice, and this Agreement shall
terminate upon the expiration of such Term.
5. Termination. This Agreement may be terminated as follows:
5.1 The Company. The Company shall have the right to terminate
Executive's employment hereunder at any time during the Term hereof (i) for
Cause, (ii) if the Executive becomes Disabled, (iii) upon the Executive's death,
or (iv) without Cause.
5.1.1 If the Company terminates Executive's
employment under this Agreement pursuant to clauses (i), (ii) or (iii)
of Section 5.1, the Company's obligations hereunder shall cease as of
the date of termination; provided, however, if Executive is terminated
for Cause after a Change in Control, then such termination shall be
treated as a Voluntary Termination as contemplated in Section 5.2.3
below.
5.1.2 If the Company terminates Executive pursuant to
clause (iv) of Section 5.1, Executive shall be entitled to receive
immediately as severance upon such termination, aggregate compensation
and benefits provided in Section 6 equal to three times Executive's
annual compensation being paid at the time of termination. For purposes
of determining compensation which is not fixed (such as a bonus), the
annual amount of such unfixed compensation shall be deemed to be the
equal to the average of such compensation over the three year period
immediately prior to the termination.
5.1.3 In the event of such termination pursuant to
clause (iv) of Section 5.1, (A) all rights of Executive pursuant to
awards of share grants or options granted by the Company shall be
deemed to have vested and shall be released from all conditions and
restrictions, except for restrictions on transfer pursuant to the
Securities Act of 1933, as amended, and (B) the Executive shall be
deemed to be credited with service with the Company for such remaining
Term for the purposes of the Company's benefit plans; (C) the Executive
shall be deemed to have retired from the Company and shall be entitled
as of the termination date, or at such later time as he may elect to
commence receiving the total combined qualified and non-qualified
retirement benefit to which he is entitled hereunder,
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or his total non-qualified retirement benefit hereunder if under the
terms of the Company's qualified retirement plan for salaried employees
he is not entitled to a qualified benefit, and (D) if any provision of
this Section 5.1.3 cannot, in whole or in part, be implemented and
carried out under the terms of the applicable compensation, benefit, or
other plan or arrangement of the Company because the Executive has
ceased to be an actual employee of the Company, because the Executive
has insufficient or reduced credited service based upon his actual
employment by the Company, because the plan or arrangement has been
terminated or amended after the effective date of this Agreement, or
because of any other reason, the Company itself shall pay or otherwise
provide the equivalent of such rights, benefits and credits for such
benefits to Executive, his dependents, beneficiaries and estate.
5.2 By Executive. Executive shall have the right to terminate
his employment hereunder if (i) the Company materially breaches this Agreement
and such breach is not cured within 30 days after written notice of such breach
is given by Executive to the Company; (ii) there is a Voluntary Termination; or
(iii) there is an Involuntary Termination.
5.2.1 If Executive terminates his employment other
than pursuant to clauses (i), (ii) or (iii) of Section 5.2, the
Company's obligations under this Agreement shall cease as of the date
of such termination and Executive shall be subject to the
confidentiality provisions set forth in Section 8 hereof and the
noncompetition provisions set forth in Section 9 hereof for a period of
one (1) year without the additional compensation provided in Section 9.
5.2.2 If Executive terminates his employment
hereunder pursuant to either clause (i) or clause (iii) of Section 5.2,
Executive shall be entitled to receive his base salary and other
benefits due him through the termination date, less applicable taxes
and other deductions, and receive immediately in a lump sum as
severance, aggregate cash compensation provided in Section 6 equal to
three times Executive's annual compensation being paid at the time of
termination. For purposes of determining compensation which is not
fixed (such as a bonus), the annual amount of such unfixed compensation
shall be deemed to be the equal to the average of such compensation
over the three year period immediately prior to the termination.
5.2.3 If Executive terminates his employment pursuant
to clause (ii) of Section 5.2, Executive shall be entitled to receive
his base salary and other benefits due him through the termination date
less applicable taxes and other deductions and receive immediately in a
lump sum as severance aggregate compensation and benefits provided in
Section 6 equal to one times Executive's annual compensation being paid
at the time of Voluntary Termination. For purposes of determining
compensation which is not fixed (such as a bonus), the annual amount of
such unfixed compensation shall be deemed to be the equal to the
average of such compensation over the three year period immediately
prior to the termination.
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5.2.4 In addition, in the event of such termination
pursuant to any of clauses (i) through (iii) of this Section 5.2, (A)
all rights of Executive pursuant to awards of share grants or options
granted by the Company shall be deemed to have vested and shall be
released from all conditions and restrictions, except for restrictions
on transfer pursuant to the Securities Act of 1933, as amended, and (B)
the Executive shall be deemed to be credited with service with the
Company for such remaining Term for the purposes of the Company's
benefit plans, and (C) the Executive shall be deemed to have retired
from the Company and shall be entitled as of the termination date, or
at such later time as he may elect to commence receiving the total
combined qualified and non-qualified retirement benefit to which he is
entitled hereunder, or his total non-qualified retirement benefit
hereunder if under the terms of the Company's qualified retirement plan
for salaried employees he is not entitled to a qualified benefit, and
(D) if any provision of this Section 5.2.4 cannot, in whole or in part,
be implemented and carried out under the terms of the applicable
compensation, benefit, or other plan or arrangement of the Company
because the Executive has ceased to be an actual employee of the
Company, because the Executive has insufficient or reduced credited
service based upon his actual employment by the Company, because the
plan or arrangement has been terminated or amended after the effective
date of this Agreement, or because of any other reason, the Company
itself shall pay or otherwise provide the equivalent of such rights,
benefits and credits for such benefits to Executive, his dependents,
beneficiaries and estate.
6. Compensation. In consideration of Executive's services and covenants
hereunder, Company shall pay to Executive the compensation and benefits
described below (which compensation shall be paid in accordance with the normal
compensation practices of the Company and shall be subject to such deductions
and withholdings as are required by law or policies of the Company in effect
from time to time, provided that his salary pursuant to Section 6.1 shall be
payable not less frequently than monthly):
6.1 Annual Salary. During the Term hereof, the Company shall
pay to Executive a base established by the Board which for the first year of the
Term shall be not less than the salary of the Executive for the past three
years. Executive's salary will be reviewed by the Board at the beginning of each
of its fiscal years and, in the sole discretion of the Board, may be increased
for such year; provided, however, that following a Change in Control, the base
salary shall be increased annually by a percentage at least equal to the average
annual increase over the past three years.
6.2 Annual Incentive Bonus. During the Term hereof, the Board
may pay to Executive an annual incentive cash bonus in accordance with the terms
of the Short Term Incentive Compensation Plan.
6.3 Long Term Incentive Compensation Plan. During the Term
hereof, the Board may pay to Executive long term incentive cash bonuses in
accordance with the Long Term Incentive Compensation Plan.
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6.4 Stock Options and Restricted Stock. During the Term
hereof, the Board shall grant Executive options to purchase Company Common Stock
and restricted stock in accordance with the terms of the Company's Long Term
Incentive Compensation Plan.
6.5 Other Benefits. Executive shall be entitled to share in
any other employee benefits generally provided by the Company to its most highly
ranking executives for so long as the Company provides such benefits. The
Company also agrees to provide Executive with a Company-paid automobile,
reasonable club dues for one country club and two business club(s), personal tax
advisory services, and a $5,000,000 life insurance policy and such disability
insurance as may be purchased by $_____ per year in premiums. Executive shall
also be entitled to participate in all other benefits accorded general Company
employees.
7. Excess Parachute Payments.
7.1 It is the intention of the parties hereto that the
severance payments and other compensation provided for herein (other than
payments pursuant to Section 9) are reasonable compensation for Executive's
services to the Company and shall not constitute "excess parachute payments"
within the meaning of Section 280G of the Code and any regulations thereunder.
In the event that the Company's independent accountants acting as auditors for
the Company on the date of a Change in Control determine that the payments
provided for herein constitute "excess parachute payments," then the
compensation payable hereunder shall be reduced to the point that such
compensation shall not qualify as "excess parachute payments."
7.2 To the extent that payments under Section 9 cause a
"parachute payment," as defined in Section 280G(b)(2) of the Code, the Company
shall indemnify Executive and hold him harmless against all claims, losses,
damages, penalties, expenses, and excise taxes relating thereto. To effect this
indemnification, the Company shall pay Executive an additional amount that is
sufficient to pay any excise tax imposed by Section 4999 of the Code on the
payments and benefits to which Executive is entitled without the additional
amount plus any penalties or interest imposed by the Internal Revenue Service in
regard to such amounts, plus another additional amount sufficient to pay all the
excise and income taxes on the additional amounts. The determination of any
additional amount that must be paid under this section at any time shall be made
in good faith by the independent auditors then employed by the Company.
8. Confidentiality. Executive shall hold in a fiduciary capacity for
the benefit of the Company all Confidential Information relating to the Company
or any of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by the
Company or any of its affiliated companies. After termination of Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. Upon the termination or expiration
of his employment hereunder, Executive agrees to deliver promptly to the Company
all Company files, customer lists, management reports,
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memoranda, research, Company forms, financial data and reports and other
documents supplied to or created by him in connection with his employment
hereunder (including all copies of the foregoing) in his possession or control
and all of the Company's equipment and other materials in his possession or
control. In no event shall an asserted violation of the provisions of this
Section 10 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
9. Noncompetition and Nonsolicitation Agreement. If this Agreement is
terminated by the Company pursuant to Section 5.1(iv) or by Executive pursuant
to Section 5.2(i) or (iii), Executive shall not enter into an employment
relationship or a consulting arrangement with any other bank, thrift, lending or
financial institution of any type headquartered or having a physical presence in
the State of South Carolina (hereinafter a "competitor") within five years of
the anniversary of the date of the Change in Control (the "Noncompete Period").
The obligations contained in this Section 9 shall not prohibit Executive from
being an owner of not more than 5% of the outstanding stock of any class of a
corporation which is publicly traded, so long as Executive has no active
participation in the business of such corporation.
9.1 During the Noncompete Period, Executive shall not directly
or indirectly through another entity (i) induce or attempt to induce any
employee of Company to leave the employ of Company, including but not limited to
a competitor, or in any way interfere with the relationship between Company and
any employee thereof, (ii) hire any person who was an employee of Company or any
subsidiary at any time during the time that Executive was employed by Company,
or (iii) induce or attempt to induce any customer, supplier, or other entity in
a business relation of Company to cease doing business with Company, or in any
way interfere with the relationship between any such customer, supplier, or
business relation and Company or do business with a competitor.
9.2 Solely in consideration of Executive's promises set forth
in this Section 9 (and in addition to any other severance compensation provided
in this Agreement), upon termination of the Executive pursuant to the terms
contained in this Section 9, Company agrees to pay Executive an amount equal to
ten times Executive's annual cash compensation as provided in Sections 6.1 and
6.2 being paid at the time of commencement of the Noncompete Period. For
purposes of determining compensation which is not fixed (such as a bonus), the
annual amount of such unfixed compensation shall be deemed to be the equal to
the average of such compensation over the three year period immediately prior to
the termination. The amount payable under this Section 9.2 shall be in five
annual installments beginning on the first day of the Noncompete Period and on
the four subsequent anniversaries thereof.
9.3 If, at the time of enforcement of this Section 9, a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law. Executive agrees that the restrictions
contained in this Section 9 are reasonable.
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9.4 In the event of the breach or a threatened breach by
Executive of any of the provisions of this Section 9, Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof (without posting a bond or other security). In
addition, in the event of an alleged breach or violation by Executive of this
Section 9, the Noncompete Period shall be tolled until such breach or violation
has been duly cured.
10. Trust. The Company shall establish an irrevocable trust to fund the
maximum amount of obligations which could reasonably be expected to become
payable hereunder under any circumstances (which may be a "rabbi trust" if so
requested by Executive), which trust (i) shall have as trustee an individual
acceptable to Executive, (ii) shall be fully funded upon the earlier of a Change
in Control or the approval of any regulatory application filed by a potential
acquiror of the Company seeking to acquire control of the Company, and (iii)
shall contain such other terms and conditions as are reasonably necessary in
Executive's determination to ensure the Company's compliance with its
obligations hereunder.
11. Assignment. The parties acknowledge that this Agreement has been
entered into due to, among other things, the special skills of Executive, and
agree that this Agreement may not be assigned or transferred by Executive, in
whole or in part, without the prior written consent of Company.
12. Notices. All notices, requests, demands, and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered or seven days after mailing if mailed, first class,
certified mail postage prepaid:
To the Company: Carolina First Corporation
102 South Main Street
Greenville, South Carolina 29601
Attn: Chairman of the Board
To Executive: Mack I. Whittle, Jr.
9 Hidden Hills Drive
Greenville, South Carolina 29605
Any party may change the address to which notices, requests, demands, and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.
13. Provisions Severable. If any provision or covenant, or any part
thereof, of this Agreement should be held by any court to be invalid, illegal or
unenforceable, either in whole or in part, such invalidity, illegality or
unenforceability shall not affect the validity, legality or
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enforceability of the remaining provisions or covenants, or any part thereof, of
this Agreement, all of which shall remain in full force and effect.
