UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the period ended September 30, 1997
Commission File Number: 0-16471
First Citizens BancShares, Inc
(Exact name of Registrant as specified in its charter)
Delaware 56-1528994
(State or other jurisdiction of (I.R.S. Employer Identification Number)
incorporation or organization)
239 Fayetteville Street, Raleigh, North Carolina 27601
(Address of principal executive offices) (zip code)
(919) 716-7000
(Registrant's telephone number, including area code)
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 twelve 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 ninety days.
Yes X No _____
Class A Common Stock--$1 Par Value-- 9,631,599 shares
Class B Common Stock--$1 Par Value-- 1,753,854 shares
(Number of shares outstanding, by class, as of November 13, 1997)
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets at September 30, 1997,
December 31, 1996, and September 30, 1996
Consolidated Statements of Income for the three-month
and nine-month periods ended September 30, 1997, and September 30, 1996
Consolidated Statements of Changes in Shareholders' Equity
for the three-month and nine-month periods ended September 30, 1997,
and September 30, 1996
Consolidated Statements of Cash Flows for the nine-month
periods ended September 30, 1997, and September 30, 1996
Note to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
27 Financial Data Schedule
3.(ii) Amended Bylaws of Registrant
(b) Reports on Form 8-K. During the quarter ended
September 30, 1997, Registrant filed no Current Reports
on Form 8-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
FIRST CITIZENS BANCSHARES, INC.
(Registrant)
Dated: November 13, 1997 By:/s/Kenneth A. Black
Kenneth A. Black
Vice President, Treasurer,
and Chief Financial Officer
First Citizens BancShares, Inc and Subsidiaries
Third Quarter 1997
<PAGE>
Consolidated Balance Sheets
First Citizens BancShares, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Consolidated Balance Sheets
First Citizens BancShares, Inc. and Subsidiaries
September 30* December 31# September 30*
(thousands, except share data) 1997 1996 1996
<S> <C> <C> <C>
Assets
Cash and due from banks $451,772 $437,029 $422,343
Investment securities 2,432,424 2,138,831 1,912,448
Federal funds sold 70,000 156,000 203,600
Loans 5,208,195 4,930,508 4,914,748
Less reserve for loan losses 83,385 81,439 81,192
Net loans 5,124,810 4,849,069 4,833,556
Premises and equipment 264,066 229,496 222,118
Income earned not collected 63,268 60,175 56,942
Other assets 189,251 184,972 175,111
Total assets $8,595,591 $8,055,572 $7,826,118
Liabilities
Deposits:
Noninterest-bearing $1,104,615 $1,087,474 $1,084,166
Interest-bearing 6,193,269 5,866,554 5,724,199
Total deposits 7,297,884 6,954,028 6,808,365
Short-term borrowings 539,382 392,006 332,448
Long-term obligations 11,482 6,922 6,715
Other liabilities 84,353 87,109 85,626
Total liabilities 7,933,101 7,440,065 7,233,154
Shareholders' Equity
Common stock:
Class A - $1 par value (9,633,699; 9,651,900;
and 9,668,576 shares issued, respectively) 9,634 9,652 9,669
Class B - $1 par value (1,756,229; 1,758,980;
and 1,759,404 shares issued, respectively) 1,756 1,759 1,759
Surplus 143,760 143,760 143,753
Retained earnings 496,673 453,640 437,783
Unrealized gains on marketable equity securities, net of taxes 10,667 6,696 -
Total shareholders' equity 662,490 615,507 592,964
Total liabilities and shareholders' equity $8,595,591 $8,055,572 $7,826,118
* Unaudited
# Derived from the Consolidated Balance Sheets included in the 1996 Annual Report on Form 10-K.
See accompanying Note to Consolidated Financial Statements.
</TABLE>
First Citizens BancShares, Inc and Subsidiaries
Third Quarter 1997
<PAGE>
Consolidated Statements of Income
First Citizens BancShares, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
(thousands, except per share data, unaudited) 1997 1996 1997 1996
<S> <C> <C> <C> <C>
Interest income
Loans $107,892 $104,013 $317,748 $306,779
Investment securities:
U. S. Government 34,732 27,902 96,461 84,184
State, county and municipal 53 78 203 252
Other 25 43 84 131
Total investment securities interest income 34,810 28,023 96,748 84,567
Federal funds sold 2,792 2,234 7,555 5,194
Total interest income 145,494 134,270 422,051 396,540
Interest expense
Deposits 62,063 57,090 178,778 172,712
Short-term borrowings 6,651 4,130 15,806 11,761
Long-term obligations 233 158 611 813
Total interest expense 68,947 61,378 195,195 185,286
Net interest income 76,547 72,892 226,856 211,254
Provision for loan losses 1,309 1,787 4,973 5,586
Net interest income after provision for loan losses 75,238 71,105 221,883 205,668
Noninterest income
Trust income 2,808 2,269 8,361 6,792
Service charges on deposit accounts 10,615 10,072 30,865 30,497
Credit card income 5,574 4,505 14,190 11,652
Other service charges and fees 7,306 6,120 20,093 17,728
Other 4,784 3,111 9,886 8,553
Total noninterest income 31,087 26,077 83,395 75,222
106,325 97,182 305,278 280,890
Noninterest expense
Salaries and wages 31,944 29,203 93,796 86,186
Employee benefits 5,967 5,239 17,883 15,181
Occupancy expense 6,066 5,600 17,571 16,411
Equipment expense 8,337 6,881 23,571 19,699
Other 24,247 31,174 69,141 72,168
Total noninterest expense 76,561 78,097 221,962 209,645
Income before income taxes 29,764 19,085 83,316 71,245
Income taxes 10,746 6,647 30,122 25,596
Net income $19,018 $12,438 $53,194 $45,649
Per Share
Net income $1.67 $1.08 $4.67 $4.03
Cash dividends 0.250 0.225 0.750 0.675
See accompanying Note to Consolidated Financial Statements.
</TABLE>
First Citizens BancShares, Inc. and Subsidiaries
Third Quarter 1997
<PAGE>
Consolidated Statements of Changes in Shareholders' Equity
First Citizens BancShares, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Class A Class B Unrealized Gain
Common Common Retained on Marketable Total
(thousands, except share data, unaudited) Stock Stock Surplus Earnings Equity Securit Equity
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1995 $8,950 $1,766 $106,954 $403,167 $520,837
Issuance of 87,992 shares of Class A
common stock pursuant to the Employee
Stock Purchase Plan 87 3,951 4,038
Issuance of 8,736 shares of Class A
common stock pursuant to the
Dividend Reinvestment Plan 9 114 123
Issuance of 668,654 shares of Class A
common stock in connection with various
acquisitions 669 32,734 33,403
Redemption of 46,520 shares of Class A
common stock and 7,060 shares
Class B common stock (46) (7) (3,321) (3,374)
Net income 45,649 45,649
Cash dividends (7,712) (7,712)
Balance at September 30, 1996 $9,669 $1,759 $143,753 $437,783 $592,964
Balance at December 31, 1996 $9,652 $1,759 $143,760 $453,640 $6,696 $615,507
Redemption of 18,201 shares of Class A
common stock and 2,751 shares of
Class B common stock (18) (3) (1,627) (1,648)
Net income 53,194 53,194
Unrealized gain on marketable equity
securities, net of taxes 3,971 3,971
Cash dividends (8,534) (8,534)
Balance at September 30, 1997 $9,634 $1,756 $143,760 $496,673 $10,667 $662,490
See accompanying Note to Consolidated Financial Statements.
</TABLE>
First Citizens BancShares, Inc. and Subsidiaries
Third Quarter 1997
<PAGE>
Consolidated Statements of Cash Flows
First Citizens BancShares, Inc. and Subsidiaries
<TABLE>
<CAPTION>
Nine Months Ended September 30
(thousands, unaudited) 1997 1996
<S> <C> <C>
Operating Activities
Net income $53,194 $45,649
Adjustments:
Amortization of intangibles 6,665 6,032
Provision for loan losses 4,973 5,586
Deferred tax benefit (760) (1,966)
Change in current taxes payable (1,326) 874
Depreciation 14,009 12,700
Change in accrued interest payable (1,849) (3,815)
Change in income earned not collected (3,210) 2,371
Origination of loans held for sale (312,429) (124,649)
Proceeds from sale of loans 321,909 77,465
(Gain) loss on mortgage loans 300 69
Net amortization of premiums and discounts 5,491 9,705
Net change in other assets 10,093 (3,442)
Net change in other liabilities (3,563) 6,556
Net cash provided by operating activities 93,497 33,135
Investing Activities
Net increase in loans outstanding (253,192) (86,055)
Purchases of investment securities (651,725) (624,374)
Proceeds from maturities of investment securities 363,770 703,613
Net change in federal funds sold 86,000 (163,155)
Dispositions of premises and equipment 1,305 4,263
Additions to premises and equipment (48,594) (28,854)
Purchase of institutions, net of cash acquired 105,535 7,584
Net cash used by investing activities (396,901) (186,978)
Financing Activities
Net change in time deposits 185,438 44,550
Net change in demand and other interest-bearing dep (9,045) 167,339
Net change in short-term borrowings 151,936 (77,408)
Repurchases of common stock (1,648) (3,374)
Proceeds from issuance of stock - 4,161
Cash dividends paid (8,534) (7,712)
Net cash provided by financing activities 318,147 127,556
Change in cash and due from banks 14,743 (26,287)
Cash and due from banks at beginning of period 437,029 448,630
Cash and due from banks at end of period $451,772 $422,343
Cash payments for:
Interest $197,558 $189,101
Income taxes 27,476 27,569
Supplemental disclosure of noncash investing and financing activities:
Common stock issued for acquisitions - $33,403
Long-term obligations issued for acquisitions - 1,468
Unrealized gain on marketable equity securities $6,575 -
See accompanying Note to Consolidated Financial Statements.
