FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended September 30, 2003 Commission File Number 0-11172
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC.
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
SOUTH CAROLINA 57-0738665
- ------------------------------- -------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1230 MAIN STREET
COLUMBIA, SOUTH CAROLINA 29201
- ------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (803) 733-2659
--------------
NO CHANGE
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark whether the Registrant is an accelerated filer (as
defined in Rule 12b-2 of the Act). YES [X] NO [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 31, 2003
----- -------------------------------
VOTING COMMON STOCK, $5.00 PAR VALUE 869,347 SHARES
NON-VOTING COMMON STOCK,$5.00 PAR VALUE 36,409 SHARES
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC. AND SUBSIDIARIES
- -----------------------------------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED (DOLLARS IN THOUSANDS, EXCEPT PAR VALUES)
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
2003 2002 2002
--------------- -------------- ---------------
ASSETS
Cash and due from banks $ 146,660 $ 165,747 $ 146,033
Federal funds sold 87,972 121,626 74,800
--------------- -------------- ---------------
Total cash and cash equivalents 234,632 287,373 220,833
--------------- -------------- ---------------
Investment securities:
Held-to-maturity, at amortized cost (fair value September 30, 2003-$20,344;
December 31, 2002-$35,268; and September 30, 2002-$22,220) 19,795 34,543 21,582
Available-for-sale, at fair value 904,516 881,327 861,418
--------------- -------------- ---------------
Total investment securities 924,311 915,870 883,000
--------------- -------------- ---------------
Gross loans 2,849,352 2,415,396 2,369,770
Less: Allowance for loan losses (50,467) (43,305) (42,285)
--------------- -------------- ---------------
Net loans 2,798,885 2,372,091 2,327,485
--------------- -------------- ---------------
Premises and equipment 127,503 110,472 106,927
Interest receivable 18,055 17,696 18,877
Intangible assets 73,470 45,478 42,611
Other assets 42,452 38,896 39,562
--------------- -------------- ---------------
TOTAL ASSETS $ 4,219,308 $ 3,787,876 $ 3,639,295
=============== ============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits:
Demand $ 675,220 $ 575,632 $ 568,107
Time and savings 2,973,807 2,700,376 2,553,315
--------------- -------------- ---------------
Total deposits 3,649,027 3,276,008 3,121,422
Securities sold under agreements to repurchase 148,043 130,360 146,023
Long-term debt 72,357 52,139 50,963
Other liabilities 20,349 25,785 24,509
--------------- -------------- ---------------
TOTAL LIABILITIES 3,889,776 3,484,292 3,342,917
--------------- -------------- ---------------
Commitments and contingencies -- -- --
--------------- -------------- ---------------
STOCKHOLDERS' EQUITY:
Preferred stock 3,111 3,173 3,173
Non-voting common stock - $5.00 par value, authorized
1,000,000; issued and outstanding September 30, 2003,
December 31, 2002 and September 30, 2002 - 36,409 182 182 182
Voting common stock - $5.00 par value, authorized 2,000,000;
issued and outstanding September 30, 2003 - 869,487;
December 31, 2002 - 874,835; and September 30, 2002 - 875,914 4,347 4,374 4,380
Surplus 65,081 65,081 65,081
Undivided profits 238,798 211,264 203,269
Accumulated other comprehensive income, net of taxes 18,013 19,510 20,293
--------------- -------------- ---------------
TOTAL STOCKHOLDERS' EQUITY 329,532 303,584 296,378
--------------- -------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 4,219,308 $ 3,787,876 $ 3,639,295
=============== ============== ===============
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
Page 2
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC. AND SUBSIDIARIES
- --------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(DOLLARS IN THOUSANDS-EXCEPT PER SHARE DATA)
FOR THE FOR THE
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------------ ------------------
2003 2002 2003 2002
-------- -------- -------- --------
INTEREST INCOME:
Interest and fees on loans $ 43,477 $ 42,103 $126,987 $125,734
Interest on investment securities:
Taxable 5,805 9,362 19,472 29,289
Non-taxable 137 141 411 456
Federal funds sold 299 326 1,510 1,993
-------- -------- -------- --------
Total interest income 49,718 51,932 148,380 157,472
-------- -------- -------- --------
INTEREST EXPENSE:
Interest on deposits 9,865 13,110 32,703 42,490
Interest on short-term borrowings 338 714 1,070 2,399
Interest on long-term debt 1,460 1,050 3,992 3,149
-------- -------- -------- --------
Total interest expense 11,663 14,874 37,765 48,038
-------- -------- -------- --------
Net interest income 38,055 37,058 110,615 109,434
Provision for loan losses 4,436 3,518 7,799 6,979
-------- -------- -------- --------
Net interest income after
provision for loan losses 33,619 33,540 102,816 102,455
-------- -------- -------- --------
NONINTEREST INCOME:
Service charges on deposits 9,179 8,000 26,203 22,674
Commissions and fees from fiduciary activities 864 1,013 2,521 2,664
Fees for other customer services 406 359 1,160 1,098
Mortgage income 4,022 591 6,889 1,939
Bankcard discount and fees 1,735 1,583 4,733 4,311
Insurance premiums 443 513 1,478 1,300
Gain on sale of investment securities 62 228 781 228
Other 374 566 1,445 1,696
-------- -------- -------- --------
Total noninterest income 17,085 12,853 45,210 35,910
-------- -------- -------- --------
NONINTEREST EXPENSE:
Salaries and employee benefits 17,485 16,749 51,874 46,887
Net occupancy expense 2,817 2,301 8,072 6,689
Furniture and equipment expense 1,823 1,534 5,067 4,395
Bankcard processing fees 1,749 1,674 4,933 4,558
Data processing fees 2,932 2,586 8,597 7,745
Amortization expense 2,242 1,973 5,917 6,258
Other 5,614 5,487 16,064 16,132
-------- -------- -------- --------
Total noninterest expense 34,662 32,304 100,524 92,664
-------- -------- -------- --------
Income before income tax expense 16,042 14,089 47,502 45,701
Income tax expense 5,806 4,720 17,006 15,310
-------- -------- -------- --------