14. Remedies in the Absence of a Change in Control. The terms of
this Section 14 will apply in the absence of a Change in Control.
14.1 The Executive acknowledges that if he breaches or
threatens to breach his covenants and agreements in this Agreement, such actions
may cause irreparable harm and damage to the Company which could not be
compensated in damages. Accordingly, if Executive breaches or threatens to
breach this Agreement, the Company shall be entitled to injunctive relief, in
addition to any other rights or remedies of the Company.
14.2 All claims, disputes and other matters in question
between the Executive and the Company arising out of or related to the
interpretation of this Agreement or the breach of this Agreement, except as
specifically governed by the foregoing provisions where there may be irreparable
harm and damage to the Company which could not be compensated in damages, shall
be decided by arbitration in accordance with the rules of the American
Arbitration Association. This agreement to arbitrate shall be specifically
enforceable under applicable law in any court having jurisdiction. The award
rendered by the arbitrator shall be final and judgment may be entered upon it in
accordance with the applicable law of any court having jurisdiction thereof.
14.3 In the event that the Executive is reasonably required to
engage legal counsel to enforce his rights hereunder against the Company,
Executive shall be entitled to receive from the Company his reasonable
attorneys' fees and costs; provided that Executive shall not be entitled to
receive those fees and costs related to matters, if any, which were the subject
of litigation and with respect to which a judgment is rendered against
Executive.
15. Remedies in the Event of a Change in Control. The terms of
this Section 15 shall apply in the event of a Change of Control.
15.1 The Executive acknowledges that if he breaches or
threatens to breach his covenants and agreements in this Agreement, such actions
may cause irreparable harm and damage to the Company which could not be
compensated in damages. Accordingly, if Executive breaches or threatens to
breach this Agreement, the Company shall be entitled to injunctive relief, in
addition to any other rights or remedies of the Company. All claims, disputes
and other matters in question between the Executive and the Company arising out
of or related to the interpretation of this Agreement or the breach of this
Agreement shall be decided under and governed by the laws of the State of South
Carolina.
15.2 The Company is aware that upon the occurrence of a Change
in Control, the Board or a stockholder of the Company may then cause or attempt
to cause the Company to refuse to comply with its obligations under this
Agreement, or may cause or attempt to cause the Company to institute, or may
institute, litigation seeking to have this Agreement declared unenforceable, or
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may take, or attempt to take, other action to deny the Executive the benefits
intended under this Agreement. In these circumstances, the purpose of this
Agreement could be frustrated. It is the intent of the parties that the
Executive not be required to incur the legal fees and expenses associated with
the protection or enforcement of his rights under this Agreement by litigation
or other legal action because such costs would substantially detract from the
benefits intended to be extended to the Executive hereunder, nor be bound to
negotiate any settlement of his rights hereunder under threat of incurring such
costs. Accordingly, if at any time after a Change of Control, it should appear
to the Executive that the Company is or has acted contrary to or is failing or
has failed to comply with any of its obligations under this Agreement for the
reason that it regards this Agreement to be void or unenforceable or for any
other reason, or that the Company has purported to terminate his employment for
cause or is in the course of doing so in either case contrary to this Agreement,
or in the event that the Company or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any litigation or other
legal action designed to deny, diminish or to recover from the Executive the
benefits provided or intended to be provided to him hereunder, and the Executive
has acted in good faith to perform his obligations under this Agreement, the
Company irrevocably authorizes the Executive from time to time to retain counsel
of his choice at the expense of the Company to represent him in connection with
the protection and enforcement of his rights hereunder, including without
limitation representation in connection with termination of his employment
contrary to this Agreement or with the initiation or defense of any litigation
or other legal action, whether by or against the Executive or the Company or any
director, officer, stockholder or other person affiliated with the Company, in
any jurisdiction. The reasonable fees and expenses of counsel selected from time
to time by the executive as hereinabove provided shall be paid or reimbursed to
the Executive by the Company on a regular, periodic basis upon presentation by
the Executive of a statement or statements prepared by such counsel representing
other officers or key executives of the Company in connection with the
protection and enforcement of their rights under similar agreements between them
and the Company, and, unless in his sole judgment use of common counsel could be
prejudicial to him or would not be likely to reduce the fees and expenses
chargeable hereunder to the Company, the Executive agrees to use his best
efforts to agree with such other officers or executives to retain common
counsel.
16. Waiver. Failure of either party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted in this Agreement or of the future performance of any such
term or condition or of any other term or condition of this Agreement, unless
such waiver is contained in a writing signed by the party making the waiver.
17. Amendments and Modifications. This Agreement may be amended or
modified only by a writing signed by other parties hereto.
18. Governing Law. The validity and effect of this agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of South Carolina.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EXECUTIVE
__________________________________
Mack I. Whittle, Jr.
CAROLINA FIRST CORPORATION
___________________________________
By: William R. Timmons, Jr.
Chairman of the Board
13
Exhibit 10.2
NOTICE: THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT
TO THE SOUTH CAROLINA UNIFORM ARBITRATION ACT
AMENDED AND RESTATED NONCOMPETITION,
SEVERANCE AND EMPLOYMENT AGREEMENT
BETWEEN
CAROLINA FIRST CORPORATION AND WILLIAM S. HUMMERS, III
This Amended and Restated Noncompetition, Severance and Employment
Agreement (this "Agreement") is made and entered into as of this 21st day of
May, 1999 by and between William S. Hummers, III, an individual (the
"Executive"), and Carolina First Corporation, a South Carolina corporation and
financial institution holding company headquartered in Greenville, South
Carolina (the "Company"). As used herein, the term "Company" shall include the
Company and any and all of its subsidiaries where the context so applies.
W I T N E S S E T H
WHEREAS the Company's Board of Directors (the "Board") believes that
the Executive has been instrumental in the success of the Company since its
inception in 1986;
WHEREAS the Company desires to continue to employ the Executive as
Executive Vice President Finance of the Company and in such other capacities as
the Executive is currently employed as of the date hereof;
WHEREAS the terms hereof are consistent with the executive compensation
objectives of the Company as established by the Board;
WHEREAS the Executive is willing to accept the employment contemplated
herein under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. Employment. Subject to the terms and conditions hereof, the Company
hereby employs the Executive and Executive hereby accepts such employment as the
Executive Vice President Finance of the Company having such duties and
responsibilities as are set forth in Section 3 below.
2. Definitions. For purposes of this Agreement, the following terms
shall have the meanings specified below.
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"Change in Control" shall mean:
(i) The acquisition, directly or indirectly, by any Person
(other than (A) any employee plan established by the Company, (B) the
Company or any of its affiliates (as defined in Rule 12b-2 promulgated
under the Exchange Act), (C) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (D) a
corporation owned, directly or indirectly, by stockholders of the
Company in substantially the same proportions as their ownership of the
Company), of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from
the Company) representing an aggregate of 20% or more of the combined
voting power of the Company's then outstanding voting securities;
(ii) During any period of up to two consecutive years,
individuals who, at the beginning of such period, constitute the Board
cease for any reason to constitute at least a majority thereof,
provided that any person who becomes a director subsequent to the
beginning of such period and whose nomination for election is approved
by at least two-thirds of the directors then still in office who either
were directors at the beginning of such period or whose election or
nomination for election was previously so approved (other than a
director (A) whose initial assumption of office is in connection with
an actual or threatened election contest relating to the election of
the directors of the Company, as such terms are used in Rule 14a-11 of
Regulation 14A under the Exchange Act, or (B) who was designated by a
Person who has entered into an agreement with the Company to effect a
transaction described in clause (i), (iii) or (iv) hereof) shall be
deemed a director as of the beginning of such period;
(iii) The stockholders of the Company approve a merger or
consolidation of the Company with any other corporation other than (A)
a merger or consolidation that would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of any Company, at
least 51% of the combined voting power of the voting securities of the
Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or becomes the
beneficial owner (as defined in clause (i) above), directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company) representing 25% or more of the combined
voting power of the Company's then outstanding voting securities; or
(C) a plan of complete liquidation of the Company or an agreement for
the sale or disposition of the Company of all or substantially all of
the Company's assets; or
(iv) The occurrence of any other event or circumstance which
is not covered by (i) through (iii) above which the Board determines
affects control of the Company and, in order to implement the purposes
of this Agreement as set forth above, adopts a resolution
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that such event or circumstance constitutes a Change in Control for the
purposes of this Agreement.
"Cause" shall mean:
(i) In the absence of a Change in Control: (a) fraud; (b)
embezzlement; (c) conviction of the Executive of any felony; (d) a
material breach of, or the wilful failure or refusal by the Executive
to perform and discharge the Executive's duties, responsibilities and
obligations under this Agreement; (e) any act of moral turpitude or
wilful misconduct by the Executive intended to result in personal
enrichment of the Executive at the expense of the Company, or any of
its affiliates or which has a material adverse impact on the Business
or reputation of the Company or any of its affiliates (such
determination to be made by the Board in its reasonable judgment); (f)
intentional material damage to the property or Business of the Company;
(g) gross negligence; or (h) the ineligibility of the Executive to
perform his duties because of a ruling, directive or other action by
any agency of the United States or any state of the United States
having regulatory authority over the Company.
(ii) After a Change in Control: (a) material criminal fraud,
(b) gross negligence, (c) material dereliction of duties, (d)
intentional material damage to the property or business of the Company,
or (e) the commission of a material felony, in each case, as determined
in the reasonable discretion of the Board, but only if (1) the
Executive has been provided with written notice of any assertion that
there is a basis for termination for cause which notice shall specify
in reasonable detail specific facts regarding any such assertion, (2)
such written notice is provided to the Executive a reasonable time
before the Board meets to consider any possible termination for cause,
(3) at or prior to the meeting of the Board to consider the matters
described in the written notice, an opportunity is provided to the
Executive and his counsel to be heard before the Board with respect to
the matters described in the written notice, (4) any resolution or
other Board action held with respect to any deliberation regarding or
decision to terminate the Executive for cause is duly adopted by a vote
of a majority of the entire Board of the Company at a meeting of the
Board called and held and (5) the Executive is promptly provided with a
copy of the resolution or other corporate action taken with respect to
such termination. No act or failure to act by the Executive shall be
considered wilful unless done or omitted to be done by him not in good
faith and without reasonable belief that his action or omission was in
the best interests of the Company. The unwillingness of the Executive
to accept any or all of a change in the nature or scope of his
position, authorities or duties, a reduction in his total compensation
or benefits, a relocation that he deems unreasonable in light of his
personal circumstances, or other action by or request of the Company in
respect of his position, authority, or responsibility that he
reasonably deems to be contrary to this Agreement, may not be
considered by the Board to be a failure to perform or misconduct by the
Executive.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
successor statute, rule or regulation of similar effect.
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"Confidential Information" shall mean all business and other
information relating to the business of the Company, including without
limitation, technical or nontechnical data, programs, methods, techniques,
processes, financial data, financial plans, product plans, and lists of actual
or potential customers, which (i) derives economic value, actual or potential,
from not being generally known to, and not being readily ascertainable by proper
means by, other Persons, and (ii) is the subject of efforts that are reasonable
under the circumstances to maintain its secrecy or confidentiality. Such
information and compilations of information shall be contractually subject to
protection under this Agreement whether or not such information constitutes a
trade secret and is separately protectable at law or in equity as a trade
secret. Confidential Information does not include confidential business
information which does not constitute a trade secret under applicable law two
years after any expiration or termination of this Agreement.
"Disability" or "Disabled" shall mean the Executive's inability as a
result of physical or mental incapacity to substantially perform his duties for
the Company on a full-time basis, with or without accommodation, for a period of
six (6) months.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Involuntary Termination" shall mean the termination of Executive's
employment by the Executive following a Change in Control which, in the sole
judgment of the Executive, is due to (i) a change of the Executive's
responsibilities, position (including status as Executive Vice President Finance
of the Company, its successor or ultimate parent entity, office, title,
reporting relationships or working conditions) authority or duties (including
changes resulting from the assignment to the Executive of any duties
inconsistent with his positions, duties or responsibilities as in effect
immediately prior to the Change in Control); or (ii) a change in the terms or
status (including the rolling ten year termination date) of this Agreement; or
(iii) a reduction in the Executive's compensation or benefits; or (iv) a forced
relocation of the Executive outside the Greenville metropolitan area; or (v) a
significant increase in the Executive's travel requirements.
"Person" shall mean any individual, corporation, bank, partnership,
joint venture, association, joint-stock company, trust, unincorporated
organization or other entity.
"Voluntary Termination" shall mean the termination by Executive of
Executive's employment following a Change in Control which is not the result of
any of clauses (i) through (v) set forth in the definition of Involuntary
Termination above.
3. Duties. During the term hereof, the Executive shall have such duties
and authority as are typical of the executive vice president finance of a
company such as the Company, including, without limitation, those specified in
the Company's Bylaws. Executive agrees that during the Term hereof, he will
devote his full time, attention and energies to the diligent performance of his
duties. Executive shall not, without the prior written consent of the Company,
at any time during the Term hereof (i) accept employment with, or render
services of a business, professional or commercial nature to, any Person other
than the Company, (ii) engage in any venture or activity which the Company may
in good faith consider to be competitive with or adverse to the business of the
Company or of any affiliate of the Company, whether alone, as a partner, or as
an officer, director,
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employee or shareholder or otherwise, except that the ownership of not more than
5% of the stock or other equity interest of any publicly traded corporation or
other entity shall not be deemed a violation of this Section, or (iii) engage in
any venture or activity which the Board may in good faith consider to interfere
with Executive's performance of his duties hereunder.
