<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- - --------- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1995
------------------
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- - --------- SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------ --------------
COMMISSION FILE NUMBER 0-17939
-------
CAROLINA FIRST BANCSHARES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-165582
-------------- ---------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
402 East Main Street
Lincolnton, North Carolina 28092
- - -------------------------- -----
(Address of principal executive office) (Zip Code)
704-732-2222
------------
(Registrant's telephone number, including area code)
N/A
---
(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
----- -----
1,556,294 SHARES OF COMMON STOCK, PAR VALUE $2.50
PER SHARE, OUTSTANDING AS OF NOVEMBER 6, 1995
----------------
<PAGE> 2
CAROLINA FIRST BANCSHARES, INC. AND SUBSIDIARY COMPANIES
<TABLE>
<CAPTION>
INDEX PAGE
- - ----- ----
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - September 30, 1995
and December 31, 1994 3
Consolidated Statements of Operations -
Nine Months and Three Months Ended September 30, 1995
and 1994 4
Consolidated Statements of Changes in
Shareholders' Equity - Nine Months Ended
September 30, 1995 and 1994 5
Consolidated Statements of Cash Flows -
Nine Months Ended September 30, 1995 and 1994 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 8 - 13
PART II. OTHER INFORMATION 14
Signatures 15
</TABLE>
<PAGE> 3
CAROLINA FIRST BANCSHARES, INC. AND SUBSIDIARY COMPANIES
- - --------------------------------------------------------
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
- - --------------------------------------------------------
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31,
------------ ------------
1995 1994
------------ ------------
<S> <C> <C>
Assets:
Cash and due from banks $ 11,676,569 $ 10,576,564
Federal funds sold 7,458,239 950,000
------------ ------------
Total cash and cash equivalents 19,134,808 11,526,564
Investment securities (market value $54,730,102
in 1995 and $50,916,612 in 1994) 53,962,615 51,670,001
Securities available for sale (cost of $24,604,587 in
1995 and $18,855,290 in 1994) 24,502,694 18,073,981
Loans, net of unearned income ( $311,830 in 1995 and
$299,472 in 1994) 247,876,594 223,999,059
Allowance for loan losses (3,420,944) (3,158,168)
------------ ------------
Loans, net 244,455,650 220,840,891
Premises and equipment, net 8,629,461 8,174,108
Other real estate owned 823,295 1,017,020
Other assets 7,183,511 7,302,445
------------ ------------
Total Assets $358,692,034 $318,605,010
Liabilities and Shareholders' Equity
Deposits:
Demand $ 26,630,814 $ 25,303,176
Interest bearing demand accounts 78,794,027 74,582,598
Savings 42,768,892 42,516,535
Time, $100,000 and over 28,783,242 19,859,638
Other time 148,415,759 130,359,329
------------ ------------
Total deposits 325,392,734 292,621,276
Other liabilities 3,197,631 2,094,896
------------ ------------
Total Liabilities 328,590,365 294,716,172
Shareholders' Equity:
Common stock, $2.50 par value;
authorized --- 5,000,000 shares;
issued and outstanding - 1,555,892 shares in
1995, and 1,402,028 shares in 1994 3,889,730 3,505,070
Additional paid-in capital 15,508,483 12,661,483
Retained earnings 10,781,277 8,231,596
Net unrealized loss on available for sale securities (77,821) (509,311)
------------ ------------
Total Shareholders' Equity 30,101,669 23,888,838
Commitments and Contingent Liabilities ----- -----
Total Liabilities and Shareholders' Equity $358,692,034 $318,605,010
============ ============
Book Value Per Share $ 19.35 $ 16.23
============ ============
</TABLE>
3
<PAGE> 4
CAROLINA FIRST BANCSHARES, INC. AND SUBSIDIARY COMPANIES
- - --------------------------------------------------------
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
- - --------------------------------------------------------
<TABLE>
<CAPTION>
Quarter Ended Nine Months Ended
September 30, September 30,
----------------------- -------------------------