</TABLE>
First Citizens BancShares, Inc. and Subsidiaries
Third Quarter 1997
<PAGE>
Financial Summary
<TABLE>
<CAPTION>
1997 1996
Nine Months Ended
Third Second First Fourth Third September 30
(thousands, except per share data and ratios) Quarter Quarter Quarter Quarter Quarter 1997 1996
S> <C> <C> <C> <C> <C> <C> <C>
Summary of Operations
Interest Income $145,494 $140,118 $136,439 $137,655 $134,270 $422,051 $396,540
Interest income - taxable equivalent 145,999 140,634 136,961 138,222 134,837 423,594 398,279
Interest expense 68,947 64,542 61,706 62,964 61,378 195,195 185,286
Net interest income-taxable equivalent 77,052 76,092 75,255 75,258 73,459 228,399 212,993
Taxable equivalent adjustment 505 516 522 567 567 1,543 1,739
Net interest income 76,547 75,576 74,733 74,691 72,892 226,856 211,254
Provision for loan losses 1,309 2,097 1,567 3,321 1,787 4,973 5,586
Net interest income after provision for loan los 75,238 73,479 73,166 71,370 71,105 221,883 205,668
Noninterest income 31,087 28,894 23,414 28,082 26,077 83,395 75,222
Noninterest expense 76,561 74,817 70,584 69,023 78,097 221,962 209,645
Income before income taxes 29,764 27,556 25,996 30,429 19,085 83,316 71,245
Income taxes 10,746 9,972 9,404 10,611 6,647 30,122 25,596
Net income 19,018 $17,584 $16,592 $19,818 $12,438 $53,194 $45,649
Selected Average Balances
Total assets 8,411,774 $8,099,236 $7,903,566 $7,935,197 $7,670,538 $8,140,047 $7,595,760
Investment securities 2,359,115 2,166,362 2,094,376 2,097,690 1,919,935 2,207,587 1,964,606
Loans 5,073,404 5,023,409 4,921,346 4,895,815 4,907,435 5,006,665 4,824,286
Interest-earning assets 7,632,755 7,368,645 7,196,138 7,209,982 6,989,109 7,400,834 6,913,094
Deposits 7,144,502 6,952,848 6,823,697 6,831,926 6,641,427 6,974,860 6,593,327
Interest-bearing liabilities 6,608,892 6,341,125 6,203,598 6,185,161 6,017,476 6,386,022 5,997,428
Long-term obligations 12,017 11,545 6,809 6,866 7,762 10,142 15,705
Shareholders' equity 651,923 $635,680 $619,956 $599,953 $589,618 $635,667 $569,400
Shares outstanding 11,389,472 11,394,965 11,398,246 11,415,943 11,441,007 11,394,195 11,315,813
Profitability Ratios (averages)
Rate of return (annualized) on:
Total assets 0.90% 0.87% 0.85% 0.99% 0.65% 0.87% 0.80%
Shareholders' equity 11.57 11.10 10.85 13.14 8.39 11.19 10.71
Dividend payout ratio 14.97 16.23 17.12 14.37 19.57 16.06 16.75
Liquidity and Capital Ratios (averages)
Loans to deposits 71.01% 72.25% 72.12% 71.66% 73.89% 71.78% 73.17%
Shareholders' equity to total assets 7.75 7.85 7.84 7.56 7.69 7.81 7.50
Time certificates of $100,000 or more to total
deposits 9.68 9.36 9.30 8.79 8.61 9.47 9.03
Per Share of Stock
Net income $1.67 $1.54 $1.46 $1.74 $1.08 $4.67 $4.03
Cash dividends 0.250 0.250 0.250 0.250 0.225 0.75 0.675
Book Value at period end 58.16 56.55 55.22 53.94 51.89 58.16 51.89
Tangible book value at period end 49.27 48.10 46.89 45.42 43.03 49.27 43.03
</TABLE>
First Citizens BancShares, Inc. and Subsidiaries
Third Quarter 1997
<PAGE>
Outstanding Loans by Type
<TABLE>
<CAPTION>
Table 2
1997 1996
Third Second First Fourth Third
(thousands) Quarter Quarter Quarter Quarter Quarter
<S> <C> <C> <C> <C> <C>
Real estate:
Construction and land development $108,363 $109,125 $103,361 $109,806 $107,651
Mortgage:
1-4 family residential 1,411,922 1,383,250 1,529,972 1,542,836 1,587,352
Commercial 970,553 942,637 906,408 882,067 850,358
Equity Line 548,959 510,067 430,924 411,856 411,893
Other 133,661 134,793 134,852 132,954 135,241
Commercial and industrial 588,158 569,327 533,812 514,535 516,857
Consumer 1,355,783 1,258,330 1,230,501 1,251,704 1,218,605
Lease financing 75,922 73,861 69,496 68,694 69,984
Other 14,874 15,380 15,809 16,056 16,807
Total loans 5,208,195 4,996,770 4,955,135 4,930,508 4,914,748
Less reserve for loan losses 83,385 81,902 81,459 81,439 81,192
Net loans $5,124,810 $4,914,868 $4,873,676 $4,849,069 $4,833,556
</TABLE>
First Citizens BancShares, Inc. and Subsidiaries
Third Quarter 1997
<PAGE>
Investment Securities
<TABLE>
<CAPTION>
Table 3
September 30, 1997 September 30, 1996
Average Taxable Average Taxable
Book Fair Maturity Equivalent Book Fair Maturity Equivalent
(thousands) Value Value (Yrs./Mos.) Yield Value Value (Yrs./Mos.) Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U. S. Government:
Within one year $1,054,982 $1,055,159 0/6 5.77% $749,731 $750,814 0/6 5.97
One to five years 1,363,244 1,365,991 1/10 5.97 1,142,458 1,133,318 1/9 5.78
Five to ten years 2,906 2,961 6/0 5.52 3,251 2,175 6/10 5.76
Over ten years 4,855 4,976 19/10 7.50 7,733 7,752 18/7 7.43
Total 2,425,987 2,429,087 1/3 5.88 1,903,173 1,894,059 1/4 5.85
State, county and municipal:
Within one year 910 1,119 0/7 6.23 777 781 0/9 6.32
One to five years 3,425 3,491 2/11 6.89 4,067 4,332 2/11 6.95
Five to ten years 509 544 5/2 8.16 1,271 1,293 5/1 6.29
Over ten years 175 175 19/11 9.14 185 185 20/11 9.14
Total 5,019 5,329 3/3 6.98 6,300 6,591 3/9 6.99
Other
Within one year 853 852 0/4 14.20 1,553 1,552 0/6 6.48
One to five years 555 552 1/5 5.42 1,377 1,631 1/10 11.08
Five to ten years 10 10 5/4 5.63 45 45 5/8 5.43
Total 1,418 1,414 0/9 12.37 2,975 2,958 11/9 8.62
Total investment securities $2,432,424 $2,435,830 1/3 5.89% $1,912,448 $1,903,608 1/4 5.87%
/Table>
First Citizens BancShares, Inc. and Subsidiaries
Third Quarter 1997
<PAGE>
Consolidated Taxable Equivalent Rate/Volume Variance Analysis - Third Quarter
</TABLE>
<TABLE>
<CAPTION>
Table 4
1997 1996 Increase (decrease) due to:
Interest Interest
Average Income Yield Average Income Yield Yield
(thousands) Balance Expense /Rate Balance Expense /Rate Volume /Rate Total
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Loans:
Secured by real estate $3,092,757 $64,611 8.33 % $3,089,270 $63,442 8.17 % ($3) $1,172 $1,169
Commercial and industrial 583,231 13,079 8.68 513,849 11,616 8.56 1,402 61 1,463
Consumer 1,305,113 28,731 8.80 1,218,164 27,734 9.00 1,781 (784) 997
Lease financing 77,472 1,621 8.85 69,089 1,393 8.07 131 97 228
Other 14,831 327 7.71 17,063 352 8.19 (25 0 (25)
Total loans 5,073,404 108,369 8.52 4,907,435 104,537 8.43 3,286 546 3,832
Investment securities:
U. S. Government 2,352,277 34,732 5.86 1,910,705 27,902 5.81 6,528 302 6,830
State, county and municipal 5,213 81 6.16 6,253 121 7.70 (18 (22) (40)
Other 1,625 25 6.10 2,977 43 5.75 (20 2 (18)
Total investment securities 2,359,115 34,838 5.86 1,919,935 28,066 5.82 6,490 282 6,772
Federal funds sold 200,237 2,792 5.53 161,739 2,234 5.49 537 21 558
Total interest-earning assets $7,632,756 $145,999 7.62 % $6,989,109 $134,837 7.64 % $10,313 $849 $11,162
Liabilities
Deposits:
Checking With Interest $923,049 $2,478 1.07 % $867,218 $2,549 1.17 % $156 ($227) ($71)
Savings 707,477 3,588 2.01 724,255 3,769 2.07 (80 (101) (181)
Money market accounts 933,002 8,806 3.74 821,078 7,371 3.57 1,045 390 1,435
Time deposits 3,516,673 47,191 5.32 3,246,938 43,401 5.32 3,703 87 3,790
Total interest-bearing deposits 6,080,201 62,063 4.05 5,659,489 57,090 4.01 4,824 149 4,973
Federal funds purchased 20,386 284 5.53 14,534 273 7.47 96 (85) 11
Repurchase agreements 36,894 407 4.38 20,933 227 4.31 175 5 180
Master notes 313,366 3,689 4.67 280,947 3,142 4.45 377 170 547
U. S. Treasury tax and loan accounts 13,365 260 7.72 17,117 219 5.09 (60 101 41
Other short-term borrowings 132,663 2,011 6.01 16,694 269 6.41 1,816 (74) 1,742
Long-term obligations 12,017 233 7.69 7,762 158 8.10 85 (10) 75
Total interest-bearing liabilities $6,608,892 $68,947 4.14 % $6,017,476 $61,378 4.06 % $7,313 $256 $7,569
Interest rate spread 3.48 % 3.58 %
Net interest income and net yield
on interest-earning assets $77,052 4.01 % $73,459 4.18 % $3,000 $593 $3,593
</TABLE>
First Citizens BancShares, Inc. and Subsidiaries
Third Quarter 1997
<PAGE>
Consolidated Taxable Equivalent Rate/Volume Variance Analysis - Nine Months
<TABLE>
<CAPTION> Table 5
1997 1996 Increase (decrease) due to
Interest Interest
Average Income/ Yield/ Average Income/ Yield/ Yield/ Total
(thousands) Balance Expense Rate Balance Expense Rate Volume Rate Change
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets
Loans:
Secured by real estate $3,100,969 $191,645 8.23% $3,032,058 $187,243 8.17 $3,626 $776 $4,402
Commercial and industrial 553,339 36,767 8.48 496,365 33,706 8.56 3,503 (442) 3,061
Consumer 1,265,298 85,276 8.92 1,213,816 82,514 9.00 3,483 (721) 2,762
Lease financing 71,834 4,616 8.57 65,337 3,906 8.07 429 281 710
Other 15,225 878 7.71 16,710 1,013 8.19 (83) (52) (135)
Total loans 5,006,665 319,182 8.51 4,824,286 308,382 8.53 10,958 (158) 10,800
Investment securities:
U. S. Government 2,199,958 96,461 5.86 1,954,881 84,184 5.75 10,604 1,673 12,277
State, county and municipal 5,775 312 7.22 6,748 388 7.68 (54) (22) (76)
Other 1,854 84 6.06 2,977 131 5.88 (50) 3 (47)
Total investment securities 2,207,587 96,857 5.87 1,964,606 84,703 5.76 10,500 1,654 12,154
Federal funds sold 186,582 7,555 5.41 124,202 5,194 5.59 2,568 (207) 2,361
