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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended 12/31/94 Commission File Number 0-11172
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
(Exact name of registrant as specified in its charter)
State of South Carolina 57-0738665
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1230 Main Street
Columbia, South Carolina 29201
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (803) 733-3456
Securities Registered Pursuant to Section 12(b) of the Act:
None
Securities Registered Pursuant to Section 12 (g) of the Act:
Common Stock, $5.00 per value
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. YES [ X ] NO [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
Regulation S-K is not contained herein, and will not be contained, to be the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K.
YES [ X ] NO [ ]
The aggregate market value of the Registrant's Common Stock held by non-
affiliates as of February 3, 1995 was $38,287,945. The Registrant's voting
Preferred Stock is not regularly traded and has no quoted prices and therefore
has no readily ascertainable market value.
As of February 3, 1995, there were 892,813 outstanding shares of the
Registrant's Common Stock, $5.00 par value per share and 50,720 outstanding
shares of its Non-Voting Common Stock, $5.00 par value per share.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of Registrant's Annual
Report to Shareholders for the fiscal year ended December 31, 1994 are
incorporated by reference into Parts I and II.
(2) Portions of Registrant's
definitive Proxy Statement dated March 24, 1995 for the Annual Meeting of
Shareholders to be held April 26, 1995 are incorporated by reference into Part
III.
PART I.
Item 1. BUSINESS
First Citizens Bancorporation of South Carolina, Inc. ("Bancorporation"),
a South Carolina corporation, is a one bank holding company organized in 1982
which owns all the outstanding stock of First-Citizens Bank and Trust Company
of South Carolina ("Bank"). The Bank, which is the principal asset and source
of income of Bancorporation, is engaged in the general banking business
throughout South Carolina and offers complete retail, commercial banking and
trust services. The net income of the Bank constituted approximately 103% of
the consolidated net income of Bancorporation for the year ended December 31,
1994, and the assets of the Bank constituted approximately 99% of the
consolidated assets of Bancorporation at December 31, 1994. First Citizens
Mortgage Corporation of South Carolina, a wholly-owned subsidiary of the Bank,
is engaged in mortgage banking. Another wholly-owned subsidiary of the Bank
is Wateree Enterprises, Inc., which through its wholly-owned subsidiary,
Wateree Life Insurance Company, a South Carolina corporation, issues credit
life, accident and health insurance on borrowers from the Bank. Another
wholly-owned subsidiary of Wateree Enterprises, Inc. is Wateree Agency, Inc.,
a South Carolina corporation, which acts as agent for the sale of insurance to
the Bank's customers.
Supervision and Regulation
As a bank holding company, Bancorporation is subject to regulation by the
Federal Reserve Board under the Bank Holding Company Act of 1956, as amended
(BHC Act), and its examination and reporting requirements. Bancorporation is
likewise subject to the requirements of the BHC Act which imposes certain
limitations and restrictions on the degree to which Bancorporation may conduct
non-banking related activities and the extent to which Bancorporation may
engage in merger and acquisition activities. In addition to the provisions of
the BHC Act, state banking commissions serve in a supervisory and regulatory
capacity with respect to bank holding company activities.
Federal law regulates transactions among Bancorporation and its
affiliates, including the amount of banking affiliate's loans to, or
investment in, non-banking affiliates. In addition, various requirements and
restrictions under federal and state laws regulate the operations of
Bancorporation's banking affiliates, requiring the maintenance of reserves
against deposits, limiting the nature of loans and interest that may be
charged thereon, restricting investments and other activities, and subjecting
the banking affiliates to regulation and examination by the state banking
authorities and the FDIC.
There are various legal and regulatory limits on the extent to which
Bancorporation's subsidiary bank may pay dividends or otherwise supply funds
to Bancorporation. In addition, federal and state regulatory agencies also
have the authority to prevent a bank or bank holding company from paying a
dividend or engaging in any activity that, in the opinion of the agency, would
constitute an unsafe or unsound practice.
Under FRB policy, Bancorporation is expected to act as a source of
financial strength to, and commit resources to support, its subsidiary bank.