1995 1994 1995 1994
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Interest Income:
Interest and fees on loans $6,027,641 $4,869,515 $17,104,962 $13,682,667
Interest and dividends on securities:
Taxable income 964,079 927,614 2,820,434 2,804,276
Non-taxable income 177,413 190,438 538,444 567,022
Interest on federal funds sold 97,452 21,695 210,092 90,270
---------- ---------- ----------- -----------
Total interest income 7,266,585 6,009,262 20,673,932 17,144,235
Interest Expense:
Interest on deposits 3,345,282 2,442,126 9,242,273 7,100,271
Interest on notes payable 2,553 16,466 41,019 30,726
---------- ---------- ----------- -----------
Total interest expense 3,347,835 2,458,592 9,283,292 7,130,997
---------- ---------- ----------- -----------
Net Interest Income 3,918,750 3,550,670 11,390,640 10,013,238
Provision for Loan Losses 180,000 160,683 490,200 533,303
---------- ---------- ----------- -----------
Net Credit Income 3,738,750 3,389,987 10,900,440 9,479,935
Other Income:
Charges on deposit accounts 438,967 397,352 1,235,585 1,137,841
Insurance commissions 230,086 208,394 694,554 658,822
Other service fees and commissions 112,566 73,553 289,899 210,694
Mortgage banking income 94,549 59,631 280,784 228,863
Securities gains, net 893 (1,750) 893 31,043
Other income 492,741 249,329 796,298 522,447
---------- ---------- ----------- -----------
Total other income 1,369,802 986,509 3,298,013 2,789,710
Operating Expenses:
Salaries and benefits 1,750,851 1,629,794 5,043,697 4,602,196
Occupancy and equipment 362,038 307,612 1,068,566 929,356
Federal and other insurance premiums 51,732 181,284 412,356 531,547
Office supplies 97,698 67,249 279,375 241,797
Data processing 100,029 97,559 297,542 285,967
Other expenses 1,048,472 647,663 2,524,639 2,019,646
---------- ---------- ----------- -----------
Total operating expenses 3,410,820 2,931,161 9,626,175 8,610,509
---------- ---------- ----------- -----------
Income Before Income Taxes 1,697,732 1,445,335 4,572,278 3,659,136
Income Taxes 611,031 489,597 1,542,922 1,126,952
---------- ---------- ----------- -----------
Net income $1,086,701 $ 955,738 $ 3,029,356 $ 2,532,184
========== ========== =========== ===========
Net Income Per Common Share $ 0.69 $ 0.68 $ 2.05 $ 1.80
========== ========== =========== ===========
</TABLE>
4
<PAGE> 5
CAROLINA FIRST BANCSHARES, INC. AND SUBSIDIARY COMPANIES
- - -----------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
- - -----------------------------------------------------------------
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED)
- - -----------------------------------------------------------------
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL
PAID-IN RETAINED VALUATION SHAREHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS RESERVE EQUITY
--------- ---------- ----------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1993 1,333,324 $3,333,310 $11,529,198 $ 6,752,537 $ 0 $21,615,045
NET UNREALIZED LOSS ON
SECURITIES AVAILABLE
FOR SALE (466,985) (466,985)
ISSUANCE OF STOCK 2,907 7,268 39,958 47,226
EXERCISE OF STOCK OPTIONS 4,728 11,806 15,500 27,306
RETIREMENT OF STOCK (4,896) (12,238) (72,549) (84,787)
NET INCOME 2,532,184 2,532,184
DIVIDENDS PAID (400,576) (400,576)
--------- ---------- ----------- ----------- --------- -----------
BALANCE, SEPTEMBER 30, 1994 1,336,063 3,340,146 11,512,107 8,884,145 (466,985) 23,269,413
BALANCE, DECEMBER 31, 1994 1,402,028 3,505,070 12,661,483 8,231,596 (509,311) 23,888,838
ISSUANCE OF STOCK 150,000 375,000 2,787,088 3,162,088
EXERCISE OF STOCK OPTIONS 1,668 4,170 15,140 19,310
CASH DIVIDEND ($.11 PER SHARE) (421,940) (421,940)
RETIREMENT OF STOCK 370 (925) (6,548) (7,473)
DIVIDEND REINVESTMENT PLAN 2,566 6,415 51,320 (57,735) 0
INCREASE IN NET UNREALIZED GAIN
ON SECURITIES AVAILABLE FOR SALE 431,490 431,490
NET INCOME 3,029,356 3,029,356
--------- ---------- ----------- ----------- --------- -----------
BALANCE, SEPTEMBER 30, 1995 1,555,892 $3,889,730 $15,508,483 $10,781,277 $ (77,821) $30,101,669
========= ========== =========== =========== ========= ===========
