United States
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (FEE REQUIRED) FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (NO FEE REQUIRED) FOR THE TRANSITION PERIOD
FROM to
Commission file number 0-15083
CAROLINA FIRST CORPORATION
(Exact name of registrant as specified in its charter)
South Carolina 57-0824914
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
102 South Main Street, Greenville, South Carolina 29601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (803) 255-7900
Securities registered pursuant to Section 12(b) of the Act:
None None
(Title of Class) (Name of each exchange on which registered)
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $1.00 par value
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by nonaffiliates
(shareholders holding less than 5% of an outstanding class of stock, excluding
directors and executive officers), computed by reference to the closing price of
such stock, as of March 1, 1996 was $192,343,000.
The number of shares outstanding of the Registrant's common stock, $1.00 Par
Value was 9,213,683 at March 25, 1996.
DOCUMENTS INCORPORATED BY REFERENCE
Incorporated Document Location in Form 10-K
Portions of 1995 Annual Report to Shareholders Part II; IV
Portions of Proxy Statement dated March 12, 1996 Part III
PART I
ITEM 1 - BUSINESS
THE COMPANY
Carolina First Corporation (the "Company"), organized in 1986,
is a bank holding company headquartered in Greenville, South Carolina. At
December 31, 1995, it operated through three subsidiaries: Carolina First Bank,
a state-chartered bank headquartered in Greenville, South Carolina; Carolina
First Mortgage Company, a South Carolina corporation headquartered in Columbia,
South Carolina ("CF Mortgage"); and Blue Ridge Finance Company, an automobile
finance company headquartered in Greenville, South Carolina ("Blue Ridge"). On
February 3, 1995, the Company completed the merger of Carolina First Savings
Bank, its savings bank subsidiary, into Carolina First Bank. Through its
subsidiaries, the Company provides a full range of banking services, including
mortgage, trust and investment services, designed to meet substantially all of
the financial needs of its customers. The Company, which commenced banking
operations in December 1986, currently conducts business through 55 locations in
South Carolina. At December 31, 1995, the Company had approximately $1.415
billion in assets, $1.062 billion in loans, $1.095 billion in deposits and $95.0
million in shareholders' equity.
The Company was formed principally in response to perceived
opportunities resulting from the takeovers of several South Carolina-based banks
by large southeastern regional bank holding companies. A significant number of
the Company's executive officers and management personnel were previously
employed by certain of the larger South Carolina-based banks that were acquired
by these southeastern regional institutions. Consequently, these officers and
management personnel have significant customer relationships and commercial
banking experience that have contributed to the Company's loan and deposit
growth. The Company targets individuals and small- to medium-sized businesses in
South Carolina that require a full range of quality banking services.
The Company currently serves four principal market areas: the
Greenville metropolitan area and surrounding counties (located in the Upstate
region of South Carolina); the Columbia metropolitan area and surrounding
counties (located in the Midlands region of South Carolina); Georgetown and
Horry counties (located in the northern Coastal region of South Carolina); and
the Charleston metropolitan area (located in the central Coastal region of South
Carolina). The Company's principal market areas represent the four largest
Metropolitan Statistical Areas in the state. The Company also has branch
locations in other counties in South Carolina.
The Company began its operations with the de novo opening of
Carolina First Bank in Greenville and has pursued a strategy of growth through
internal expansion and through the acquisition of branch locations and financial
institutions in selected market areas. Its more significant acquisitions include
(i) the acquisition in August 1990 of First Federal Savings and Loan Association
of Georgetown (subsequently renamed Carolina First Savings Bank) which was
merged into Carolina First Bank in February 1995, (ii) the acquisitions in March
1993 and May 1994 of twelve branch locations and six branch locations,
respectively, of Republic National Bank, (iii) the acquisition of First Sun
Mortgage Corporation (subsequently renamed Carolina First Mortgage Company) in
September 1993, (iv) the merger of Aiken County National Bank into Carolina
First Bank in April 1995, and (v) the merger of Midlands National Bank into
Carolina First Bank in June 1995. Approximately half of the Company's total
deposits have been generated through acquisitions.
