1
A LOOK INSIDE
FIRST NATIONAL
CORPORATION
ANNUAL REPORT 2000
2
Headquartered in Orangeburg, S.C., First National
Corporation is a $970 million bank holding
company - the fourth largest independent S.C.-based
depository institution - with 32 locations in 11
counties. The Company owns First National Bank,
National Bank of York County, Florence
County National Bank, and 90% of
CreditSouth Financial Services Corporation.
TABLE OF CONTENTS
Letter 2 Locations 12
Relationships 6 Financial Statements 14
Products and Services 8 Board and Officers 18
The Future 10 Corporate Information 25
For more financial information about the Company, please refer to First National
Corporation's Annual Report on Form 10-K, a copy of which is included with the
package provided to the Company's shareholders in connection with the Company's
2000 annual meeting of shareholders.
3
FINANCIAL HIGHLIGHTS
INCREASE
YEAR ENDED DECEMBER 31 (DECREASE)
(dollars in thousands except per share) 2000 1999 %CHANGE
- --------------------------------------- ---------- ---------- ----------
FOR THE YEAR
Interest income $ 73,846 $ 60,569 21.92%
Interest expense 33,232 23,916 38.95%
Net interest income 40,614 36,653 10.81%
Provision for loan losses 1,838 1,613 13.95%
Noninterest income 10,971 9,727 12.79%
Noninterest expense 34,096 33,802 .87%
Income before provision for income taxes 15,651 10,965 42.74%
Provision for income taxes 5,118 3,025 69.19%
Net income 10,533 7,940* 32.66%
PER COMMON SHARE
Net income $ 1.50 $ 1.14 31.58%
Net income, diluted 1.49 1.13 31.86%
Cash dividends .54 .52 3.85%
Book value 12.09 10.77 12.26%
KEY PERFORMANCE RATIOS
Return on average assets 1.11% .98% 12.24%
Return on average equity 13.14 10.58 24.20%
Nonperforming assets as a percentage of assets .15 .18 (16.67)%
Average stockholders' equity as a percentage of average assets 8.41 9.25 (9.30)%
SELECTED YEAR END BALANCES
Assets $ 969,848 $ 872,398 11.17%
Loans, net of unearned income 729,049 610,541 19.41%
Investment securities 183,198 195,572 (6.33)%
Deposits 757,576 689,665 9.85%
Borrowings 122,998 103,150 19.24%
Stockholders' equity 84,936 75,819 12.03%
Common shares outstanding 7,026,901 7,041,101 (.20)%
YEAR ENDED DECEMBER 31
(dollars in thousands except per share) 2000 1999 1998 1997 1996
SUMMARY OF OPERATIONS
Interest income $ 73,846 $ 60,569 $ 54,487 $48,896 $41,302
Interest expense 33,232 23,916 23,122 20,788 17,267
Net interest income 40,614 36,653 31,365 28,108 24,035
Provision for loan losses 1,838 1,613 1,213 1,416 1,481
Net interest income after provision
for loan losses 38,776 35,040 30,152 26,692 22,554
Noninterest income 10,971 9,727 8,856 7,002 5,962
Noninterest expense 34,096 33,802 26,866 22,833 19,742
Income before provision for income taxes 15,651 10,965 12,142 10,861 8,774
Provision for income taxes 5,118 3,025 3,871 3,448 2,745
Net income 10,533 7,940 8,271 7,413 6,029
PER COMMON SHARE
Net income $ 1.50 $ 1.14 $ 1.24 $ 1.14 $ .97
Net income, diluted 1.49 1.13 1.21 1.11 .95
Book value 12.09 10.77 10.77 10.26 9.44
Dividends .54 .52 .48 .40 .37
Dividends payout ratio 36.09% 40.14% 30.69% 27.78% 28.55%
*In 1999 non-recurring expenses associated with the acquisition of
FirstBancorporation and two Carolina First branches reduced net income by
$1,684,000.
4
LETTER TO SHAREHOLDERS
We have witnessed many changes in the financial markets over the course of our
66 years in operation. While First National Corporation has been a constant in
many of South Carolina's communities, our success is due to our ability to adapt
to the changes that allow us and our customers to flourish. Through a
combination of internal growth, careful acquisitions, and strategic initiatives,
First National has achieved the necessary scale to be even more responsive to
customer needs while broadening our reach in the state.
We made strong progress this year despite difficult business conditions
in the banking sector. Due to higher interest rates during most of the year and
the slowing of the U.S. economy, our industry was out of favor with Wall
Street, and our stock price performance lagged well behind our solid operating
performance in 2000. Fortunately, First National's success is less dependent
than larger national and regional banks' success on world economic conditions.
Our superior asset quality, excellent customer service, and strong markets
helped us achieve impressive results in 2000.
Net income for 2000 increased 32.7% year-over-year to $10,533,000, or
$1.49 diluted earnings per share. (1999's net income of $7,940,000 was impacted
by non-recurring expenses totaling $1,684,000 associated with the acquisition of
FirstBancorporation and the purchase of two additional bank branches.) The 2000
net income of $10,533,000 was also an increase of 9.4% over 1999's core
operating earnings of $9,624,000 or $1.365 diluted earnings per share, which
excludes the one-time acquisition expenses in 1999. The Company achieved a
return on average equity and a return on average assets of 13.14% and 1.10%,
respectively.