</TABLE>
5
<PAGE> 6
CAROLINA FIRST BANCSHARES, INC. AND SUBSIDIARY COMPANIES
- - -----------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED)
- - -----------------------------------------------------------------
<TABLE>
<CAPTION>
September 30, September 30,
------------ ------------
1995 1994
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net Income $ 3,029,356 $2,532,184
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 653,331 528,724
Accretion and amortization of securities discounts
and premiums, net 184,397 207,360
Provision for loan losses 490,200 533,303
Deferred taxes (benefit) 661,109 521,985
Losses on sales of securities available for sale ----- 4,723
Gains on calls and maturities of securities held to maturity (894) (33,426)
Losses (gains) on sales of equipment, net 381 (1,267)
Gains on sales of real estate, net (131,270) (116,120)
Federal Home Loan Bank stock dividend (58,678) (53,504)
Increase in other assets (609,865) (104,346)
Increase (decrease) in other liabilities 1,116,112 159,371
------------ ------------
Net cash provided by operating activities 5,334,179 4,178,987
------------ ------------
INVESTING ACTIVITIES:
Proceeds from maturities of securities available for sale 5,571,613 3,530,085
Proceeds from sales of securities available for sale ----- 2,000,000
Purchases of securities available for sale (11,553,456) (10,725,751)
Proceeds from calls and maturities of securities held to maturity 8,461,038 10,036,816
Purchases of securities held to maturity (10,893,857) (5,373,294)
Purchases and maturities of certificates of deposit, net ----- 727,555
Originations of loans, net (24,242,298) (17,033,841)
Proceeds from sale of real estate 411,345 500,086
Capital improvements to real estate (2,488) (5,625)
(Increase) decrease in investment in joint ventures 28,307 158,258
Proceeds from sales of premises and equipment 60 -----
Capital expenditures (1,016,265) (134,286)
------------ ------------
Net cash used in investing activities (33,236,001) (16,319,997)
------------ ------------
FINANCING ACTIVITIES:
Increase (decrease) in time deposits, net 26,980,034 (2,951,862)
Increase in other deposits, net 5,791,424 12,336,037
Repayment of notes payable (13,377) (12,715)
Repurchase of stock (7,473) (84,787)
Payment of cash dividends and fractional shares (421,940) (400,576)
Issuance of stock 3,181,398 74,532
------------ ------------
Net cash provided by financing activities 35,510,066 8,960,629
------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 7,608,244 (3,180,381)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 11,526,564 14,840,375
------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 19,134,808 $ 11,659,994
============ ============
Supplemental disclosures of cash flow information:
Interest paid $ 8,891,732 $ 7,129,636
Income taxes paid 1,235,000 1,205,899
Supplemental disclosure on noncash investing and financing activities:
Decrease in net unrealized loss (77,821) (466,985)
Assets transferred to other real estate 137,339 35,400
Transferred from investment securities to securities available for sale ----- -----
============ ============
Disclosure of accounting policy:
For purposes of reporting cash flows, cash and cash equivalents include
cash on hand, due from banks and federal funds sold.
See accompanying notes to consolidated financial statements.
</TABLE>
6
<PAGE> 7
CAROLINA FIRST BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. In the opinion of Management, the accompanying consolidated financial
statements contain all adjustments (consisting of only normal recurring
accruals) necessary to present fairly the financial position of Carolina First
BancShares, Inc. and Subsidiary Companies as of September 30, 1995 and
December 31, 1994 the results of operations for the nine-month and three-month
periods ended September 30, 1995 and 1994, and cash flows for the nine-month
periods ended September 30, 1995 and 1994.
The accounting policies followed by the Company are set forth in Note 1 to the
Company's audited financial statements for the year ended December 31, 1994.