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CAROLINA FIRST BANK
Carolina First Bank engages in a general banking business
through 52 branches in 34 communities in 15 South Carolina counties. Carolina
First Bank's primary focus is on commercial and consumer lending to customers in
its market areas, with mortgage lending being of secondary emphasis. It also
provides demand transaction accounts and time deposit accounts to businesses and
individuals. Since the acquisition of CF Mortgage in 1993, Carolina First Bank's
mortgage origination and servicing activities have been performed by CF
Mortgage.
Carolina First Bank provides a full range of commercial and
consumer banking services, including short and medium-term loans, mortgage
loans, revolving credit arrangements, inventory and accounts receivable
financing, equipment financing, real estate lending, safe deposit services,
savings accounts, interest- and noninterest-bearing checking accounts and
installment and other personal loans. Carolina First Bank also provides trust
services, investment products and various cash management programs.
CF MORTGAGE
On September 30, 1993, the Company acquired First Sun Mortgage
Corporation (subsequently renamed Carolina First Mortgage Company). CF Mortgage
is engaged primarily in originating, underwriting and servicing one-to-four
family residential mortgage loans. CF Mortgage also buys or sells purchased
mortgage servicing rights to keep its servicing balances at economically
desirable levels or to recognize gains from favorable terms.
CF Mortgage's mortgage loan origination operation is
conducted principally through eight offices in South Carolina. Mortgage loan
applications are forwarded to CF Mortgage's headquarters in Columbia for
processing in accordance with GNMA, FNMA and other applicable guidelines. During
1995, 1,162 mortgage loans totaling $110 million were originated. The Company
generally sells all conforming fixed rate mortgage loans into the secondary
market.
CF Mortgage's mortgage servicing operations consist of
servicing loans that are owned by Carolina First Bank and subservicing loans, to
which the right to service is owned by Carolina First Bank and other
non-affiliated financial institutions. This servicing operation is conducted at
its headquarters location in Columbia, South Carolina. At December 31, 1995, CF
Mortgage was servicing or subservicing approximately 14,979 loans having an
aggregate principal balance of approximately $1.279 billion. These servicing
balances included $300 million in mortgage loans for which the mortgage
servicing rights were sold at year end and CF Mortgage is subservicing until
June 1996.
BLUE RIDGE
On December 29, 1995, the Company completed its acquisition of
Blue Ridge, an automobile finance company headquartered in Greenville, South
Carolina. Blue Ridge operates from one location and, at December 31, 1995, had
approximately $4 million in total assets. Blue Ridge is engaged primarily in
indirect automobile lending.
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ACQUISITIONS
Since its inception in 1986, the Company has pursued a
strategy of growth through internal expansion and through the acquisition of
branch locations and financial institutions in selected market areas when
suitable opportunities develop. The Company has emphasized internal growth
through the acquisition of market share from the large out-of-state bank holding
companies. It attempts to acquire market share by providing quality banking
services and personal service to individuals and business customers.
The Company has grown through acquisitions. The following list
summarizes the Company's acquisition activity during the past three years.
Method of
Acquisition Date Acquired Accounting
13 Branch Locations March 1993 $205 million Purchase
Republic National Bank (Deposits)
South Carolina
First Sun Mortgage Corporation September 1993 $250 million Purchase
Columbia, South Carolina (Mortgage Servicing Rights)
3 Branch Locations December 1993 $38 million Purchase
Bay Savings Bank, F.S.B (Deposits)
Columbia, South Carolina
1 Branch Location April 1994 $6 million Purchase
Citadel Federal Savings and (Deposits)
Loan Association
Charleston, South Carolina
6 Branch Locations May 1994 $135 million Purchase
Republic National Bank (Deposits)
South Carolina
Aiken National Bank April 1995 $39 million Pooling
Aiken, South Carolina (Assets)
Midlands National Bank June 1995 $44 million Pooling
Prosperity, South Carolina (Assets)
Blue Ridge Finance Company December 1995 $4 million Pooling
Greenville, South Carolina (Assets)
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DIVIDENDS
The Company and its subsidiaries are subject to certain
regulatory restrictions on the amount of dividends they are permitted to pay.
In each year from 1989 through 1995, the Company issued 5%
common stock dividends to common stockholders. At its June 1995 meeting, the
Board of Directors of the Company declared the issuance of a 5% common stock
dividend on August 15, 1995 to common shareholders of record as of August 1,
1995. The Company has paid all scheduled cash dividends on the Series 1993
Preferred Stock, Series 1993B Preferred Stock, Series 1994 Preferred Stock and
Notes since their respective issuances.