Total assets grew 11.2% to $969,848,000 during the year, led by a 19.4%
increase in loans to $729,049,000. We are gratified that this significant growth
occurred without sacrificing asset quality, a distinguishing hallmark of our
company. Net charge-offs of 0.12%
FIRST NATIONAL CORPORATION
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[PHOTO]
Our superior asset quality, excellent
customer service, and strong markets helped us achieve
impressive results in 2000.
Dwight W. Frierson, Vice Chairman of the Board
Robert R. Horger, Chairman of the Board
C. John Hipp, III, Chief Executive Officer
FIRST NATIONAL CORPORATION
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of average loans remained well below local and national peer averages. Other
measures of asset quality - such as non-performing loans as a percentage of
total loans at 0.44%, a loan-loss reserve coverage of non-performing loans at
2.73 times and coverage of charged-off loans at 11.0 times - also indicate First
National's high quality of lending.
The Company's funding sources and capital base also increased during
the year. Total deposits grew 10% to $757,576,000. First National Corporation
also expanded its use of other funding through correspondent banks, government
agency sources, and customer cash management repurchase agreements. Through
retained earnings, the Company increased its shareholder equity by a healthy 12%
to $84,936,000. At the same time, First National increased its cash dividend per
share to stock owners in the middle of 2000. Your company has a solid capital
position, and comfortably retains "well-capitalized" levels for all regulatory
standards.
Our financial performance is a testament to the power of the franchise
First National has continued to build through our extensive customer
relationships and the outstanding group of professionals in the Company today.
Other notable accomplishments in 2000 include a second branch in
Columbia and the continued integration of acquired banking centers in Beaufort
and Jasper counties. We initiated a Customer Care (Call) Center to better serve
our customers via telephone and in the branches. We continue to reach out to
customers throughout our markets with broader product offerings and progressive
approaches to service.
We also added talented, experienced managers to our executive
management team in the financial and credit administration areas. Richard C.
Mathis was named Executive Vice President and Chief Financial Officer of the
Corporation, and Joe Burns was hired as Executive Vice President and Chief
Credit Officer. In addition, we restructured our executive group and Robert R.
Hill, Jr. was named President and Chief Operating Officer of First National Bank
in Orangeburg, South Carolina, and John C. Pollok was named Executive Vice
President and Chief Administrative Officer. These appointments have already
enhanced our leadership and operational focus.
Part of being a community bank is providing the solutions that are
unique to each community where we have operations. To aid our growth and to
provide optimum service at the
FIRST NATIONAL CORPORATION
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local level, we have established three regional presidents: Jeff E. Fulp,
Regional President for Beaufort County; David J. Charpia, Regional President for
Columbia; and Gene McConnell, Regional President for Orangeburg, Bamberg, and
Colleton Counties. These newly created positions will keep our decision-makers
close to our customers, which is vital as we continue to expand throughout the
state.
Through technology investments and reengineering, we have streamlined
many departments and improved internal processes to bring greater efficiencies
to our customers. First National has not only made substantial investments in
technology, we've invested a considerable amount of time, energy, and resources
into making sure that this technology will serve our company's needs today and
tomorrow. We expect our efficiency ratio to make further gains as synergies
continue to be realized, technology expenses dissipate, and our de novo branches
mature.
Our performance in 2000 demonstrates that our strategy is working.
Florence County National Bank, which is now approximately 2.5 years old,
produced a monthly profit in each of the final six months of 2000 and very
nearly broke even for the year in net income. National Bank of York County, only
4.5 years old, had a very good year with 723,000 in net income. Our largest and
oldest bank, First National Bank, eclipsed the $10 million net income threshold.
All our banks finished the year with strong momentum and are well positioned for
profitable growth in 2001.
We believe your company has emerged from the year 2000 with solid
business fundamentals, strong growth momentum across all our banks, and
confidence in our ability to successfully manage the year ahead. We know that
outstanding customer service is key to our financial performance, and we are
proud that ours is still and always will be a business of relationships.
Sincerely,
/s/ Dwight W. Frierson /s/ Robert R. Horger /s/ C. John Hipp, III
Dwight W. Frierson Robert R. Horger C. John Hipp, III
Vice Chairman Chairman Chief Executive
of the Board of the Board Officer
FIRST NATIONAL CORPORATION
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[PHOTO]
At First National Corporation, we are only as good
as the quality of our employees, our standard of service,
and our flawlessness of execution.
Rene Brannan, Vice President and Relationship Manager
National Bank of York County
Gary Hood, Executive Vice President
National Bank of York County
FIRST NATIONAL CORPORATION
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RELATIONSHIPS
At First National Corporation, we are welcoming new customers while honoring
trusted relationships with long-time constituents. Efficiencies achieved through
centralized administrative and support functions contribute to our ability to
provide individualized, high-level customer service. This emphasis on people has
enabled us to attract customers from larger banks, while our expertise and
attention to detail have allowed us to garner a substantial level of repeat
business.