In addition, Financial Institutions Reform, Recovery and Enforcement Act
(FIRREA) provides that a depository institution insured by the FDIC can be
held liable for any loss incurred by, or reasonably expected to be incurred
by, the FDIC in connection with the default of a commonly controlled FDIC
insured depository institution. Under the Federal Deposit Insurance
Corporation Improvement Act of 1991 (FDICIA) federal banking regulators are
required to take prompt corrective action in respect of depository
institutions that do not meet minimum capital requirements. FDICIA generally
prohibits a depository institution from making any capital distribution or
paying management fees to its holding company if the depository institution
would thereafter be undercapitalized. In addition, undercapitalized
institutions will be subject to restrictions on borrowing from the Federal
Reserve System, to growth limitations and to obligations to submit capital
restoration plans. In order for a capital restoration to be acceptable, the
depository institution's parent holding company must guarantee the
institution's compliance with the capital restoration plan up to an amount not
exceeding 5% of the depository institution's total assets. Significantly
undercapitalized institutions are subject to greater restrictions, and
critically undercapitalized institutions are subject to appointment of a
receiver.
FDICIA also substantially revises the bank regulatory insurance coverage
and funding provisions of the Federal Deposit Insurance Act and makes
revisions to several other federal banking statues. FDICIA imposes
substantial new examination, audit and reporting requirements on insured
depository institutions. Under FDICIA, each federal banking agency must
prescribe standards for depository institutions and depository institution
holding companies relating to internal controls, information systems, internal
audit systems, loan documentation, credit underwriting, interest rate
exposure, asset growth, compensation, a maximum ratio of classified assets to
capital, minimum earnings sufficient to absorb losses, a minimum ratio of
market value to book value for publicly traded shares, and other standards as
the agency deems appropriate.
2
PART 1 (CONTINUED)
Item 1. BUSINESS (CONTINUED)
The FDIC has adopted or currently proposes to adopt rules pursuant to
FDICIA that include: (a) real estate lending standards for banks, (b) revision
to the risk-based capital rules; (c) rules requiring depository institutions
to develop and implement internal procedures to evaluate and control credit
and settlement exposure to their correspondent banks; (d) a rule restricting
the ability of depository institutions that are not well capitalized from
accepting brokered deposits; (e) rules addressing various "safety and
soundness" issues, including operations and managerial standards for asset
quality, earnings and stock valuations, and compensation standards for the
officers, directors, employees and principal shareholders of the depository
institution; and (f) rules mandating enhanced financial reporting and audit
requirements.
Uncertainties surrounding the health and solvency of the banking and
thrift industries, as well as continued concerns relating to the viability of
the FDIC, will likely result in additional legislation aimed at banking
industry reform.
First-Citizens Bank and Trust Company of South Carolina
The Bank was organized as a state bank in 1964. Its predecessor, Anderson
Brothers Bank, was organized in 1936. As measured by deposits, the Bank is
the fourth largest commercial bank in South Carolina and has 114 offices
throughout South Carolina.
The Bank is an insured bank, and is supervised, examined and regulated by
the Federal Deposit Insurance Corporation and the South Carolina State Board
of Financial Institutions.
For the year ended December 31, 1994, approximately 64% of the revenues of
the Bank were derived from interest and fees on loans, 20% from income on
investment securities, .4% from income on temporary investments, .7% from
trust fees, 9% from service charges on deposit accounts and 6.2% from other
sources.
On June 3, 1994, the Bank purchased the assets and assumed the liabilities
of four South Carolina branches of Cooper River Federal Savings Association.
Further information concerning this transaction is contained in the section
entitled "Management's Discussion and Analysis" of the Registrant's 1994
Annual Report to Shareholders which is incorporated herein by reference.
Commercial Banking Services. The Bank provides a wide range of
traditional commercial banking and related financial services to customers
engaged in manufacturing, wholesaling, retailing, providing services, buying
and selling real estate, and agriculture; and to institutions and agencies of
state government. It makes commercial loans for various purposes, including
working capital, real estate financing, equipment financing and floor plan
loans for automobile dealers. As of December 31, 1994, commercial and real
estate loans accounted for approximately 71% of the Bank's total loans.
Interest and fees on commercial and real estate loans constituted 44% of the
Bank's operating revenues for the year ended December 31, 1994.
Consumer Services. The Bank provides a full range of consumer banking
services, including checking accounts, savings programs, installment lending
services, real estate loans, trust accounts, travelers' cheques and safe
deposit facilities through its branch offices in South Carolina. The Bank
provides automated teller machines in over 97 locations and participates in an
electronic transfer network which presently gives customers access to their
accounts through over 52,000 automated teller machines worldwide. The Bank
issues MasterCard and VISA cards. As of December 31, 1994, consumer loans
accounted for approximately 29% of the Bank's total loan portfolio. Interest
and fees for consumer loans and services contributed 20% of the Bank's
operating revenues for the year ended December 31, 1994.