2. The consolidated financial statements include the accounts of the holding
company, and its wholly owned subsidiaries, Cabarrus Bank of North Carolina,
("Cabarrus Bank"), and Lincoln Bank of North Carolina, ("Lincoln Bank"). The
financial statements of Lincoln Bank also include its wholly owned subsidiary,
North State Insurance Agency, Inc. Cabarrus Bank also has a wholly-owned
subsidiary, Cabco, Inc. Jointly, Lincoln Bank and Cabarrus Bank own a mortgage
company, Carolina First Mortgage Corporation and a financial services company,
Carolina First Financial Services Corporation. All significant intercompany
items and transactions have been eliminated in consolidation.
3. The results of operations for the nine-month and three-month periods ended
September 30, 1995 and 1994, are not necessarily indicative of the results that
might be expected for the full year ending December 31, 1995 and 1994.
4. The Company's Board of Directors declared a 5% stock dividend payable
November 29, 1994. The market value of the common stock at November 29, 1994
was $19.50. Earnings per share for the periods presented have been computed
after giving retroactive effect to the stock dividend.
5. On April 26, 1994, the Company established a new subsidiary, Carolina First
Financial Services Corporation, whose primary business activity is expected to
consist of the retail sale of annuities and mutual funds.
7
<PAGE> 8
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATION
The following discussion and analysis sets forth the major factors which
affected the Company's results of operations and financial condition reflected
in the unaudited financial statements for the nine-month and three-month
periods ended September 30, 1995 and 1994.
General
Net income for the quarter ended September 30, 1995, was $1,086,701, or $ .69
per share, compared to income of $995,738, or $ .68 per share, for the same
period in 1994.
During June, 1995, the Company sold 150,000 shares of newly issued common stock
on a best efforts basis. The stock was sold for $22.50 per share and generated
in excess of $3.1 million of capital.
The Company invested approximately 16.73% in First Gaston Bank of North
Carolina, ("First Gaston") in Gastonia, North Carolina in November 1994. The
Company and its subsidiary, Lincoln Bank, are providing, at market rates, data
and item processing services, operational support services, accounting
services, audit and loan rating and reporting services, compliance services and
marketing services.
Net Interest Income/Margins
Net interest income of $11,390,640 during the first nine-months of 1995
resulted from a net interest margin of 4.66% on average earning assets of
$308.2 million. This compares with a net interest margin of 4.58% on average
earning assets of $282.3 million generating net interest income of $10,013,238
for the same period in 1994. Interest rates began to increase during the first
quarter of 1994, and have continued to rise through the first quarter of 1995.
Interest rates stabilized during the second quarter and decreased just after
the end of the second quarter. Each decrease in the prime lending rate
initially decreases the Company's net interest income since a large number of
loans are tied to the prime lending rate and are directly and immediately
effected. However, with the passage of time, interest sensitive liabilities
will decrease and the Company's interest margins should stabilize. The
increase in loan demand experienced by most financial institutions positively
affects the net interest margin and is an indicator of the continued expanding
local economy. The increase in net interest income consists of an increase of
$129,000 relative to rate and an increase of $1,247,000 relative to volume.
Management reviews asset/liability volumes and rates on a weekly basis. As
Carolina First's loans have continued to grow, the funds have been obtained
primarily through customer deposits. Deposit and loan rates are adjusted as
market conditions and Company needs allow.
8
<PAGE> 9
Analysis of average balances and interest rates for the nine months ended
September 30, 1995 and 1994, is presented on pages 12 and 13 of this report.
Such analysis is presented on a fully-taxable equivalent basis at the federal
statutory rate of 34%.
Loan Loss Allowance/Provision
The allowance for loan losses represents management's determination as to an
adequate amount in relation to the risk of future losses inherent in the loan
portfolio. In evaluating the allowance and its adequacy, management considers
the bank's loan loss experience, the amount of past due and non-performing
loans, current and anticipated economic conditions and other appropriate
information. While it is the Company's policy to charge-off in the current
period the loans in which a loss is considered probable, there are additional
risks for future losses which cannot be quantified precisely or attributed to
particular loans or classes of loans. Because these risks are continually
changing in response to facts beyond the control of the Company, such as the
state of the economy, management's judgment as to the adequacy of the provision
is approximate and imprecise. It is also subject to regulatory examinations
and determinations as to adequacy, which may take into account such factors as
methodology used to calculate the allowance for loan losses and the size of the
loan loss allowance in comparison to a group of peer banks identified by the
regulatory agencies.