We regularly and actively seek customer feedback, and we continually analyze
and evaluate the quality of service we provide. In 2000, our customer service
measurements rose as we identified and expanded our best practices. We have
listened and responded proactively since our establishment and will continue to
follow this mutually beneficial course. First National is committed to creating
value for customers.
At First National Corporation, we are only as good as the quality of our
employees, our standard of service, and our flawlessness of execution. Our
decentralized management philosophy fosters a culture of entrepreneurship at all
levels within our corporate structure. We create significant and attractive
career opportunities in an environment that is productive and supportive of
employees' needs.
As a result, First National Corporation attracts an exceptional pool of capable
professionals eager to be a part of our building process. Our commitment to
excellence continues through the group of extremely talented people that are
custodians of our franchise.
FIRST NATIONAL CORPORATION
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PRODUCTS AND SERVICES
We will continue to expand our diverse
range of products and services to meet
the ever-changing needs of our customers.
Michelle Smoak, Assistant Vice President and
Marketing Manager, First National Bank
Terrance Rivers, Assistant Vice President
Treasury Management; First National Bank
First National Corporation is one of the few community banks to offer a wealth
of services on an integrated basis. We deliver large-bank innovation and access
with a community-bank touch. We are committed to developing new products to meet
emerging consumer needs.
First National offers a variety of deposit services, including savings accounts,
certificates of deposits, Individual Retirement Accounts, money market accounts
and a full array of interest-bearing and checking accounts. On the retail
deposit side, we have refined our delivery methods to meet the needs of customer
convenience and market demand. Our delivery channels expanded in 2000 through
new branch locations, our Customer Care Center, and expanded Internet banking
capabilities.
We are meeting consumer mortgage needs as a leading lender in the communities
where we maintain a retail presence. First National is building on its share of
home equity, mortgage, and installment loans with flexible terms, competitive
rates, easy application, and fast closing.
To further accommodate customers seeking diversified investment portfolios,
First National works in tandem with UVEST Investment Services, a provider of
investments and securities at First National branch offices. Through UVEST,
First National is meeting customer demand for fixed and variable annuities,
mutual funds, and other non-FDIC insured investment products. Clients can rely
on sophisticated investment analysis and advice as well as other services that
provide immediate access to markets and information.
Our Asset Management group offers private banking services to individuals often
overlooked by larger banks. Delivering sophisticated, integrated expertise in
personal trust and employee benefit plans, estate planning, charitable trusts
and tax planning, we also provide clients with investment advice and asset
management services.
Our website undergoes continual refinement, reflecting the company's commitment
to serving our customers in new ways - capitalizing on technology to
FIRST NATIONAL CORPORATION
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[PHOTO]
generate growth and enhance efficiency - using the Internet to build
relationships.
First National Corporation is a leading provider of small-to-medium-sized
business banking solutions. Our strategy is to anticipate and respond to the
evolving needs of your business and develop new capabilities to improve your
experience with us. Through creative products, streamlined application, and
processing procedures, we differentiate ourselves by satisfying business needs
with greater speed and convenience.
We have aligned ourselves with business clients by providing the capital and
advice they need to grow. Specializing in companies with sales under $50
million, our experts bring premier services to small-to-medium-sized businesses.
We offer a series of flexible checking, cash management, and credit options,
including lines of credit and commercial loans to fit any enterprise. Our
business relationships are built upon intimate knowledge of the communities we
serve.
First National's Business Link provides unparalleled access to business
accounts-24 hours a day, seven days a week. Detailed account information,
internal account transfers, wire transfers and account reconciliation - all
available online - strengthen our ties to our business customers. First National
Image Link images canceled checks on compact disks, reducing file storage in an
easy-to-use format.
Despite our high-tech offerings, we have not lost sight of the fact that our
business is to help your business grow. First National is proud to be a leading
commercial lender in the Low Country of South Carolina.
Our banking performance reflects the growing customer appreciation of our
efforts. While all our channels represent a broad range of innovative bank
products, one channel - on-line financial services - represents real industry
leadership. First National's Internet banking product has become the foundation
of an aggressive effort to electronically expand our complete range of services.
FIRST NATIONAL CORPORATION
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[PHOTO]
As a community bank, our philosophy will continue to be
based on providing our customers with fast, friendly,
accurate service together with all of the possibilities offered by
new technology.
Cathy Diller, Assistant Vice President and Relationship Manager
Beaufort County, First National Bank
Bruce VanHorn, Assistant Vice President and City Executive
Northern Beaufort County, First National Bank
FIRST NATIONAL CORPORATION
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THE FUTURE OF FIRST NATIONAL
First National Corporation's progressive position, based on time proven banking
policies, establishes the foundation for a successful future. Despite the ever-
changing influence of market climates throughout our history, First National has
endured exceedingly well.