Total interest-earning assets $7,400,834 $423,594 7.65 $6,913,094 $398,279 7.69 $24,026 $1,289 $25,315
Liabilities
Deposits:
Checking With Interest $914,580 $7,323 1.07 $865,771 $8,207 1.27 $437 ($1,321) ($884)
Savings 709,681 10,875 2.05 719,184 11,309 2.10 (157) (277) (434)
Money market accounts 900,416 24,875 3.69 814,794 21,524 3.53 2,318 1,033 3,351
Time deposits 3,419,691 135,705 5.31 3,247,178 131,672 5.42 6,849 (2,816) 4,033
Total interest-bearing deposits 5,944,368 178,778 4.02 5,646,927 172,712 4.09 9,447 (3,381) 6,066
Federal funds purchased 24,916 955 5.12 28,015 1,357 6.47 (135) (267) (402)
Repurchase agreements 28,337 915 4.32 21,424 697 4.35 224 (6) 218
Master notes 295,600 10,103 4.57 257,752 8,547 4.43 1,270 286 1,556
U. S. Treasury tax and loan accou 11,965 702 7.84 14,814 574 5.18 (139) 267 128
Other short-term borrowings 70,694 3,131 5.92 12,791 586 6.12 2,607 (62) 2,545
Long-term obligations 10,142 611 8.05 15,705 813 6.91 (312) 110 (202)
Total interest-bearing liabilitie $6,386,022 $195,195 4.09 $5,997,428 $185,286 4.13 $12,962 ($3,053) $9,909
Interest rate spread 3.56 3.56
Net interest income and net yield
on interest-earning assets $228,399 4.13% $212,993 4.12% $11,064 $4,342 $15,406
</TABLE>
First Citizens BancShares, Inc. and Subsidiaries
Third Quarter 1997
<PAGE>
Summary of Loan Loss Experience and Risk Elements
<TABLE>
<CAPTION> Table 6
1997 1996
Nine Months Ended
Third Second First Fourth Third September 30
(thousands, except ratios) Quarter Quarter Quarter Quarter Quarter 1997 1996
<S> <C> <C> <C> <C> <C> <C> <C>
Reserve balance at beginning of period $81,902 $81,459 $81,439 $81,192 $81,026 $81,439 $78,495
Reserve of acquired loans 358 123 481 1,387
Provision for loan losses 1,309 2,107 1,557 3,321 1,787 4,973 5,586
Net charge-offs:
Charge-offs (3,162) (3,774) (3,538) (3,860) (2,697) (10,474) (7,793)
Recoveries 2,978 1,987 2,001 786 1,076 6,966 3,517
Net (charge-offs) recoveries (184) (1,787) (1,537) (3,074) (1,621) (3,508) (4,276)
Reserve balance at end of period $83,385 $81,902 $81,459 $81,439 $81,192 $83,385 $81,192
Historical Statistics
Balances
Average total loans $5,073,404 $5,023,409 $4,921,346 $4,895,815 $4,907,435 $5,006,665 $,824,286
Total loans at period-end 5,208,195 4,996,770 4,955,135 4,930,508 4,914,748 5,208,195 ,914,748
Risk Elements
Nonaccrual loans $11,983 $14,589 $14,628 $12,810 $14,213 11,983 14,213
Other real estate acquired through foreclosure 1,450 1,152 1,337 1,160 1,634 1,450 1,634
Total nonperforming assets $13,433 $15,741 $15,965 $13,970 $15,847 $13,433 $15,847
Accruing loans 90 days or more past due $4,157 $4,503 $5,748 $4,983 $5,601 $4,157 $5,601
Ratios
Net charge-offs (annualized) to average tota 0.01 % 0.14 % 0.13 % 0.25 % 0.13 % 0.09 % 0.12
Reserve for loan losses to total loans at pe 1.60 1.64 1.64 1.65 1.65 1.60 1.65
Nonperforming assets to total loans plus foreclosed
real estate at period-end 0.26 0.31 0.32 0.28 0.32 0.26 0.32
</TABLE>
First Citizens BancShares, Inc. and Subsidiaries
Third Quarter 1997
INTRODUCTION
Management's discussion and analysis of earnings and related financial
data are presented to assist in understanding the financial condition and
results of operations of First Citizens BancShares, Inc. and Subsidiaries
("BancShares"). It should be read in conjunction with the unaudited
Consolidated Financial Statements and related notes presented within this
report. The focus of this discussion concerns BancShares' three banking
subsidiaries. First-Citizens Bank & Trust Company ("FCB") operates branches in
North Carolina and Virginia; First-Citizens Bank & Trust Company of West
Virginia ("FCBWV") operates in West Virginia; and Atlantic States Bank operates
offices in Georgia and North Carolina.
SUMMARY
BancShares realized an increase in earnings of 52.9 percent during the third
quarter of 1997 compared to the third quarter of 1996. Consolidated net income
during the third quarter of 1997 was $19 million, compared to $12.4 million
earned during the corresponding period of 1996. The increase was primarily due
to the negative impact of the 1996 third quarter FDIC SAIF deposit assessment.
Net income during 1997 also benefitted from improved net interest income and
growth in noninterest income. Net income per share during the third quarter of
1997 totaled $1.67, compared to $1.08 during the third quarter of 1996. Return
on average assets was 0.90 percent for the third quarter of 1997 compared to
0.65 percent during the same period of 1996.
For the first nine months of 1997, BancShares recorded net income of $53.2
million, compared to $45.6 million earned during the first nine months of 1996.
The 16.5 percent increase was the net result of beneficial increases in net
interest income and noninterest income that were partially offset by higher
noninterest expenses. Net income per share for the first nine months of 1997
was $4.67, compared to $4.03 during the same period of 1996. BancShares returned
0.87 percent on average assets during the first nine months of 1997 compared to
0.80 percent during the corresponding period of 1996. During 1997, BancShares
has purchased a total of seven branch offices from other banks. BancShares also
purchased First Savings Financial Corp., the parent of First Savings Bank in
Reidsville, North Carolina. These acquisitions contributed a total of $167.5
million in deposits and $37.8 million in loans. All other increases result from
the existing banking network.
Other profitability, liquidity and capital ratios are presented in Table 1.
To understand the changes and trends in interest-earning assets and
interest-bearing liabilities, refer to the average balance sheets presented in
Table 4 for the third quarter and Table 5 for the first nine months of 1997 and
1996.
INTEREST-EARNING ASSETS
Average interest-earning assets for the third quarter of
1997 totaled $7.63 billion, an increase of $643.6 million or 9.2 percent
from the third quarter of 1996. For the first nine months of 1997, earning
assets averaged $7.40 billion, an increase of $487.7 million over the same
period of 1996. These increases result from growth in the investment and
loan portfolios.
Loans. At September 30, 1997 and 1996, gross loans totaled $5.21 billion
and $4.91 billion, respectively. As of December 31, 1996, gross loans were
$4.93 billion. The $293.4 million growth in loans from September 30, 1996 to
September 30, 1997 results from growth within BancShares' commercial loan
products and retail growth within home equity and sales finance products during
1997. Acquisitions during 1997 contributed $37.8 million in loans outstanding at
September 30, 1997. Table 2 details outstanding loans by type for the past five
quarters.
During the third quarter of 1997, average loans totaled $5.07 billion,
an increase of $166 million or 3.4 percent from the comparable period of 1996.
Consumer loans averaged $1.31 billion during the third quarter of 1997, compared
to $1.22 billion during the same period of 1996, an increase of $87 million or
7.1 percent. Much of that growth results from indirect automobile financing.
Average commercial and industrial loans increased $69.4 million between the two
periods, a 13.5 percent increase. Loans secured by real estate averaged $3.09
billion during the third quarter of both years. This component of the loan
portfolio remained essentially unchanged as sales of residential mortgage loans
offset the increases in retail home equity loans.
For the year-to-date, loans have averaged $5.01 billion for 1997 compared to
$4.82 billion for the same period of 1996. This $182.4 million or 3.8 percent
increase is likewise due to growth among small business and retail customers.
The 2.3 percent increase in loans secured by real estate includes the impact of
the sale of the residential mortgage loans, partially offsetting the robust
growth in home equity loans during 1997.
As of September 30, 1997, $17.9 million in fixed-rate residential mortgage
loans are classified as held for sale. All loans held for sale are carried at
the lower of cost or market. During the first nine months of 1997, BancShares
sold $250.7 million in residential mortgage loans, compared to sales of $77.5
million during the same period of 1996. The sales during 1997 have resulted in a
net loss of $300,000, compared to a net loss of $67,000 from loan sales during
1996. Mortgage loan sale activity during the first nine months of 1997 has
resulted from two primary goals. First, as in the past, management seeks to
lessen the exposure to changes in interest rates by selling portions of its
long-term fixed-rate loan portfolio. Second, management has focused on
strengthening BancShares' capacity to meet the loan demand that has been growing
among commercial borrowers during recent quarters. The sales of residential
mortgage loans has supported both objectives.
