FORM 11-K
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the Fiscal Year Ended December 31, 1996 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-22445
A. Full title of the plan and the address of the plan, if different from
that of the issuer named below:
First Federal Savings and Loan 401(k) Plan
B. Name of issuer of the securities held pursuant to the plan and the
address of its principal executive office:
FirstSpartan Financial Corp.
380 East Main Street
Spartanburg, South Carolina 29302
THE PLAN IS SUBJECT TO THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS
AMENDED ("ERISA"). IN ACCORDANCE WITH ITEM NO. 4 OF REQUIRED INFORMATION, THE
PLAN FINANCIAL STATEMENTS AND SCHEDULES ATTACHED HERETO ARE PREPARED IN
ACCORDANCE WITH THE FINANCIAL REPORTING REQUIREMENTS OF ERISA.
First Federal Savings & Loan 401(k) Plan
Table of Contents
Page
----
Independent Auditors' Report 1
Financial Statements:
Statements of Net Assets Available for Benefits
with Fund Information:
December 31, 1996 2
December 31, 1995 3
Statements of Changes in Net Assets Available for
Benefits with Fund Information:
Year Ended December 31, 1996 4
Year Ended December 31, 1995 5
Notes to Financial Statements 6-10
INDEPENDENT AUDITORS' REPORT
- ----------------------------
To the Trustees and Participants of
First Federal Savings & Loan 401(k) Plan
Spartanburg, SC
We have audited the accompanying statements of net assets available for
benefits of First Federal Savings & Loan 401(k) Plan (the "Plan") as of
December 31, 1996 and 1995, and the related statements of changes in net
assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan as of December 31,
1996 and 1995, and the changes in net assets available for benefits for the
years then ended in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Greenville, SC
June 5, 1997
1
First Federal Savings & Loan 401 (k) Plan
Statement of Net Assets Available for Benefits with Fund Information
December 31, 1996
------------------------------------------------------------------------------
Certificates Self-
of Stock Bond Money Directed Aggressive
Deposit Fund Fund Fund Market Fund Fund Growth Fund Total
------------ ----- ------ ----------- -------- ----------- -------
Assets
Investments:
At fair value-(Notes B and C)
Money market funds $ 36,428 $9,101 $2,926 $ 1,381 $ 388 $ 786 $ 51,010
U.S. government agency
securities 5,995 5,995
Corporate bonds and
debentures 3,045 6,464 9,509
Common stocks 115,142 115,142
------------ ------- ------ ----------- -------- ----------- -------
Total investments 36,428 124,243 11,966 1,381 6,852 786 181,656
------------ ------- ------ ----------- -------- ----------- -------
Receivables:
Employer's contribution 11,964 60,214 3,123 903 2,600 393 79,197
Accrued investment income 157 226 212 6 137 3 741
------------ ------- ------ ----------- -------- ----------- -------
Total receivables 12,121 60,440 3,335 909 2,737 396 79,938
------------ ------- ------ ----------- -------- ----------- -------
Total assets 48,549 184,683 15,301 2,290 9,589 1,182 261,594
------------ ------- ------ ----------- -------- ----------- -------
Liabilities
Accounts payable 1,458 1,458
Accrued expenses 91 311 30 3 17 2 454
------------ ------- ------ ----------- -------- ----------- -------
Total liabilities 91 1,769 30 3 17 2 1,912
------------ ------- ------ ----------- -------- ----------- -------
Net assets available
for benefits $ 48,458 $182,914 $15,271 $ 2,287 $ 9,572 $ 1,180 $259,682
============ ======== ======= =========== ======== =========== =======
The accompanying notes are an integral part of these financial statements.