4. Term. Unless earlier terminated as provided herein, the Executive's
employment hereunder shall be for a rolling term of five years (the "Term")
commencing on the date hereof. This Agreement shall be deemed to extend each day
for an additional day automatically and without any action on behalf of either
party hereto until Executive turns sixty; upon Executive's sixtieth birthday,
such "Term" shall be converted to a fixed term of ten years and shall expire
(without any action on behalf of either party hereto) on Executive's sixtieth
birthday; this Agreement shall terminate upon the expiration of such Term.
Either party may, by notice to the other, cause this Agreement to cease to
extend automatically and, upon such notice, the "Term" of this Agreement shall
be the ten years following the date of such notice, and this Agreement shall
terminate upon the expiration of such Term.
5. Termination. This Agreement may be terminated as follows:
5.1 The Company. The Company shall have the right to terminate
Executive's employment hereunder at any time during the Term hereof (i) for
Cause, (ii) if the Executive becomes Disabled, (iii) upon the Executive's death,
or (iv) without Cause.
5.1.1 If the Company terminates Executive's
employment under this Agreement pursuant to clauses (i), (ii) or (iii)
of Section 5.1, the Company's obligations hereunder shall cease as of
the date of termination; provided, however, if Executive is terminated
for Cause after a Change in Control, then such termination shall be
treated as a Voluntary Termination as contemplated in Section 5.2.3
below.
5.1.2 If the Company terminates Executive pursuant to
clause (iv) of Section 5.1, Executive shall be entitled to receive
immediately as severance upon such termination, aggregate compensation
and benefits provided in Section 6 equal to three times Executive's
annual compensation being paid at the time of termination. For purposes
of determining compensation which is not fixed (such as a bonus), the
annual amount of such unfixed compensation shall be deemed to be the
equal to the average of such compensation over the three year period
immediately prior to the termination.
5.1.3 In the event of such termination pursuant to
clause (iv) of Section 5.1, (A) all rights of Executive pursuant to
awards of share grants or options granted by the Company shall be
deemed to have vested and shall be released from all conditions and
restrictions, except for restrictions on transfer pursuant to the
Securities Act of 1933, as amended, and (B) the Executive shall be
deemed to be credited with service with the Company for such remaining
Term for the purposes of the Company's benefit plans; (C) the Executive
shall be deemed to have retired from the Company and shall be entitled
as of the termination date, or at such later time as he may elect to
commence receiving the total combined qualified and non-qualified
retirement benefit to which he is entitled hereunder,
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or his total non-qualified retirement benefit hereunder if under the
terms of the Company's qualified retirement plan for salaried employees
he is not entitled to a qualified benefit, and (D) if any provision of
this Section 5.1.3 cannot, in whole or in part, be implemented and
carried out under the terms of the applicable compensation, benefit, or
other plan or arrangement of the Company because the Executive has
ceased to be an actual employee of the Company, because the Executive
has insufficient or reduced credited service based upon his actual
employment by the Company, because the plan or arrangement has been
terminated or amended after the effective date of this Agreement, or
because of any other reason, the Company itself shall pay or otherwise
provide the equivalent of such rights, benefits and credits for such
benefits to Executive, his dependents, beneficiaries and estate.
5.2 By Executive. Executive shall have the right to terminate
his employment hereunder if (i) the Company materially breaches this Agreement
and such breach is not cured within 30 days after written notice of such breach
is given by Executive to the Company; (ii) there is a Voluntary Termination; or
(iii) there is an Involuntary Termination.
5.2.1 If Executive terminates his employment other
than pursuant to clauses (i), (ii) or (iii) of Section 5.2, the
Company's obligations under this Agreement shall cease as of the date
of such termination and Executive shall be subject to the
confidentiality provisions set forth in Section 8 hereof and the
noncompetition provisions set forth in Section 9 hereof for a period of
one (1) year without the additional compensation provided in Section 9.
5.2.2 If Executive terminates his employment
hereunder pursuant to either clause (i) or clause (iii) of Section 5.2,
Executive shall be entitled to receive his base salary and other
benefits due him through the termination date, less applicable taxes
and other deductions, and receive immediately in a lump sum as
severance, aggregate cash compensation provided in Section 6 equal to
three times Executive's annual compensation being paid at the time of
termination. For purposes of determining compensation which is not
fixed (such as a bonus), the annual amount of such unfixed compensation
shall be deemed to be the equal to the average of such compensation
over the three year period immediately prior to the termination.
5.2.3 If Executive terminates his employment pursuant
to clause (ii) of Section 5.2, Executive shall be entitled to receive
his base salary and other benefits due him through the termination date
less applicable taxes and other deductions and receive immediately in a
lump sum as severance aggregate compensation and benefits provided in
Section 6 equal to one times Executive's annual compensation being paid
at the time of Voluntary Termination. For purposes of determining
compensation which is not fixed (such as a bonus), the annual amount of
such unfixed compensation shall be deemed to be the equal to the
average of such compensation over the three year period immediately
prior to the termination.
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5.2.4 In addition, in the event of such termination
pursuant to any of clauses (i) through (iii) of this Section 5.2, (A)
all rights of Executive pursuant to awards of share grants or options
granted by the Company shall be deemed to have vested and shall be
released from all conditions and restrictions, except for restrictions
on transfer pursuant to the Securities Act of 1933, as amended, and (B)
the Executive shall be deemed to be credited with service with the
Company for such remaining Term for the purposes of the Company's
benefit plans, and (C) the Executive shall be deemed to have retired
from the Company and shall be entitled as of the termination date, or
at such later time as he may elect to commence receiving the total
combined qualified and non-qualified retirement benefit to which he is
entitled hereunder, or his total non-qualified retirement benefit
hereunder if under the terms of the Company's qualified retirement plan
for salaried employees he is not entitled to a qualified benefit, and
(D) if any provision of this Section 5.2.4 cannot, in whole or in part,
be implemented and carried out under the terms of the applicable
compensation, benefit, or other plan or arrangement of the Company
because the Executive has ceased to be an actual employee of the
Company, because the Executive has insufficient or reduced credited
service based upon his actual employment by the Company, because the
plan or arrangement has been terminated or amended after the effective
date of this Agreement, or because of any other reason, the Company
itself shall pay or otherwise provide the equivalent of such rights,
benefits and credits for such benefits to Executive, his dependents,
beneficiaries and estate.
6. Compensation. In consideration of Executive's services and covenants
hereunder, Company shall pay to Executive the compensation and benefits
described below (which compensation shall be paid in accordance with the normal
compensation practices of the Company and shall be subject to such deductions
and withholdings as are required by law or policies of the Company in effect
from time to time, provided that his salary pursuant to Section 6.1 shall be
payable not less frequently than monthly):
6.1 Annual Salary. During the Term hereof, the Company shall
pay to Executive a base established by the Board which for the first year of the
Term shall be not less than the salary of the Executive for the past three
years. Executive's salary will be reviewed by the Board at the beginning of each
of its fiscal years and, in the sole discretion of the Board, may be increased
for such year; provided, however, that following a Change in Control, the base
salary shall be increased annually by a percentage at least equal to the average
annual increase over the past three years.
6.2 Annual Incentive Bonus. During the Term hereof, the Board
may pay to Executive an annual incentive cash bonus in accordance with the terms
of the Short Term Incentive Compensation Plan.
6.3 Long Term Incentive Compensation Plan. During the Term
hereof, the Board may pay to Executive long term incentive cash bonuses in
accordance with the Long Term Incentive Compensation Plan.
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6.4 Stock Options and Restricted Stock. During the Term
hereof, the Board shall grant Executive options to purchase Company Common Stock
and restricted stock in accordance with the terms of the Company's Long Term
Incentive Compensation Plan.
6.5 Other Benefits. Executive shall be entitled to share in
any other employee benefits generally provided by the Company to its most highly
ranking executives for so long as the Company provides such benefits. The
Company also agrees to provide Executive with a Company-paid automobile,
reasonable club dues for one country club and two business club(s), personal tax
advisory services, and a $2,000,000 life insurance policy and such disability
insurance as may be purchased by $_____ per year in premiums. Executive shall
also be entitled to participate in all other benefits accorded general Company
employees.
7. Excess Parachute Payments.
7.1 It is the intention of the parties hereto that the
severance payments and other compensation provided for herein (other than
payments pursuant to Section 9) are reasonable compensation for Executive's
services to the Company and shall not constitute "excess parachute payments"
within the meaning of Section 280G of the Code and any regulations thereunder.
In the event that the Company's independent accountants acting as auditors for
the Company on the date of a Change in Control determine that the payments
provided for herein constitute "excess parachute payments," then the
compensation payable hereunder shall be reduced to the point that such
compensation shall not qualify as "excess parachute payments."
7.2 To the extent that payments under Section 9 cause a
"parachute payment," as defined in Section 280G(b)(2) of the Code, the Company
shall indemnify Executive and hold him harmless against all claims, losses,
damages, penalties, expenses, and excise taxes relating thereto. To effect this
indemnification, the Company shall pay Executive an additional amount that is
sufficient to pay any excise tax imposed by Section 4999 of the Code on the
payments and benefits to which Executive is entitled without the additional
amount plus any penalties or interest imposed by the Internal Revenue Service in
regard to such amounts, plus another additional amount sufficient to pay all the
excise and income taxes on the additional amounts. The determination of any
additional amount that must be paid under this section at any time shall be made
in good faith by the independent auditors then employed by the Company.
8. Confidentiality. Executive shall hold in a fiduciary capacity for
the benefit of the Company all Confidential Information relating to the Company
or any of its affiliated companies, and their respective businesses, which shall
have been obtained by the Executive during the Executive's employment by the
Company or any of its affiliated companies. After termination of Executive's
employment with the Company, the Executive shall not, without the prior written
consent of the Company or as may otherwise be required by law or legal process,
communicate or divulge any such information, knowledge or data to anyone other
than the Company and those designated by it. Upon the termination or expiration
of his employment hereunder, Executive agrees to deliver promptly to the Company
all Company files, customer lists, management reports,
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memoranda, research, Company forms, financial data and reports and other
documents supplied to or created by him in connection with his employment
hereunder (including all copies of the foregoing) in his possession or control
and all of the Company's equipment and other materials in his possession or
control. In no event shall an asserted violation of the provisions of this
Section 10 constitute a basis for deferring or withholding any amounts otherwise
payable to the Executive under this Agreement.
9. Noncompetition and Nonsolicitation Agreement. If this Agreement is
terminated by the Company pursuant to Section 5.1(iv) or by Executive pursuant
to Section 5.2(i) or (iii), Executive shall not enter into an employment
relationship or a consulting arrangement with any other bank, thrift, lending or
financial institution of any type headquartered or having a physical presence in
the State of South Carolina (hereinafter a "competitor") within five years of
the anniversary of the date of the Change in Control (the "Noncompete Period").
The obligations contained in this Section 9 shall not prohibit Executive from
being an owner of not more than 5% of the outstanding stock of any class of a
corporation which is publicly traded, so long as Executive has no active
participation in the business of such corporation.
9.1 During the Noncompete Period, Executive shall not directly
or indirectly through another entity (i) induce or attempt to induce any
employee of Company to leave the employ of Company, including but not limited to
a competitor, or in any way interfere with the relationship between Company and
any employee thereof, (ii) hire any person who was an employee of Company or any
subsidiary at any time during the time that Executive was employed by Company,
or (iii) induce or attempt to induce any customer, supplier, or other entity in
a business relation of Company to cease doing business with Company, or in any
way interfere with the relationship between any such customer, supplier, or
business relation and Company or do business with a competitor.
9.2 Solely in consideration of Executive's promises set forth
in this Section 9 (and in addition to any other severance compensation provided
in this Agreement), upon termination of the Executive pursuant to the terms
contained in this Section 9, Company agrees to pay Executive an amount equal to
five times Executive's annual cash compensation as provided in Sections 6.1 and
6.2 being paid at the time of commencement of the Noncompete Period. For
purposes of determining compensation which is not fixed (such as a bonus), the
annual amount of such unfixed compensation shall be deemed to be the equal to
the average of such compensation over the three year period immediately prior to
the termination. The amount payable under this Section 9.2 shall be in five
annual installments beginning on the first day of the Noncompete Period and on
the four subsequent anniversaries thereof.
9.3 If, at the time of enforcement of this Section 9, a court
shall hold that the duration, scope or area restrictions stated herein are
unreasonable under circumstances then existing, the parties agree that the
maximum duration, scope or area reasonable under such circumstances shall be
substituted for the stated duration, scope or area and that the court shall be
allowed to revise the restrictions contained herein to cover the maximum period,
scope and area permitted by law. Executive agrees that the restrictions
contained in this Section 9 are reasonable.