Management anticipates modest growth among commercial and indirect
installment loans for the rest of 1997. Direct installment loans and real-estate
loans will likely see sluggish loan growth. All growth projections, however,
remain dependent on interest rates, as any upward pressure on interest rates
will likely deter retail borrowers and may also impair commercial loan growth.
Investment securities. At September 30, 1997 and 1996, the investment
portfolio totaled $2.43 billion and $1.91 billion, respectively. At December
31, 1996, the investment portfolio was $2.14 billion. The 27.2 percent increase
in the investment portfolio since September 30, 1996 resulted from deposit
growth that has exceeded loan demand. All securities are classified as
held-to-maturity, as BancShares has the ability and the positive intent to hold
its investment portfolio until maturity. Table 3 presents detailed information
relating to the investment portfolio.
Included in other assets are marketable equity securities with a current
fair value of $29.2 million. These securities are reported at their fair
values, with the adjustment to historical cost recorded, net of deferred taxes,
as an adjustment to shareholders' equity.
Income on Interest-Earning Assets. Interest income amounted to $145.5
million during the third quarter of 1997, an 8.4 percent increase over the third
quarter of 1996. Balance sheet growth contributed to higher interest income in
the third quarter of 1997 when compared to the same period of 1996. The average
yield on total interest-earning assets for the third quarter of 1997 was 7.62
percent, compared to 7.64 percent for the corresponding period of 1996.
Loan interest income for the third quarter of 1997 was $107.9 million, an
increase of $3.9 million or 3.7 percent from the third quarter of 1996, due to
volume growth. The taxable-equivalent yield on the loan portfolio was 8.52
percent during the third quarter of 1997, compared to 8.43 percent during the
same period of 1996. The improved loan yield reflects the sale of lower-yielding
residential mortgage loans during 1997.
For the nine months ending September 30, 1997, loan interest income was
$317.7 million, an increase of $11 million or 3.6 percent over the same period
of 1996. The increase in interest income reflects the growth in the loan
portfolio.
Income earned on the investment securities portfolio amounted to $34.8
million during the third quarter of 1997 and $28 million during the same period
of 1996, an increase of $6.8 million or 24.2 percent. This increase is the
result of a $439.2 million increase in the average securities portfolio. The
securities portfolio taxable-equivalent yield increased from 5.82 percent for
the quarter ended September 30, 1996, to 5.86 percent for the quarter ended
September 30, 1997.
For the nine months ending September 30, 1997, interest income from
investment securities was $96.7 million, compared to $84.6 million during the
same period of 1996, an increase of 14.4 percent. This increase is the direct
result of growth in the securities portfolio.
INTEREST-BEARING LIABILITIES
At September 30, 1997 and 1996, interest-bearing liabilities totaled $6.74
billion and $6.06 billion, respectively, compared to $6.27 billion as of
December 31, 1996. During the third quarter of 1997, interest-bearing
liabilities averaged $6.61 billion, an increase of 9.8 percent from the third
quarter of 1996. Growth in interest-bearing deposit accounts caused much of the
increase, resulting from acquired branches as well as new deposits from existing
customers.
Deposits. At September 30, 1997, total deposits were $7.30 billion, an
increase of $489.5 million or 7.2 percent over September 30, 1996. Compared to
the December 31, 1996 balance of $6.95 billion, total deposits have increased
$343.9 million. Acquisitions during 1997 have contributed a total of $167.5
million in deposits.
Average interest-bearing deposits were $6.08 billion during the third
quarter of 1997 compared to $5.66 billion during the third quarter of 1996, an
increase of 7.4 percent. Much of the increase is attributed to average time
deposits, which increased $269.7 million from the third quarter of 1996 to the
third quarter of 1997. Much of the growth in time deposits has resulted from
the in-store network that has expanded significantly during 1997. Average money
market accounts increased $111.9 million from the third quarter of 1996 to the
third quarter of 1997, while average Checking With Interest accounts increased
$55.8 million between the two periods. Time deposits of $100,000 or more
averaged 9.68 percent of total average deposits during the third quarter of
1997, compared to 8.61 percent during the same period of 1996. Management does
not consider the current level of high dollar deposits to be excessive.
Borrowed Funds. At September 30, 1997, short-term borrowings totaled $539.4
million compared to $392 million at December 31, 1996 and $332.4 million at
September 30, 1996. For the quarters ended September 30, 1997 and 1996,
short-term borrowings averaged $516.7 million and $350.2 million, respectively.
This increase resulted from short-term borrowings relating to the formation of
First Citizens Bank, A Virginia Corporation during the second quarter of 1997.
This company, a wholly-owned subsidiary of FCB, was created to own the retail
credit cards originated through FCB. The debt associated with the new
subsidiary is expected to remain outstanding until early 1998. Long-term
obligations averaged $12 million during the third quarter of 1997, compared to
$7.8 million during the third quarter of 1996. The increase in long-term
obligations results from the modification of outstanding debt during the second
quarter that extended the repayment of a note payable by another subsidiary of
FCB.
Expense on Interest-Bearing Liabilities. BancShares' interest expense
amounted to $68.9 million during the third quarter of 1997, a $7.6 million or
12.3 percent increase from the third quarter of 1996. The higher interest
expense was the result of the $591.4 million increase in average
interest-bearing liabilities. The rate on these liabilities was 4.14 percent
during the third quarter of 1997, compared to 4.06 percent during the third
quarter of 1996.
For the year-to-date, interest expense was $195.2 million, compared to
$185.3 million for the same period of 1996. The 5.3 percent increase is largely
due to the growth in time deposits.
NET INTEREST INCOME
Net interest income totaled $76.5 million during the third quarter of 1997,
an increase of 5 percent from the third quarter of 1996. The taxable-equivalent
net yield on interest-earning assets was 4.01 percent for the third quarter of
1997, down 17 basis points from the 4.18 percent achieved for the third quarter
of 1996. The taxable equivalent interest rate spread for the third quarter of
1997 was 3.48 percent compared to 3.58 percent for the same period of 1996.
A principal objective of BancShares' asset/liability management function is
to manage interest rate risk or the exposure to changes in interest rates.
Management maintains portfolios of interest-earning assets and interest-bearing
liabilities with maturities or repricing opportunities that will protect against
wide interest rate fluctuations, thereby limiting, to the extent possible, the
ultimate interest rate exposure. Management is aware of the potential negative
impact that movements in market interest rates may have on net interest income.
ASSET QUALITY
Reserve for loan losses. Management continuously analyzes the growth and
risk characteristics of the total loan portfolio under current and projected
economic conditions in order to evaluate the adequacy of the reserve for loan
losses. Such factors as the financial condition of the borrower, fair market
value of collateral and other considerations are recognized in estimating
possible credit losses. At September 30, 1997, the reserve for loan losses
amounted to $83.4 million or 1.60 percent of loans outstanding. This compares to
$81.4 million or 1.65 percent at December 31, 1996, and $81.2 million or 1.65
percent at September 30, 1996.
Management considers the established reserve adequate to absorb losses that
relate to loans outstanding at September 30, 1997. While management uses
available information to establish provisions for loan losses, future additions
to the reserve may be necessary based on changes in economic conditions or other
factors. In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the reserve for loan losses. Such
agencies may require the recognition of additions to the reserve based on their
judgments of information available to them at the time of their examination.
The provision for loan losses charged to operations during the third quarter
of 1997 was $1.3 million, compared to $1.8 million during the third quarter of
1996. Net charge-offs for the nine months ended September 30, 1997 totaled $3.5
million, compared to net charge-offs of $4.3 million during the same period of
1996. The lower level of net charge-offs during 1997 have resulted from an
increase in commercial loan recoveries, which have more than offset the increase
in revolving credit charge-offs as well as higher retail installment loan
charge-offs. Management attributes the increase in revolving loan charge-offs
and retail installment loan charge-offs to an increase in personal bankruptcies.
The annualized net charge-offs represent only 0.09 percent of loans outstanding
for the nine months ending September 30, 1997. Management remains committed to
maintaining high levels of credit quality. Table 6 provides details concerning
the reserve and provision for loan losses ov past five quarters and for the
year-to-date for 1997 and 1996.
Nonperforming assets. At September 30, 1997, BancShares' nonperforming
assets amounted to $13.4 million or 0.26 percent of gross loans plus foreclosed
properties, compared to $14 million at December 31, 1996, and $15.8 million at
September 30, 1996. Management continues to closely monitor nonperforming
assets, taking necessary actions to minimize potential exposure.
NONINTEREST INCOME
During the first nine months of 1997, noninterest income was $83.4 million,
compared to $75.2 million during the same period of 1996. The 10.9 percent
increase was due to growth in the credit card operation, higher other service
charge and fee income, and improved trust income. Fee income from the credit
card operation has improved as a result of the relocation of the credit card
accounts to the Virginia bank. Continued growth in merchant income and the
number of cardholders has also contributed to a 21.8 percent increase in credit
card fee income from the first nine months of 1996 to the same period of 1997.
Income earned by the trust department increased 23.1 percent from the first nine
months of 1997, the result of growth in assets under management.
Other service charges and fees includes fees earned by First Citizens
Investor Services, which, during the first nine months of 1997, were $3.9
million compared to $2.5 million during the same period of 1996. The 53.7
percent increase in fees resulted from growth in the subsidiary's sales of
mutual fund and annuity products. Fee income also benefitted from a 12.1
percent increase in income generated from processing services provided to
affiliate banks. These fees contributed $7.7 million during the first nine
months of 1997, compared to $7.2 million during the same period of 1996.
Results from the sale of residential mortgage loans is included in other income;
these sale resulted in net losses of $300,000 for the first nine months of 1997,
compared to net losses of $67,000 during the same period of 1996.
NONINTEREST EXPENSE
Noninterest expense was $222 million for the first nine months of 1997, a
5.9 percent increase over the $209.6 million recorded during the same period of
1996. The comparison of operating expenses between 1996 and 1997 is
significantly affected by the 1996 SAIF assessment. Ignoring the impact of the
1996 SAIF assessment, the increase in noninterest expense would have been $22.6
million or 11.4 percent.