In November 1993, the Board of Directors initiated a regular
quarterly cash dividend of $0.05 per share payable on the Common Stock, the
first of which was paid on February 1, 1994. Cash dividends have been paid on a
quarterly basis since the initiation of the cash dividend. The Board of
Directors increased the quarterly cash dividend to $0.06 beginning in the first
quarter of 1995 and to $0.07 beginning in the first quarter of 1996. The Company
presently intends to continue to pay this quarterly cash dividend on the Common
Stock; however, future dividends will depend upon the Company's financial
performance and capital requirements.
COMPETITION
Each of the Company's markets is a highly competitive banking
market in which all of the largest banks in the state are represented. The
competition among the various financial institutions is based upon interest
rates offered on deposit accounts, interest rates charged on loans, credit and
service charges, the quality of services rendered, the convenience of banking
facilities and, in the case of loans to large commercial borrowers, relative
lending limits. In addition to banks and savings associations, the Company
competes with other financial institutions including securities firms, insurance
companies, credit unions, leasing companies and finance companies. Size gives
larger banks certain advantages in competing for business from large
corporations. These advantages include higher lending limits and the ability to
offer services in other areas of South Carolina and the region. As a result, the
Company does not generally attempt to compete for the banking relationships of
large corporations, but concentrates its efforts on small to medium-sized
businesses and on individuals. The Company believes it has competed effectively
in this market segment by offering quality, personal service.
EMPLOYEES
At December 31, 1995, the Company employed a total of 589
full-time equivalent employees. The Company believes that its relations with its
employees are good.
MONETARY POLICY
The earnings of bank holding companies are affected by the
policies of regulatory authorities, including the Board of Governors of the
Federal Reserve System, in connection with its regulation of the money supply.
Various methods employed by the Federal Reserve Board include open market
operations in U.S. Government securities, changes in the discount rate on member
bank borrowings and changes in reserve
5
requirements against member bank deposits. These methods are used in varying
combinations to influence overall growth and distribution of bank loans,
investments and deposits, and their use may also affect interest rates charged
on loans or paid on deposits. The monetary policies of the Federal Reserve Board
have had a significant effect on the operating results of commercial banks in
the past and are expected to continue to do so in the future.
IMPACT OF INFLATION
Unlike most industrial companies, the assets and liabilities
of financial institutions such as the Company's subsidiaries are primarily
monetary in nature. Therefore, interest rates have a more significant effect on
the Company's performance than do the general levels of inflation on the price
of goods and services. While the Company's noninterest income and expense and
the interest rates earned and paid are affected by the rate of inflation, the
Company believes that the effects of inflation are generally manageable through
asset/liability management.
INDUSTRY DEVELOPMENTS
Certain recently-enacted and proposed legislation could have
an effect on both the costs of doing business and the competitive factors facing
the financial institutions industry. The Company is unable at this time to
assess the impact of this legislation on its financial condition or operations.
In August 1995, the FDIC approved a reduction in the
insurance assessments for Bank Insurance Fund ("BIF") deposits. This reduction
decreased Carolina First Bank's insurance assessment for BIF deposits from 0.26%
to 0.04% of the average assessment base. Effective January 1, 1996, the
insurance assessment for Carolina First Bank's BIF deposits was set at zero
(although banks pay a $2,000 annual fee). The FDIC insurance assessment
reduction applies only to BIF-insured deposits and does not include deposits
insured by the Savings Association Insurance Fund ("SAIF"). In connection with
the merger of Carolina First Savings Bank into Carolina First Bank and Carolina
First Bank's assumption of other SAIF-insured deposits in connection with
various acquisitions, approximately $223 million of Carolina First Bank's total
deposits (as of March 31, 1995, the proposed assessment date) are subject to
SAIF insurance assessments imposed by the FDIC. The SAIF is underfunded and
various proposals, including a one-time charge assessed on all SAIF- insured
deposits, are being considered by regulators and lawmakers to recapitalize the
SAIF. The proposed amount of the special assessment has been as high as $0.85
per $100 of SAIF deposits. Assuming that the special assessment were applied at
the $0.85 rate, the Company would incur additional deposit insurance premium
expense of approximately $1.9 million which would be charged against current
period income. The timing and amount of such an assessment cannot be accurately
predicted at this time. Carolina First Bank's SAIF-insured deposits are
currently assessed at 0.23% of the average assessment base.