NET INCOME $ 10,236 $ 9,369 $ 30,496 $ 30,391
======== ======== ======== ========
NET INCOME PER COMMON SHARE -
BASIC AND DILUTED $ 11.24 $ 10.19 $ 33.41 $ 32.92
WEIGHTED AVERAGE COMMON
SHARES OUTSTANDING-BASIC AND DILUTED 907,075 915,576 909,045 919,321
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
Page 3
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY AND ACCUMULATED OTHER COMPREHENSIVE INCOME - UNAUDITED
(DOLLARS IN THOUSANDS)
NON- ACCUMULATED TOTAL
VOTING VOTING OTHER STOCK-
PREFERRED COMMON COMMON UNDIVIDED COMPREHENSIVE HOLDERS'
STOCK STOCK STOCK SURPLUS PROFITS INCOME/(LOSS) EQUITY
----------- ------- -------- -------- ----------- --------------- ----------
Balance at December 31, 2001 $ 3,201 $ 182 $ 4,448 $ 65,081 $ 178,399 $ 19,604 $ 270,915
Comprehensive income:
Net income 30,391 30,391
Change in unrealized gain
on investment securities
available-for-sale, net of
taxes of $371 689 689
----------
Total comprehensive income 31,080
----------
Reacquired preferred stock (28) (3) (31)
Reacquired voting common stock (68) (4,722) (4,790)
Common stock dividends (673) (673)
Preferred stock dividends (123) (123)
----------- ------- -------- -------- ----------- --------------- ----------
Balance at September 30, 2002 3,173 182 4,380 65,081 203,269 20,293 296,378
Comprehensive income:
Net income 8,657 8,657
Change in unrealized gain
on investment securities
available-for-sale, net of
benefit of $422 (783) (783)
----------
Total comprehensive income 7,874
----------
Reacquired preferred stock -
Reacquired voting common stock (6) (396) (402)
Common stock dividends (224) (224)
Preferred stock dividends (42) (42)
----------- ------- -------- -------- ----------- --------------- ----------
Balance at December 31, 2002 3,173 182 4,374 65,081 211,264 19,510 303,584
Comprehensive income:
Net income 30,496 30,496
Change in unrealized gain
on investment securities
available-for-sale, net of
benefit of $806 (1,497) (1,497)
----------
Total comprehensive income 28,999
----------
Reacquired preferred stock (62) 21 (41)
Reacquired voting common stock (27) (2,119) (2,146)
Common stock dividends (742) (742)
Preferred stock dividends (122) (122)
----------- ------- -------- -------- ----------- --------------- ----------
Balance at September 30, 2003 $ 3,111 $ 182 $ 4,347 $ 65,081 $ 238,798 $ 18,013 $ 329,532
=========== ======= ======== ======== =========== =============== ==========
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
Page 4
FIRST CITIZENS BANCORPORATION OF SOUTH CAROLINA, INC. AND SUBSIDIARIES
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CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED (DOLLARS IN THOUSANDS)
FOR THE
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
2003 2002
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 30,496 $ 30,391
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses 7,799 6,979
Depreciation and amortization 14,574 13,848
Net accretion of discount on
investment securities 348 743
Deferred income tax benefit (3,163) (528)
(Gain) loss on sale of premises and equipment (85) 53
(Increase) decrease in accrued interest receivable (359) 1,134
Decrease in accrued interest payable (3,072) (3,940)
Origination of mortgage loans held-for-resale (418,080) (210,427)
Proceeds from sales of mortgage loans held-for-resale 426,013 242,294
Gain on sales of mortgage loans held-for-resale (5,916) (1,695)
Gain on sale of investment securities (781) (228)
Decrease (increase) in other assets 6,376 (10,908)
(Decrease) increase in other liabilities (4,037) 4,624
---------- ----------
NET CASH PROVIDED BY OPERATING ACTIVITIES 50,113 72,340
========== ==========
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans (250,470) (144,840)
Calls, maturities and prepayments of investment securities, held-to-maturity 24,171 3,231
Purchases of investment securities, held-to-maturity (5,520) (2,247)
Calls, maturities and prepayments of investment securities, available-for-sale 370,035 357,716
Purchases of investment securities, available-for-sale (380,771) (341,400)
Proceeds from sales of premises and equipment 287 90
Purchases of premises and equipment (20,174) (15,221)
(Increase) decrease in other real estate owned (1,300) 454
(Increase) decrease in intangible assets (32,700) 1,961
Purchase of institution, net of cash acquired 89,155 -
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES (207,287) (140,256)
========== ==========
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 89,801 106,468
Increase (decrease) in securities sold under agreements
to repurchase 17,683 (68,000)
Cash dividends paid (864) (796)
Cash paid to reacquire preferred stock (41) (31)
Cash paid to reacquire common stock (2,146) (4,790)
---------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 104,433 32,851
========== ==========
NET INCREASE IN CASH AND CASH EQUIVALENTS (52,741) (35,065)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 287,373 255,898
---------- ----------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 234,632 $ 220,833
========== ==========
SEE ACCOMPANYING NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS.
Page 5
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies of First Citizens
Bancorporation of South Carolina, Inc. ("Bancorporation") is set forth in Note 1
to the Consolidated Financial Statements in Bancorporation's Annual Report on
Form 10-K for 2002. The significant accounting policies used during the current
quarter are unchanged from those disclosed in the 2002 Annual Report.
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with accounting principles generally accepted in the United States
for interim financial preparation. In the opinion of management, all material
adjustments necessary to present fairly the financial position of Bancorporation
as and for each of the periods presented, and all adjustments comprising normal
recurring accruals necessary for a fair presentation of the consolidated
financial statements have been recorded. Certain amounts in prior periods have
been reclassified to conform to the 2003 presentation. Such reclassifications
had no effect on shareholders' equity or net income.