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9.4 In the event of the breach or a threatened breach by
Executive of any of the provisions of this Section 9, Company, in addition and
supplementary to other rights and remedies existing in its favor, may apply to
any court of law or equity of competent jurisdiction for specific performance
and/or injunctive or other relief in order to enforce or prevent any violations
of the provisions hereof (without posting a bond or other security). In
addition, in the event of an alleged breach or violation by Executive of this
Section 9, the Noncompete Period shall be tolled until such breach or violation
has been duly cured.
10. Trust. The Company shall establish an irrevocable trust to fund the
maximum amount of obligations which could reasonably be expected to become
payable hereunder under any circumstances (which may be a "rabbi trust" if so
requested by Executive), which trust (i) shall have as trustee an individual
acceptable to Executive, (ii) shall be fully funded upon the earlier of a Change
in Control or the approval of any regulatory application filed by a potential
acquiror of the Company seeking to acquire control of the Company, and (iii)
shall contain such other terms and conditions as are reasonably necessary in
Executive's determination to ensure the Company's compliance with its
obligations hereunder.
11. Assignment. The parties acknowledge that this Agreement has been
entered into due to, among other things, the special skills of Executive, and
agree that this Agreement may not be assigned or transferred by Executive, in
whole or in part, without the prior written consent of Company.
12. Notices. All notices, requests, demands, and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered or seven days after mailing if mailed, first class,
certified mail postage prepaid:
To the Company: Carolina First Corporation
102 South Main Street
Greenville, South Carolina 29601
Attn: Chairman of the Board
To Executive: William S. Hummers, III
12 Windy Court
Greenville, South Carolina 29615
Any party may change the address to which notices, requests, demands, and other
communications shall be delivered or mailed by giving notice thereof to the
other party in the same manner provided herein.
13. Provisions Severable. If any provision or covenant, or any part
thereof, of this Agreement should be held by any court to be invalid, illegal or
unenforceable, either in whole or in part, such invalidity, illegality or
unenforceability shall not affect the validity, legality or
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enforceability of the remaining provisions or covenants, or any part thereof, of
this Agreement, all of which shall remain in full force and effect.
14. Remedies in the Absence of a Change in Control. The terms of this
Section 14 will apply in the absence of a Change in Control.
14.1 The Executive acknowledges that if he breaches or
threatens to breach his covenants and agreements in this Agreement, such actions
may cause irreparable harm and damage to the Company which could not be
compensated in damages. Accordingly, if Executive breaches or threatens to
breach this Agreement, the Company shall be entitled to injunctive relief, in
addition to any other rights or remedies of the Company.
14.2 All claims, disputes and other matters in question
between the Executive and the Company arising out of or related to the
interpretation of this Agreement or the breach of this Agreement, except as
specifically governed by the foregoing provisions where there may be irreparable
harm and damage to the Company which could not be compensated in damages, shall
be decided by arbitration in accordance with the rules of the American
Arbitration Association. This agreement to arbitrate shall be specifically
enforceable under applicable law in any court having jurisdiction. The award
rendered by the arbitrator shall be final and judgment may be entered upon it in
accordance with the applicable law of any court having jurisdiction thereof.
14.3 In the event that the Executive is reasonably required to
engage legal counsel to enforce his rights hereunder against the Company,
Executive shall be entitled to receive from the Company his reasonable
attorneys' fees and costs; provided that Executive shall not be entitled to
receive those fees and costs related to matters, if any, which were the subject
of litigation and with respect to which a judgment is rendered against
Executive.
15. Remedies in the Event of a Change in Control. The terms of this
Section 15 shall apply in the event of a Change of Control.
15.1 The Executive acknowledges that if he breaches or
threatens to breach his covenants and agreements in this Agreement, such actions
may cause irreparable harm and damage to the Company which could not be
compensated in damages. Accordingly, if Executive breaches or threatens to
breach this Agreement, the Company shall be entitled to injunctive relief, in
addition to any other rights or remedies of the Company. All claims, disputes
and other matters in question between the Executive and the Company arising out
of or related to the interpretation of this Agreement or the breach of this
Agreement shall be decided under and governed by the laws of the State of South
Carolina.
15.2 The Company is aware that upon the occurrence of a Change
in Control, the Board or a stockholder of the Company may then cause or attempt
to cause the Company to refuse to comply with its obligations under this
Agreement, or may cause or attempt to cause the Company to institute, or may
institute, litigation seeking to have this Agreement declared unenforceable, or
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may take, or attempt to take, other action to deny the Executive the benefits
intended under this Agreement. In these circumstances, the purpose of this
Agreement could be frustrated. It is the intent of the parties that the
Executive not be required to incur the legal fees and expenses associated with
the protection or enforcement of his rights under this Agreement by litigation
or other legal action because such costs would substantially detract from the
benefits intended to be extended to the Executive hereunder, nor be bound to
negotiate any settlement of his rights hereunder under threat of incurring such
costs. Accordingly, if at any time after a Change of Control, it should appear
to the Executive that the Company is or has acted contrary to or is failing or
has failed to comply with any of its obligations under this Agreement for the
reason that it regards this Agreement to be void or unenforceable or for any
other reason, or that the Company has purported to terminate his employment for
cause or is in the course of doing so in either case contrary to this Agreement,
or in the event that the Company or any other person takes any action to declare
this Agreement void or unenforceable, or institutes any litigation or other
legal action designed to deny, diminish or to recover from the Executive the
benefits provided or intended to be provided to him hereunder, and the Executive
has acted in good faith to perform his obligations under this Agreement, the
Company irrevocably authorizes the Executive from time to time to retain counsel
of his choice at the expense of the Company to represent him in connection with
the protection and enforcement of his rights hereunder, including without
limitation representation in connection with termination of his employment
contrary to this Agreement or with the initiation or defense of any litigation
or other legal action, whether by or against the Executive or the Company or any
director, officer, stockholder or other person affiliated with the Company, in
any jurisdiction. The reasonable fees and expenses of counsel selected from time
to time by the executive as hereinabove provided shall be paid or reimbursed to
the Executive by the Company on a regular, periodic basis upon presentation by
the Executive of a statement or statements prepared by such counsel representing
other officers or key executives of the Company in connection with the
protection and enforcement of their rights under similar agreements between them
and the Company, and, unless in his sole judgment use of common counsel could be
prejudicial to him or would not be likely to reduce the fees and expenses
chargeable hereunder to the Company, the Executive agrees to use his best
efforts to agree with such other officers or executives to retain common
counsel.
16. Waiver. Failure of either party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted in this Agreement or of the future performance of any such
term or condition or of any other term or condition of this Agreement, unless
such waiver is contained in a writing signed by the party making the waiver.
17. Amendments and Modifications. This Agreement may be amended or
modified only by a writing signed by other parties hereto.
18. Governing Law. The validity and effect of this agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of South Carolina.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EXECUTIVE
___________________________________
William S. Hummers, III
CAROLINA FIRST CORPORATION
___________________________________
By: William R. Timmons, Jr.
Chairman of the Board
13
Exhibit 10.3
NOTICE: THIS CONTRACT IS SUBJECT TO ARBITRATION PURSUANT TO THE
SOUTH CAROLINA UNIFORM ARBITRATION ACT
NONCOMPETITION, SEVERANCE AND EMPLOYMENT AGREEMENT
BETWEEN
CAROLINA FIRST CORPORATION AND JOHN DUBOSE
This Noncompetition, Severance and Employment Agreement (this
"Agreement") is made and entered into as of this 5th day of October , 1999, (the
"Effective Date") by and between John DuBose, an individual (the "Executive"),
and Carolina First Corporation, a South Carolina corporation and financial
institution holding company headquartered in Greenville, South Carolina (the
"Company"). As used herein, the term "Company" shall include the Company and any
and all of its affiliates where the context so applies.
W I T N E S S E T H
WHEREAS the Company is engaged in the business of banking primarily in
the State of South Carolina (the "Business");
WHEREAS the Company desires to employ and retain the services of the
Executive in the capacity of Executive Vice President, and the Executive desires
to provide his personal services to the Company;
WHEREAS the Company provides for incentive compensation payments to be
made to the executive officers of the Company (including the Executive) through
a Long Term Incentive Compensation Plan (the "Incentive Compensation Plan");
WHEREAS the terms of this Agreement are intended to be consistent with
the objectives of the Incentive Compensation Plan;
WHEREAS the Executive is willing to accept the employment contemplated
herein under the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Employment. Subject to the terms and conditions hereof, the Company
hereby employs the Executive and Executive hereby accepts such employment as an
Executive Vice President of the Company having such duties and responsibilities
as are set forth in Section 3 below.
2. Definitions. For purposes of this Agreement, the following terms
shall have the meanings specified below.
<PAGE>
"CHANGE IN CONTROL" shall mean:
(i) the acquisition, directly or indirectly, by any Person
(other than (A) any employee plan established by any "Corporation"
[which for these purposes shall be deemed to be the Company and any
corporation, association, joint venture, proprietorship or partnership
which is connected with the Company either through stock ownership or
through common control, within the meaning of Sections 414(b) and (c)
and 1563 of the Internal Revenue Code of 1986, as amended], (B) the
Company or any of its affiliates (as defined in Rule 12b-2 promulgated
under the Exchange Act), (C) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (D) a
corporation owned, directly or indirectly, by stockholders of the
Company in substantially the same proportions as their ownership of the
Company), of securities of the Company (not including in the securities
beneficially owned by such Person any securities acquired directly from
the Company) representing 25% or more of the combined voting power of
the Company's then outstanding voting securities;
(ii) during any period of up to two consecutive years (not
including any period prior to the Effective Date) individuals who, at
the beginning of such period, constitute the Board cease for any reason
to constitute at least a majority thereof, provided that any person who
becomes a director subsequent to the beginning of such period and whose
nomination for election is approved by at least two-thirds of the
directors then still in office who either were directors at the
beginning of such period or whose election or nomination for election
was previously so approved (other than a director (A) whose initial
assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the
Company, as such terms are used in Rule 14a-11 of Regulation 14A under
the Exchange Act, or (B) who was designated by a Person who has entered
into an agreement with the Company to effect a transaction described in
clause (i), (iii) or (iv) hereof) shall be deemed a director as of the
beginning of such period;
(iii) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation (other than (A)
a merger or consolidation that would result in the voting securities of
the Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof), in
combination with the ownership of any trustee or other fiduciary
holding securities under an employee benefit plan of any Corporation,
at least 51% of the combined voting power of the voting securities of
the Company or such surviving entity or any parent thereof outstanding
immediately after such merger or consolidation, or (B) a merger or
consolidation effected to implement a recapitalization of the Company
(or similar transaction) in which no Person is or becomes the
beneficial owner (as defined in clause (i) above), directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such Person any securities acquired
directly from the Company) representing 25% or more of the combined
voting power of the Company's then outstanding voting securities; or
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(iv) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all of the Company's
assets, other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at least 75% of
the combined voting power of the voting securities of which are owned
by persons in substantially the same proportions as their ownership of
the Company immediately prior to such sale.
(v) the occurrence of any other event or circumstance which is
not covered by (i) through (iv) above which the Board determines
affects control of the Company and, in order to implement the purposes
of this Agreement as set forth above, adopts a resolution that such
event or circumstance constitutes a Change in Control for the purposes
of this Agreement.
For purposes of this definition of Change in Control, there
shall be a Change in Control in the event of any of the above changes
related to the parent corporation of the Company.
"CAUSE" SHALL MEAN:
(i) IN THE ABSENCE OF A CHANGE IN CONTROL, (a) fraud; or (b)
embezzlement; or (c) conviction of the Executive of any felony; or (d)
a material breach of, or the wilful failure or refusal by the Executive
to perform and discharge the Executive's duties, responsibilities and
obligations under this Agreement; or (e) any act of moral turpitude or
wilful misconduct by the Executive intended to result in personal
enrichment of the Executive at the expense of the Company, or any of
its affiliates or which has a material adverse impact on the Business
or reputation of the Company or any of its affiliates (such
determination to be made by the Board of Directors in its reasonable
judgment); or (f) intentional material damage to the property or
Business of the Company; or (g) gross negligence; or (h) the
ineligibility of the Executive to perform his duties because of a
ruling, directive or other action by any agency of the United States or
any state of the United States having regulatory authority over the
Company.
(ii) IN THE EVENT OF A CHANGE IN CONTROL, (a) the willful and
continued failure of the Executive substantially to perform his duties
with the Company (other than any failure due to physical or mental
incapacity) or (b) willful misconduct materially and demonstrably
injurious to the Company, in each case, as determined in the reasonable
discretion of the Board of Directors.
Notwithstanding the above, the Executive may be terminated for cause only if (1)
the Executive has been provided with written notice of any assertion that there
is a basis for termination for cause which notice shall specify in reasonable
detail specific facts regarding any such assertion, (2) such written notice is
provided to the Executive a reasonable time before the Board meets to consider
any possible termination for cause, (3) at or prior to the meeting of the Board
to consider the matters described in the written notice, an opportunity is
provided to the Executive and his
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counsel to be heard before the Board with respect to the matters described in
the written notice, (4) any resolution or other Board action held with respect
to any deliberation regarding or decision to terminate the Executive for cause
is duly adopted by a vote of a majority of the entire Board of Directors of the
Company at a meeting of the Board called and held and (5) the Executive is
promptly provided with a copy of the resolution or other corporate action taken
with respect to such termination.