Trust Services. Through its trust department, the Bank offers a full
range of trust services. To individuals, the services offered include acting
as executor and administrator of decedents' estates, trustee of various types
of trusts, guardian of estates of minors and incompetents, portfolio
management service, investment counseling and assistance in estate planning.
For corporations, offered services include acting as registrar, transfer
agent, dividend paying agent for stock issues, and as trustee for bond and
debenture issues and pension and profit sharing plans. Fees for trust
services contributed .7% of the Bank's operating revenues for the year ended
December 31, 1994.
3
PART I (CONTINUED)
Item 1. BUSINESS (CONTINUED)
Statistical Data
Certain statistical disclosures for bank holding companies required by
Guide 3 are included in the section entitled "Management's Discussion and
Analysis" on pages 3 through 15 of the Registrant's 1994 Annual Report to
Shareholders which is incorporated herein by reference.
Non-Banking Subsidiaries
First Citizens Mortgage Corporation of South Carolina is engaged in the
business of originating, selling and servicing residential mortgage loans and
performing other incidental activities necessary to conduct a mortgage banking
business. As of December 31, 1994, First Citizens Mortgage Corporation of
South Carolina was servicing mortgage loans amounting to $480.3 million for
independent investors and $29.6 million for the Bank. Interest and fees
earned by First Citizens Mortgage Corporation of South Carolina constituted 1%
of Bancorporation's consolidated operating revenues for 1994.
Wateree Life Insurance Company issues credit life insurance on borrowers
from the Bank. All policies in excess of $30,000 and individual accident and
health policies are insured by another insurance company. The company had
earned premiums of $321,337 or .3% of Bancorporation's consolidated operating
revenues for the year ended December 31, 1994. Net income for the year ended
December 31, 1994 was $169,795, or 1% of Bancorporation's consolidated net
income. Total insurance in force amounted to $67,205,000 at December 31,
1994.
Wateree Agency, Inc. acts as agent for the sale of insurance to the Bank's
customers. Net income for the year ended December 31, 1994 was not material.
Employees of Bancorporation
Bancorporation has no salaried employees. As of December 31, 1994, the
Bank and its subsidiaries had 984 full-time equivalent employees.
Bancorporation and its subsidiaries are not parties to any collective
bargaining agreement and relations with employees are considered to be good.
Competition
Because South Carolina allows statewide branch banking, the Bank must
compete in local markets throughout the state with other depository
institutions. The Bank is subject to intense competition from various
financial institutions and other companies or firms that engage in similar
activities, both for local business in individual communities and for business
in the national market. The Bank competes for deposits with other commercial
banks, savings and loan associations, credit unions and with the issuers of
commercial paper and other securities, such as shares in money market funds.
In making loans, the Bank competes with other commercial banks, savings and
loan associations, consumer finance companies, credit unions, leasing
companies and other lenders. In addition, competition for personal and
corporate trust services is offered by insurance companies and other
businesses, and firms and individuals.
A factor which has also increased competition in the Bank's local markets
is reciprocal interstate banking legislation. South Carolina law allows bank
holding companies in 12 other Southeastern states and the District of Columbia
to acquire banks and bank holding companies in South Carolina, provided that
reciprocal legislation has been passed in such other state or district. As a
result, a number of large bank holding companies located in other states and
having consolidated resources greater than those of Bancorporation (among them
four of the largest in the Southeastern United States) have acquired banks
located in South Carolina with which the Bank competes in its local markets.
The Bank is the fourth largest bank in South Carolina in terms of assets, but
is the largest bank owned by a South Carolina based holding company.
During September 1994, Congress adopted new legislation which, one year
after enactment and subject to certain limitations, will permit adequately
capitalized and managed bank holding companies to acquire control of a bank in
any state (the "Interstate Banking Law"). Also, beginning June 1, 1997 and
subject to certain limitations, the Interstate Banking Law permits banks to
merge with one another across state lines. Each state can authorize mergers
earlier than that date and also can choose to permit out-of-state banks to
open branch offices within that state's borders. Alternatively, a state can
opt out of interstate branching by adopting legislation before June 1, 1997.
As of March 1995, South Carolina has not adopted any such legislation in
response to the Interstate Banking Law.
4
PART I (CONTINUED)
Item 2. PROPERTIES
Bancorporation owns in fee simple 1 piece of property having a book value
at December 31, 1994 of $83,293. To the limited extent necessary, it occupies
space owned by the Bank. Bancorporation's and the Bank's principal office is
located at 1230 Main Street in Columbia, South Carolina.