We fared better than most banks in the interest rate environment of 2000. Based
on the published asset quality results of local and national peers, First
National Corporation ranks among the nation's best-performing financial
institutions in this regard. We will continue to do so by adhering to our basic
philosophy of sound, steady and consistent business practices. We believe the
industry consolidation over the years has created a vacuum in the market that
can only be filled by a bank like ours.
First National Corporation is building an outstanding community financial
services company that remains as much a part of South Carolina's future as it
has for the past 66 years. We intend to be here with the diverse range of
products our customers need, along with the personalized service of a bank
firmly grounded in the communities it serves. Our strategy of service, sound-
ness, profitability, and growth is a balanced approach to banking in the
Palmetto State. We are better prepared than ever to meet the banking and
financial services needs of our customers today and well into the future.
FIRST NATIONAL CORPORATION
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LOCATIONS
FIRST NATIONAL BANK NATIONAL BANK
OF YORK COUNTY
BAMBERG LADY'S ISLAND
317 North Main Street 184 Sea Island Parkway FORT MILL
Bamberg, SC 29003 Beaufort, SC 29901 808 Tom Hall Street
(803) 245-2416 (843) 521-5660 Fort Mill, SC 29715
(803) 548-6292
BEAUFORT MONCKS CORNER
1121 Boundary Street 317 North Highway 52 ROCK HILL
Beaufort, SC 29901 Moncks Corner, SC 29416 1127 Ebenezer Road
(843) 521-5600 (843) 761-8024 Rock Hill, SC 29732
(803) 329-1222
BLUFFTON NORWAY
1328 Fording Island Road 8703 Savannah Highway YORK
Bluffton, SC 29910 Norway, SC 29113 1 South Congress Street
(843) 837-2100 (803) 263-4295 York, SC 29745
(803) 684-5554
1 Burnt Church Road ORANGEBURG
Bluffton, SC 29910 BANK CENTER
(843) 837-7726 950 John C. Calhoun Drive FLORENCE COUNTY
Orangeburg, SC 29115 NATIONAL BANK
CAMERON (803) 534-2175
202 North Main Street FLORENCE
Cameron, SC 29042 1501 Old Edisto Drive 1600 W. Palmetto Street
(803) 823-2333 Orangeburg, SC 29115 Florence, SC 29501
(803) 531-0540 (843) 673-9900
COLUMBIA
1900 Assembly Street 1255 St. Matthews Road LAKE CITY
Columbia, SC 29201 Orangeburg, SC 29118 266 W. Main Street
(803) 771-2265 (803) 531-0520 Lake City, SC 29560
(843) 394-1417
COLUMBIA NE 3025 St. Matthews Road
2010 Clemson Road Orangeburg, SC 29115
Columbia, SC 29229 (803) 531-0550 CREDITSOUTH FINANCIAL
(803) 736-6479 SERVICES CORPORATION
RIDGELAND
DENMARK 207 Jacob Smart Boulevard FLORENCE
127 South Palmetto Ave. Ridgeland, SC 29936 480 Second Loop Road
Denmark, SC 29042 (843) 726-5596 Florence, SC 29501
(803) 793-3324 (843) 669-4616
SANTEE
ELLOREE 657 Bass Drive ORANGEBURG
6512 Old No. 6 Highway Santee, SC 29142 552 John C. Calhoun Drive
Elloree, SC 29047 (803) 854-2451 Orangeburg, SC 29115
(803) 897-2121 (803) 536-0706
ST. GEORGE
HARDEEVILLE 5542 Memorial Boulevard MYRTLE BEACH
26 Highway 17 St. George, SC 29477 4505 Socastee Boulevard
Hardeeville, SC 29927 (843) 563-2324 Socastee Plaza - Suite L
(843) 784-3151 Myrtle Beach, SC 29577
WALTERBORO (843) 293-3050
HARLEYVILLE 520 N. Jefferies Boulevard
122 West Main Street Walterboro, SC 29488
Harleyville, SC 29448 (843) 549-1553
(843) 462-7687
600 Robertson Boulevard
HILTON HEAD Walterboro, SC 29488
81 Main Street (843) 549-1553
Hilton Head, SC 29926
(843) 342-2100
FIRST NATIONAL CORPORATION
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[SOUTH CAROLINA MAP]
First National Bank Florence County National Bank
National Bank of York County CreditSouth Financial Services
FIRST NATIONAL CORPORATION
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STOCK PERFORMANCE AND STATISTICS
All of the following financial information from page 14 to 17 should be read in
conjunction with Management's Discussion and Analysis of Operations and
Financial Condition and is qualified in its entirety by reference to the more
detailed financial statements and the notes thereto, all of which are contained
in First National Corporation's Annual Report on Form 10-K.