ACCOUNTING ISSUES
In October 1995, the FASB issued SFAS 123, "Accounting for
Stock-Based Compensation." SFAS 123 establishes a new method of accounting for
stock-based arrangements by measuring the value of a stock compensation award by
the fair value method versus the intrinsic method as currently is used under the
provisions of Opinion 25. If entities do not adopt SFAS 123, they will be
required to disclose in the footnotes net income and earnings per share
information as if the fair value based method had been adopted. The
6
disclosure requirements of SFAS are effective for financial statements with
fiscal years beginning after December 15, 1995. SFAS 123 will have minimal
impact on the Company.
SUPERVISION AND REGULATION
GENERAL
The Company and its subsidiaries are extensively regulated
under federal and state law. To the extent that the following information
describes statutory or regulatory provisions, it is qualified in its entirety by
reference to the particular statutory and regulatory provisions. Any change in
applicable laws may have a material effect on the business and prospects of the
Company. The operations of the Company may be affected by possible legislative
and regulatory changes and by the monetary policies of the United States.
The Company. As a bank holding company registered under the
Bank Holding Company Act of 1956, as amended (the "BHCA"), the Company is
subject to regulation and supervision by the Federal Reserve. Under the BHCA,
the Company's activities and those of its subsidiaries are limited to banking,
managing or controlling banks, furnishing services to or performing services for
its subsidiaries or engaging in any other activity that the Federal Reserve
determines to be so closely related to banking or managing or controlling banks
as to be a proper incident thereto. The BHCA prohibits the Company from
acquiring direct or indirect control of more than 5% of any class of outstanding
voting stock, or substantially all of the assets of any bank, or merging or
consolidating with another bank holding company without prior approval of the
Federal Reserve. The BHCA also prohibited the Company from acquiring control of
any bank operating outside the State of South Carolina until September 29, 1995
unless such action was specifically authorized by the statutes of the state
where the bank to be acquired was located. See " -- Supervision and Regulation
- -- Interstate Banking."
Additionally, the BHCA prohibits the Company from engaging in
or from acquiring ownership or control of more than 5% of the outstanding voting
stock of any company engaged in a nonbanking business unless such business is
determined by the Federal Reserve to be so closely related to banking or
managing or controlling banks as to be properly incident thereto. The BHCA
generally does not place territorial restrictions on the activities of such
nonbanking-related entities.
Further, the Federal Deposit Insurance Act, as amended
("FDIA"), authorizes the merger or consolidation of any Bank Insurance Fund
("BIF") member with any Savings Association Insurance Fund ("SAIF") member, the
assumption of any liability by any BIF member to pay any deposits of any SAIF
member or vice versa, or the transfer of any assets of any BIF member to any
SAIF member in consideration for the assumption of liabilities of such BIF
member or vice versa, provided that certain conditions are met and, in the case
of any acquiring, assuming or resulting depository institution which is a BIF
member, that such institution continues to make payment of SAIF assessments on
the portion of liabilities attributable to any acquired, assumed or merged
SAIF-insured institution (or, in the case of any acquiring, assuming or
resulting depository institution which is a SAIF member, that such institution
continues to make payment of BIF assessments on the portion of liabilities
attributable to any acquired, assumed or merged BIF-insured institution).
There are a number of obligations and restrictions imposed on
bank holding companies and their depository institution subsidiaries by law and
regulatory policy that are designed to minimize potential loss exposure to the
depositors of such depository institutions and to the FDIC insurance funds in
the event the depository institution becomes in danger of defaulting or in
default under its obligations to repay deposits. For
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example, under current federal law, to reduce the likelihood of receivership of
an insured depository institution subsidiary, a bank holding company is required
to guarantee the compliance of any insured depository institution subsidiary
that may become "undercapitalized" with the terms of any capital restoration
plan filed by such subsidiary with its appropriate federal banking agency up to
the lesser of (i) an amount equal to 5% of the institution's total assets at the
time the institution became undercapitalized, or (ii) the amount that is
necessary (or would have been necessary) to bring the institution into
compliance with all applicable capital standards as of the time the institution
fails to comply with such capital restoration plan. Under a policy of the
Federal Reserve with respect to bank holding company operations, a bank holding
company is required to serve as a source of financial strength to its subsidiary
depository institutions and to commit resources to support such institutions in
circumstances where it might not do so absent such policy. The Federal Reserve
also has the authority under the BHCA to require a bank holding company to
terminate any activity or relinquish control of a nonbank subsidiary (other than
a nonbank subsidiary of a bank) upon the Federal Reserve's determination that
such activity or control constitutes a serious risk to the financial soundness
or stability of any subsidiary depository institution of the bank holding
company. Further, federal law grants federal bank regulatory authorities
additional discretion to require a bank holding company to divest itself of any
bank or nonbank subsidiary if the agency determines that divestiture may aid the
depository institution's financial condition.