NEW ACCOUNTING STANDARDS
In June 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain Financial
Institutions, an amendment of FASB Statements No. 72 and 144 and Interpretation
No. 9." Except for transactions between two or more mutual enterprises, this
Statement removes financial institutions from the scope of both Statement No. 72
and Interpretation 9 and requires that those transactions be accounted for in
accordance with SFAS No. 141 and 142. Additionally, this Statement amends SFAS
No. 144 to include in its scope long-term customer-relationship intangible
assets of financial institutions. Bancorporation adopted the Statement effective
October 1, 2002, and it did not have a material impact on Bancorporation's
financial position or results of operations.
In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others." The Interpretation elaborates on the
disclosures to be made by a guarantor in its financial statements under certain
guarantees that it has issued. It also clarifies that a guarantor is required to
recognize, at the inception of a guarantee, a liability for the fair value of
the obligation undertaken in issuing the guarantee. The disclosure requirements
of the Interpretation are effective and were adopted by Bancorporation as of
December 31, 2002, and require disclosure of the nature of the guarantee, the
maximum potential amount of future payments that the guarantor could be required
to make under the guarantee, and the current amount of the liability, if any,
for the guarantor's obligations under the guarantee. The recognition
requirements of the interpretation were effective beginning January 1, 2003. The
implementation of the recognition requirements of the Interpretation did not
have a significant effect on Bancorporation's consolidated financial position or
consolidated results of operations.
In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities." FIN No. 46 is an Interpretation of Accounting Research Bulletin No.
51, "Consolidated Financial Statements" and addresses consolidation by business
enterprises of variable interest entities ("VIEs"). The Interpretation is based
on the concept that an enterprise controlling another entity through interests
other than voting interests should consolidate the controlled entity. Business
enterprises are required under the provisions of the Interpretation to identify
VIEs, based on specified characteristics, and then determine whether they should
be consolidated. An enterprise that holds a majority of the variable interests
is considered the primary beneficiary which would consolidate the VIE. The
primary beneficiary of a VIE is also required to include various disclosures in
interim and annual financial statements. Additionally, an enterprise that holds
a significant variable interest in a VIE, but that is not the primary
beneficiary, is also required to make certain disclosures.
The Interpretation was effective immediately for all enterprises with variable
interests in VIEs created after January 31, 2003. A public entity with variable
interests in a VIE created before February 1, 2003 was required to apply the
provisions of this Interpretation to that entity by the end of the first interim
or annual reporting period beginning after June 15, 2003. However, on October 9,
2003, the FASB delayed the effective date of this Interpretation for public
entities until the first interim or annual reporting period beginning after
December 15, 2003 so long as the VIE was created before February 1, 2003 and the
public entity has not issued financial statements reporting that VIE in
accordance with Interpretation 46, other than in the disclosures required by
paragraph 26 of the Interpretation. Management has determined that
Bancorporation meets these conditions and will defer the adoption of FIN 46
until December 31, 2003. Management is currently continuing to evaluate
Bancorporation's involvement with VIEs and potential VIEs or transactions,
particularly with limited liability partnerships in low-income housing
developments, and trust preferred securities structures. Depending on the
ultimate applicability of the Interpretation on these entities or transactions,
the most significant effect of the Interpretation is expected to be on
Bancorporation's statement of condition, as the potential consolidation of
additional entities would increase Bancorporation's consolidated assets and
liabilities and affect its capital ratios. Management believes that the ultimate
implementation of FIN 46 will not have a significant impact on Bancorporation's
results of operations. Any consolidation of
Page 6
previously unconsolidated entities as a result of FIN 46 would represent an
accounting change; however, it would not affect Bancorporation's legal rights or
obligations with respect to these entities. Interpretive guidance relating to
FIN 46 is continuing to evolve and management will continue to assess various
aspects of consolidations and VIE accounting as additional guidance becomes
available.
CRITICAL ACCOUNTING POLICIES
The accounting and reporting policies of Bancorporation and its subsidiaries are
in accordance with accounting principles generally accepted in the United States
and conform to general practices within the banking industry. Bancorporation's
financial position and results of operations are affected by management's
application of accounting policies, including judgments made to arrive at the
carrying value of assets and liabilities and amounts reported for revenues,
expenses and related disclosures including mortgage servicing rights and pension
accrual. Different assumptions in the application of these policies could result
in material changes in Bancorporation's consolidated financial position and/or
consolidated results of operations. The more critical accounting and reporting
policies include Bancorporation's accounting for securities, loans, the
allowance for loan losses, mergers and acquisitions and income taxes.
Bancorporation's accounting policies are fundamental to understanding
Management's Discussion and Analysis of Financial Condition and Results of
Operations. Accordingly, Bancorporation's significant accounting policies are
discussed in detail in Bancorporation's 2002 Annual Report on Form 10-K filed
with the Securities and Exchange Commission.
FORWARD-LOOKING STATEMENTS
This discussion may contain statements that could be deemed forward-looking
statements within the meaning of Section 21E of the Securities Exchange Act of
1934 and the Private Securities Litigation Reform Act, which statements are
inherently subject to risks and uncertainties. Forward-looking statements are
statements that include projections, predictions, expectations or beliefs about
future events or results, or otherwise are not statements of historical fact.
Such statements are often characterized by the use of the qualifying words (and
their derivatives) such as "expect," "believe," "estimate," "plan," "project,"
"anticipate," or other statements concerning opinions or judgments of
Bancorporation and its management about future events. Factors that could
influence the accuracy of such forward-looking statements include, but are not
limited to, the financial success or changing strategies of Bancorporations'
customers, actions of government regulators, the level of market interest rates,
and general economic conditions.
GOODWILL AND OTHER INTANGIBLES (DOLLARS IN THOUSANDS)
In accordance with SFAS No.142, no goodwill amortization was recorded for the
quarter ended September 30, 2003. At September 30, 2003, the total carrying
amount of intangible assets not subject to amortization was $25,913. The
discontinuation of amortization of goodwill has had an immaterial effect on
Bancorporation's consolidated financial statements.