(dollars in thousands except per share) 2000 1999 1998 1997 1996
STOCK PERFORMANCE
Dividends paid per share $ .54 $ .52 $ .48 $ .40 $ .37
Dividend payout percentage 36.09% 40.14% 30.69% 27.78% 28.55%
Dividend yield (based on the average
of the high and low price for the year) 3.10% 1.97% 1.94% 1.78% 1.38%
Price/earnings ratio (based on year-end
stock price and diluted earnings per share) 8.81x 19.80x 20.83x 19.10x 12.60x
Price/book ratio (end of year) 1.09x 2.08x 2.34x 2.07x 2.97x
COMMON STOCK STATISTICS
Stock price ranges:
High $ 22.750 $ 30.750 $ 28.800 $ 25.144 $11.970
Low 12.063 22.000 20.750 19.800 10.900
Close 13.125 22.375 25.200 21.206 11.970
Volume traded (on AMEX) 617,900 281,300 351,800 281,100 n/a
As a percentage of average shares outstanding 8.78% 4.02% 5.26% 4.31% n/a
Earnings per share (basic) $ 1.50 $ 1.14 $ 1.24 $ 1.14 $ .97
Earnings per share (diluted) 1.49 1.13 1.21 1.11 .95
Book value per share 12.09 10.77 10.77 10.26 9.44
QUARTERLY COMMON STOCK PRICE RANGES AND DIVIDENDS
2000 1999 1998
QUARTER HIGH LOW DIVIDEND HIGH LOW DIVIDEND HIGH LOW DIVIDEND
1st $ 22.750 $ 17.625 $ 0.13 $ 30.250 $ 25.000 $ 0.13 $ 23.400 $ 20.475 $ 0.12
2nd 18.250 16.188 0.13 28.500 26.000 0.13 25.088 21.488 0.12
3rd 17.000 13.250 0.14 31.000 22.125 0.13 25.650 21.488 0.12
4th 15.688 12.063 0.14 30.750 22.000 0.13 28.800 22.500 0.12
Per share data have been retroactively adjusted to give effect to five percent
common stock dividend paid to shareholders of record October 31, 1996, a 2 for 1
stock split paid to shareholders of record on May 19, 1997, and a ten percent
common stock dividend paid to shareholders of record on November 2, 1998.
FIRST NATIONAL CORPORATION
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SELECTED CONSOLIDATED FINANCIAL DATA
AT OR FOR THE YEAR ENDED DECEMBER 31
(dollars in thousands) 2000 1999 1998 1997 1996
AT DECEMBER 31
Assets $969,848 $872,398 $750,077 $657,256 $589,352
Loans, net of unearned income 729,049 610,541 493,144 436,982 373,062
Investment securities 183,198 195,572 206,137 168,243 163,366
Deposits 757,576 689,665 611,891 531,837 492,454
Borrowings 122,998 103,150 58,500 59,361 38,146
Stockholders' equity 84,936 75,819 74,325 61,881 55,391
Number of offices 32 31 25 21 21
Full-time equivalent employees 402 426 353 288 281
SELECTED RATIOS
Return on average equity 13.14% 10.58% 12.14% 12.64% 11.86%
Return on average assets 1.11 .98 1.18 1.19 1.09
Average equity as a percentage of average assets 8.39 9.25 9.68 9.22 9.03
ASSET QUALITY RATIOS
Allowance for loan losses to period end loans 1.22% 1.29% 1.41% 1.43% 1.43%
Allowance for loan losses to period end
nonperforming loans 273.14 513.08 448.22 432.25 374.91
Nonperforming assets to period end loans .20 .26 .31 .34 .38
Nonperforming assets to period end total assets .15 .18 .21 .22 .24
Net charge-offs to average loans .12 .12 .12 .13 .09
FIRST NATIONAL CORPORATION
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CONSOLIDATED BALANCE SHEETS
DECEMBER 31
(dollars in thousands) 2000 1999
ASSETS
Cash and cash equivalents:
Cash and due from banks $ 31,843 $ 39,479
Interest-bearing deposits with banks 158 1,848
---------- ----------
Total cash and cash equivalents 32,001 41,327
---------- ----------
Investment securities:
Securities held-to-maturity:
Taxable 615 4,335
Tax-exempt 37,935 42,933
---------- ----------
Total (fair value of $38,530 in 2000 and 46,529 in 1999) 38,550 47,268
Securities available-for-sale, at fair value 144,648 148,304
---------- ----------
Total investment securities 183,198 195,572
---------- ----------
Loans: 732,266 613,961
Less, unearned income (3,217) (3,420)
Less, allowance for loan losses (8,922) (7,886)
---------- ----------
Loans, net 720,127 602,655
---------- ----------
Premises and equipment, net 16,311 15,693
Other assets 18,211 17,151
---------- ----------
Total assets $ 969,848 $ 872,398
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Demand $ 111,997 $ 105,018
Interest-bearing transaction accounts 128,196 123,597
Savings 152,453 134,203
CDs of $100,000 and over 116,663 88,762
Other time 248,267 238,085
---------- ----------
Total deposits 757,576 689,665
---------- ----------