In addition, the "cross-guarantee" provisions of the FDIA
require insured depository institutions under common control to reimburse the
FDIC for any loss suffered by either the SAIF or the BIF as a result of the
default of a commonly controlled insured depository institution or for any
assistance provided by the FDIC to a commonly controlled insured depository
institution in danger of default. The FDIC may decline to enforce the
cross-guarantee provisions if it determines that a waiver is in the best
interest of the SAIF or the BIF, or both. The FDIC's claim for damages is
superior to claims of stockholders of the insured depository institution or its
holding company but is subordinate to claims of depositors, secured creditors
and holders of subordinated debt (other than affiliates) of the commonly
controlled insured depository institutions.
The Company is subject to the obligations and restrictions
described above. However, management currently does not expect that any of these
provisions will have any material impact on its operations.
As a bank holding company registered under the South Carolina
Bank Holding Company Act, the Company also is subject to regulation by the State
Board. Consequently, the Company must receive the approval of the State Board
prior to engaging in the acquisitions of banking or nonbanking institutions or
assets. The Company must also file with the State Board periodic reports with
respect to its financial condition and operations, management, and intercompany
relationships between the Company and its subsidiaries.
Carolina First Bank. Carolina First Bank is an FDIC-insured,
South Carolina-chartered banking corporation and is subject to various statutory
requirements and rules and regulations promulgated and enforced primarily by the
State Board and the FDIC. These statutes, rules and regulations relate to
insurance of deposits, required reserves, allowable investments, loans, mergers,
consolidations, issuance of securities, payment of dividends, establishment of
branches and other aspects of the business of Carolina First Bank. The FDIC has
broad authority to prohibit Carolina First Bank from engaging in what it
determines to be unsafe or unsound banking practices. In addition, federal law
imposes a number of restrictions on state-chartered, FDIC-insured banks and
their subsidiaries. These restrictions range from prohibitions against engaging
as a principal in certain activities to the requirement of prior notification of
branch closings. Carolina First Bank also is subject to various other state and
federal laws and regulations, including state usury laws, laws relating to
fiduciaries, consumer credit and equal credit and fair credit reporting laws.
Carolina First Bank is not a member of the Federal Reserve System.
8
Dividends. The holders of the Company's common stock are
entitled to receive dividends when and if declared by the Board of Directors out
of funds legally available therefor. The holders of the Company's outstanding
series of preferred stock are also entitled to receive dividends when, as and if
declared by the Board of Directors in their discretion out of funds legally
available therefor and as set forth in the Company's Articles of Incorporation.
The Company is a legal entity separate and distinct from its subsidiaries and
depends for its revenues on the payment of dividends from its subsidiaries.
Current federal law would prohibit, except under certain circumstances and with
prior regulatory approval, an insured depository institution, such as Carolina
First Bank, from paying dividends or making any other capital distribution if,
after making the payment or distribution, the institution would be considered
"undercapitalized," as that term is defined in applicable regulations. In
addition, as a South Carolina-chartered bank, Carolina First Bank is subject to
legal limitations on the amount of dividends it is permitted to pay. In
particular, Carolina First Bank must receive the approval of the South Carolina
Commissioner of Banking prior to paying dividends to the Company.