Much of the increase in noninterest expense resulted from higher
personnel-related expenses. Salaries and wages were $93.8 million during the
first nine months of 1997, an increase of 8.8 percent or $7.6 million over the
same period of 1996. This increase is the result of new associates hired for
Atlantic States Bank, First Citizens Direct, and the bank's "in-store" Financial
Service Centers. Employee benefits expense increased 17.8 percent from 1996 to
1997, the result of growth in health insurance expense.
Equipment expense increased 19.7 percent during the first nine months of
1997, compared to the corresponding period of 1996 due to higher technology
related expenditures. Equipment expenses increased $3.9 million during 1997. In
addition to equipment purchases and leases, maintenance costs continue to grow,
the result of investments in processing and delivery systems.
Occupancy expense increased 7.1 percent during the first nine months of
1997, the result of higher rent and depreciation expense. The $1.2 million
increase reflects the expanding branch franchise and the renovations of existing
facilities and construction of new offices.
The $3.0 million decrease in other expenses resulted from the absence of the
FDIC insurance assessment which adversely affected other expenses during 1996.
Without that single expense during the third quarter of 1996, other expenses
would have increased $7.3 million or 11.8 percent. The significant increases in
other expense include costs relating to technological issues related to the year
2000. During 1997, BancShares anticipates incurring $2 million in expense
related to Year 2000 remediation, with an additional $2 million to $3 million
incurred during 1998. Additional expense variances in other expenses during the
first nine months of 1997 when compared to the same period of 1996 include a
$1.4 million increase in advertising expense and a $1.2 million increase in
costs associated with a cardholder award program.
INCOME TAXES
Income tax expense amounted to $30.1 million during the first nine months of
1997, compared to $25.6 million during the same period of 1996, a 17.7 percent
increase resulting from higher pre-tax income. The effective tax rates for
these periods were 36.2 percent and 36 percent, respectively. The slight
increase in the effective tax rate from 1996 to 1997 results from an increase in
state income taxes.
LIQUIDITY
Management relies on the investment portfolio as a source of liquidity,
with maturities designed to provide needed cash flows. Further, retail deposits
generated throughout the branch network have enabled management to fund asset
growth and maintain liquidity. In the event additional liquidity is needed,
BancShares maintains readily available sources to borrow funds through its
correspondent network.
SHAREHOLDERS' EQUITY AND CAPITAL ADEQUACY
BancShares maintains an adequate capital position and exceeds all minimum
regulatory capital requirements. At September 30, 1997 and 1996, the leverage
capital ratio of BancShares was 6.6 percent and 6.4 percent, respectively,
surpassing the minimum level of 3 percent. As a percentage of risk-adjusted
assets, BancShares' core capital ratio was 10.1 percent at September 30, 1997,
and 9.9 percent as of September 30, 1996. The minimum ratio allowed is 4
percent of risk-adjusted assets. The total risk-adjusted capital ratio was 11.4
percent at September 30, 1997 and 11.1 percent as of September 30, 1996. The
minimum total capital ratio is 8 percent. BancShares and its subsidiary banks
exceed the capital standards established by their respective regulatory
agencies.
CURRENT ACCOUNTING AND REGULATORY ISSUES
The Financial Accounting Standards Board ("FASB") has issued Statement of
Financial Accounting Standards ("SFAS") No. 125 "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities," SFAS No. 128
"Earnings Per Share" and SFAS No. 129 "Disclosure of Information about Capital
Structure," (collectively, the "Pronouncements"). The Pronouncements are
effective for 1997 and require disclosures regarding the matters included in the
respective titles. Adoption of each of the Pronouncements is not expected to
have a material impact on BancShares' consolidated financial statements.
FASB has also issued SFAS No. 130 "Reporting Comprehensive Income" and SFAS
No. 131 "Disclosures about Segments of an Enterprise and Related Information."
SFAS. No. 130 and SFAS No. 131 will alter the disclosure requirements, but will
have no impact on BancShares' consolidated financial statements.
Management is not aware of any current recommendations by regulatory
authorities that, if implemented, would have or would be reasonably likely to
have a material effect on liquidity, capital ratios or results of operations.
NOTE A
ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
statements.
In the opinion of management, the consolidated statements contain all
material adjustments necessary to present fairly the financial position of First
Citizens BancShares, Inc. as of and for each of the periods presented, and all
such adjustments are of a normal recurring nature. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosures of contingent liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
These financial statements should be read in conjunction with the financial
statements and notes included in the 1996 First Citizens BancShares Annual
Report, which is incorporated by reference on Form 10-K. Certain amounts for
prior years have been reclassified to conform with statement presentations for
1997. However, the reclassifications have no effect on shareholders' equity or
net income as previously reported.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 451,772
<INT-BEARING-DEPOSITS> 6,193,269
<FED-FUNDS-SOLD> 70,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 29,164
<INVESTMENTS-CARRYING> 2,432,424
<INVESTMENTS-MARKET> 2,435,830
<LOANS> 5,208,195
<ALLOWANCE> 83,385
<TOTAL-ASSETS> 8,595,591
<DEPOSITS> 7,297,884
<SHORT-TERM> 539,382
<LIABILITIES-OTHER> 84,353
<LONG-TERM> 11,482
0
0
<COMMON> 11,390
<OTHER-SE> 651,100
<TOTAL-LIABILITIES-AND-EQUITY> 8,595,591
<INTEREST-LOAN> 317,748
<INTEREST-INVEST> 96,748
<INTEREST-OTHER> 7,555
<INTEREST-TOTAL> 422,051
<INTEREST-DEPOSIT> 178,778
<INTEREST-EXPENSE> 16,417
<INTEREST-INCOME-NET> 226,856
<LOAN-LOSSES> 4,973
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 221,962
<INCOME-PRETAX> 83,316
<INCOME-PRE-EXTRAORDINARY> 53,194
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 53,194
<EPS-PRIMARY> 4.67
<EPS-DILUTED> 4.67
<YIELD-ACTUAL> 7.65
<LOANS-NON> 11,983
<LOANS-PAST> 4,157
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 81,439
<CHARGE-OFFS> 10,474
<RECOVERIES> 6,966
<ALLOWANCE-CLOSE> 83,385
<ALLOWANCE-DOMESTIC> 83,385
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
BYLAWS
OF
FIRST CITIZENS BANCSHARES, INC.
(As last amended April 28, 1997)
Index
ARTICLE I
Offices
Section 1. Principal Office
Section 2. Registered Offices
Section 3. Other Offices
ARTICLE II
Meetings of Shareholders
Section 1. Place of Meetings
Section 2. Annual Meetings
Section 3. Special Meetings
Section 4. Notice of Meetings
Section 5. Voting Lists
Section 6. Quorum
Section 7. Proxies
Section 8. Voting of Shares
Section 9. Informal Action By Shareholders
Section 10. Presiding Officer
ARTICLE III
Directors
Section 1. General Powers
Section 2. Number, Term and Qualifications
Section 3. Election of Directors
Section 4. Removal
Section 5. Vacancies
Section 6. Chairman of the Board
Section 7. Compensation
Section 8. Committees of the Board
ARTICLE IV
Meetings of Directors
Section 1. Regular Meetings
Section 2. Special Meetings
Section 3. Notice of Meetings
Section 4. Quorum
Section 5. Manner of Acting
Section 6. Informal Action by Directors
ARTICLE V
Executive Committee
Section 1. Membership and General Powers
Section 2. Vacancies
Section 3. Removal
Section 4. Minutes
Section 5. Responsibility of Directors
Section 6. Ex Officio Members
Section 7. Chairman of the Executive Committee
ARTICLE VI
Executive Management
Group
Section 1. Membership and Duties
ARTICLE VII
Officers
Section 1. Number
Section 2. Election and Term
Section 3. Removal
Section 4. Compensation
Section 5. Chairman of the Board, Executive Vice
Chairman of the Board, Vice Chairman of the Board, and Preside
Section 6. Vice Chairman
Section 7. President
Section 8. Executive Vice Presidents, Senior Vice
Presidents and Other Vice Presidents
Section 9. Secretary
Section 10. Assistant Secretaries
Section 11. Treasurer
Section 12. Assistant Treasurers
Section 13. Other Officers
Section 14. Bonds
ARTICLE VIII
Contracts, Loans, Checks and Deposits
Section 1. Contracts
Section 2. Loans
Section 3. Checks and Drafts
Section 4. Deposits
ARTICLE IX
Certificates of Stock and Their Transfer
Section 1. Certificates of Stock
Section 2. Transfer of Stock
Section 3. Fixing Record Date
Section 4. Lost Certificates
Section 5. Registered Shareholders
Section 6. Treasury Shares
ARTICLE X
General Provisions
Section 1. Dividends
Section 2. Seal
Section 3. Annual Statement
Section 4. Notice and Waiver of Notice
Section 5. Amendments
Section 6. Fiscal Year
Section 7. Indemnification
Section 8. Disallowance of Deductions
BYLAWS
OF
FIRST CITIZENS
BANCSHARES, INC.
(As last amended April
28, 1997)
ARTICLE I
Offices
Section 1. Principal Office: The principal office of
the corporation shall be located in Raleigh, Wake County, North
Carolina.
Section 2. Registered Offices: The registered office
of the corporation required by law to be maintained in the State
of Delaware shall be located in Wilmington, New Castle County,
Delaware. The registered office of the corporation required by
law to be maintained in the State of North Carolina may be, but
need not be, identical with the principal office.
Section 3. Other Offices: The corporation may have
offices at such other places, either within or without the State
of Delaware, as the Board of Directors from time to time may
determine, or as the affairs of the corporation may require.
ARTICLE II
Meetings of Shareholders
Section 1. Place of Meetings: All meetings of
shareholders shall be held at the principal office of the
corporation or at such other place, either within or without the
State of Delaware, as shall be designated from time to time by
the Board of Directors and stated in the notice of the meeting or
agreed upon by a majority of the shareholders entitled to vote
thereat.