Federal funds purchased and securities sold under agreements to repurchase 65,948 76,400
Notes payable 57,050 26,750
Other liabilities 4,338 3,764
---------- ----------
Total liabilities 884,912 796,579
---------- ----------
Shareholders' equity:
Common stock - $2.50 par value, authorized 40,000,000 shares, issued and
outstanding 7,026,901 shares in 2000 and 7,041,101 shares in 1999 17,567 17,603
Surplus 47,488 47,666
Retained earnings 20,228 13,496
Accumulated other comprehensive income (loss) (347) (2,946)
---------- ----------
Total shareholders' equity 84,936 75,819
---------- ----------
Total liabilities and shareholders' equity $ 969,848 $ 872,398
========== ==========
FIRST NATIONAL CORPORATION
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CONSOLIDATED INCOME STATEMENTS
YEAR ENDED DECEMBER 31
(dollars in thousands except per share data) 2000 1999 1998
INTEREST INCOME:
Loans, including fees $ 61,284 $ 47,701 $ 41,799
Investment securities:
Taxable:
Held-to-maturity 67 400 676
Available-for-sale 9,185 9,899 9,290
Tax-exempt - held-to-maturity 1,775 1,847 1,672
Federal funds sold 1,501 456 579
Deposits with banks 34 266 471
-------- -------- --------
Total interest income 73,846 60,569 54,487
-------- -------- --------
INTEREST EXPENSE:
Interest-bearing transaction accounts 1,222 1,014 2,437
Savings 5,056 4,090 3,246
Certificates of deposit 19,180 14,540 14,770
Federal funds purchased and securities
sold under agreements to repurchase 5,923 2,818 2,425
Notes payable 1,851 1,454 244
-------- -------- --------
Total interest expense 33,232 23,916 23,122
-------- -------- --------
NET INTEREST INCOME:
Net interest income 40,614 36,653 31,365
Provision for loan losses 1,838 1,613 1,213
-------- -------- --------
Net interest income after provision for loan losses 38,776 35,040 30,152
-------- -------- --------
NONINTEREST INCOME:
Service charges on deposit accounts 7,358 5,838 5,619
Other service charges and fees 3,545 3,632 3,096
Gain on sale of securities available-for-sale -- 214 95
Other income 68 43 46
-------- -------- --------
Total noninterest income 10,971 9,727 8,856
-------- -------- --------
NONINTEREST EXPENSE:
Salaries and employee benefits 17,304 16,841 14,367
Net occupancy expense 1,989 1,773 1,417
Furniture and equipment expense 3,569 3,042 1,937
Other expense 11,234 12,146 9,145
-------- -------- --------
Total noninterest expense: 34,096 33,802 26,866
-------- -------- --------
EARNINGS:
Income before provision for income taxes 15,651 10,965 12,142
Provision for income taxes 5,118 3,025 3,871
-------- -------- --------
Net income $ 10,533 $ 7,940 $ 8,271
-------- -------- --------
EARNINGS PER SHARE:
Basic $ 1.50 $ 1.14 $ 1.24
Diluted $ 1.49 $ 1.13 $ 1.21
FIRST NATIONAL CORPORATION
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FIRST NATIONAL CORPORATION
OFFICERS
ROBERT R. HORGER DWIGHT W. FRIERSON JOE BURNS
Chairman of the Board Vice Chairman of the Board Executive Vice President and
Chief Credit Officer
C. JOHN HIPP, III JAMES C. HUNTER, JR.
Chief Executive Officer Secretary LORAN ADAMS
Senior Vice President and
RICHARD C. MATHIS JOHN C. POLLOK General Auditor
Executive Vice President and Executive Vice President and
Chief Financial Officer Chief Administrative Officer
BOARD OF DIRECTORS
COLDEN R. BATTEY, JR. JOHN L. GRAMLING, JR. ROBERT R. HORGER(*)
Partner and Attorney Farmer Chairman
Harvey & Battey Orangeburg, SC First National Corporation
Beaufort, SC First National Bank
RICHARD L. GRAY(*) Attorney
CHARLES W. CLARK(*) Chairman of the Board Horger, Barnwell & Reid
President Grayco Company Orangeburg, SC
Santee Shores, Inc. Beaufort, SC
Santee, SC HARRY M. MIMS, JR.(*)
ROBERT R. HILL, JR. President
WILLIAM W. COLEMAN, JR. President and J.F. Cleckley & Company
President and Chief Operating Officer Orangeburg, SC
Chief Executive Officer First National Bank
Florence County National Bank Orangeburg, SC RALPH W. NORMAN
Florence, SC President
C. JOHN HIPP, III(*) Warren Norman Co., Inc.
DWIGHT W. FRIERSON(*) Chief Executive Officer Rock Hill, SC
Vice President and First National Corporation
General Manager First National Bank ANNE H. OSWALD
Coca-Cola Bottling Company Orangeburg, SC Oswald, White & Associates, Inc.