The following table relates to the carrying values of core deposit intangibles
recorded in Bancorporation's consolidated financial statements, all of which are
being amortized:
AS OF AS OF AS OF
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30
2003 2002 2002
--------------- ------------- --------------
CORE DEPOSIT INTANGIBLES:
Gross carrying value $ 117,166 $ 105,669 $ 102,498
Accumulated amortization (75,953) (70,034) (68,129)
--------------- -------------- --------------
Balance at end of period $ 41,213 $ 35,635 $ 34,369
=============== ============== ==============
Amortization expense on core deposit intangibles was $5,917 and $6,258 for the
nine months ended September 30, 2003 and 2002, respectively. Amortization
expense on core deposit intangibles was $2,242 and $1,973 for the quarters ended
September 30, 2003 and 2002, respectively.
Bancorporation projects the following aggregate amortization expense:
2003 $8,327
2004 $9,137
2005 $7,682
2006 $6,118
2007 $5,303
Page 7
Mortgage servicing rights as of September 30, 2003, December 31, 2002 and
September 30, 2002 were $6,344, $5,365, and $5,026, respectively. The
amortization expense related to mortgage servicing rights, included as a
reduction of mortgage income in the Consolidated Statements of Income, was
$1,588 and $1,942 for the nine months ended September 30, 2003 and 2002,
respectively. Amortization expense includes $255 and $1,193 for impairment of
mortgage servicing rights for the nine months ended September 30, 2003 and 2002,
respectively. During the quarter ended September 30, 2003, $1,546 of previously
recorded mortgage servicing rights impairment was recaptured due to the
increasing interest rate environment surrounding mortgage loans. The recapture
had the effect of reducing amortization expense recorded on mortgage servicing
rights during the quarter, and thereby increased mortgage income as included in
the Consolidated Statements of Income. Total amortization expense, including
the $1,546 recapture described above, was negative $1,078. The difference
between the $1,546 recapture and the negative $1,078 of amortization expense
represents normal amortization of mortgage servicing rights recorded during the
quarter ended September 30, 2003. The amortization expense related to mortgage
servicing rights, included as a reduction of mortgage income in the Consolidated
Statements of Income, was $1,101 which includes $821 for impairment of mortgage
servicing rights for the quarter ended September 30, 2002.
MERGERS AND ACQUISITIONS (DOLLARS IN THOUSANDS)
On September 26, 2003, First Citizens Bank and Trust Company of South Carolina
("First Citizens") completed its acquisition of four branches from an unrelated
financial institution with total deposits of $69,616.
SUBSEQUENT EVENTS
On October 29, 2003, Bancorporation's Board of Directors declared a $.35
dividend on common stock to shareholders of record on November 14, 2003, payable
November 25, 2003.
Page 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION
RESULTS OF OPERATIONS
SUMMARY (DOLLARS IN THOUSANDS)
Net income for the quarter and nine months ended September 30, 2003 totaled
$10,236, or $11.24 per common share and $30,496, or $33.41 per common share,
respectively. Net income for the quarter and nine months ended September 30,
2002 totaled $9,369, or $10.19 per common share and $30,391, or $32.92 per
common share, respectively.
The primary factor affecting the increase in net income for the quarter ended
September 30, 2003 was a $4,232 or 32.93% increase in noninterest income,
partially offset by an increase in noninterest expense of $2,358 or 7.30%. See
detailed discussion of components under the "Noninterest income and expense"
section below.
The primary factor affecting the increase in net income for the nine months
ended September 30, 2003 was a $9,300 or 25.90% increase in noninterest income,
partially offset by a $7,860 or 8.48% increase in noninterest expense. See
detailed discussion of components under the "Noninterest income and expense"
section below.
Return on average stockholders' equity and average assets are key measures of
earnings performance. Return on average stockholders' equity for the quarters
ended September 30, 2003 and September 30, 2002 was 12.49% and 12.57%,
respectively. Return on assets decreased from 1.02% for the quarter ended
September 30, 2002 to 0.97% for the quarter ended September 30, 2003.
Return on average stockholders' equity for the nine months ended September 30,
2003 and September 30, 2002 was 12.84% and 14.24%, respectively. Return on
assets decreased from 1.11% for the nine months ended September 30, 2002 to
1.01% for the nine months ended September 30, 2003.
The decrease in return on average assets for both the quarter and nine months
ended September 30, 2003 was primarily due to a decline in net interest margin
to average assets. See detailed discussion of net interest income under the
"Net interest income" section below.
Individual components of net income are discussed further in the following
sections.
Page 9
Table 1 provides summary information on selected ratios, average and
year-to-date balances.