The Bank owns in fee simple 132 properties having a book value at December
31, 1994 of $32,180,343 which are used for its main office, branch office
locations, associated parking lots for customers and employees, or housing
other operational units of the Bank. In addition, the Bank leases 31
properties, substantially all of which are used for branch office locations
and associated parking lots for customers and employees. All these leases are
for relatively long terms or include renewal options considered by management
of the Bank to be adequate. Rental expense paid for these properties in 1994
was approximately $378,000, which was offset by $570,000 in rental income.
The properties leased and owned are all generally considered adequate for
the Bank's purposes; however, there is a continuing program of modernization,
expansion, and the occasional replacement of facilities. Maintenance and
repairs are not significant items of expense in the Bank's operations. Items
of a capital nature are added to the property accounts, and, at such time as
they are retired or otherwise disposed of, the cost and accumulated
depreciation are removed from the related accounts and the resulting gains or
losses are reflected in income.
For information concerning Bancorporation's commitments under current
leasing arrangements, see Note 12 to Bancorporation's Consolidated Financial
Statements.
Item 3. LEGAL PROCEEDINGS
Neither Bancorporation nor its subsidiary, the Bank, nor its subsidiaries,
are a party to, nor is any of their property the subject of, any material or
other pending legal proceeding, other than ordinary routine proceedings
incidental to their business.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
PART II
Item 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS.
The information required by this item is incorporated herein by reference
to the section entitled "Market and Dividend Information Regarding Common and
Preferred Stock" on the inside cover of the Registrant's 1994 Annual Report to
Shareholders.
Item 6. SELECTED FINANCIAL DATA
The information required by this item is incorporated herein by reference
to the section entitled "Financial Highlights" on Page 1 of the Registrant's
1994 Annual Report to Shareholders.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
The information required by this item is incorporated herein by reference
to the section entitled "Management's Discussion and Analysis" on pages 3
through 15 of the Registrant's 1994 Annual Report to Shareholders. The
statistical disclosures for bank holding companies required by Guide 3 are
included therein.
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is incorporated herein by reference
to the financial statements and supplementary data set forth on pages 16
through 30 of the Registrant's 1994 Annual Report to Shareholders.
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
5
PART III
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information under the captions "PROPOSAL 2: ELECTION OF DIRECTORS"
and "Executive Officers" on Pages 6 through 9 and Page 11 of Bancorporation's
definitive Proxy Statement dated March 24, 1995, is incorporated herein by
reference.
Item 11. EXECUTIVE COMPENSATION
The information under the captions "Directors' Fees", "Compensation
Committee Interlocks and Insider Participation", "Executive Compensation" and
"Pension Plan" on Pages 9 through 12 of Bancorporation's definitive Proxy
Statement dated March 24, 1995, is incorporated herein by reference.
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information under the captions "PRINCIPAL HOLDERS OF VOTING
SECURITIES" and "OWNERSHIP OF SECURITIES BY MANAGEMENT" on Pages 2 through 6
of Bancorporation's definitive Proxy Statement dated March 24, 1995, is
incorporated herein by reference.
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information in Footnote (4) on Page 9 and under the captions
"Compensation Committee Interlocks and Insider Participation" and
"Transactions with Management" on Pages 10 and 13 of Bancorporation's
definitive Proxy Statement dated March 24, 1995, is incorporated herein by
reference.
6
PART IV
Item 14. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) (1) Financial Statements:
The following consolidated financial statements of First Citizens
Bancorporation of South Carolina, Inc. and subsidiary included in the
Registrant's 1994 Annual Report to Shareholders are incorporated by
reference in Item 8 from pages 16 through 30 of the Annual Report:
Report of Independent Accountants
Consolidated Balance Sheet
Consolidated Statement of Income
Consolidated Statement of Changes in Stockholder's Equity
Consolidated Statement of Cash Flows
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules:
All schedules are omitted as the required information is either
inapplicable or is presented in the consolidated financial statements of
the Registrant and its subsidiary or Notes thereto incorporated herein by
reference.
(3) The following exhibits are either attached hereto or incorporated by
reference:
3.1 Articles of Incorporation of Registrant as amended
3.3 Bylaws of Registrant as amended
10.1 Term Loan Agreement (incorporated herein by reference to Exhibit
10. in the Registrant's 1987 Annual Report on Form 10-K).