Orangeburg, SC Walterboro, SC
FIRST NATIONAL CORPORATION
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21
FIRST NATIONAL CORPORATION
[BOARD OF DIRECTORS PHOTO]
SAMUEL A. RODGERS A. DEWALL WATERS R.H. JENNINGS, III
Vice Chairman Partner (Chairman Emeritus)
Carolina Eastman, Inc. Main-Waters Enterprises Partnership First National Corporation
Florence, SC Orangeburg, SC First National Bank
Orangeburg, SC
JAMES W. ROQUEMORE(*) CATHY COX YEADON
Chief Executive Officer Cox Wood Preserving Co., Inc. J.C. MCALHANY (EMERITUS)
Patten Seed Company, Inc. Orangeburg, SC Retired Farmer and Cotton Broker
General Manager St. George, SC
Super-Sod C. PARKER DEMPSEY (EMERITUS)
Orangeburg, SC Dempsey Wood Products, Inc. L.D. WESTBURY (EMERITUS)
Orangeburg, SC Retired President and Chairman
WALTER L. TOBIN First National Corporation
Retired Consultant and Educator E. EVERETT GASQUE, JR. (EMERITUS) First National Bank
Columbia, SC EE Gasque & Son, Inc. Orangeburg, SC
Retired 12-21-00 Gasque Farms
Elloree, SC (*)Member Executive Committee
JOHNNY E. WARD
President
W & W Truck & Tractor, Inc.
Moncks Corner, SC
Retired 8-17-00
FIRST NATIONAL CORPORATION
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FIRST NATIONAL CORPORATION
[EXECUTIVE MANAGEMENT COMMITTEE PHOTO]
C. JOHN HIPP, III
Chief Executive Officer
ROBERT R. HILL, JR.
President and
Chief Operating Officer
First National Bank
Orangeburg, SC
RICHARD C. MATHIS
Executive Vice President and
Chief Financial Officer
JOHN C. POLLOK
Executive Vice President and
Chief Administrative Officer
JOE BURNS
Executive Vice President and
Chief Credit Officer
THOMAS S. CAMP
President and
Chief Executive Officer
National Bank of York County
Rock Hill, SC
WILLIAM W. COLEMAN, JR.
President and
Chief Executive Officer
Florence County National Bank
Florence, SC
FIRST NATIONAL CORPORATION
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23
FIRST NATIONAL BANK
EXECUTIVE OFFICERS
C. JOHN HIPP, III
Chief Executive Officer
RICHARD C. MATHIS
Executive Vice President and
Chief Financial Officer
JOHN C. POLLOK
Executive Vice President and
Chief Administrative Officer
ROBERT R. HILL, JR.
President and
Chief Operating Officer
JAMES C. HUNTER, JR.
Executive Vice President
DON KERR
Senior Vice President and
Chief Technology Officer
DANE H. MURRAY
Executive Vice President
JOE BURNS
Executive Vice President and
Chief Credit Officer
ALEX SHUFORD
Executive Vice President
BOARD OF DIRECTORS
COLDEN R. BATTEY, JR.
Partner and Attorney
Harvey & Battey, Beaufort, SC
LUTHER J. BATTISTE, III
Johnson, Toal & Battiste, P.A.
Columbia and Orangeburg, SC
CHARLES W. CLARK(*)
President
Santee Shores, Inc., Santee, SC
C. PARKER DEMPSEY
Secretary
Dempsey Wood Products, Inc.
Orangeburg, SC
M. OSWALD FOGLE
President and Chief
Executive Officer
Decolam, Inc., Orangeburg, SC
DWIGHT W. FRIERSON(*)
Vice President and General
Manager
Coca-Cola Bottling Company
Orangeburg, SC
E. EVERETT GASQUE, JR.
President
EE Gasque & Son, Inc.
Gasque Farms, Elloree, SC
JOHN L. GRAMLING, JR.
Farmer, Orangeburg, SC
RICHARD L. GRAY(*)
Chairman of the Board
Grayco Company, Beaufort, SC
C. JOHN HIPP, III(*)
Chief Executive Officer
First National Corporation
First National Bank
Orangeburg, SC
ROBERT R. HORGER(*)
Chairman of the Board
First National Corporation
First National Bank
Attorney
Horger, Barnwell & Reid
Orangeburg, SC
HARRY M. MIMS, JR.(*)
President
J.F. Cleckley & Company
Orangeburg, SC
ANNE H. OSWALD
Oswald, White & Associates, Inc.
Walterboro, SC
JAMES W. ROQUEMORE(*)
Chief Executive Officer
Patten Seed Company, Inc.
General Manager
Super-Sod, Orangeburg, SC
THOMAS E. SUGGS(*)
President
Rooney, McArthur & Suggs, Inc.
Columbia, SC
WALTER L. TOBIN
Retired Consultant and Educator
Columbia, SC, Retired 12-21-00
JOHNNY E. WARD
President
W & W Truck & Tractor, Inc.
Moncks Corner, SC
Retired 8-17-00
A. DEWALL WATERS
Partner
Main-Waters Enterprises Partnership
Orangeburg, SC
J.W. WILLIAMSON, III
President
J.W. Williamson Ginnery, Inc.
Denmark, SC
CATHY COX YEADON
Cox Wood Preserving Co., Inc.
Orangeburg, SC
DIRECTORS EMERITI
Robert H. Jennings, III
J. Carlisle McAlhany
Larry D. Westbury
*Member Executive Committee
FIRST NATIONAL CORPORATION
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NATIONAL BANK OF YORK COUNTY
EXECUTIVE OFFICERS
BERNARD N. ACKERMAN
Chairman of the Board
FRANK M. WILKERSON, JR.