TABLE 1: SELECTED SUMMARY INFORMATION (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
AS OF AND FOR THE AS OF AND FOR THE
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30
------------------------ ------------------------
SELECTED RATIOS: 2003 2002 2003 2002
----------- ----------- ----------- -----------
Return on average assets 0.97% 1.02% 1.01% 1.11%
Return on average stockholders' equity 12.49% 12.57% 12.84% 14.24%
Return on average common stockholders' equity 12.61% 12.70% 12.96% 14.40%
Yield on average interest-earning assets (tax
equivalent) 3.98% 4.42% 4.01% 4.38%
Average loans to average deposits 77.71% 75.27% 75.06% 73.54%
Nonperforming assets to total loans .34% .30% .34% .30%
Allowance for loan losses to total loans 1.77% 1.78% 1.77% 1.78%
Allowance for loan losses to nonperforming assets N/A N/A 5.28x 5.99x
Average stockholders' equity to average total assets 7.80% 8.10% 7.85% 7.79%
Total stockholders' equity to total assets 7.81% 8.14% 7.81% 8.14%
Dividends paid per common share $ 0.35 $ 0.25 $ 0.85 $ 0.75
Total risk-based capital ratio 11.91% 12.89% 11.91% 12.89%
Tier I risk-based capital ratio 10.06% 11.63% 10.06% 11.63%
Tier I leverage ratio 7.18% 7.95% 7.18% 7.95%
SELECTED AVERAGE BALANCES:
Total assets $4,167,228 $3,651,191 $4,047,712 $3,662,395
Interest-earning assets 3,821,169 3,354,754 3,715,408 3,363,513
Investment securities 916,595 946,242 925,213 933,552
Loans 2,783,180 2,332,854 2,614,214 2,274,560
Deposits 3,581,548 3,099,334 3,482,619 3,092,917
Noninterest-bearing deposits 655,396 550,451 621,533 531,898
Interest-bearing deposits 2,926,152 2,548,883 2,861,086 2,561,019
Interest-bearing liabilities 3,160,403 2,776,401 3,080,995 2,817,201
Stockholders' equity 325,128 295,755 317,638 285,429
SELECTED YEAR-TO-DATE BALANCES:
Total assets $4,219,308 $3,639,295 $4,219,308 $3,639,295
Interest-earning assets 3,861,635 3,327,570 3,861,635 3,327,570
Investment securities 924,311 883,000 924,311 883,000
Loans 2,849,352 2,369,770 2,849,352 2,369,770
Deposits 3,649,027 3,121,422 3,649,027 3,121,422
Noninterest-bearing deposits 675,220 568,107 675,220 568,107
Interest-bearing deposits 2,973,807 2,553,315 2,973,807 2,553,315
Interest-bearing liabilities 3,194,207 2,750,301 3,194,207 2,750,301
Stockholders' equity 329,532 296,378 329,532 296,378
Page 10
NET INTEREST INCOME (DOLLARS IN THOUSANDS)
Net interest income represents the principal source of earnings for
Bancorporation. Tables 2 and 3 compare average balance sheet items and analyze
net interest income on a tax equivalent basis for the quarters and nine months
ended September 30, 2003 and 2002.
TABLE 2: COMPARATIVE AVERAGE BALANCE SHEETS AND TAXABLE EQUIVALENT RATE/VOLUME VARIANCES (DOLLARS IN THOUSANDS)
AS OF AND FOR THE QUARTER ENDED SEPTEMBER 30,
---------------------------------------------
INTEREST YIELD/ CHANGE DUE TO (2)
AVERAGE BALANCE INCOME/EXPENSE (1) RATE YIELD NET
--------------- ------------------ ------ ---------------- INCREASE
2003 2002 2003 2002 2003 2002 /RATE VOLUME (DECREASE)
---------- ---------- ------ ------- ---- ---- ------- ------- ----------
INTEREST-EARNING ASSETS:
Loans (3) $2,783,180 $2,332,854 $43,649 $42,307 6.22% 7.19% $(5,661) $ 7,003 $ 1,342
Investment securities:
Taxable 904,668 934,594 5,805 9,362 2.55 3.97 (3,366) (191) (3,557)
Non-taxable 11,927 11,648 210 218 7.04 7.49 (13) 5 (8)
Federal funds sold 121,394 75,658 299 326 0.98 1.71 (139) 112 (27)
---------- ---------- ------- ------- ----- ----- -------- -------- -----------
Total interest-earning assets 3,821,169 3,354,754 49,963 52,213 5.19 6.18 (9,179) 6,929 (2,250)
---------- ---------- ------- ------- -------- -------- -----------
NONINTEREST-EARNING ASSETS:
Cash and due from banks 143,127 133,714
Premises and equipment 125,908 105,191
Other, less allowance for loan losses 77,024 57,532
---------- ----------
Total noninterest-earning assets 346,059 296,437
---------- ----------
TOTAL ASSETS $4,167,228 $3,651,191
========== ==========
INTEREST-BEARING LIABILITIES:
Deposits $2,926,152 $2,548,883 $ 9,865 $13,110 1.34% 2.04% $(4,509) $ 1,264 $ (3,245)
Securities sold under
agreements to repurchase 161,894 176,555 338 714 0.83 1.60 (346) (30) (376)
Long-term debt 72,357 50,963 1,460 1,050 8.07 8.24 (22) 432 410
---------- ---------- ------- ------- ----- ----- -------- -------- -----------
Total interest-bearing liabilities 3,160,403 2,776,401 11,663 14,874 1.47 2.13 (4,877) 1,666 (3,211)
---------- ---------- ------- ------- ----- ----- -------- -------- -----------
NONINTEREST-BEARING LIABILITIES:
Demand deposits 655,396 550,451
Other liabilities 26,301 28,584
---------- ----------
Total noninterest-bearing liabilities 681,697 579,035
---------- ----------
TOTAL LIABILITIES 3,842,100 3,355,436
---------- ----------
Stockholders' equity 325,128 295,755
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $4,167,228 $3,651,191
========== ==========
NET INTEREST SPREAD 3.72% 4.05%
===== =====
NET INTEREST MARGIN: $38,300 $37,339 $(4,302) $ 5,263 $ 961
======= ======= ======== ======== ===========
TO AVERAGE ASSETS 3.65% 4.06%
===== =====
TO AVERAGE INTEREST-EARNING
ASSETS 3.98% 4.42%
===== =====
(1) Non-taxable interest income has been adjusted to a taxable equivalent rate, using the federal income tax rate of 35%.
(2) Yield/rate-volume changes have been allocated to each category based on the percentage of each to the total change.
(3) Nonaccrual loans are included in the average loan balances. Interest income on nonaccrual loans is generally recognized
on a cash basis.