Section 2. Annual Meetings: The annual meeting of
shareholders shall be held at the designated location on such
date during the first six months of each year as shall be
determined by the Chairman of the Board, the Executive Vice
Chairman of the Board, the Vice Chairman of the Board, the
President or the Board of Directors. The purpose of such annual
meeting shall be to elect directors of the corporation and for
the transaction of such other business as may properly be brought
before the meeting.
Section 3. Special Meetings: Special meetings of the
shareholders may be called at any time by the Chairman of the
Board, Executive Vice Chairman of the Board, Vice Chairman of the
Board, President or Secretary, and shall be called by the
President or Secretary at the request in writing of a majority of
the Board of Directors. Such written request shall state the
purpose or purposes of the proposed meeting.
Business transacted at any special meeting of
shareholders shall be limited to the purpose stated in the
notice.
Section 4. Notice of Meetings: Written or printed
notice stating the place, day and hour of the meeting shall be
delivered not less than ten nor more than sixty days before the
date thereof, either personally or by mail, by or at the
direction of the Chairman of the Board, Executive Vice Chairman
of the Board, Vice Chairman of the Board, President, Secretary,
or other person calling the meeting, to each shareholder of
record entitled to vote at such meeting.
In the case of an annual meeting, the notice of meeting
need not specifically state the business to be transacted thereat
unless such a statement is expressly required by the provisions
of the General Corporation Law of the State of Delaware.
In the case of a special meeting, the notice of meeting
shall specifically state the purpose or purposes for which the
meeting is called. In the case of a special meeting called by
the written request of a majority of the members of the Board of
Directors or the written request of the holders of a majority in
amount of the entire capital stock of the corporation issued,
outstanding and entitled to vote, the notice also shall state
that the meeting is being called upon such written request.
When a meeting is adjourned for thirty (30) days or
more, or if after the adjournment a new record date is fixed for
the adjourned meeting, a notice of the adjourned meeting shall be
given to each shareholder of record entitled to vote at the
meeting. When a meeting is adjourned for less than thirty (30)
days in any one adjournment, it is not necessary to give any
notice of the adjourned meeting other than by announcement of the
time and place thereof at the meeting at which the adjournment is
taken.
Section 5. Voting Lists: The officer who has charge
of the stock ledger of the corporation shall prepare and make, at
least ten days before every meeting of shareholders, a complete
list of the shareholders entitled to vote at the meeting,
arranged in alphabetical order, and showing the address of each
shareholder and the number of shares registered in the name of
each shareholder. Such list shall be opened to the examination
of any shareholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten days
prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the
notice of the meeting, or, if not so specified, at the place
where the meeting is to be held. The list shall also be produced
and kept at the time and place of the meeting during the whole
time thereof, and may be inspected by any shareholder who is
present.
Section 6. Quorum: The holders of a majority of the
stock issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall constitute a
quorum at all meetings of the shareholders for the transaction of
business except as otherwise provided by the General Corporation
Law of the State of Delaware or by the Certificate of
Incorporation of the corporation. If, however, such quorum shall
not be present or represented at any meeting of the shareholders,
the shareholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting
from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such
adjourned meeting, at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally notified.
The shareholders present at a duly organized meeting
may continue to do business until adjournment, notwithstanding
the withdrawal of enough shareholders to leave less than a
quorum.
Section 7. Proxies: Each shareholder entitled to vote
at a meeting of shareholders or to express consent or dissent to
corporate action in writing without a meeting may vote in person
or may authorize another person or persons to act for him by
proxy, but no such proxy shall be voted or acted upon after three
years from its date, unless the proxy provides for a longer
period.
Section 8. Voting of Shares: Unless otherwise
provided in the Certificate of Incorporation and subject to the
provisions of the General Corporation Law of the State of
Delaware, each shareholder shall at every meeting of shareholders
be entitled to one vote for each share of issued and outstanding
capital stock held by such shareholder. If the Certificate of
Incorporation provides for more or less than one vote for any
share on any matter, any reference in these Bylaws to a majority
or other proportion of stock shall refer to such majority or
other proportion of the votes of such stock.
When a quorum is present at any meeting, the vote of
the holders of a majority of the stock having voting power
present in person or represented by proxy shall decide any
question brought before such meeting, unless the question is one
which by express provision of the statutes or of the Certificate
of Incorporation, a different vote is required in which case such
express provision shall govern and control the decision of such
question.
Voting on all matters except the election of directors
shall be by voice vote or by a show of hands unless the holders
of a majority of the shares represented at the meeting shall,
prior to the voting on any matter, demand a ballot vote on that
particular matter.
Section 9. Informal Action by Shareholders: Unless
otherwise provided in the Certificate of Incorporation, any
action required to be taken at any annual or special meeting of
shareholders of the corporation, or any action which may be taken
at any annual or special meeting of such shareholders, may be
taken without a meeting, without prior notice and without a vote,
if a consent in writing, setting forth the action so taken, shall
be signed by the holders of outstanding stock having not less
than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted. Prompt notice
of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those
shareholders who have not consented in writing.
Section 10. Presiding Officer: The succession order
for purposes of these Bylaws shall be: the Chairman of the
Board, Executive Vice Chairman of the Board, Vice Chairman of the
Board, President, Executive Vice President in order of seniority,
Vice President in order of seniority, and Secretary. In the
event neither the Chairman of the Board, the Executive Vice
Chairman of the Board, the Vice Chairman of the Board, nor the
President is present, the shareholders may elect a Chairman of
the meeting.
ARTICLE III
Directors
Section 1. General Powers: The business and affairs
of the corporation shall be managed by the Board of Directors or
by such Committees of the Board as the Board may establish
pursuant to these Bylaws. The directors shall have and exercise
full power in the management and conduct of the business and
affairs of the corporation and do all such lawful acts and things
as are not by statute, or by Certificate of Incorporation, or by
these Bylaws directed or required to be exercised or done by the
shareholders.
Section 2. Number, Term and Qualifications: The
number of directors of the corporation shall be not less than
five nor more than thirty. The directors, by a majority vote of
the remaining directors, though less than a quorum, or by the
sole remaining director, shall determine the exact number of
directors which shall be not less than five nor more than thirty
without a Bylaw modification. Each director shall hold office
until his death, resignation, retirement, removal,
disqualification, or until his successor is elected and
qualified. Directors need not be residents of the State of
Delaware nor shareholders of the corporation; provided, however,
that not less than three-fourths (3/4) of the directors shall be
residents of the State of North Carolina and stock ownership for
qualification shall be subject to North Carolina law.
Section 3. Election of Directors: Except as provided
in Section 5 of this Article, the directors shall be elected by
written ballot at the annual meeting of the shareholders and
those persons who receive the highest number of votes shall be
deemed to have been elected.
Section 4. Removal: Any director may be removed from
office, with or without cause, by a vote of shareholders holding
a majority of the shares entitled to vote at an election of
directors. If any directors are so removed, new directors may be
elected at the same meeting.
Section 5. Vacancies: Vacancies and newly created
directorships resulting from any increase in the authorized
number of directors may be filled by a majority vote of the
directors then in office, though less than a quorum, or by a sole
remaining director, and the directors so chosen shall hold office
until the next annual election and until their successors are
duly elected and shall qualify, unless sooner displaced. If
there are no directors in office, then an election of directors
may be held in the manner provided by statute. If, at the time
of filling any vacancy or any newly created directorship, the
directors then in office shall constitute less than a majority of
the whole Board (as constituted immediately prior to any such
increase), the Court of Chancery may, upon application of any
shareholder or shareholders owning at least ten percent of the
total number of the shares at the time outstanding having the
right to vote for such directors, summarily order an election to
be held to fill any such vacancies or newly created
directorships, or to replace the directors chosen by the
directors then in office.
Section 6. Chairman of the Board: There may be a
Chairman of the Board of Directors elected by the directors from
their number at any meeting of the Board. The Chairman shall
preside at all meetings of the Board of Directors and perform
such other duties as may be directed by the Board.
Section 7. Compensation: The Board of Directors may
compensate directors for their services as such and may provide
for the payment of all expenses incurred by directors in
attending regular and special meetings of the Board. Members of
special or standing committees of the Board of Directors may be
allowed like compensation for attending such committee meetings.
Section 8. Committees of the Board: The Board of
Directors may, by resolution adopted by a majority of the whole
Board, designate one or more committees of the Board, each
committee to consist of two or more directors of the corporation.
The Board may designate one or more directors as alternate
members of any committee, who may replace any absent or
disqualified member at any meeting of the committee. Any such
committee, to the extent provided in the resolution and these
Bylaws, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the
corporation and may authorize the seal of the corporation to be
affixed to all papers which may require it, except as limited by
the provisions of the General Corporation Law of the State of
Delaware; provided, however, that in the absence or
disqualification of any member of such committee or committees,
the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a
quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent
or disqualified member. Such committee or committees shall have
such name or names as may be determined from time to time by
resolution adopted by the Board of Directors or as set forth in
these Bylaws. Each committee shall keep regular minutes of its
meetings and report the same to the Board of Directors when
required.
ARTICLE IV
Meetings of Directors
Section 1. Regular Meetings: A regular meeting of the
Board of Directors shall be held immediately after, and at the
same place as, the annual meeting of shareholders. In addition,
the Board of Directors may provide, by resolution, the time and
place, either within or without the State of Delaware, for the
holding of additional regular meetings, one of which shall be
held in each calendar quarter.
Section 2. Special Meetings: Special meetings of the
Board of Directors may be called by or at the request of the
Chairman of the Board, Executive Vice Chairman of the Board, Vice
Chairman of the Board, President or any two directors. Such
meetings may be held either within or without the State of
Delaware.
Section 3. Notice of Meetings: Regular meetings of
the Board of Directors may be held without notice.
The person or persons calling a special meeting of the
Board of Directors shall, at least one day before the meeting,
give notice thereof by any usual means of communication. Such
notice need not specify the purpose for which the meeting is
called, unless a statement of the specific purpose is otherwise
required by these Bylaws.
Section 4. Quorum: A majority of the Board of
Directors as established by the Bylaws and fixed by the Board of
Directors shall constitute a quorum for the transaction of
business at any meeting of the Board of Directors.