2
First Federal Savings & Loan 401 (k) Plan
Statement of Net Assets Available for Benefits with Fund Information
December 31, 1995
-------------------------------------------------------------------
Certificates Self-
of Stock Bond Money Directed
Deposit Fund Fund Fund Market Fund Fund Total
------------ ----- ------ ----------- -------- -------
Assets
Investments:
At fair value-(Notes B and C)
Money market funds $ 12,823 $ 3,728 $ 2,427 $ 236 $ 4,972 $ 24,186
U.S. government agency
securities 2,029 2,029
Common stocks 29,598 29,598
----------- ------- ------- ----------- -------- -------
Total investments 12,823 33,326 4,456 236 4,972 55,813
----------- ------- ------- ----------- -------- -------
Receivables:
Employer's contribution 8,008 35,051 1,605 126 2,460 47,250
Participants' contributions 1,060 1,779 368 19 423 3,649
Accrued investment income 54 78 32 1 25 190
----------- ------- ------ ----------- -------- -------
Total receivables 9,122 36,908 2,005 146 2,908 51,089
----------- ------- ------ ----------- -------- -------
Total assets 21,945 70,234 6,461 382 7,880 106,902
----------- ------- ------- ----------- -------- -------
Liabilities
Accounts payable 6,261 2,897 9,158
Accrued expenses 32 83 11 11 137
------------ ------- ------ ----------- -------- -------
Total liabilities 32 6,344 11 2,908 9,295
------------ ------- ------ ----------- -------- -------
Net assets available
for benefits $ 21,913 $ 63,890 $ 6,450 $ 382 $ 4,972 $ 97,607
============ ======== ======= =========== ======== ========
The accompanying notes are an integral part of these financial statements.
3
First Federal Savings & Loan 401 (k) Plan
Statement of Changes in Net Assets Available for Benefits With Fund Information
Year Ended December 31, 1996
-----------------------------------------------------------------------------
Certificates Self-
of Stock Bond Money Directed Aggressive
Deposit Fund Fund Fund Market Fund Fund Growth Fund Total
------------ ----- ------ ----------- -------- ----------- -------
Additions to net assets
attributed to:
Investment income:
Net appreciation
(depreciation) in
fair value of
investments (Note C) $4,026 $ (81) $ (272) $ 3,673
Interest and dividends $ 1,491 2,198 590 46 365 $ 7 4,697
------------ -------- ------- ----------- -------- ----------- --------
1,491 6,224 509 46 93 7 8,370
Less investment expenses 320 1,007 97 10 62 2 1,498
------------ -------- ------- ----------- -------- ----------- --------
1,171 5,217 412 36 31 5 6,872
------------ -------- ------- ----------- -------- ----------- --------
Contributions:
Participants' 20,535 50,013 5,827 960 2,818 782 80,935
Employer's 11,964 60,214 3,123 903 2,600 393 79,197
------------ -------- ------- ----------- -------- ----------- --------
32,499 110,227 8,950 1,863 5,418 1,175 160,132
------------ -------- ------- ----------- -------- ----------- --------
Total additions 33,670 115,444 9,362 1,899 5,449 1,180 167,004
------------ -------- ------- ----------- -------- ----------- --------
Deductions from net assets
attributed to:
Benefits paid to participants 2,257 1,643 981 48 4,929
------------ -------- ------- ----------- -------- ----------- --------
Total deductions 2,257 1,643 981 48 4,929
Net increase prior to ------------ -------- ------- ----------- -------- ----------- --------
interfund transfers 31,413 113,801 8,381 1,851 5,449 1,180 162,075
Interfund transfers (4,868) 5,223 440 54 (849)
------------ -------- ------- ----------- -------- ----------- --------
Net increase 26,545 119,024 8,821 1,905 4,600 1,180 162,075
Net assets available for benefits:
Beginning of year 21,913 63,890 6,450 382 4,972 97,607
------------ -------- ------- ----------- -------- ----------- --------
End of year $ 48,458 $182,914 $15,271 $ 2,287 $ 9,572 $ 1,180 $259,682
============ ======== ======= =========== ======== =========== ========
The accompanying notes are an integral part of these financial statements.