Page 11
TABLE 3: COMPARATIVE AVERAGE BALANCE SHEETS AND TAXABLE EQUIVALENT RATE/VOLUME VARIANCES (DOLLARS IN THOUSANDS)
AS OF AND FOR THE NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------------------------
INTEREST YIELD/ CHANGE DUE TO (2)
AVERAGE BALANCE INCOME/EXPENSE (1) RATE YIELD NET
--------------- ------------------ ---- ----------------- INCREASE
2003 2002 2003 2002 2003 2002 /RATE VOLUME (DECREASE)
---------- ---------- -------- -------- ----- ----- --------- -------- -----------
INTEREST-EARNING ASSETS:
Loans (3) $2,614,214 $2,274,560 $127,528 $126,362 6.52% 7.43% $(15,443) $16,609 $ 1,166
Investment securities:
Taxable 912,744 921,047 19,472 29,289 2.85 4.25 (9,640) (177) (9,817)
Non-taxable 12,469 12,505 633 703 6.77 7.50 (68) (2) (70)
Federal funds sold 175,981 155,401 1,510 1,993 1.15 1.71 (661) 178 (483)
---------- ---------- -------- -------- ----- ----- --------- -------- -----------
Total interest-earning assets 3,715,408 3,363,513 149,143 158,347 5.37 6.29 (25,812) 16,608 (9,204)
---------- ---------- -------- -------- --------- -------- -----------
NONINTEREST-EARNING ASSETS:
Cash and due from banks 142,216 139,060
Premises and equipment 118,534 102,290
Other, less allowance for loan losses 71,554 57,532
---------- ----------
Total noninterest-earning assets 332,304 298,882
---------- ----------
TOTAL ASSETS $4,047,712 $3,662,395
========== ==========
INTEREST-BEARING LIABILITIES:
Deposits $2,861,086 $2,561,019 $ 32,703 $ 42,490 1.53% 2.22% $(13,230) $ 3,443 $ (9,787)
Securities sold under
agreements to repurchase 153,890 205,219 1,070 2,399 0.93 1.56 (971) (358) (1,329)
Long-term debt 66,019 50,963 3,992 3,149 8.06 8.24 (67) 910 843
---------- ---------- -------- -------- ----- ----- --------- -------- -----------
Total interest-bearing liabilities 3,080,995 2,817,201 37,765 48,038 1.64 2.28 (14,268) 3,995 (10,273)
---------- ---------- -------- -------- ----- ----- --------- -------- -----------
NONINTEREST-BEARING LIABILITIES:
Demand deposits 621,533 531,898
Other liabilities 27,546 27,867
---------- ----------
Total noninterest-bearing liabilities 649,079 559,765
---------- ----------
TOTAL LIABILITIES 3,730,074 3,376,966
---------- ----------
Stockholders' equity 317,638 285,429
---------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $4,047,712 $3,662,395
========== ==========
NET INTEREST SPREAD 3.73% 4.01%
===== =====
NET INTEREST MARGIN: $111,378 $110,309 $(11,544) $12,613 $ 1,069
======== ======== ========= ======== ===========
TO AVERAGE ASSETS 3.68% 4.03%
===== =====
TO AVERAGE INTEREST-EARNING
ASSETS 4.01% 4.38%
===== =====
(1) Non-taxable interest income has been adjusted to a taxable equivalent rate, using the federal income tax rate of 35%.
(2) Yield/rate-volume changes have been allocated to each category based on the percentage of each to the total change.
(3) Nonaccrual loans are included in the average loan balances. Interest
income on nonaccrual loans is generally recognized on a cash basis.
Page 12
NET INTEREST INCOME (CONTINUED)
CURRENT QUARTER COMPARED TO PRIOR YEAR QUARTER
- ----------------------------------------------------
Net interest income on a tax equivalent basis increased $961 or 2.57% for the
quarter ended September 30, 2003, over the comparable period in 2002. Net
interest margin to average assets decreased from 4.06% for the quarter ended
September 30, 2002 to 3.65% for the quarter ended September 30, 2003. This is
primarily attributable to a 44 basis point decrease in the net interest margin
to average interest-earning assets.
Net interest margin to average interest-earning assets decreased from 4.42% for
the quarter ended September 30, 2002 to 3.98% for the quarter ended September
30, 2003. This was primarily attributable to a decrease in the net interest
spread from 4.05% for the quarter ended September 30, 2002 to 3.72% for the
quarter ended September 30, 2003. The decrease in the net interest spread was
due to yields on interest-earning assets declining more than the cost of
interest-bearing liabilities. The yield on interest-earning assets decreased
from 6.18% for the quarter ended September 30, 2002 to 5.19% for the quarter
ended September 30, 2003, or by 99 basis points, while the cost of
interest-bearing liabilities decreased from 2.13% to 1.47%, or by 66 basis
points. The decrease in the yield on interest-earning assets was due to a
decrease in the yields on loans, investment securities and federal funds sold.
The decrease in the cost of interest-bearing liabilities was primarily due to
decreases in the rates paid on interest-bearing deposits and securities sold
under agreements to repurchase. The decrease in yields on interest-earning
assets has occurred as rates have declined significantly on new loans added to
replace those that were refinanced or prepaid, and on investments that have
matured or have been called. The decrease in rates paid on interest-bearing
deposits is primarily due to a decline in rates paid on new and matured time
deposits.
CURRENT YEAR-TO-DATE PERIOD COMPARED TO PRIOR YEAR-TO-DATE PERIOD
- ------------------------------------------------------------------------
Net interest income on a tax equivalent basis increased $1,069 or .97% for the
nine months ended September 30, 2003, over the comparable period in 2002. Net
interest margin to average assets decreased from 4.03% for the nine months ended
September 30, 2002 to 3.68% for the nine months ended September 30, 2003. This
is primarily attributable to a 37 basis point decrease in the net interest
margin to average interest-earning assets.
Net interest margin to average interest-earning assets decreased from 4.38% for
the nine months ended September 30, 2002 to 4.01% for the nine months ended
September 30, 2003. This was primarily attributable to a decrease in the net
interest spread from 4.01% for the nine months ended September 30, 2002 to 3.73%
for the nine months ended September 30, 2003. The decrease in the net interest
spread was due to yields on interest-earning assets declining more than the cost
of interest-bearing liabilities. The yield on interest-earning assets decreased
from 6.29% for the nine months ended September 30, 2002 to 5.37% for the nine
months ended September 30, 2003, or by 92 basis points, while the cost of
interest-bearing liabilities decreased from 2.28% to 1.64%, or by 64 basis
points. The decrease in the yield on interest-earning assets was due to a
decrease in the yields on loans, investment securities and federal funds sold.