Section 5. Manner of Acting: Except as otherwise
provided in these Bylaws, or as specifically provided by statute
or by the Certificate of Incorporation, the act of the majority
of the directors present at a meeting at which a quorum is
present shall be the act of the Board of Directors. If a quorum
shall not be present at any meeting of the Board of Directors,
the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting,
until a quorum shall be present.
Section 6. Informal Action by Directors: Unless
otherwise restricted by the Certificate of Incorporation or these
Bylaws, any action required or permitted to be taken at any
meeting of the Board of Directors or of any committee thereof may
be taken without a meeting, if all members of the Board or of a
committee, as the case may be, consent thereto in writing, and
the writing or writings are filed with the minutes of proceedings
of the Board or the committee, whether done before or after the
action so taken.
ARTICLE V
Executive Committee
Section 1. Members and General Powers: A majority of
the qualified members of the Board of Directors then in office
may, by proper resolution, appoint an Executive Committee which
shall be composed of not less than three nor more than seven
directors who shall have and exercise the powers of the Board of
Directors in the management of the business affairs of the
corporation, except at such time as the Board of Directors is in
session. However, the Board of Directors shall have the power to
direct, limit or control said Executive Committee by resolution
at any special or regular meeting or by general rules adopted for
its guidance. The Executive Committee shall not have any
authority to take any action prohibited by the General
Corporation Law of the State of Delaware; provided, however, that
such Executive Committee shall have the power to declare
dividends and to authorize the issuance of stock.
A majority of the members of the Executive Committee
shall constitute a quorum. Further, the Executive Committee
shall have authority to take informal action by written consent
as provided in Article IV, Section 6 for the Board of Directors.
Section 2. Vacancies: Any vacancy occurring on the
Executive Committee shall be filled by the vote of a majority of
the number of qualified directors at a regular or special meeting
of the Board of Directors.
Section 3. Removal: Any member of the Executive
Committee may be removed at any time with or without cause by a
majority of the number of qualified directors then in office.
Section 4. Minutes: The Executive Committee shall
keep regular minutes of its proceedings and report the same to
the Board when required.
Section 5. Responsibility of Directors: The
designation of an Executive Committee and the delegation thereto
of authority shall not operate to relieve the Board of Directors,
or any member thereof, of any responsibility or liability imposed
upon it or him by law.
If such action taken by the Executive Committee is not
thereafter formally considered by the full Board, a director may
dissent from such action by filing his written objection with the
Secretary with reasonable promptness after learning of such
action.
Section 6. Ex Officio Members: A majority of the
qualified members of the Board of Directors then in office may,
by proper resolution, appoint one or more ex officio members of
the Executive Committee; provided, however, that such ex officio
members shall not be included or counted in the regular
membership of the Executive Committee nor included in the
requirements for a quorum as set forth in Section 1 above, nor
shall the attendance of such ex officio members be required at
any regular or special meeting of the Executive Committee nor
shall such persons be required to execute written consent minutes
in order for the Executive Committee to take informal action as
provided in Article IV, Section 6. Each ex officio member
appointed by the Board will be eligible to vote at any regular or
special meeting of the Executive Committee at which such ex
officio member is in attendance.
Section 7. Chairman of the Executive Committee: A
Chairman of the Executive Committee shall be elected by the
members of the Board of Directors from their number at any
meeting of the Board. The Chairman shall preside at all meetings
of the Executive Committee and perform such other duties as may
be directed by the Executive Committee.
ARTICLE VI
Executive Management
Group
Section 1. Membership and Duties: The Executive
Management Group of the corporation shall consist of the Chairman
of the Board and the Executive Vice Chairman of the Board, who
shall be the Chief Executive Officers of the corporation. The
Executive Management Group shall carry into effect all legal
directives of the Board of Directors or the Executive Committee
and shall at all times exercise general supervision over the
interests, affairs and obligations of the corporation and perform
all duties with reference to or incident to their offices,
subject to such regulations and restrictions as the Board of
Directors shall from time to time determine. Each member of the
Executive Management Group shall be an ex officio member of all
committees to which said Executive Management Group member is not
specifically appointed.
ARTICLE VII
Officers
Section 1. Number: The officers of the corporation
shall consist of a Chairman of the Board, Executive Vice Chairman
of the Board, Vice Chairman of the Board, President, and
Secretary and may also consist of one or more Executive Vice
Presidents, one or more Senior Vice Presidents, one or more Vice
Presidents, a Treasurer, and other specially designated Vice
Presidents or Assistant Vice Presidents as may be determined by
the Board of Directors, and such Assistant Secretaries and other
officers as may be deemed necessary or advisable by the Board of
Directors, each of which officers or assistant officers thereto
shall have such powers as may be delegated to them by the Board
of Directors, the Executive Management Group and these Bylaws.
Any two or more offices may be held by the same person, except
that no officer may act in more than one capacity where action of
two or more officers is required.
Section 2. Election and Term: The officers of the
corporation shall be elected by the Board of Directors. Such
elections may be held at any regular or special meeting of the
Board. Each officer shall hold office until his death,
resignation, retirement, removal, disqualification, or until his
successor is duly elected and qualified.
Section 3. Removal: Any officer or agent elected or
appointed by the Board of Directors may be removed by the
affirmative vote of a majority of the Board with or without
cause; but such removal shall be without prejudice to the
contract rights, if any, of the person so removed.
Section 4. Compensation: The compensation of all
officers of the corporation shall be fixed by the Board of
Directors or as delegated by the Board of Directors.
Section 5. Chairman of the Board, Executive Vice
Chairman of the Board, Vice Chairman of the Board, and President:
The Chairman of the Board shall preside at all meetings of the
Board of Directors and the meetings of shareholders. In his
absence or disability, the Executive Vice Chairman shall perform
the duties of the Chairman of the Board at all such meetings. In
the absence or disability of both the Chairman of the Board and
the Executive Vice Chairman of the Board, the Vice Chairman of
the Board shall perform such duties. In the absence of all of
the Chairman of the Board, Executive Vice Chairman of the Board,
and the Vice Chairman of the Board, the President shall perform
such duties.
The Chairman of the Board and the Executive Vice
Chairman of the Board, being the members of the Executive
Management Group, shall, subject to the control of the Board of
Directors, supervise, control and manage the corporation and
shall be jointly responsible to the Board for the carrying out of
the Executive Management Group functions.
The Chairman of the Board, the Executive Vice Chairman
of the Board, the Vice Chairman of the Board, and the President,
or any one of them, shall sign, with any other proper officer,
certificates for shares of the corporation and any deeds, leases,
mortgages, bonds, contracts or other instruments which may be
lawfully executed on behalf of the corporation, except where
required or permitted by law to be otherwise signed and executed
and except where the signing and execution thereof shall be
delegated by the Board of Directors, the Chairman of the Board or
the Executive Management Group to some other officer or agent.
The Chairman of the Board, the Executive Vice Chairman of the
Board, the Vice Chairman of the Board, and the President, and
each of them, may, when exercising the authority granted in this
Section, use the title of "President"; and all documents signed
on behalf of the corporation by any such person, for purposes of,
among other things, N.C. Gen. Stat. Sect. 47-18.3, shall be deemed to
have been signed by the President of the corporation.
Section 6. Vice Chairman: The Vice Chairman shall be
the chief operating officer of the corporation and, subject to
the control of the Board of Directors, the Chairman of the Board
and the Executive Management Group, shall operate, administer and
supervise the management of the corporation in accordance with
these Bylaws. The Vice Chairman shall sign, with any other
proper officer, all documents referred to in Section 5 above and
in general, he shall perform all duties incident to the office of
Vice Chairman and such other duties as may be prescribed by the
Board of Directors, the Chairman of the Board, or the Executive
Management Group from time to time.
Section 7. President: The President shall be the
principal staff officer of the corporation and, subject to the
control of the Board of Directors, the Chairman of the Board, the
Executive Management Group, and the Vice Chairman of the Board,
shall direct, administer and supervise all of the staff and
support functions of the corporation in accordance with these
Bylaws. The President shall sign, with any other proper officer,
all documents referred to in Section 5 above, and, in general, he
shall perform all duties incident to the office of President and
such other duties as may be prescribed by the Board of Directors,
the Chairman of the Board, the Executive Management Group or the
Vice Chairman from time to time.
Section 8. Executive Vice Presidents, Senior Vice
Presidents and other Vice Presidents: The duties of the
Executive Vice Presidents, the Senior Vice Presidents and other
Vice Presidents shall be to perform the tasks assigned and
exercise the powers of the office given to them as directed by
the Board of Directors, the Executive Management Group, the
Chairman of the Board and the Vice Chairman of the Board, and to
have such other powers as the Board of Directors shall prescribe.
Section 9. Secretary: The Secretary shall attend and
keep accurate records of the acts and proceedings of all meetings
of shareholders and directors. He shall give or cause to be
given all notices required by law and by these Bylaws. He shall
have general charge of the corporate books and records and of the
corporate seal, and he shall affix the corporate seal to any
lawfully executed instrument requiring it. He shall have general
charge of the stock transfer books of the corporation and shall
keep, at the registered or principal office of the corporation, a
record of shareholders showing the name and address of each
shareholder and the number and class of the shares held by each.
He shall sign such instruments as may require his signature and
shall perform such other duties as may be assigned to him by the
Vice Chairman, the Executive Management Group or the Board of
Directors. The Secretary shall sign, with the Chairman of the
Board, Executive Vice Chairman of the Board, Vice Chairman of the
Board, President, or a Vice President, or other authorized
officer, certificates for shares of the corporation.
Section 10. Assistant Secretaries: In the absence of
the Secretary or in the event of his death, inability or refusal
to act, the Assistant Secretaries in the order of their length of
service as Assistant Secretaries, unless otherwise determined by
the Board of Directors, shall perform the duties of the
Secretary, and when so acting shall have all the powers of and be
subject to all the restrictions upon the Secretary. They shall
perform such other duties as may be assigned to them by the
Secretary, the Vice Chairman, the Executive Management Group or
the Board of Directors. Any Assistant Secretary may sign, with
the Chairman of the Board, Executive Vice Chairman of the Board,
Vice Chairman of the Board, President, or a Vice President, or
other authorized officer, certificates for shares of the
corporation.