Vice Chairman of the Board
THOMAS S. CAMP
President and
Chief Executive Officer
J. GARY HOOD
Executive Vice President
BOARD OF DIRECTORS
BERNARD N. ACKERMAN CPA, PA
Rock Hill, SC
THOMAS S. CAMP
President and
Chief Executive Officer
National Bank of York County
Rock Hill, SC
FRANK S. CAMPBELL
President
AME, Inc.
Fort Mill, SC
DWIGHT W. FRIERSON
Vice President and
General Manager
Coca-Cola Bottling Company
Orangeburg, SC
R. WESLEY HAYES, JR.
Attorney
Harrelson and Hayes
Rock Hill, SC
C. JOHN HIPP, III
Chief Executive Officer
First National Corporation
First National Bank
Orangeburg, SC
RALPH W. NORMAN, JR.
President
Warren Norman Co., Inc.
Rock Hill, SC
DR. JAY K. SHAH, MD
Carolina Cardiology Associates
Rock Hill, SC
JACOB D. SMITH
President
Smith Enterprises, Inc.
Rock Hill, SC
JOLENE STEPP
President
Stepp-Tuttle Realty
Rock Hill, SC
FRANK M. WILKERSON, JR.
President
Wilkerson Fuel Co., Inc.
Rock Hill, SC
FIRST NATIONAL CORPORATION
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FLORENCE COUNTY NATIONAL BANK
EXECUTIVE OFFICERS
SAMUEL A. RODGERS
Chairman of the Board
WILLIAM W. COLEMAN, JR.
President and
Chief Executive Officer
JOHN L. HANNA
Senior Vice President
BOARD OF DIRECTORS
SAMUEL A. RODGERS
Vice Chairman
Carolina Eastern
Scranton, SC
STARLEE B. ALEXANDER
State Farm Insurance
Florence, SC
DR. J. WILLIAM BURCH
Dentist-Farmer-Businessman
Lake City, SC
WILLIAM W. COLEMAN, JR.
President and
Chief Executive Officer
Florence County National Bank
Florence, SC
DR. W. S. "BILL" EDWARDS
Orthopedic Surgeon
Florence, SC
DR. F. GREGG JONES
Anesthesiologist
Florence, SC
JAMES C. GREGG, JR.
Sheriff, Florence County
Effingham, SC
C. JOHN HIPP, III
Chief Executive Officer
First National Corporation
First National Bank
Orangeburg, SC
ROBERT R. HORGER
Chairman of the Board
First National Corporation
Attorney
Horger, Barnwell & Reid
Orangeburg, SC
JERRY SHEALY
Jerry Shealy Agency, Inc.
Florence, SC
SAMUEL F. SPARROW
CPA, EA
Florence, SC
D.P. "TILLY" THOMPSON
(EMERITUS)
Retired Executive Officer
Belk
Florence, SC
FIRST NATIONAL CORPORATION
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CREDITSOUTH FINANCIAL SERVICES CORP
EXECUTIVE OFFICERS
ROBERT R. HORGER
Chairman of the Board
JAY J. CREEL
President
BOARD OF DIRECTORS
JAY J. CREEL
President
CreditSouth Financial Services
DWIGHT W. FRIERSON
Vice President and General Manager
Coca-Cola Bottling Company
Orangeburg, SC
C. JOHN HIPP, III
Chief Executive Officer
First National Corporation
First National Bank
Orangeburg, SC
ROBERT R. HORGER
Chairman of the Board
First National Corporation
Attorney
Horger, Barnwell & Reid
Orangeburg, SC
A. DEWALL WATERS
Partner
Main-Waters Enterprises Partnership
Orangeburg, SC
FIRST NATIONAL CORPORATION
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CORPORATE INFORMATION
GENERAL OFFICES
950 John C. Calhoun Drive, SE
Orangeburg, South Carolina 29115-6715
803-534-2175
ANNUAL MEETING
The Annual Meeting of Shareholders will be held at 2 p.m. on Tuesday, April 24,
2001 in the Liberty Room,
1857 Joe S. Jeffords Highway, Orangeburg, South Carolina.
FORM 10-K AND OTHER INFORMATION
Copies of First National Corporation's Annual Report to the Securities and
Exchange Commission on
Form 10-K (excluding exhibits thereto), and other information may be obtained
without charge by written request to:
John L. Phillips
Controller
First National Corporation
Post Office Box 1287
Orangeburg, South Carolina 29116-1287
803-534-2175
ANALYST CONTACT
Richard C. Mathis
Chief Financial Officer
First National Corporation
Post Office Box 1287
Orangeburg, South Carolina 29116-1287
803-534-2175
STOCK INFORMATION
The Company's Common Stock is listed on the American Stock Exchange
under the trading symbol FNC.
WEBSITES
www.1nationalbank.com www.banknbyc.com www.bankfcnb.com
28
FIRST NATIONAL CORPORATION
P.O. Box 1287
Orangeburg, South Carolina 29116
800.277.2175