The decrease in the cost of interest-bearing liabilities was primarily due to
decreases in the rates paid on interest-bearing deposits and securities sold
under agreements to repurchase. The decrease in yields on interest-earning
assets has occurred as rates have declined significantly on new loans and
investments added to replace those that were refinanced or prepaid, and on
investments that have matured or have been called. The decrease in rates paid
on interest-bearing deposits is primarily due to a decline in rates paid on new
and matured time deposits.
NONINTEREST INCOME AND EXPENSE (DOLLARS IN THOUSANDS)
CURRENT QUARTER COMPARED TO PRIOR YEAR QUARTER
- ----------------------------------------------------
Noninterest income increased by $4,232 or 32.93% for the quarter ended September
30, 2003, over the comparable period in 2002 primarily due to increases in
service charges on deposits and mortgage income. The increase in service charges
on deposits was primarily due to an increase in non-sufficient funds ("NSF")
fees over the comparable period in 2002, which account for $769 of the increase.
Mortgage income increased by $3,431, or 580.54%, due to $1,133 and $2,298
increases in the gain on sale of mortgage loans and servicing income,
respectively. Servicing income increased primarily due to the $1,546 recapture
during the quarter ended September 30, 2003 of mortgage servicing rights
impairment discussed under the caption "Goodwill and other intangibles" section
in Item 1 above, compared to an $821 impairment charge for the quarter ended
September 30, 2002. The recapture of mortgage servicing rights impairment
recorded in the current quarter was the result of increased mortgage rates since
the second quarter 2003.
Page 13
Noninterest expense increased by $2,358, or 7.30%, for the quarter ended
September 30, 2003 over the comparable period in 2002 primarily due to increases
in salaries and employee benefits, net occupancy expense and data processing
expense. Salaries and employee benefits increased by $736, or 4.39%, during the
quarter primarily due to an increase in the number of employees and merit
increases. New employees have been added due to acquisitions and continued
expansion of lines of business. Net occupancy expense increased by $516, or
22.43%. The increase was due to $530 additional depreciation expense related to
branches purchased after September 30, 2002 and on-going growth. Data
processing expense increased by $346, or 13.38%, during the quarter primarily
due to increased transaction volume related to on-going growth of
Bancorporation.
CURRENT YEAR-TO-DATE PERIOD COMPARED TO PRIOR YEAR-TO-DATE PERIOD
- ------------------------------------------------------------------------
Noninterest income increased by $9,300 or 25.90% for the nine months ended
September 30, 2003, over the comparable period in 2002 primarily due to
increases in service charges on deposits and mortgage income. The increase in
service charges on deposits was primarily due to an increase in NSF fees over
the comparable period in 2002, which accounted for $2,116 of the increase.
Mortgage income increased by $4,950, or 255.29%, due to a $4,221 and $729
increase in the gain on sale of mortgage loans and servicing income,
respectively. See discussion of mortgage servicing rights in the previous
section.
Noninterest expense increased by $7,860, or 8.48%, for the nine months ended
September 30, 2003 over the comparable period in 2002 primarily due to increases
in salaries and employee benefits, net occupancy expense and data processing
expense. Salaries and employee benefits increased by $4,987, or 10.64%, during
the nine months ended September 30, 2003 primarily due to an increase in the
number of employees and merit increases. New employees have been added due to
acquisitions and continued expansion of lines of business. Net occupancy
expense increased by $1,383, or 20.68%. The increase was due to $1,313
additional depreciation expense related to branches purchased after September
30, 2002 and on-going growth. Data processing expense increased $852, or 11.00%,
during the nine months ended primarily due to increased transaction volume
related to on-going growth realized by Bancorporation.
INCOME TAXES (DOLLARS IN THOUSANDS)
Total income tax expense increased by $1,086 or 23.01% for the quarter ended
September 30, 2003 over the comparable period in 2002. Total income tax expense
increased by $1,696 or 11.08% for the nine months ended September 30, 2003 over
the comparable period in 2002. The effective tax rate was 36.19% and 33.50%
for the quarters ended September 30, 2003 and September 30, 2002, respectively.
The effective tax rate was 35.80% and 33.50% for the nine months ended September
30, 2003 and September 30, 2002, respectively.
Page 14
FINANCIAL CONDITION
INVESTMENT SECURITIES (DOLLARS IN THOUSANDS)
As of September 30, 2003, the investment portfolio totaled $924,311, compared to
$883,000 at September 30, 2002. Bancorporation continues to invest primarily in
short-term U.S. government obligations and agency securities to minimize credit,
interest rate and liquidity risks. The investment portfolio consisted of 92.58%
and 94.16% U.S. government and agency securities as of September 30, 2003 and
September 30, 2002, respectively. The remainder of the investment portfolio
consists of municipal bonds, corporate bonds, and equity securities.
LOANS AND THE ALLOWANCE FOR LOAN LOSSES (DOLLARS IN THOUSANDS)
As of September 30, 2003, loans totaled $2,849,352, compared to $2,369,770 at
September 30, 2002, an increase of $479,582, or 20.24%. Of the increase,
$183,783 was due to the acquisition of First Banks, Inc. ("FBI") on April 1,
2003. The remainder was due to internal loan growth. The composition of the
loan portfolio has not shifted significantly since September 30, 2002. Internal
loan growth was funded primarily through core deposits and short-term borrowed
funds.
It is the policy of Bancorporation to maintain an allowance for loan losses to
absorb potential losses inherent in the loan portfolio. Management believes
that the provision taken during the quarter and nine months ended September 30,
2003 was appropriate to provide an allowance for loan losses which considers the
past experience of charge-offs, the level of past due and nonaccrual loans, the
size and mix of the loan portfolio, credit classifications and general economic
conditions in Bancorporation's market areas.
An analysis of activity in the allowance for loan losses as of September 30,
2003 and 2002 is presented below. The allowance for loan losses is maintained
through charges to the provision for loan losses. Loan charge-offs and
recoveries are charged or credited directly to the allowance for loan losses.