In assessing the adequacy of the allowance, management relies predominantly on
its ongoing review of the loan portfolio, which is undertaken to both ascertain
whether there are probable losses which must be charged-off and to assess the
risk characteristics of the portfolio in the aggregate. This review considers
the judgments of management, and also those of bank regulatory agencies that
review the loan portfolio as part of their regular bank examination process.
There are no loans classified for regulatory purposes as loss, doubtful,
substandard, or special mention that the Company reasonably expects will
materially impact future operating results, liquidity, or capital resources.
The Company has no concentrations or credit risks by type of credit or industry
group within its loan or investment portfolio.
On a monthly basis, Carolina First reviews the adequacy of its allowance for
loan losses. The loan review staff prepares a listing of loans believed to be
deserving of a closer review by management. These loans are rated as to the
presumed collectibility, and a statistical loss factor is assigned to each
category of loans that directly relates to the associated risk. In addition to
these specific allowances, an additional component of the allowance is computed
by applying a factor based on historical loss experience to all loans by type
that are not listed on the above referenced schedule. Finally, an additional
factor is assigned to the entire portfolio to cover unexpected losses from any
borrower that may not be identified. This final component reflects the
economic conditions of the market areas served. These factors are multiplied
by the balances in each category and totaled to determine the required
allowance for loan losses. The actual allowance for loan losses (after
charge-offs) is compared with the required level to determine if an additional
provision should be made in the current period. The allowance for loan losses
was $3,420,944 or 1.38% of outstanding loans, at September 30, 1995 and
$3,158,168 or 1.41% of outstanding loans, at December 31, 1994.
9
<PAGE> 10
The provision for loan losses charged to operations during the first nine
months was $490,200 in 1995 and $533,303 in 1994. Charge-offs, net of
recoveries, were $227,239 or .09% of average loans outstanding, during the nine
months ended September 30, 1995, as compared to $32,000 or .01% of average
loans outstanding, during the same period in 1994. The ratio of non-accrual
loans to total loans was .24% at September 30, 1995, .25% at December 31,
1994, and .31% at September 30, 1994. Management believes that reserves and
asset values are adequate to facilitate the timely disposition of these assets.
Net Non-Interest Income
Non-interest income increased 18.22% for the first nine months of 1995 and
38.85% for the third quarter as compared to the same period a year earlier.
This increase is primarily the result of the sale of real estate and the growth
of the Company's credit card department and trust operations. These operations
were begun during 1993 in an effort to increase non-interest income. The
Company expects this income to increase as these departments continue to grow.
Non-interest expense increased $1,015,666 or 11.80%, for the nine-month period
ended September 30, 1995, as compared to the same period a year earlier. The
increase is a result of the general growth in business volume and the related
increase in salaries and employee benefits (resulting from a larger number of
employees). Conversely, cost control measures and a central purchasing
function have shown to be beneficial as office supplies decreased from the cost
a year ago. The FDIC has adopted a proposal that assesses deposit insurance
premiums based on an institution's capital level and supervisory evaluation.
Carolina First member banks have paid the lowest assessment level of .23% per
$100 of insured deposits and the Company is expected to benefit from any
premium reductions that may be forth coming. The amount of the benefit is
dependent on the level of reductions the Bank Insurance Fund and/or the Savings
Insurance Fund. During the third quarter, the FDIC announced that the bank
insurance fund (BIF) reached the required level of funding. Accordingly, the
deposit premium assessed "well capitalized" commercial banks has been reduced
by 82.6% going forward and a rebate of excess premiums paid since June 1, 1995
was distributed in September. Lincoln Bank received a rebate of approximately
$130,000; however, Cabarrus Bank is a member of the savings association
insurance fund (SAIF) which received no such rebate. Because the SAIF fund has
not reached the desired funding level and is not expected to do so for some
time, Congress is debating a one time assessment for all SAIF members during
the first quarter of 1996 to equalize the assessment level among financial
institutions. Should this occur, the amount of the assessment will
significantly impact first quarter's earnings; however, quarterly earnings
going forward will improve due to reduced premiums for SAIF members.
Financial Condition
The Company's total assets at September 30, 1995 and 1994, were $358,692,034,
and $312,442,842, respectively, and $318,605,010 at December 31, 1994. Average
earning assets for the first nine months of 1995 were $308,169,000 versus
$282,335,000 for the same period a year earlier, an increase of 9.15%. This
growth is the result of the strong local economy and the Company's continued
expansion of its customer base and market share.