CAPITAL ADEQUACY
The Company. The Federal Reserve has adopted risk-based
capital guidelines for bank holding companies. Under these guidelines, the
minimum ratio of total capital to risk-weighted assets (including certain
off-balance sheet activities, such as standby letters of credit) is 8%. At least
half of the total capital is required to be "Tier 1 capital," principally
consisting of common stockholders' equity, noncumulative preferred stock, a
limited amount of cumulative perpetual preferred stock, and minority interests
in the equity accounts of consolidated subsidiaries, less certain goodwill
items. The remainder (Tier 2 capital) may consist of a limited amount of
subordinated debt and intermediate-term preferred stock, certain hybrid capital
instruments and other debt securities, perpetual preferred stock, and a limited
amount of the general loan loss allowance. In addition to the risk-based capital
guidelines, the Federal Reserve has adopted a minimum Tier 1 (leverage) capital
ratio under which a bank holding company must maintain a minimum level of Tier 1
capital (as determined under applicable rules) to average total consolidated
assets of at least 3% in the case of bank holding companies which have the
highest regulatory examination ratios and are not contemplating significant
growth or expansion. All other bank holding companies are required to maintain a
ratio of at least 100 to 200 basis points above the stated minimum. At December
31, 1995, the Company was in compliance with both the risk-based capital
guidelines and the minimum leverage capital ratio.
Carolina First Bank. As a state-chartered, FDIC-insured
institution which is not a member of the Federal Reserve System, Carolina First
Bank is subject to capital requirements imposed by the FDIC. The FDIC requires
state-chartered nonmember banks to comply with risk-based capital standards
substantially similar to those required by the Federal Reserve, as described
above. The FDIC also requires state-chartered nonmember banks to maintain a
minimum leverage ratio similar to that adopted by the Federal Reserve. Under the
FDIC's leverage capital requirement, state nonmember banks that (a) receive the
highest rating during the examination process and (b) are not anticipating or
experiencing any significant growth are required to maintain a minimum leverage
ratio of 3% of Tier 1 capital to total assets; all other banks are required to
maintain a minimum ratio of 100 to 200 basis points above the stated minimum,
with an absolute minimum leverage ratio of not less than 4%. As of December 31,
1995, the Company and Carolina First Bank were both in compliance with each of
the applicable regulatory capital requirements.
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FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 1991
The Federal Deposit Insurance Corporation Improvement Act of
1994 ("FDICIA") required each federal banking agency to revise its risk-based
capital standards to ensure that those standards take adequate account of
interest rate risk, concentration of credit risk and the risk of nontraditional
activities, as well as reflect the actual performance and expected risk of loss
on multifamily mortgages. The Federal Reserve, the FDIC and the OCC have issued
a joint advance notice of proposed rulemaking, and have issued a revised
proposal, soliciting comments on a proposed framework for implementing these
revisions. Under the proposal, an institution's assets, liabilities, and
off-balance sheet positions would be weighted by risk factors that approximate
the instrument's price sensitivity to a 100 basis point change in interest
rates. Institutions with interest rate risk exposure in excess of a threshold
level would be required to hold additional capital proportional to that risk.
The notice also asked for comments on how the risk-based capital guidelines of
each agency may be revised to take account of concentration and credit risk and
the risk of nontraditional activities. Carolina First Corporation cannot assess
at this point the impact the proposal would have on the capital requirements of
Carolina First Corporation or its subsidiary depository institutions.
As an FDIC-insured institution, Carolina First Bank is subject
to insurance assessments imposed by the FDIC. Under current law, the insurance
assessment to be paid by insured institutions shall be as specified in a
schedule required to be issued by the FDIC that specifies, at semiannual
intervals, target reserve ratios designed to increase the FDIC insurance fund's
reserve ratio to 1.25% of estimated insured deposits (or such higher ratio as
the FDIC may determine in accordance with the statute) in 15 years. Further, the
FDIC is authorized to impose one or more special assessments in any amount
deemed necessary to enable repayment of amounts borrowed by the FDIC from the
United States Department of the Treasury (the "Treasury Department").
Effective January 1, 1993, the FDIC implemented a risk-based
assessment schedule, having assessments ranging from 0.23% to 0.31% of an
institution's average assessment base. The actual assessment to be paid by each
FDIC-insured institution is based on the institution's assessment risk
classification, which is determined based on whether the institution is
considered "well capitalized," "adequately capitalized" or "undercapitalized,"
as such terms have been defined in applicable federal regulations adopted to
implement the prompt corrective action provisions of FDICIA (see "--Certain
Regulatory Matters--Other Safety and Soundness Regulations"), and whether such
institution is considered by its supervisory agency to be financially sound or
to have supervisory concerns. In August 1995, the FDIC approved a reduction in
the insurance assessments for Bank Insurance Fund ("BIF") deposits. This
reduction decreased Carolina First Bank's insurance assessment for BIF deposits
from 0.26% to 0.04% of the average assessment base. Effective January 1, 1996,
the insurance assessment for Carolina First Bank's BIF deposits was set at zero
(although banks pay a $2,000 annual fee). The FDIC insurance assessment
reduction applies only to BIF-insured deposits and does not include deposits
insured by the Savings Association Insurance Fund ("SAIF").