No act or failure to act by the Executive shall be considered willful unless
done or omitted to be done by him not in good faith and without reasonable
belief that his action or omission was in the best interests of the Company. The
unwillingness of the Executive to accept any or all of a change in the nature or
scope of his position, authorities or duties, a reduction in his total
compensation or benefits, a relocation that he deems unreasonable in light of
his personal circumstances, or other action by or request of the Company in
respect of his position, authority, or responsibility that he reasonably deems
to be contrary to this Agreement, shall not be considered by the Board of
Directors to be a failure to perform or misconduct by the Executive.
"DISABILITY" or "DISABLED" shall mean the Executive's inability as a result of
any physical or mental incapacity due to injury or sickness to perform each of
his material duties for the Company on a full-time basis for a period of six (6)
months with or without reasonable accommodation.
"EMPLOYMENT PERIOD" shall mean, in the event of a Change in Control, the period
commencing on the effective date for the Change in Control and ending upon the
last day of the month in which occurs the second anniversary of the effective
date for the Change in Control. The preceding is not intended to create any
substantive obligations, duties or rights in addition to or independent of those
set forth elsewhere in this Agreement but is intended to express the current
good faith intentions of the Company and the Executive with respect to
continuing the employment relationship after a Change in Control.
"GOOD REASON" shall mean the Executive shall have the right to terminate his
employment under this Agreement for Good Reason (as hereafter defined) upon
prior written notice to the Company, and receive the payments and benefits set
forth in Section 5.1.2 in which case this Agreement shall terminate on the date
specified in such notice; provided the date of termination specified in the
notice shall be at least thirty (30) days after the delivery of the notice. The
term "Good Reason" shall mean:
(i) the assignment to the Executive of any duties inconsistent
in any material respect with the Executive's position (including
status, offices, titles and reporting requirements), authority, duties,
or responsibilities as contemplated by Section 3 of this Agreement,
including any duties inconsistent in any material respect with the
Executive's position, authority, duties or responsibilities with the
Company as an Executive Vice President or any action by the Company
which results in a material diminishment in such position, authority,
duties or responsibilities as in effect immediately before the Change
in Control. For purposes of this Section, any good faith determination
by the Executive that any event set forth in this clause (i) has
occurred above shall be conclusive; or
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(ii) a change in the terms or status (including the rolling
one-year termination date) of this Agreement; or
(iii) a substantial reduction in the Executive's compensation
or benefits; or
(iv) any requirement that the Executive maintain his principal
office other than at the Company's South Carolina facilities at either
1225 Lady Street, Columbia, or the Company's technology center in
Lexington, or spend substantially all of his business time other than
in the aforementioned facilities or their environs such that it would
be reasonably expected that the Executive would need to relocate from
the Columbia metropolitan area; or
(v) a significant increase in the Executive's travel
requirements.
(vi) the determination by the Executive, in his sole
discretion, that, as a result of a Change in Control and a change in
circumstances thereafter significantly affecting his position, he is
unable to exercise the authority and responsibilities attached to his
position and contemplated by Section 3.
"PERSON" shall mean any individual, corporation, bank, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
other entity.
"PROTECTED INFORMATION" shall mean trade secrets, confidential or proprietary
information and all other knowledge, know-how, information, documents or
materials, owned, developed, or possessed by the Company or any of its
subsidiaries or affiliates, whether tangible or intangible form, pertaining to
the Business of the Company or the Business of any of its subsidiaries or
affiliates, including without limitation, research and development operations,
systems, data bases, computer programs, computer software, designs, models,
operating procedures, knowledge of the organization, products (including prices,
costs, sales or content), processes, technical or non-technical data, programs,
methods, techniques, processes, office machinery, contracts, financial data,
financial plans, financial information or measures, business methods, future
business plans, details of consultant contracts, new personnel acquisition
plans, business acquisition plans, customers (including identities of customers
and prospective customers, identities of individual contacts at business
entities which are customers or prospective customers, preferences, businesses
or habits), business relationships and other information owned, developed or
possessed by the Company or its subsidiaries or affiliates, which (i) derives
economic value, actual or potential, from not being generally known to, and not
being readily ascertainable by proper means by, other persons, and (ii) is the
subject of efforts that are reasonable under the circumstances to maintain its
secrecy or confidentiality; provided, however, that Protected Information shall
not include information that is generally known to the public or the trade. Such
information and compilations of information shall be contractually subject to
protection under this Agreement whether or not such information constitutes a
trade secret and is separately protected at law or in equity as a trade secret.
Protected Information does not include protected business information which does
not
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<PAGE>
constitute a trade secret under applicable law two years after expiration or
termination of this Agreement.
"VOLUNTARY TERMINATION" shall mean the termination by Executive of Executive's
employment following a Change in Control which is not for Good Reason as defined
above.
3. Duties.
3.1 During the term hereof, the Executive shall serve on a
full-time basis as an Executive Vice President of the Company. In the
Executive's capacity as an Executive Vice President of the Company, he shall
have the authority and management responsibility as is typical of an Executive
Vice President of a company such as this Company, including, without limitation,
those specified in the Company's Bylaws. In addition, the Executive shall have
such more specific responsibilities or duties for the Business, consistent with
the Executive's position as an Executive Vice President as may be reasonably
determined and assigned to the Executive from time-to-time by or upon the
authority of the Board of Directors, or the Chief Executive Officer of the
Company. The Executive shall serve the Company faithfully and to the best of his
ability, devoting substantially all of his business time, attention, knowledge,
energy and skills to the diligent performance of his duties, except for that
time and attention that, consistent with the practices of other senior executive
officers similarly situated, the Executive may devote to civic or community
affairs, other business matters that do not interfere in any material respect
with the performance by the Executive of services required to be performed by
him hereunder, or time devoted to serving as a director of other companies. If
elected, the Executive also shall serve during any part of the Term of this
Agreement as any other officer or a director of the Company or any subsidiary
corporation or parent corporation of the Company without any additional
compensation therefor. Executive agrees that during the Term of this Agreement
he will devote his full time, attention and energies to the diligent performance
of his duties. Company agrees that Executive will be included in and covered by
its standard directors and officers liability insurance coverage.
3.2 Executive shall not, without the prior written consent of
the Company, at any time during the Term hereof (i) accept employment with, or
render services of a business, professional or commercial nature to, any Person
other than the Company, (ii) engage in any venture or activity which the Company
may in good faith consider to be competitive with or adverse to the Business of
the Company or of any affiliate of the Company, whether alone, as a partner, or
as an officer, director, employee or shareholder or otherwise, except that the
ownership of not more than 5% of the stock or other equity interest of any
publicly traded corporation or other entity shall not be deemed a violation of
this Section, or (iii) engage in any venture or activity which the Board of
Directors of the Company may in good faith consider to interfere with
Executive's performance of his duties hereunder. Notwithstanding the foregoing,
Company acknowledges and agrees that Executive's investment and regular
participation in the real estate venture known as Osprey Development, Inc., will
not be considered to violate this Section 3.2.
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4. Term. The parties acknowledge that Executive has provided services
to the Company and received remuneration for such services from the Company
before the commencement date of this Agreement. Unless earlier terminated as
provided herein, the Executive's employment hereunder shall be for a rolling
term of one year (the "Term") commencing on September 30, 1999. This Agreement
shall be deemed to extend each day for an additional day automatically and
without any action on behalf of either party hereto; provided, however, that
either party may, by notice to the other, cause this Agreement to cease to
extend automatically and, upon such notice, the "Term" of this Agreement shall
be the one-year period following the date of such notice, and this Agreement
shall terminate upon the expiration of such Term.
5. Termination. This Agreement may be terminated as follows:
5.1 The Company. The Company shall have the right to terminate
Executive's employment hereunder at any time during the Term hereof (i) for
Cause, (ii) if the Executive becomes Disabled and unable to perform the
essential duties of his position with or without reasonable accommodation, (iii)
upon the Executive's death.
5.1.1 If the Company terminates Executive's
employment under this Agreement pursuant to clauses (i) through (iii) of
Section 5.1. the Company's obligations hereunder shall cease as of the date of
termination; provided, however, if Executive is terminated for Cause after a
Change in Control, then such termination shall be treated as a Voluntary
Termination as contemplated in Section 5.2.1 below.
5.1.2 If the Company terminates Executive other than
pursuant to clauses (i) through (iii) of Section 5.1 and there has been a
Change in Control within the prior twelve (12) months, within 30 days following
the termination date, Executive shall be entitled to receive in a lump sum as
severance upon such termination the payments and benefits listed and described
below (the "Termination Payments"):
(i) the Executive's base salary and all other
benefits due him through the termination date, less applicable
withholding taxes and other authorized payroll deductions;
(ii) the amount equal to the highest annual bonus
paid or payable to the Executive in any of the previous three
(3) fiscal years prior to the fiscal year in which termination
occurs, reduced pro rata for the portion of the fiscal year
not completed as of the end of the month in which termination
occurs; provided, however, that if the Executive has deferred
his award for such year, the payment due the Executive under
this paragraph (ii) shall be paid in accordance with the terms
of the deferral; and
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(iii) a lump sum severance allowance in an amount
which is equal to the sum of the amounts determined in
accordance with the following subparagraphs (a) and (b):
(a) twice his annual base salary at the
rate in effect immediately prior to termination; and
(b) twice an amount equivalent to the
highest amount of the annual incentive compensation,
including annual bonus, received or deferred by the
Executive for the three (3) fiscal years immediately
prior to the fiscal year in which termination occurs.
If the Executive has not been entitled to a bonus for
any of such 3 years, his annual bonus will be at
least equal to his target bonus to be used for
purposes of the calculation in this Section for the
year in which the employment period commences.
(iv) the Company shall pay, distribute, and otherwise
provide to the Executive the amount and value of his entire
plan account and interest under any investment plan or stock
plans, and all employer contributions made or payable to any
such plans for his account prior to the end of the month in
which termination occurs shall be deemed vested and payable to
him. Such payment or distribution shall be in accordance with
the elections made by the Executive in respect of
distributions in accordance with the plan as if the
Executive's employment in the Company terminated at the end of
the month in which termination occurs. Any such election made
by the Executive is by this reference incorporated into this
Agreement with the same force and effect as if fully set
herein and shall be made on such forms or instruments as may
be adopted and made available from time to time to the
Executive under the plan(s) in which he participates.
(v) during a period of one year, the Company shall
pay the Executive pursuant to the terms of any long-term
incentive performance plan in which he was participating at
the time of termination as if he continued to be a participant
in the plan during that period, and if pursuant to the terms
of such plan no distributions therefrom become vested until
after the expiration of the Term of employment, then whenever
distributions thereunder become vested, the Company shall pay
the Executive the amount or other distribution to which he
would have been entitled had his participation in the plan
continued until the time distributions become vested and are
made pursuant to the plan.
(vi) for a period of one year from the date of
termination, the Executive shall continue to be deemed and
treated as if he were an eligible employee under the
provisions of all stock option, stock appreciation right,
restricted stock, and other incentive compensation plans of
the Company under which he held options or awards, or in which
he participated at the time of termination, and he may
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exercise options and rights as a fully vested shareholder, and
shall receive payments and distributions accordingly.
(vii) for a period of two years from the date of
termination, the Executive shall continue to participate in
and be entitled to all benefits and credited service for
benefits under the benefit plans, programs and arrangements
described in Section 6.7 as if he remained employed by the
Company at the compensation levels referred to in this Section
during such period, exclusive however of disability benefits.
Contributions and deductions for investment and stock plans by
the Company cease as of the last date worked.
(viii) upon the expiration of the period of one year
from the date of termination, the Executive shall be deemed to
have retired from the Company and he shall be entitled at that
time, or at such later time as he may elect in order to avoid
or minimize any applicable early pension reduction provision,
to commence to receive the total combined qualified and
non-qualified retirement benefit to which he is entitled
hereunder, or his total non-qualified retirement benefit
hereunder if under the terms of the Company's qualified
retirement plan for salaried employees he is not entitled to a
qualified benefit.
(ix) if termination occurs after a reduction (which
reduction occurs after the effective date of a Change in
Control) in all or any part of the Executive's total
compensation or benefits, the monthly severance allowance and
other compensation and benefits payable to him pursuant to
this Section shall be based upon his compensation and benefits
before the reduction.
(x) if any provision of this Section cannot, in whole
or in part, be implemented and carried out under the terms of
the applicable compensation, benefit, or other plan or
arrangement of the Company because the Executive has ceased to
be an actual employee of the Company, because he has
insufficient or reduced credited service based upon his actual
employment by the Company, because the plan or arrangement has
been terminated or amended after the effective date of this
Agreement, or for any other reason, the Company itself shall
pay or otherwise provide the equivalent of such rights,
benefits and credits for such benefits to the Executive, his
dependents, beneficiaries and estate. Such payments shall be
made by the Company in a lump sum within sixty (60) days of
the Company's determination that such payments and credits are
due.