Section 11. Treasurer: The Treasurer shall have
custody of all funds and securities belonging to the corporation
and shall receive, deposit or disburse the same under the
direction of the Board of Directors. He shall keep full and
accurate accounts of the finances of the corporation and shall
render to the Vice Chairman and the Board of Directors, at its
regular meetings or when the Board of Directors so requires, an
account of all his transactions as Treasurer and of the financial
condition of the corporation. The Treasurer, in general, shall
perform all duties incident to his office and such other duties
as may be assigned to him from time to time by the Vice Chairman,
the Executive Management Group or the Board of Directors.
Section 12. Assistant Treasurers: In the absence of
the Treasurer or in the event of his death, inability, or refusal
to act, the Assistant Treasurers in the order of their length of
service as Assistant Treasurers, unless otherwise determined by
the Board of Directors, shall perform the duties of the
Treasurer, and when so acting shall have all the powers of and be
subject to all the restrictions upon the Treasurer. They shall
perform such other duties as may be assigned to them by the
Treasurer, the Vice Chairman, the Executive Management Group or
the Board of Directors.
Section 13. Other Officers: The duties of all
officers and employees not defined and enumerated in the Bylaws
shall be prescribed and fixed by the Executive Management Group
and the Vice Chairman and in carrying out the authority to do all
other acts necessary to be done to carry out the prescribed
duties unless otherwise ordered by the Board of Directors,
including but not limited to the power to sign, certify or
endorse notes, certificates of indebtedness, deeds, checks,
drafts or other contracts for and on behalf of the corporation
and/or to affix the seal of the corporation to such documents as
may require it.
Section 14. Bonds: The Board of Directors may by
resolution require any or all officers, agents and employees of
the corporation to give bond to the corporation, with sufficient
sureties, conditioned on the faithful performance of the duties
of their respective offices or positions, and to comply with such
other conditions as may from time to time be required by the
Board of Directors.
ARTICLE VIII
Contracts, Loans, Checks and Deposits
Section 1. Contracts: The Board of Directors may
authorize any officer or officers, agent or agents, to enter into
any contract, lease, or to execute and deliver any instrument on
behalf of the corporation, and such authority may be general or
confined to specific instances. The Board of Directors may enter
into employment contracts for any length of time it deems wise.
Section 2. Loans: No loans shall be contracted on
behalf of the corporation and no evidences of indebtedness shall
be issued in its name unless authorized by a resolution of the
Board of Directors. Such authority may be general or specific in
nature and scope.
Section 3. Checks and Drafts: All checks, drafts or
other orders for the payment of money issued in the name of the
corporation shall be signed by such officer or officers, agent or
agents of the corporation and in such manner as from time to time
shall be determined by resolution of the Board of Directors.
Section 4. Deposits: All funds of the corporation not
otherwise employed from time to time shall be deposited to the
credit of the corporation in such depositories as the Board of
Directors shall direct.
ARTICLE IX
Certificates of Stock and Their Transfer
Section 1. Certificates of Stock: Certificates
representing stock in the corporation shall be issued in such
form as the Board of Directors shall determine to every
shareholder for the fully paid shares owned by him; such stock
certificates shall indicate thereon a reference to any and all
restrictive conditions of said stock. These certificates shall
be signed by the Chairman of the Board, or the Executive Vice
Chairman of the Board, or the Vice Chairman of the Board, or the
President, or any Vice President and the Secretary, an Assistant
Secretary, Treasurer or an Assistant Treasurer or may have
facsimile signatures of such officers placed thereon and such
officers shall have the power to make or order to be made by an
authorized officer or transfer agent any and all transfers of the
securities of the corporation. They shall be consecutively
numbered or otherwise identified; and the name and address of the
persons to whom they are issued, with the number of shares and
the date of issue, shall be entered on the stock transfer books
of the corporation. In case any officer, transfer agent or
registrar who has signed or whose facsimile signature has been
placed upon a certificate shall have ceased to be such officer,
transfer agent or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if he
were such an officer, transfer agent or registrar at the date of
issue.
Section 2. Transfer of Stock: Transfer of stock shall
be made on the stock transfer books of the corporation only upon
surrender of the certificates for the shares sought to be
transferred by the registered holder thereof or by his duly
authorized agent, transferee or legal representative. All
certificates surrendered for transfer shall be cancelled before
new certificates for the transferred shares shall be issued.
Upon surrender to the corporation or its transfer agent
of a certificate for shares duly endorsed or accompanied by
proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the corporation or its transfer
agent to issue a new certificate to the person entitled thereto,
to cancel the old certificate and to record the transaction upon
its books.
Section 3. Fixing Record Date: In order that the
corporation may determine the shareholders entitled to notice of
or to vote at any meeting of shareholders or any adjournment
thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend
or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or
exchange of stock or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which
shall not be more than sixty nor less than ten days before the
date of such meeting, nor more than sixty days prior to any other
action. A determination of shareholders of record entitled to
notice of or to vote at a meeting of shareholders shall apply to
any adjournment of the meeting; provided, however, that the Board
of Directors may fix a new record date for the adjourned meeting.
Section 4. Lost Certificates: The Board of Directors
may authorize and direct the issuance of a new share certificate
or certificates in place of a certificate or certificates claimed
to have been lost, stolen or destroyed, upon receipt of an
affidavit to such fact from the person claiming the loss, theft
or destruction. When authorizing such issuance of a new
certificate or certificates, the Board may, in its discretion and
as a condition precedent to the issuance thereof, require the
claimant, or his legal representative, to advertise the same in
such manner as it may require and/or to give the corporation a
bond in such sum as the Board may direct to indemnify the
corporation against loss from any claim with respect to the
certificate claimed to have been lost, stolen or destroyed; or
the Board may, by resolution reciting the circumstances
justifying such action, authorize the issuance of the new
certificate or certificates without requiring such a bond.
Section 5. Registered Shareholders: The corporation
shall be entitled to recognize the exclusive right of a person
registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for
calls and assessments a person registered on its books as the
owner of shares, and shall not be bound to recognize any
equitable or other claim to interest in such share or shares on
the part of any other person, whether or not it shall have
express or other notice hereof, except as otherwise provided by
the laws of Delaware.
Section 6. Treasury Shares: Treasury shares of the
corporation shall consist of such shares as have been issued and
thereafter acquired but not cancelled by the corporation.
Treasury shares shall not carry voting or dividend rights.
ARTICLE X
General Provisions
Section 1. Dividends: Dividends upon the capital
stock of the corporation, subject to the provisions of the
Certificate of Incorporation, if any, may be declared by the
Board of Directors or the Executive Committee at any regular or
special meeting, pursuant to law. Dividends may be paid in cash,
in property, or in shares of the capital stock, subject to the
provisions of the Certificate of Incorporation.
Before payment of any dividend, there may be set aside
out of any funds of the corporation available for dividends, such
sum or sums as the directors from time to time, in their absolute
discretion, think proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of
the corporation, and the directors may modify or abolish any such
reserve in the manner in which it was created.
Section 2. Seal: The corporate seal of the
corporation shall have inscribed thereon the name of the
corporation, the year of its organization and the words
"Corporate Seal, Delaware". The seal may be used by causing it
or a facsimile thereof to be impressed or affixed or reproduced
or otherwise.
Section 3. Annual Statement: The Board of Directors
shall present at each annual meeting, and at any special meeting
of the shareholders when called for by majority vote of the
shareholders, a full and clear statement of the business and
condition of the corporation.
Section 4. Notice and Waiver of Notice: Whenever any
notice is required to be given to any shareholder or director
under the provisions of the General Corporation Law of the State
of Delaware or under the provisions of the Certificate of
Incorporation or Bylaws of this corporation, it shall not be
construed to mean personal notice, but such notice may be given
in writing, by mail, addressed to such director or shareholder,
at his address as it appears on the records of the corporation,
with postage thereon prepaid, and such notice shall be deemed to
be given at the time when the same shall be deposited in the
United States mail. Notice to directors may also be given by
telegram, telephone, telecopier or other electronic communication
media.
Whenever notice is required to be given under the
provisions of the General Corporation Law of the State of
Delaware or of the Certificate of Incorporation or of these
Bylaws, a waiver thereof in writing, signed by the person or
persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent thereto.
The attendance by a director at a meeting of the Board
or a committee of the Board shall constitute a waiver of notice
of such meeting, except where a director attends a meeting for
the express purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened.
Section 5. Amendments: Except as otherwise provided
herein, these Bylaws may be altered, amended or repealed and new
bylaws may be adopted at any regular meeting of the Board of
Directors or the shareholders, or at any special meeting of the
Board of Directors or shareholders if notice of such alteration,
amendment, repeal or adoption, be contained in the notice of said
special meeting.
Section 6. Fiscal Year: The fiscal year of the
corporation shall be fixed by the Board of Directors.
Section 7. Indemnification: The corporation shall
indemnify its officers, directors, employees and agents to the
maximum extent permitted by the General Corporation Law of the
State of Delaware.
Section 8. Disallowance of Deductions: Any payments
made to or on behalf of an officer or director of the
corporation, including salary, commission, bonus, interest, rent
or entertainment expense incurred by him, which shall be
disallowed in whole or in part as a deductible expense of the
corporation by the Internal Revenue Service (and such
determination shall be acceded to by the corporation, or such
determination shall be rendered final by the appropriate taxing
authority, or a judgment of a court of competent jurisdiction and
no appeal shall be taken therefrom, or the applicable period for
filing notice of appeal shall have expired), then such sum shall
be reimbursed by such officer or director to the corporation to
the full extent of such disallowance. It shall be the duty of
the Board of Directors to enforce the payment of any such sum
disallowed and such repayment may not be waived. However, in
lieu of such direct payment by the officer or director involved
to the corporation, and subject to the determination of the Board
of Directors in its sole discretion, proportionate amounts may be
withheld from future compensation payments of such officer or
director until the amount owed to the corporation as a result of
such disallowance has been fully recovered.