In connection with the merger of Carolina First Savings Bank
into Carolina First Bank and Carolina First Bank's assumption of other
SAIF-insured deposits in connection with various acquisitions, approximately
$223 million of Carolina First Bank's total deposits (as of March 31, 1995, the
proposed assessment date) are subject to SAIF insurance assessments imposed by
the FDIC. The SAIF is underfunded and various proposals, including a one-time
charge assessed on all SAIF-insured deposits, are being considered by regulators
and lawmakers to recapitalize the SAIF. The proposed amount of the special
assessment has been as high as $0.85 per $100 of SAIF deposits. Assuming that
the special assessment were applied at the $0.85 rate, the Company would incur
additional deposit insurance premium expense of approximately $1.9 million which
would be charged against current period income. The timing and amount of such an
assessment cannot be accurately predicted at this time. Carolina First Bank's
SAIF-insured deposits are currently assessed at 0.23% of the average assessment
base.
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OTHER SAFETY AND SOUNDNESS REGULATIONS
Prompt Corrective Action. Current law provides the federal
banking agencies with broad powers to take prompt corrective action to resolve
problems of insured depository institutions. The extent of these powers depends
upon whether the institutions in question are "well capitalized," "adequately
capitalized," "undercapitalized," "significantly undercapitalized" or
"critically undercapitalized." Under uniform regulations defining such capital
levels issued by each of the federal banking agencies, a bank is considered
"well capitalized" if it has (i) a total risk-based capital ratio of 10% or
greater, (ii) a Tier 1 risk-based capital ratio of 6% or greater, (iii) a
leverage ratio of 5% or greater, and (iv) is not subject to any order or written
directive to meet and maintain a specific capital level for any capital measure.
An "adequately capitalized" bank is defined as one that has (i) a total
risk-based capital ratio of 8% or greater, (ii) a Tier 1 risk-based capital
ratio of 4% or greater, and (iii) a leverage ratio of 4% or greater (or 3% or
greater in the case of a bank with a composite CAMEL rating of 1). A bank is
considered (A) "undercapitalized" if it has (i) a total risk-based capital ratio
of less than 8%, (ii) a Tier 1 risk-based capital ratio of less than 4% or (iii)
a leverage ratio of less than 4% ( or 3% in the case of a bank with a composite
CAMEL rating of 1); (B) "significantly undercapitalized" if the bank has (i) a
total risk-based capital ratio of less than 6%, or (ii) a Tier 1 risk-based
capital ratio of less than 3%, or (iii) a leverage ratio of less than 3%; and
(C) "critically undercapitalized" if the bank has a ratio of tangible equity to
total assets equal to or less than 2%. Carolina First Corporation and Carolina
First Bank each currently meet the definition of well capitalized.
Brokered Deposits. Current federal law also regulates the
acceptance of brokered deposits by insured depository institutions to permit
only a "well capitalized" depository institution to accept brokered deposits
without prior regulatory approval. Under FDIC regulations, "well capitalized"
insured depository institutions may accept brokered deposits without
restriction, "adequately capitalized" insured depository institutions may accept
brokered deposits with a waiver from the FDIC (subject to certain restrictions
on payments of interest rates) while "undercapitalized" insured depository
institutions may not accept brokered deposits. The regulations provide that the
definitions of "well capitalized," "adequately capitalized" and
"undercapitalized" are the same as the definitions adopted by the agencies to
implement the prompt corrective action provisions of FDICIA (as described in the
previous paragraph). Carolina First Corporation does not believe that these
regulations will have a material adverse effect on its current operations.
Other FDICIA Regulations. To facilitate the early
identification of problems, FDICIA required the federal banking agencies to
review and, under certain circumstances, prescribe more stringent accounting and
reporting requirements than those required by generally accepted accounting
principles. The FDIC has issued final regulations implementing those provisions.