(xi) the Company's obligation under this Section to
continue to pay or provide health care and life and accident
insurance to the Executive during a period of two years shall
be reduced when and to the extent any of such benefits are
paid or provided to the Executive by another employer,
provided that the Executive
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shall have all rights afforded to retirees to convert group
insurance coverage to individual insurance coverage as to the
extent of, and whenever his group insurance coverage under
this Section is reduced or expires. Apart from this paragraph
(xi), the Executive shall have and be subject to no obligation
to mitigate.
(xii) the Company shall deduct applicable withholding
taxes in performing its obligations under this Section.
Nothing in this Section 5.1.2 is intended, or shall be
deemed or interpreted, to be an amendment to any compensation, benefit, or other
plan of the Company. To the extent the Company's obligations under this Section
include the performance of the Company's obligations to the Executive under any
such plan or under another agreement between the Company and the Executive, the
Company need only perform once, and to the extent this Agreement requires
duplicative performance by the Company, the rights of the Executive under this
Agreement, are discharged, surrendered, or released pro tanto, it being the
intention of the parties that any benefits payable or to be paid to the
Executive pursuant to this Agreement be paid only one time.
5.1.3 If the Company terminates Executive other than
pursuant to clauses (i) through (iii) of Section 5.1 and in the absence of a
Change in Control, Executive shall be entitled to receive immediately in a lump
sum as severance upon such termination, the compensation and benefits provided
in Section 6 hereof for the remaining Term of this Agreement.
5.1.4 If the Company terminates Executive other than
pursuant to clauses (i) through (iii) of Section 5.1 and in the absence of a
Change of Control, (A) all rights of Executive pursuant to awards of share
grants or options granted by the Company shall be deemed to have vested and
shall be released from all conditions and restrictions, except for restrictions
on transfer pursuant to the Securities Act of 1933, as amended, and (B) the
Executive shall be deemed to be credited with service with the Company for such
remaining Term for the purposes of the Company's benefit plans.
5.2 By Executive. Executive shall have the right to terminate
his employment hereunder if (i) there is a Voluntary Termination; (ii) the
Company materially breaches this Agreement and such breach is not cured within
30 days after written notice of such breach is given by Executive to the Bank;
or (iii) there is a termination for Good Reason. If the Executive elects to
terminate his employment pursuant to this Section, Executive must do so within
twelve (12) months of a Change in Control.
5.2.1 If Executive terminates his employment pursuant
to clause (i) of Section 5.2, the Company's obligations under this Agreement
shall cease as of the date of such termination.
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5.2.2 If, within twelve (12) months following a Change
in Control, Executive terminates his employment hereunder pursuant to any of
clauses (ii) or (iii) of Section 5.2. Executive shall be entitled to receive
immediately in a lump sum as severance the Termination Payments provided in
Section 5.1.2.
5.2.3 In addition, in the event of such termination
pursuant to clauses (ii) or (iii) of this Section 5.2 absent a Change in
Control, (A) all rights of Executive pursuant to awards of share grants or
options granted by the Company shall be deemed to have vested and shall be
released from all conditions and restrictions, except for restrictions on
transfer pursuant to the Securities Act of 1933, as amended, and (B) the
Executive shall be deemed to be credited with service with the Company for such
remaining Term for the purposes of the Company's benefit plans. Executive shall
be entitled to receive immediately in a lump sum as severance, upon such
termination, the compensation and benefits provided in Section 6 hereof for the
remaining Term of this Agreement.
5.2.4 In the event Executive terminates his employment
for any reason other than as specified in clauses (i), (ii), or (iii) above
(including a voluntary termination in the absence of a Change in Control), the
Company's obligation under this Agreement shall cease as of the date of such
termination.
6. Compensation. In consideration of Executive's services and covenants
hereunder, Company shall pay to Executive the compensation and benefits
described below (which compensation shall be paid in accordance with the normal
compensation practices of the Company and shall be subject to such deductions
and withholdings as are required by law or policies of the Company in effect
from time to time, provided that his salary pursuant to Section 6.1 shall be
payable not less frequently than monthly):
6.1 Annual-Salary. During the Term hereof, the Company shall
pay to Executive a salary at the rate of $180,000 per annum. Executive's salary
will be reviewed by the Board of Directors of the Company at the beginning of
each of its fiscal years and, in the sole discretion of the Board of Directors,
may be increased for such year. For purposes of computing the portion of
severance benefits under Section 5 based upon the Executive's salary, the
Executive's salary shall be his salary on the date of termination, excluding the
Annual Incentive Bonus as provided in Section 6.2.
6.2 Annual Incentive Bonus. During the Term hereof, the Board
of Directors may pay to Executive an annual incentive cash bonus in accordance
with the terms of the Short Term Incentive Compensation Plan. Executive will be
eligible to participate in the Short Term Incentive Compensation Plan for 1998
on a pro-rata basis determined by Executive's actual period of employment with
Company during 1998. Executive will be entitled to his actual bonus if greater
than $50,000 but in no case shall his bonus be less than a minimum of $50,000
under the Short Term Incentive Compensation Plan for 1999 provided that
Executive remains employed by Company for the entire 1999 calendar year.
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6.3 Long Term Incentive Compensation Plan. During the Term
hereof, the Board of Directors shall grant Executive options to purchase Company
Common Stock and restricted stock in accordance with the terms of the Company's
Long Term Incentive Compensation Plan.
6.4 Stock Options. The parties acknowledge that the Company
has granted to Executive an irrevocable option to purchase 25,000 shares of
common stock at the closing price for such common stock on the first trading day
of the 1999 calendar year in which the Executive is fully vested.
6.5 Other Benefits. Executive shall be entitled to share in
any other employee benefits generally provided by the Company to its most highly
ranking executives for so long as the Company provides such benefits. The
Company also agrees to provide Executive a monthly automobile allowance of
$1,000, grossed up for income and employment withholding taxes, plus
reimbursement for insurance, gasoline, and maintenance expenses for the
automobile that is primarily used by Executive for business purposes. Company
also agrees to provide Executive a $1,000,000 life insurance policy under the
Company's split dollar life insurance program. Executive shall also be entitled
to participate in all other benefits accorded general Company employees.
7. Gross-Up of Termination Payments. It is the intention of the parties
that (i) the net amount of all Termination Payments provided under Section 5.1.2
retained by the Executive after deduction for and payment of all applicable
federal, state and local taxes (the "Withholding Taxes") payable by or on behalf
of the Executive shall be equal to the gross amount of the Termination Payments
without regard to any such deductions or payments (the "Net Termination
Payments") and (ii) the net amount of all other payments or benefits received or
to be received by the Executive from the Company or one of its benefit plans as
a direct or indirect result of or in connection with a Change in Control or in
connection with Termination within one year of a change in Control, from
whatever source other than a Termination Payment (the "Other Payments"), that
are or become subject to the tax (the"Excise Tax") imposed by Section 4999 of
the Internal Revenue code of 1986 or any successor statute, rule or regulation
of similar effect (the "Code"), shall be equal to the gross amount of the Other
Payments without regard to deduction or payment or any such Excise Tax.
Accordingly, the Termination Payments otherwise payable hereunder shall be
increased by an amount of cash (the "Withholding Gross-Up Payment") equal to all
Withholding Taxes payable by or on behalf of the Executive in respect of the
Termination Payments, including any Withholding Taxes as may be due in respect
of such additional amounts to be paid pursuant to this sentence as will result
in the Executive actually retaining an amount equal to the Net Termination
Payments. In addition, if the sum of the Termination Payments, the Withholding
Gross Up Payment and the Other Payments (the "Total Payments") are or become
subject to the Excise Tax, the Company shall pay the Executive within 30 days of
the Termination Date an additional cash amount (the "Excise Gross-Up Payment")
such that the net amount actually retained by the Executive, after deduction for
or payment of any Excise Tax on the Total
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Payments and the sum of any Withholding Taxes upon the payment provided by this
sentence shall be equal to the Total Payments (the "Net Total Payments"). For
the purposes of determining whether any of the Total Payments will be subject to
the Excise Tax and the amount of such Excise Tax, the following shall apply:
(a) all "excess parachute payments" within the meaning of
Section 280G(b)(l) of the Code shall be treated as subject to the Excise Tax,
unless, in the opinion of tax counsel selected by the Company's independent
auditors and acceptable to the Executive, such other payments or benefits (in
whole or in part) described in clause (a) above do not constitute parachute
payments, or such excess parachute payments (in whole or in part) represent
reasonable compensation for services actually rendered within the meaning of
Section 280G(b)(4) of the Code;
(b) the amount of the Termination Payments which shall be
treated as subject to the Excise Tax shall be equal to the lesser of:
(i) the total amount of the Termination Payments; and
(ii) the amount of excess parachute payments within
the meaning of Sections 280G(b)(1) and (4) (after applying
clauses (a) and (b) above).
(c) the value of any non-cash benefits or any deferred payment
or benefit shall be determined by the Company's independent auditors in
accordance with the principles of Sections 280G(d)(3) and (4) of the Code; and
(d) the Executive shall be deemed to pay federal income taxes,
and state and local income taxes in the state and locality of the Executive's
residence on the date of Termination, at the highest marginal rate of income
taxation in effect in the calendar year in which the Gross-Up Payment is to be
made, net of the maximum reduction in federal income taxes which could be
obtained from deduction of such state and local income taxes.
Provided, that in the event the Excise Tax or Withholding
Taxes are subsequently determined to be less than the amounts taken into account
hereunder at the time of the payment of the Withholding Gross Up Payments or the
Excise Tax Gross Up Payment, the Executive shall repay the Company the portion
of such payments attributable to such reduction, or in the event that the Excise
Tax or the Withholding Taxes are subsequently determined to exceed the amount
taken into account hereunder at the time of the payment of the Withholding Gross
Up Payment or the Excise Tax Gross Up Payment (including by reason of any
payment the existence or amount of which cannot be determined at the time of
such payments), to make the Executive whole, the Company shall make an
additional gross-up payment in respect of such excess. Payment shall be made
within 30 days after the final determination of the amount of the reduction or
excess, as the
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case may be, together with interest thereon at the rate provided in Section
1274(b)(2)(B) of the Code.
8. Confidentiality. Executive acknowledges that, prior to and during
the term of this Agreement, the Company has furnished and will furnish to
Executive Protected Information which could be used by Executive on behalf of a
competitor of the Company to the Company's substantial detriment. In view of the
foregoing, Executive acknowledges and agrees that the restrictive covenants
contained in this Section are reasonably necessary to protect the Company's
legitimate business interests and goodwill. Executive agrees that he shall
protect the Company's Protected Information and shall not disclose to any
Person, or otherwise use, except in connection with his duties performed in
accordance with this Agreement, any Protected Information; provided, however,
that Executive may make disclosures required by a valid order or subpoena issued
by a court or administrative agency of competent jurisdiction, in which event
Executive will promptly notify the Company of such order or subpoena to provide
the Company an opportunity to protect its interests. Upon the termination or
expiration of his employment hereunder, the Executive agrees to deliver promptly
to the Company all Company files, customer lists, management reports, memoranda,
research, Company forms, financial data and reports and other documents supplied
to or created by him in connection with his employment hereunder (including all
copies of the foregoing) in his possession or control and all of the Company's
equipment and other materials in his possession or control.
9. Noncompetition. In the event that Executive's employment with the
Company is terminated before a Change in Control voluntarily by the Executive or
by the Board of Directors pursuant to clause (i) of Section 5.1, then Executive
shall not, for a period of one year following such termination of employment (i)
become employed by any insured depository institution which is headquartered in
the State of South Carolina, or (ii) attempt to interfere with any business
relationship of the Company, including without limitation, employee and customer
relationships. In the event that Executive's employment is terminated for any
reason following a Change in Control (whether by the Company or Executive), it
is expressly acknowledged that there shall be no limitation on any activity of
Executive, including direct competition with the Company or its successor, and
Company shall not be entitled to injunctive relief with respect to any such
activities of Executive.
The Executive acknowledges that the services to be rendered by the
Executive are special, unique and of extraordinary character and, in connection
with such services, the Executive will have access to Protected Information
vital to the Company's Business and the Business of its subsidiaries and
affiliates. By reason of this, the Executive consents and agrees that if the
Executive violates any provisions of Section 9, hereof, the Company could
sustain irreparable injury that money damages will not provide adequate remedy
to the Company and that the Company shall be entitled to have Section 9
specifically enforced by any court having equity jurisdiction. Nothing contained
herein shall be construed as prohibiting the Company and any of
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its subsidiaries or affiliates from pursuing any other remedies available to it
for such breach or threatened breach, including the recovery of damages from the
Executive.
10. Assignment. The parties acknowledge that this Agreement has been
entered into due to, among other things, the special skills of Executive, and
agree that this Agreement may not be assigned or transferred by either party, in
whole or in part, without the prior written consent of the other.
11. Notices. All notices, requests, demands, and other communications
required or permitted hereunder shall be in writing and shall be deemed to have
been duly given if delivered or seven days after mailing if mailed, first class,
certified mail postage prepaid:
To the Bank: Carolina First Bank
102 South Main Street
Greenville, South Carolina 29601
Attn: Chairman of the Board
To Executive: Mr. John DuBose
332 Mooring Lane
Lexington, South Carolina 29072
With a copy mailed to Executive:
c/o Carolina First Bank
Post Office Box 12249
Columbia, South Carolina 29211
Any party may change the address to which notices, requests, demands,
and other communications shall be delivered or mailed by giving notice thereof
to the other party in the same manner provided herein.