4
First Federal Savings & Loan 401 (k) Plan
Statement of Changes in Net Assets Available for Benefits With Fund Information
Year Ended December 31, 1995
-------------------------------------------------------------------
Certificates Self-
of Stock Bond Money Directed
Deposit Fund Fund Fund Market Fund Fund Total
------------ ----- ------ ----------- -------- -------
Additions to net assets
attributed to:
Investment income:
Net appreciation in fair
value of investments
(Note C) $ 2,612 $ 12 $ 2,624
Interest and dividends $ 166 265 66 $ 3 $ 188 688
------------ ------- ------ ----------- -------- -------
166 2,877 78 3 188 3,312
Less investment expenses 45 112 16 32 205
------------ ------- ------ ----------- -------- -------
121 2,765 62 3 156 3,107
------------ ------- ------ ----------- -------- -------
Contributions:
Participants' 13,784 17,059 4,783 253 11,371 47,250
Employer's 8,008 35,051 1,605 126 2,460 47,250
------------ ------- ------ ----------- -------- -------
21,792 52,110 6,388 379 13,831 94,500
------------ ------- ------ ----------- -------- -------
Total additions 21,913 54,875 6,450 382 13,987 97,607
------------ ------- ------ ----------- -------- -------
Net increase prior to
interfund transfers 21,913 54,875 6,450 382 13,987 97,607
Interfund transfers 9,015 (9,015)
------------ ------- ------ ----------- -------- -------
Net assets available for
benefits-end of year $ 21,913 $63,890 $6,450 $ 382 $ 4,972 $97,607
============ ======= ====== =========== ======== =======
The accompanying notes are an integral part of these financial statements.
5
First Federal Savings & Loan 401 (k) Plan
Notes to Financial Statements
A. Description of Plan
The following description of the First Federal Savings & Loan 401(k)
Plan ("Plan") provides only general information. Participants should
refer to the Plan agreement for a more complete description of the Plan's
provisions.
General
- -------
The Plan is a defined contribution plan effective January 1, 1995
covering all full-time employees of First Federal Savings and Loan
Association of Spartanburg ("Association") who have completed one year of
service and are age twenty-one or older. It is subject to the provisions
of the Employee Retirement Income Security Act of 1974 ("ERISA"). The
trustees (who also serve as Plan administrator) of the Plan include two
directors and one employee of the Association.
Contributions
- -------------
Eligible participants are permitted to elect to reduce their compensation
(as defined) pursuant to a salary reduction agreement and have the amount
of the compensation reduction contributed to the Plan on their behalf.
The salary reduction election may be no less than 2% and no greater than
10% of annual compensation. Participants also may contribute amounts
representing distributions from other qualified defined benefit or
contribution plans to the Plan.
The Association may contribute a discretionary matching contribution
equal to the amount of the participant's salary reduction election,
limited to salary reduction elections of up to 5% of annual compensation.
The Association also may make discretionary nonmatching contributions to
the Plan each year. Participants must be employed on the last day of the
Plan year to share in the Association's contributions. No discretionary
nonmatching contributions have ever been made to the Plan.
Contributions by participants and the Association are subject to certain
limitations.
Participant Accounts
- --------------------
Each participant's account is credited with the participant's
contribution and allocations of the Association's contribution and Plan
earnings, and charged with withdrawals and an allocation of
administrative expenses (as applicable). Allocations are based on
participant earnings or account balances, as defined. The
6
benefit to which a participant is entitled is the benefit that can be
provided from the participant's vested account.
Vesting
- -------
Participants are immediately vested in their own contributions and in the
Association's discretionary matching contributions, plus actual earnings
thereon. Vesting in the Association's discretionary nonmatching
contributions plus actual earnings thereon is at the rate of 20% per year
beginning in the third year of participation in the Plan with 100%
vesting occurring after seven years of credited service.
Investment Options
- ------------------
Upon enrollment in the Plan, a participant may direct employee
contributions in 5 percent increments in any of six investment options:
Certificates of Deposit Fund - Invests in federally-insured bank
certificates of deposit of varying maturities.
Money Market Fund - Invests in money market mutual funds which
invest in short duration commercial paper and government securities.
Stock Fund - Investment holdings include stocks of medium and
largely capitalized domestic and international corporations.
Bond Fund - Funds are invested in high-grade corporate, U.S.
government and U.S. government agency debt securities.
Aggressive Growth Fund - Invests in stocks of smaller capitalized
domestic and international growth-oriented corporations.
Self-Directed Fund - Individual discretionary accounts managed by
participants.
The various funds named above (other than the Self-Directed Fund) may
also hold cash and cash equivalents (e.g. money market mutual funds) for
liquidity purposes.
Participants may change their investment options quarterly.
7
Payment of Benefits
- -------------------
Participants who retire, incur a disability, or otherwise terminate
employment generally shall be paid their vested benefit amounts in the
form of a joint and survivor or life annuity. Participants may elect
other forms of payment, including a lump-sum payment, with a properly
executed waiver of the joint and survivor or life annuity.