AS OF AND FOR THE AS OF AND FOR THE
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
------------- -------------
ALLOWANCE FOR LOAN LOSSES: 2003 2002 2003 2002
-------- -------- -------- --------
Balance at beginning of period $48,120 $40,740 $43,305 $40,259
Addition related to acquisitions -- -- 3,776 --
Provision for loan losses 4,436 3,518 7,799 6,979
-------- -------- -------- --------
Charge-offs (2,532) (2,322) (5,789) (6,121)
Recoveries 443 349 1,376 1,168
-------- -------- -------- --------
Net charge-offs (2,089) (1,973) (4,413) (4,953)
-------- -------- -------- --------
Balance at end of period $50,467 $42,285 $50,467 $42,285
-------- -------- -------- --------
Nonperforming assets $ 9,564 $ 7,062 $ 9,564 $ 7,062
Annualized net charge-offs to:
Average loans .30% .34% .23% .29%
Loans at end of period .29% .33% .21% .28%
Allowance for loan losses 16.56% 18.66% 11.66% 15.62%
FUNDING SOURCES (DOLLARS IN THOUSANDS)
Bancorporation's primary source of funds is its deposit base. Total deposits
increased $527,605 or by 16.90% from September 30, 2002 to September 30, 2003.
Of the increase, $208,969 was due to the acquisition of FBI on April 1, 2003.
The remainder was due to internal deposit growth. Average deposits were
$3,482,619 and $3,092,917 at September 30, 2003 and September 30, 2002,
respectively.
Short-term borrowings in the form of securities sold under agreements to
repurchase are another source of funds. Short-term borrowings increased $2,020
or by 1.38% from September 30, 2002 to September 30, 2003. Average short-term
borrowings were $153,890 and $205,219 at September 30, 2003 and September 30,
2002, respectively.
Page 15
CAPITAL RESOURCES (DOLLARS IN THOUSANDS)
Regulatory agencies define capital as Tier I, consisting of stockholders' equity
less ineligible intangible assets, and Total Capital, consisting of Tier I
Capital plus the allowable portion of the allowance for loan losses and certain
long-term debt.
Regulatory guidelines require a minimum ratio of total capital to risk weighted
assets of 8 percent, with at least 50 percent consisting of tangible common
stockholders' equity and a minimum Tier I leverage ratio of 3 percent. Banks
which meet or exceed a Tier I capital to risk weighted assets ratio of 6
percent, a total capital to risk weighted assets ratio of 10 percent, and a Tier
I capital to average assets leverage ratio of 5 percent are considered
well-capitalized by regulatory standards. The following table details
Bancorporation's capital ratios at September 30, 2003 and 2002.
SEPTEMBER 30,
--------------
CAPITAL RATIOS 2003 2002
------ ------
Tier I capital to average assets ratio 7.18% 7.95%
Total capital to risk weighted assets 11.91% 12.89%
Tier I 10.06% 11.63%
Tier II 1.85% 1.26%
The Board of Directors each year authorizes management to repurchase outstanding
shares of its capital stock. Purchases are subject to various conditions,
including price and volume limitations (including, in the case of repurchases of
Bancorporation's voting common stock, an annual limit of up to 5% of outstanding
shares), and compliance with applicable South Carolina law. Pursuant to similar
authority during the nine months ended September 30, 2003 and 2002,
Bancorporation repurchased an aggregate of 5,348 and 13,626 shares,
respectively, of its outstanding voting common stock, for an aggregate price of
$2,146 and $4,790, respectively. With respect to other classes of
Bancorporation's capital stock, aggregate repurchases during the nine months
ended September 30, 2003 and 2002 totaled 1,242 and 670 shares, respectively,
for an aggregate price of $41 and $31, respectively. Repurchases of shares
during both periods had an immaterial impact on Bancorporation's capital.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes in market risk exposures that affect the
quantitative and qualitative disclosures presented as part of Bancorporation's
Annual Report on Form 10-K for the year ended December 31, 2002.
ITEM 4. CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Bancorporation's Chief Executive Officer and Chief Financial Officer,
after evaluating the effectiveness of Bancorporation's "disclosure
controls and procedures" (as defined in the Securities Exchange Act of
1934 rules 13a-14(c) and 15d-14(c)) as of the end of the period covered by
this quarterly report, have concluded that Bancorporation's disclosure
controls and procedures were effective as of the end of that period.
(b) Changes in Internal Control Over Financial Reporting
There were no changes in Bancorporation's internal control over financial
reporting that occurred during our most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect,
Bancorporation's internal control over financial reporting.
Page 16
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not Applicable.
ITEM 2. CHANGES IN SECURITIES
Not Applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not Applicable.
ITEM 5. OTHER INFORMATION
Not Applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - The following exhibits are either attached hereto or
incorporated by reference:
11 Statement re computation of per share earnings (filed
herewith).
31.1 Certification of Chief Executive Officer required by Rule
13a-14(a) (filed herewith)
31.2 Certification of Chief Financial Officer required by Rule
13a-14(a) (filed herewith)
32 Certification (Pursuant to 18 U.S.C. Section 1350) (filed
herewith)
(b) The following Form 8-K's were filed or furnished during the quarter
ended September 30, 2003.
Form 8-K furnished on August 1, 2003, reporting that Bancorporation
had announced its results of operations for the quarter and six
months ended June 30, 2003.
Page 17
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST CITIZENS BANCORPORATION
OF SOUTH CAROLINA, INC.
(Registrant)
Dated: November 13, 2003
By: /s/ Craig L. Nix
-----------------
Craig L. Nix
Chief Financial Officer
Page 18
EXHIBIT INDEX
11 Statement of Re Computation of Net Income per Share
31.1 Certification of Chief Executive Officer required by Rule 13a-14(a)
(filed herewith)
31.2 Certification of Chief Financial Officer required by Rule 13a-14(a)
(filed herewith)
32 Certification (Pursuant to 18 U.S.C. Section 1350)