10.2* Retirement Agreement between T. E. Brogdon and the Bank
(incorporated herein by reference to Exhibit 10.2 in the Registrant's
1988 Annual Report on Form 10-K).
10.3* Employment Contract between E. Hite Miller, Sr. and the Bank
(incorporated herein by reference to Exhibit 10.3 in the Registrant's
1988 Annual Report on Form 10-K)
13. Registrant's 1994 Annual Report to Shareholders
21. Subsidiaries of Registrant (incorporated herein by reference to
Exhibit 22 in the Registrant's 1990 Annual Report on Form 10-K)
99.** Registrant's Definitive Proxy Statement for the Annual Meeting
dated March 24, 1995.*
*Denotes a management contract or compensatory plan or arrangement in
which an executive officer or director of Registrant participates.
**Pursuant to Rule 12b-23(a)(3), this exhibit is not being refiled.
(b) Reports on Form 8-K:
No reports on Form 8-K were filed during the three month period ended
December 31, 1994.
7
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Dated: March 3, 1995 FIRST CITIZENS BANCORPORATION
OF SOUTH CAROLINA, INC.
(Registrant)
By: /s/ Jay C. Case
Jay C. Case, Treasurer and
Chief Financial Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the date indicated.
Signatures Title Date
/s/ E. Hite Miller, Sr. Chairman and Director 02/13/95
E. Hite Miller, Sr.
/s/ Frank B. Holding Vice Chairman and 02/01/95
Frank B. Holding Director
/s/ Jim B. Apple President and Director 02/13/95
Jim B. Apple
/s/ Jay C. Case Treasurer and Chief 03/02/95
Jay C. Case Financial Officer
/s/ Richard W. Blackmon Director 02/10/95
Richard W. Blackmon
Director
George H. Broadrick
/s/ T. E. Brogdon Director 02/10/95
T. E. Brogdon
/s/ William M. Faulkner, Jr. Director 02/10/95
William M. Faulkner, Jr.
/s/ Laurens W. Floyd Director 02/10/95
Laurens W. Floyd
/s/ Charles S. Haltiwanger Director 02/09/95
Charles S. Haltiwanger
/s/ William E. Hancock, III Director 02/09/95
William E. Hancock, III
/s/ T. J. Harrelson Director 02/09/95
T. J. Harrelson
/s/ Robert B. Haynes Director 02/09/95
Robert B. Haynes
8
Signatures Title Date
/s/ Wycliffe E. Haynes Director 02/08/95
Wycliffe E. Haynes
/s/ Albert R. Heyward, II Director 02/09/95
Albert R. Heyward, II
Director
Carmen P. Holding
/s/ Dan H. Jordan Director 02/10/95
Dan H. Jordan
Director
Thomas W. Lane
/s/ Russell A. McCoy, Jr. Director 02/09/95
Russell A. McCoy, Jr.
/s/ N. Welch Morrisette, Jr. Director 02/09/95
N. Welch Morrisette, Jr.
/s/ E. Perry Palmer Director 02/09/95
E. Perry Palmer
/s/ Dr. J. William Pitts, Sr. Director 02/09/95
Dr. J. William Pitts, Sr.
/s/ Bruce L. Plyler Director 02/10/95
Bruce L. Plyler
/s/ Lloyd H. Rowell Director 02/10/95
Lloyd H. Rowell
Director
William E. Sellers
/s/ Henry F. Sherrill Director 02/09/95
Henry F. Sherrill
/s/ Jack S. Stanley Director 02/10/95
Jack S. Stanley
9
FORM 10-K
EXHIBIT INDEX
Page Number
in
Sequential
Exhibit Number Exhibit Numbering System
3.1 Articles of Incorporation of Registrant
as amended 11 through 17
3.3 Bylaws of Registrant as amended 18 through 26
10.1 Term Loan Agreement between
(incorporated herein by reference to
Exhibit 10. of the Registrant's 1987
Annual Report on Form 10-K)
10.2 Retirement Agreement between T. E. Brogdon
and the Bank (incorporated herein by reference
to Exhibit 10.2 of the Registrant's 1988 Annual
Report on Form 10-K)
10.3 Employment Contract between E. Hite Miller, Sr.
and the Bank (incorporated herein by reference
to Exhibit 10.3 of the Registrant's 1988 Annual
Report on Form 10-K)
13. Registrant's 1994 Annual Report to Shareholders 27 through 66
22. Subsidiaries of Registrant (incorporated herein by
reference to Exhibit 22 of the Registrant's
1990 Annual Report on Form 10-K)
28. Registrant's Definitive Proxy Statement for
the Annual Meeting dated March 24, 1995*
*Pursuant to Rule 12b-23(a) (3), this exhibit is
not being filed.
10