Forfeitures
- -----------
Under the Plan agreement, nonvested amounts related to employer
discretionary nonmatching contributions are forfeited upon termination of
employment and are reallocated to other Plan participants.
Plan Administrative Expenses
- ----------------------------
All expenses of administration may be paid by the Plan. However, the
Association elected to pay certain administrative expenses during the
years ended December 31, 1996 and 1995 which consisted principally of
fees paid to third-party service providers (e.g. record-keeping, legal,
accounting, etc.).
B. Summary of Accounting Policies
Basis of Accounting
-------------------
The financial statements of the Plan are prepared under the accrual
method of accounting.
Use of Estimates
----------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
Investment Valuation and Income Recognition
-------------------------------------------
Investments in common stocks, U.S. government agency securities and
corporate debt instruments are stated at fair value based upon closing
sales prices reported on recognized securities exchanges on the last
business day of the year or, for listed securities having no sales, upon
the last reported bid prices on that date.
8
Investments in dollar denominated money market funds are stated at cost
plus accrued interest which approximates fair value.
Purchases and sales of securities are recorded on a trade-date basis.
Interest income is recorded on the accrual basis. Dividends are recorded
on the ex-dividend date.
Payment of Benefits
-------------------
Benefits are recorded when paid.
Accounts Payable
----------------
Accounts payable represent contributions received by the Plan during the
plan year but determined subsequently to exceed applicable limitations.
These amounts were returned to participants subsequent to year end.
C. Investments
-----------
The Plan's investments are held by an independent trust company engaged
by the Plan's trustees. The following table presents investments.
Investments that represent 5 percent or more of the Plan's net assets
available for benefits are separately identified. The fair values of all
investments were determined using quoted market prices.
December 31,
1996 1995
Money market funds - Federated Government
Obligations Tax Managed Fund $ 51,010 $ 24,186
U.S. government agency securities 5,995 2,029
Corporate bonds and debentures 9,509
Common stocks:
American Telephone and Telegraph,
100 shares 4,338 6,475
Nucor Corporation, 100 shares 5,100 5,713
Union Pacific Corporation, 100 shares 6,013 6,600
Other 99,691 10,810
--------- ---------
Total investments $ 181,656 $ 55,813
========= =========
9
During 1996 and 1995 the Plan's investments (including investments
bought, sold, and held during the year) appreciated (depreciated) in
value as follows:
Year Ended December 31,
1996 1995
U.S. government agency securities $ (132) $ 12
Corporate bonds and debentures (221)
Common stocks 4,026 2,612
Net appreciation in fair value of --------- --------
investments $ 3,673 $ 2,624
========= =========
D. Plan Termination
----------------
Although it has not expressed any intent to do so, the Association has
the right under the Plan to discontinue its contributions at any time and
to terminate the Plan subject to the provisions of ERISA. In the event
of Plan termination, participants will become 100% vested in their
accounts.
E. Tax Status
----------
The Internal Revenue Service has determined and informed the Association
by a letter dated May 29, 1996, that the Plan and related trust are
designed in accordance with applicable sections of the Internal Revenue
Code ("IRC"). Subsequent to December 31, 1996 the Plan was amended (see
Note F). However, the Plan administrator believes that the Plan is
designed and is currently being operated in compliance with the
applicable requirements of the IRC.
F. Subsequent Event
----------------
On March 31, 1997, the First Federal Savings and Loan Association of
Spartanburg Employee Retirement and Savings Fund ("Fund") was merged into
the Plan. The Plan was the surviving plan. Participant account balances
in the Fund were fully vested in connection with the merger and the
accounts of former participants in the Fund are maintained as separate
accounts in the Plan, subject to certain rights of those former
participants under the terms of the Fund. In connection with the merger,
approximately $5.0 million was transferred to the Plan.
10
SIGNATURE
The Plan. Pursuant to the requirements of the Securities and Exchange
Act of 1934, the trustees (or other persons who administer the employee
benefit plan) have duly caused this annual report to be signed on its behalf
by the undersigned hereunto duly authorized.
FIRST FEDERAL SAVINGS AND LOAN
401(K) PLAN
Date: July 2, 1997 By: /s/ R. Lamar Simpson
----------------------------
R. Lamar Simpson
Chief Financial Officer