12. Provisions Severable. If any provision or covenant, or any part
thereof, of this Agreement should be held by any court to be invalid, illegal or
unenforceable, either in whole or in part, such invalidity, illegality or
unenforceability shall not affect the validity, legality or enforceability of
the remaining provisions or covenants, or any part thereof, of this Agreement,
all of which shall remain in full force and effect.
13. Remedies in the Absence of a Change in Control. The terms of this
Section 13 will apply in the absence of a Change in Control.
The Executive acknowledges that if he breaches or threatens to breach
his covenants and agreements in this Agreement, such actions may cause
irreparable harm and damage to the
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Company which could not be compensated in damages. Accordingly, if Executive
breaches or threatens to breach this Agreement, the Company shall be entitled to
injunctive relief, in addition to any other rights or remedies of the Company.
All claims, disputes and other matters in question between the
Executive and the Company arising out of or related to the interpretation of
this Agreement or the breach of this Agreement, except as specifically governed
by the foregoing provisions where there may be irreparable harm and damage to
the Company which could not be compensated in damages, shall be decided by a
three (3) person arbitration panel in accordance with the commercial rules of
the American Arbitration Association. This agreement to arbitrate shall be
specifically enforceable under applicable law in any court having jurisdiction.
The award rendered by the arbitrator shall be final and judgment may be entered
upon it in accordance with the applicable law of any court having jurisdiction
thereof.
In the event that Executive is reasonably required to engage legal
counsel to enforce his rights hereunder against the Company, Executive shall be
entitled to receive from the Company his reasonable attorneys' fees and costs;
provided that Executive shall not be entitled to receive those fees and costs
related to matters, if any, which were the subject of litigation and with
respect to which a judgment is rendered against Executive.
14. Remedies in the Event of a Change in Control. The terms of this
Section 14 shall apply in the event of a Change in Control.
The Executive acknowledges that if he breaches or threatens to breach
his covenants and agreements in this Agreement, such actions may cause
irreparable harm and damage to the Company which could not be compensated in
damages. Accordingly, if Executive breaches or threatens to breach this
Agreement, the Company shall be entitled to injunctive relief, in addition to
any other rights or remedies of the Company. All claims, disputes and other
matters in question between the Executive and the Company arising out of or
related to the interpretation of this Agreement or the breach of this Agreement
shall be decided under and governed by the laws of the State of South Carolina.
The Company is aware that upon the occurrence of a Change in Control,
the Board of Directors or a stockholder of the Company may then cause or attempt
to cause the Company to refuse to comply with its obligations under this
Agreement, or may cause or attempt to cause the Company to institute, or may
institute, litigation seeking to have this Agreement declared unenforceable, or
may take, or attempt to take, other action to deny the Executive the benefits
intended under this Agreement. In these circumstances, the purpose of this
Agreement could be frustrated. It is the intent of the parties that the
Executive not be required to incur the legal fees and expenses associated with
the protection or enforcement of his rights under this Agreement by litigation
or other legal action because such costs would substantially detract from the
benefits intended to be extended to the Executive hereunder, nor be bound to
negotiate any settlement of his rights hereunder under threat of incurring such
costs. Accordingly, if at any time after the Effective Date, it should appear to
the Executive that the Company is or has acted contrary to or
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is failing or has failed to comply with any of its obligations under this
Agreement for the reason that it regards this Agreement to be void or
unenforceable or for any other reason, or that the Company has purported to
terminate his employment for cause or is in the course of doing so in either
case contrary to this Agreement, or in the event that the Company or any other
person takes any action to declare this Agreement void or unenforceable, or
institutes any litigation or other legal action designed to deny, diminish or to
recover from the Executive the benefits provided or intended to be provided to
him hereunder, and the Executive has acted in good faith to perform his
obligations under this Agreement, the Company irrevocably authorizes the
Executive from time to time to retain counsel of his choice at the expense of
the Company to represent him in connection with the protection and enforcement
of his rights hereunder, including without limitation representation in
connection with termination of his employment contrary to this Agreement or with
the initiation or defense of any litigation or other legal action, whether by or
against the Executive or the Company or any director, officer, stockholder or
other person affiliated with the Company, in any jurisdiction. The reasonable
fees and expenses of counsel selected from time to time by the Executive as
herein above provided shall be paid or reimbursed to the Executive by the
Company on a regular, periodic basis upon presentation by the Executive of a
statement or statements prepared by such counsel in accordance with its
customary practices. Counsel so retained by the Executive may be counsel
representing other officers or key executives of the Company in connection with
the protection and enforcement of their rights under similar agreements between
them and the Company, and, unless in his sole judgment use of common counsel
could be prejudicial to him or would not be likely to reduce the fees and
expenses chargeable hereunder to the Company, the Executive agrees to use his
best efforts to agree with such other officers or executives to retain common
counsel.
15. Waiver. Failure of either party to insist, in one or more
instances, on performance by the other in strict accordance with the terms and
conditions of this Agreement shall not be deemed a waiver or relinquishment of
any right granted in this Agreement or of the future performance of any such
term or condition or of any other term or condition of this Agreement, unless
such waiver is contained in a writing signed by the party making the waiver.
16. Amendments and Modifications. This Agreement may be amended or
modified only by a writing signed by other parties hereto.
17. Governing Law. The validity and effect of this agreement shall be
governed by and construed and enforced in accordance with the laws of the State
of South Carolina.
18. Merger. This Agreement supersedes all previous agreements, whether
written or oral, and all prior negotiations and agreements are merged into this
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
EXECUTIVE
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John DuBose
CAROLINA FIRST BANK
By: ________________________________
Mack I. Whittle, Jr.
President
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Exhibit 10.4
CAROLINA FIRST CORPORATION
CHANGE IN CONTROL AGREEMENT
This Change in Control Agreement ("Agreement") is entered into this 2
day of November, 1998, by and between Michael W. Sperry (the "Executive") and
Carolina First Corporation, a South Carolina corporation and financial
institution holding company headquartered in Greenville, South Carolina (the
"Company"). As used herein, the term Company shall include the Company and any
and all of its subsidiaries where the context so applies.
RECITALS
The Company considers it the best interest of its stockholders to
foster the continuous employment of key management personnel. In this
connection, the Board of Directors of the Company (the "Board") recognizes that,
as is the case with many publicly held corporations, the possibility of a change
in control may exist and that such possibility, and the uncertainty and
questions which it may raise among management, may result in the departure or
distraction of management personnel to the detriment of the Company and it
stockholders.
The Board has determined that appropriate steps should be taken to
reinforce and encourage the continued attention and dedication of members of the
Company's management, including the Executive, to assigned duties without
distraction in the face of potentially disturbing circumstances arising from the
possibility of a change in control of the Company.
To induce the Executive to remain in the employ of the Company, and in
consideration of the Executive's agreement set forth below, the Company agrees
that the Executive shall receive the severance benefits set forth in this
Agreement in the event that the Executive's employment with the Company is
terminated subsequent to a "change in control of the Company" (as defined in
Section 2 below) under the circumstances described below.
NOW, THEREFORE, in consideration of the Executive's continued
employment and the parties' agreement to be bound by the terms contained in this
Agreement, the parties agree as follows:
1. Term of the Agreement. This Agreement shall commence on
November 2, 1998, and shall continue in effect through
November 2, 2000; provided, however, that commencing on
November 2, 1999 and each year thereafter, the term of this
Agreement shall automatically be extended for one additional
year unless, not later than ninety (90) days prior to the end
of the preceding term, the Company shall have given notice
that it does not wish to extend this Agreement. Further, if a
change in control of the Company shall have occurred during
the original term or extended term of this Agreement, this
Agreement shall continue in effect for a period not less than
twelve (12)
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months beyond the month in which such a change in
control occurred. Unless otherwise stated, the term of this
Agreement shall not extend beyond the month in which the
Executive attains the age of sixty-five (65) years.
2. Change in Control.
No benefit shall be payable under this Agreement unless there
has been a change in control of the Company, as set forth
below. For purposes of this Agreement, a "change in control of
the Company" shall be deemed to have occurred if:
(a) Any "Person" (as the term "Person" is used for purposes of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934
(the "1934 Act")) acquires (other than directly from the
Company) any voting securities of the Company (the "Voting
Securities") immediately after which such person has
"beneficial ownership" (within the meaning of Rule 13d-3
promulgated under the 1934 Act) of 20% or more of the combined
voting power of the Company's then outstanding Voting
Securities; PROVIDED, HOWEVER, that in determining whether a
"change in control of the Company" has occurred, Voting
Securities which are acquired in a "Non-Control Acquisition"
(as hereinafter defined) shall not constitute an acquisition
which would cause a change in control. A "Non-Control
Acquisition" shall mean an acquisition by (a) an employee
benefit plan (or a trust forming a part thereof) maintained by
(x) the Company or (y) any corporation or other Person of
which a majority of its voting power or its equity securities
or equity interest is owned directly or indirectly by the
Company (a "Subsidiary"), (b) the Company or any Subsidiary,
or (c) any Person in connection with a "Non-Control
Transaction" (as hereinafter defined); or
(b) During any period of three (3) consecutive years (not
including any period prior to the execution of this
Agreement), the individuals who, as of the date of this
Agreement, are members of the Board (the "Incumbent Board")
cease for any reason to constitute at least two-thirds of the
Board; PROVIDED, HOWEVER, that if the election, or nomination
for election by the Company's stockholders, of any new
director was approved by a vote of at least two-thirds of the
Incumbent Board, such new director shall, for purposes of this
Agreement, be considered as a member of the Incumbent Board;
PROVIDED, FURTHER, HOWEVER, that no individual shall be
considered a member of the Incumbent Board if such individual
initially assumed office as a result of either an actual or
threatened "Election Contest" (as described in Rule 14a-11
promulgated under the 1934 Act) or other actual or threatened
solicitation of proxies or consents by or on behalf of a
Person other than the Board (a "Proxy Contest"), including by
reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest; or
(c) Approval by the stockholders of the Company of:
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(1) A merger, consolidation or reorganization involving the
Company, unless
(i) the stockholders of the Company, immediately
before such merger, consolidation or
reorganization, own, directly or indirectly,
immediately following such merger, consolidation
or reorganization, at least two-thirds of the
combined voting power of the outstanding voting
securities of the corporation resulting from such
merger or consolidation or reorganization (the
"Surviving Corporation") in substantially the same
proportion as their ownership of the Voting
Securities immediately before such merger,
consolidation or reorganization, and
(ii) the individuals who were members of the Incumbent
Board immediately prior to the execution of the
agreement providing for such merger, consolidation
or reorganization constitute at least two-thirds
of the members of the board of directors of the
Surviving Corporation.
(A transaction described in clauses (i) and (ii) of this
Section 2(c) shall be referred to as a "Non-Control
Transaction").
(2) A complete liquidation or dissolution of the Company; or
(3) An agreement for the sale or other disposition of all or
substantially all of the assets of the Company to any
Person (other than a transfer to a Subsidiary).
3. Termination Following Change in Control.
(a) General. If any of the events described in Section 2
above constituting a change in control of the Company
shall have occurred, the Executive shall be entitled to
the benefits provided in Section 4(c), upon the
subsequent termination of the Executive's employment
during the twelve (12) month period following the change
in control of the Company, unless such termination is:
(1) because of the Executive's death, Disability, or
Retirement; or
(2) by the Company for Cause; or
(3) by the Executive other than for Good Reason.
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In the event the Executive's employment with the Company
is terminated for any reason and subsequently a change
in control of the Company occurs, the Executive shall
not be entitled to any benefits hereunder.
(b) Disability. If, as a result of the Executive's
incapacity due to physical or mental illness as
determined by an independent physician selected with the
approval of both the Executive and the Board, the
Executive shall have been absent from the full-time
performance of his duties with the Company for six (6)
consecutive months, and, within thirty (30) days after
written notice of termination is given, the Executive
shall not have returned to full-time performance of his
duties, the Executive's employment may be terminated for
"Disability."
(c) Retirement. Termination by the Company or the Executive
of the Executive's employment based on "Retirement"
shall mean termination in accordance with the Company's
retirement policy, including early retirement, generally
applicable to its employees or in accordance with any
retirement arrangement with respect to the Executive.
(d) Cause. Termination by the Company of the Executive's
employment for "Cause" shall mean:
(1) termination for any act that (i) constitutes, on
the part of the Executive, fraud, dishonesty,
gross malfeasance of duty, or conduct grossly
inappropriate to the Executive's office, and (ii)
is demonstrably likely to lead to material injury
to the Company or resulted or was intended to
result in direct or indirect gain to or personal
enrichment of the Executive; or
(2) the conviction (from which no appeal may be or is
timely taken) of the Executive of a felony; or
(3) the suspension or removal of the Executive by
federal or state banking regulatory authorities
acting under lawful authority pursuant to
provisions of federal or state law or regulation
which may be in effect from time to time;
PROVIDED, HOWEVER, that in the case of clause (1)
above, such conduct shall not constitute Cause
unless (i) there shall have been delivered to the
Executive a written Notice of Termination setting
forth with specificity the reasons that the Board
believes
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the Executive's conduct constitutes the criteria set
forth in clause (1), (ii) the Executive shall have been
provided the opportunity to be heard in person by the
Board (with the assistance of the Executive's counsel if
the Executive so desires), and (iii) after such hearing,
the termination is evidenced by a resolution adopted in
good faith by two-thirds of the members of the Board
(other than the Executive).