10
<PAGE> 11
Average loans of $229,964,000 represented 74.62% of average earning assets
during the first nine months of 1995. During the same period in 1994, average
loans totaled $203,173,000, or 71.96% of average earning assets. However,
gross loans increased to $247,876,594 at September 30, 1995, a 10.66% increase
over loans at December 31, 1994. It is anticipated that general loan growth
will continue to mirror the economy generally, although higher interest rates
may dampen the rate of growth.
Securities averaged $73,488,000 during the nine months ended September 30, 1995
versus $76,494,000 for the same period a year ago. The securities portfolio
represented 23.85% of earning assets at September 30, 1995 and 27.09% at
September 30, 1994. At September 30, 1995, the securities portfolio had
unrealized losses of approximately $77,821. No losses or gains were realized
during the first three quarters of 1995. Securities held to maturity with a
carrying value of approximately $44.7 million were scheduled to mature within
the next five years. Of this amount, $13.0 million were scheduled to mature
within one year. Securities available for sale with a carrying value of $23.3
million were scheduled to mature within the next five years. Of this amount,
$10.8 million were scheduled to mature within one year. The Company currently
has the ability and intent to hold its investment securities to maturity.
Certain debt securities are designated by management as held for sale and are
carried at the lower of cost or market because management may sell them before
they mature.
Average interest bearing liabilities rose 7.83%, to $280,892,000 in the first
nine months of 1995, from an average of $260,500,000 in the first nine months
of 1994. Total deposits increased 13.27% from September 30, 1995 to September
30, 1994, and 11.20% from December 31, 1994 to September 30, 1995.
The Company continues to maintain capital ratios in excess of regulatory
minimum requirements. The current capital standards call for a minimum total
capital of 8% of risk-adjusted assets, including 4% Tier I capital, and a
minimum leverage ratio of Tier I capital to total tangible assets of at least
4-5%. At September 30, 1995, the Company's ratio of total Tier I capital to
total assets, adjusted for the loans loss allowance and intangibles, was 8.89%
and the Company's ratio of total capital to risk-adjusted assets was 13.80%
which includes 12.60% Tier I capital.
Liquidity
The liquidity position of the Company's subsidiaries, Lincoln Bank ("Lincoln")
and Cabarrus Bank of North Carolina ("Cabarrus"), is primarily dependent upon
their need to respond to withdrawals from deposit accounts and upon the
liquidity of their assets. Primary liquidity sources include cash and due from
banks, federal funds sold, short-term investment securities and loan
repayments. At September 30, 1995, Lincoln Bank had a liquidity ratio of
29.70% and Cabarrus had a liquidity ratio of 23.45%. Management believes the
liquidity sources are adequate to meet operating needs. Except as discussed
above, there are no known trends, events or uncertainties that will have or
that are reasonably likely to have a material effect on the Company's
liquidity, capital resources or operations.
11
<PAGE> 12
CAROLINA FIRST BANCSHARES, INC.
- - --------------------------------------
AVERAGE BALANCE SHEET AS SEPTEMBER 30,
- - --------------------------------------
(In Thousands)
<TABLE>
<CAPTION>
1995 1994
------- -------
INTEREST Interest
AVERAGE INCOME/ AVERAGE Average Income/ Average
BALANCE EXPENSE RATE Balance Expense Rate
------- ------- ---- ------- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Assets
Taxable securities $ 63,064 $ 2,820 5.96% $ 65,841 $ 2,805 5.68%
Non-taxable securities 10,424 538 10.43% 10,653 567 10.75%
Federal funds sold and securities
purchased with agreements to
resell 4,717 210 5.94% 2,668 90 4.50%
Loans 229,964 17,105 9.92% 203,173 13,683 8.98%
-------- ------- -------- -------
Interest earning assets 308,169 20,673 9.06% 282,335 17,145 8.23%
------- ----- ------- -----
Cash and due from banks $ 10,613 9,315
Other assets 16,125 14,393
-------- --------
Total assets $334,907 $306,043
======== ========
Liabilities and Shareholders' Equity
Interest bearing deposits
Demand $ 76,418 $ 1,579 2.76% $ 70,988 $ 1,223 2.30%
Savings 41,396 923 2.97% 39,807 852 2.85%
Time 162,381 6,740 5.53% 148,880 5,025 4.50%
Other borrowings 697 41 7.84% 825 31 5.01%
-------- ------- -------- -------
Interest bearing liabilities 280,892 9,283 4.41% 260,500 7,131 3.65%
-------- ------- ----- -------- ------- -----
Other liabilities 28,108 23,045
Shareholders' equity 25,907 22,498
-------- --------
Total liabilities and shareholders'
equity $334,907 $306,043
======== ========
Interest rate spread 4.66% 4.58%
===== =====
Net interest earned and net
yield on earning assets $11,390 4.92% $10,014 4.72%
======= ===== ======= =====
</TABLE>
12
<PAGE> 13
CAROLINA FIRST BANCSHARES, INC.
- - -------------------------------
RATE / VOLUME ANALYSIS
- - -------------------------------
FOR THE PERIOD ENDED SEPTEMBER 30, 1995 AND 1994
- - ------------------------------------------------
(In Thousands)
<TABLE>
<CAPTION>
Increase/(Decrease)
due to
1994 Volume Rate 1995
Inc/exp Inc/exp
------------------------------------
<S> <C> <C> <C> <C>
Interest Income:
Loans 13,683 1,993 1,429 17,105
Securities - tax - exempt 567 (12) (17) 538
Securities - taxable 2,805 (124) 139 2,820
Federal funds sold 90 91 29 210
------ ----- ----- ------
Total Interest Income 17,145 1,948 1,580 20,673
Interest Expense:
Interest Bearing Demand 1,223 112 244 1,579
Savings 852 35 36 923
Time 5,025 560 1,155 6,740
Other Borrowings 31 (8) 18 41
------ ----- ----- ------
Total Interest Expense 7,131 700 1,452 9,283
------ ----- ----- ------
Net Interest Income 10,014 1,247 129 11,390
====== ===== ===== ======
</TABLE>
13
<PAGE> 14
PART II - OTHER INFORMATION
Item
1 - Legal Proceedings None
2 - Changes in Securities None
3 - Defaults upon Senior Securities None
4 - Submission of Matters to a Vote of
Security Holders None
5 - Other Information None
6 - Exhibits and Reports on Form 8-K
(a) Exhibits: 27 - Financial Data Schedule (SEC Use Only)
(b) Reports on Form 8-K
14
<PAGE> 15
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.
CAROLINA FIRST BANCSHARES, INC.
-------------------------------
(Registrant)
Date: November 6, 1995 By: /s/ James E. Burt, III
--------------------------- ----------------------------------
James E. Burt, III
President
Date: November 6, 1995 By: /s/ Jan H. Hollar
--------------------------- ----------------------------------
Jan H. Hollar
Principal Accounting Officer
15
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 11,676,569
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 7,458,239
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 24,502,694
<INVESTMENTS-CARRYING> 53,962,615
<INVESTMENTS-MARKET> 54,730,102
<LOANS> 247,876,594
<ALLOWANCE> 3,420,944
<TOTAL-ASSETS> 358,692,034
<DEPOSITS> 325,392,734
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,197,631
<LONG-TERM> 0
<COMMON> 3,889,730
0
0
<OTHER-SE> 26,211,939
<TOTAL-LIABILITIES-AND-EQUITY> 358,692,034
<INTEREST-LOAN> 17,104,962
<INTEREST-INVEST> 3,358,878
<INTEREST-OTHER> 210,092
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 9,242,273
<INTEREST-EXPENSE> 41,019
<INTEREST-INCOME-NET> 11,390,640
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 893
<EXPENSE-OTHER> 9,626,175
<INCOME-PRETAX> 4,572,278
<INCOME-PRE-EXTRAORDINARY> 4,572,278
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,029,356
<EPS-PRIMARY> 2.05
<EPS-DILUTED> 2.05
<YIELD-ACTUAL> 4.92
<LOANS-NON> 594,789
<LOANS-PAST> 56,484
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,158,168
<CHARGE-OFFS> 183,820
<RECOVERIES> 9,153
<ALLOWANCE-CLOSE> 3,420,944
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