(e) Good Reason. The Executive shall be entitled to
terminate his employment for Good Reason. For purposes
of this Agreement, "Good Reason" shall mean, without the
Executive's express written consent, the occurrence
after a change in control of the Company of any of the
following circumstances:
(1) a material change in the Executive's
responsibilities, position (including status as an
executive of the Company, its successor or
ultimate parent entity), office, title, reporting
relationship or working conditions, authority, or
duties (including changes resulting from the
assignment to the Executive of any duties
inconsistent with his positions, duties or
responsibilities as in effect immediately prior to
the change in control of the Company); or
(2) a change in the terms or status of this Agreement;
or
(3) a reduction in the Executive's compensation or
benefits; or
(4) a forced relocation of the Executive outside of
the Greeenville metropolitan area; or
(5) a significant increase in the Executive's travel
requirements; or
(6) any attempted termination for Cause that does not
comply with the substantive and procedural
provisions set forth in the definition of Cause
above for purposes of this Agreement; or
(7) the Company's insolvency.
The Executive will be required (i) to inform the Company
by written Notice of Termination of his intent to
terminate employment with Good Reason, setting forth the
specific grounds described in this
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Agreement constituting the termination and stating in
reasonable detail the facts and circumstances claimed to
provide a basis for termination of the Executive's
employment under the grounds so indicated, and (ii) to
provide the Company ten (10) days to cure said grounds
for termination. If the grounds for termination are
corrected within ten (10) days, the Executive's notice
of intent to terminate employment with Good Reason shall
be deemed withdrawn and of no further force or effect.
4. Compensation Upon Termination or During Disability. Following
a change in control of the Company, the Executive shall be
entitled to the following benefits during a period of
disability or upon termination of the Executive's employment,
as the case may be, provided that such period or termination
occurs during the term of this Agreement.
(a) During any period the Executive fails to perform his
full time duties with the Company as a result of
incapacity due to physical or mental illness, the
Executive shall continue to receive his base salary at
the rate in effect at the commencement of any such
period, together with all compensation payable to the
Executive under the Company's disability plan or program
or other similar plan during such period, until this
Agreement is terminated pursuant to Section 3(b) hereof.
Thereafter, or in the event the Executive's employment
shall be terminated by the Company or by the Executive
for Retirement, or by reason of the Executive's death,
the Executive's benefits shall be determined under the
Company's retirement, insurance, other compensation
programs or any employment contract then in effect in
accordance with the terms of such programs or contract.
(b) If the Executive's employment shall be terminated by the
Company for Cause or by the Executive other than for
Good Reason, Disability, death, or Retirement, the
Company shall pay the Executive's full base salary
through the date of termination as determined by the
Company at the rate in effect at the time the Notice of
Termination is given, plus all other amounts to which
the Executive is entitled under any compensation plan of
the Company at the time such payments are due, and the
Company shall have no further obligations to the
Executive under this Agreement.
(c) If the Executive's employment shall be terminated by the
Company for reasons other than Cause, Retirement,
Disability, or death, or if the Executive should
terminate employment for Good Reason, then the Executive
shall be entitled to the benefits provided below.
(1) The Company shall pay the Executive's full base
salary through the date of termination as
determined by the Company at the rate in effect at
the time the Notice of Termination is given, plus
all other amounts to which the Executive is
entitled
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under any compensation plan of the Company at the
time such payments are due, except as otherwise
provided below.
(2) In lieu of any further salary payments for periods
subsequent to the date of termination, the Company
shall pay to the Executive a lump sum severance
payment equal to the compensation, defined as
current base salary plus annual bonus, that would
have otherwise been payable over the two (2) years
subsequent to such termination. The annual bonus
amount shall be deemed equal to the average of
such compensation over the three (3) year period
immediately prior to the occurrence giving rise to
the Notice of Termination. The severance payment
provided for in this Section 4(iii)(b) shall be
made no later than the sixty (60) days following
the date of termination.
(3) The Executive shall be entitled to the
continuation of basic benefits coverage and
continuing perquisites for two (2) years
subsequent to the date of termination. Such
benefits consist of those benefits generally
provided to executives and may include health
insurance, disability insurance, and retirement
benefits, but shall not include life insurance or
club dues.
5. Vesting of Executive's Stock Options and Restricted Stock.
Executive stock options, restricted stock, or other components
of compensation subject to vesting requirements shall fully
vest upon the occurrence of a change in control of the Company
or upon the triggering of the provisions of the Company's
Shareholder Rights Agreement, even if the Executive is
terminated by the Company for Cause, terminates voluntarily,
or terminates with Good Reason or for Retirement or
Disability. Additionally, to the extent that this Agreement is
inconsistent with the Company's existing Restricted Stock Plan
(the "RSP"), the terms of the RSP shall control. The Executive
will have a minimum of one (1) year subsequent to the change
in control or triggering within which to exercise such options
which have received accelerated vesting.
6. Excess Parachute Payments. It is the intention of the parties
hereto that the severance payments and other compensation
provided for herein are reasonable compensation for the
Executive's services to the Company and shall not constitute
"excess parachute payments" within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended, and any
regulations thereunder. In the event that the Company's
independent accountants acting as auditors for the Company on
the date of a change in control determine that the payments
provided for herein constitute "excess parachute payments,"
then the compensation payable hereunder shall be increased, on
a tax gross-up basis, so as to reimburse the Executive for the
tax payable by the Executive, pursuant to Section 4999 of the
Internal
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<PAGE>
Revenue Code, on such "excess parachute payments," taking into
account all taxes payable by the Executive with respect to
such tax gross-up payments hereunder, so that the Executive
shall be, after payment of all taxes, in the same financial
position as if no taxes under Section 4999 had been imposed
upon him.
7. Notice. For the purposes of this Agreement, notices and all
other communications provided shall be in writing and will be
deemed to have been duly given when delivered or seven days
after mailed by the U.S. mail, certified, first class, postage
paid, and addressed to the respective party. All Notices to
the Company shall be directed to the attention of the Board.
8. Confidentiality. The Executive acknowledges that, prior to and
during the term of this Agreement, the Company has furnished
and will furnish to Executive Confidential Information which
could be used by the Executive on behalf of a competitor of
the Company to the Company's substantial detriment.
"Confidential Information" shall mean all business and other
information relating to the business of the Company, including
without limitation, technical or nontechnical data, programs,
methods, techniques, processes, financial data, financial
plans, product plans, and lists of actual or potential
customers, which (i) derives economic value, actual or
potential, from not being generally known to, and not being
readily ascertainable by proper means by, other Persons, and
(ii) is the subject of efforts that are reasonable under the
circumstances to maintain its secrecy or confidentiality. Such
information and compilations of information shall be
contractually subject to protection under this Agreement
whether or not such information constitutes a trade secret and
is separately protectable at law or in equity as a trade
secret. Confidential Information does not include confidential
business information which does not constitute a trade secret
under applicable law two years after any expiration or
termination of this Agreement. Executive agrees that he shall
protect the Company's Confidential Information and shall not
disclose to any Person, or otherwise use, except in connection
with his duties performed in accordance with this Agreement,
any Confidential Information; provided, however, that
Executive may make disclosures required by a valid order or
subpoena issued by a court or administrative agency of
competent jurisdiction, in which event the Executive will
promptly notify the Company of such order or subpoena to
provide the Company an opportunity to protect its interests.
Upon the termination or expiration of his employment
hereunder, the Executive agrees to deliver promptly to the
Company all Company files, customer lists, management reports,
memoranda, research, Company forms, financial data and reports
and other documents supplied to or created by him in
connection with his employment hereunder (including all copies
of the foregoing) in his possession or control and all of the
Company's equipment and other materials in his possession or
control.
-8-
<PAGE>
9. Remedies. The Executive acknowledges that if he breaches or
threatens to breach his covenants and agreements in this
Agreement, such actions may cause irreparable harm and damage
to the Company which could not be compensated by monetary
damages alone. Accordingly, if Executive breaches or threatens
to breach this Agreement, the Company shall be entitled to
injunctive relief, in addition to any other rights or remedies
of the Company.
10. Validity. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or
enforceability of any other provision of this Agreement, which
shall remain in full force and effect.
11. Entire Agreement. This Agreement sets forth the entire
understanding of the parties with respect to its subject
matter and supercedes all prior written or oral agreements
regarding severance benefits provided following a change in
control of the Company.
12. Governing Law. This Agreement shall be governed by and
construed according to the laws of the State of South
Carolina.
13. Amendments and Modification. This Agreement may be amended or
modified only in writing if duly approved and signed by all
parties.
IN WITNESS WHEREOF, the Company and the Executive have executed this
Change in Control Agreement as of the date set forth above.
Date:______________________ ___________________________________
Michael W. Sperry
CAROLINA FIRST CORPORATION
Date:______________________ By:________________________________
Its: Executive Vice President
Carolina First Corporation
-9-
EXHIBIT 11.1
COMPUTATION OF EARNINGS PER SHARE
Carolina First Corporation and Subsidiaries
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1999
------------------ ------------------
<S> <C> <C>
BASIC
Net income $ 5,729,335 $20,005,000
Less dividends on preferred stock -- --
----------- -----------
Net income applicable to common
shareholders (numerator) $ 5,729,335 $20,005,000
=========== ===========
Average common shares outstanding
(denominator) 25,519,678 25,143,098
Per share amount $ 0.22 $ 0.80
=========== ===========
DILUTED
Net income (numerator) $ 5,729,335 $20,005,000
Average common shares outstanding 25,519,678 25,143,098
Dilutive average shares outstanding under options 945,853 953,094
Exercise prices $3.55 to $21.75 $3.55 to $23.13
Assumed proceeds on exercise $13,128,277 $13,564,826
Average market value per share $ 22.12 $ 23.36
Less: Treasury stock purchased with the assumed
proceeds from exercise of options 593,503 580,686
----------- -----------
Adjusted average shares 25,872,028 25,515,506
----------- -----------
Convertible preferred stock assumed
converted -- --
Average diluted shares outstanding
----------- -----------
(denominator) 25,872,028 25,515,506
----------- -----------
Per share amount $ 0.22 $ 0.78
=========== ===========
</TABLE>
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES EXHIBIT 12.1
Carolina First Corporation and Subsidiaries
($ in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 1999
--------------------- ---------------------
<S> <C> <C>
EARNINGS:
Income from continuing operations
before income taxes.................................... $ 8,723 $ 29,862
ADD:
(a) Fixed charges......................................... 27,177 78,503
DEDUCT:
(a) Interest capitalized during year...................... -- --
------------ ------------
Earnings, for computation purposes.......................... $ 35,900 $ 108,365
============ ============
FIXED CHARGES:
Interest on indebtedness, expensed or capitalized......... $ 26,651 $ 77,354
Portion of rents representative of the interest factor.... 494 1,053
Amortization of debt expense.............................. 32 96
------------ ------------
Fixed charges, for computation purposes..................... $ 27,177 $ 78,503
============ ============
RATIO OF EARNINGS TO FIXED CHARGES......................... 1.32X 1.38X
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<EXCHANGE-RATE> 1.00
<CASH> 88,693
<INT-BEARING-DEPOSITS> 15,535
<FED-FUNDS-SOLD> 13,205
<TRADING-ASSETS> 4,026
<INVESTMENTS-HELD-FOR-SALE> 434,327
<INVESTMENTS-CARRYING> 52,586
<INVESTMENTS-MARKET> 52,421
<LOANS> 2,280,081
<ALLOWANCE> 22,180
<TOTAL-ASSETS> 3,169,055
<DEPOSITS> 2,398,091
<SHORT-TERM> 229,924
<LIABILITIES-OTHER> 60,030
<LONG-TERM> 69,270
0
0
<COMMON> 25,695
<OTHER-SE> 386,095
<TOTAL-LIABILITIES-AND-EQUITY> 3,169,055
<INTEREST-LOAN> 146,657
<INTEREST-INVEST> 18,164
<INTEREST-OTHER> 3,065
<INTEREST-TOTAL> 167,886
<INTEREST-DEPOSIT> 68,426
<INTEREST-EXPENSE> 77,354
<INTEREST-INCOME-NET> 90,532
<LOAN-LOSSES> 11,752
<SECURITIES-GAINS> 321
<EXPENSE-OTHER> 39,684
<INCOME-PRETAX> 29,862
<INCOME-PRE-EXTRAORDINARY> 29,862
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 20,005
<EPS-BASIC> 0.80
<EPS-DILUTED> 0.78
<YIELD-ACTUAL> 8.57
<LOANS-NON> 6,818
<LOANS-PAST> 5,458
<LOANS-TROUBLED> 1,283
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 20,266
<CHARGE-OFFS> 8,121
<RECOVERIES> 850
<ALLOWANCE-CLOSE> 22,180
<ALLOWANCE-DOMESTIC> 22,180
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