The rule, among other things, requires that management report on the
institution's responsibility for preparing financial reporting and compliance
with designated laws and regulations concerning safety and soundness, and that
independent auditors attest to and report separately on assertions in
management's reports concerning compliance with such laws and regulations, using
FDIC approved audit procedures.
FDICIA required each of the federal banking agencies to
develop regulations addressing certain safety and soundness standards for
insured depository institutions (such as Carolina First Bank) and depository
institution holding companies (such as Carolina First Corporation), including
operational and managerial standards, asset quality, earnings and stock
valuation standards, as well as compensation standards (but not dollar levels of
compensation). Each of the federal banking agencies has issued a joint notice of
proposed rulemaking, which requested comment on the implementation of these
standards. The proposed rule sets forth general operational and managerial
standards in the areas of internal controls, information systems and internal
audit systems, loan documentation, credit underwriting, interest rate exposure,
asset growth and compensation fees and benefits. The proposed rule also
establishes a maximum ratio of classified assets to capital, and
11
requires institutions to meet minimum capital standards as a measure of whether
such institutions have minimum earning sufficient to absorb losses without
impairing capital. Finally, the proposed rule would define compensation as
excessive if it is unreasonable or disproportionate to the services actually
performed. Bank holding companies would not be subject to the standards on
compensation. The proposal contemplates that each federal agency would determine
compliance with these standards through the examination process, and if
necessary to correct weaknesses, require an institution to file a written safety
and soundness compliance plan. Carolina First Corporation has not yet determined
the effect the proposed rule would have on its operations and the operations of
its depository institution subsidiary if it is adopted substantially as
proposed.
COMMUNITY REINVESTMENT ACT
Carolina First Bank is subject to the requirements of the
Community Reinvestment Act ("CRA"). The CRA requires that financial institutions
have an affirmative and ongoing obligation to meet the credit needs of their
local communities, including low- and moderate-income neighborhoods, consistent
with the safe and sound operation of those institutions. Each financial
institution's efforts in meeting community credit needs are evaluated as part of
the examination process pursuant to twelve assessment factors. These factors
also are considered in evaluating mergers, acquisitions and applications to open
a branch or facility. Carolina First Bank received an "outstanding" rating in
its most recent evaluation.
As a result of a Presidential initiative, each of the federal
banking agencies has issued a notice of proposed rulemaking that would replace
the current CRA assessment system with a new evaluation system that would rate
institutions based on their actual performance (rather than efforts) in meeting
community credit needs. Under the proposal, each institution would be evaluated
based on the degree to which it is providing loans (the lending test), branches
and other services (the service test) and investments to low- and
moderate-income areas (the investment test). Under the lending test, as
proposed, an institution would be evaluated on the basis of its market share of
reportable loans in low- and moderate-income areas in comparison to other
lenders subject to CRA in its service area, and in comparison with the
institution's market share of reportable loans in other service areas. An
institution would be evaluated under the investment test based on the amount of
investments made that have had a demonstrable impact on low- and moderate-income
areas or persons as compared to its risk-based capital. The service test would
evaluate a retail institution primarily based on the percentage of its branches
located in, or that are readily accessible to, low- and moderate-income areas.
Each depository institution would have to report to its federal supervisory
agency and make available to the public data on the geographic distribution of
its loan applications, denials, originations and purchases. Small institutions
could elect to be evaluated under a streamlined method that would not require
them to report this data. All institutions, however, would receive one of five
ratings based on their performance: Outstanding, High Satisfactory, Low
Satisfactory, Needs to Improve or Substantial Noncompliance. An institution that
received a rating of Substantial Noncompliance would be subject to enforcement
action. The Company currently is studying the proposal and determining whether
the regulation, if adopted, would require changes to Carolina First Bank's CRA
action plans.
TRANSACTIONS BETWEEN THE COMPANY, ITS SUBSIDIARIES AND AFFILIATES
The Company's subsidiaries are subject to certain restrictions
on extensions of credit to executive officers, directors, principal stockholders
or any related interest of such persons. Extensions of credit (i) must be made
on substantially the same terms, including interest rates and collateral, as
those prevailing at the time for comparable transactions with unaffiliated
persons; and (ii) must not involve more than the normal risk of
12
repayment or present other unfavorable features. Aggregate limitations on
extensions of credit also may apply. The Company's subsidiaries also are subject
to certain lending limits and restrictions on overdrafts to such persons.
Subsidiary banks of a bank holding company are subject to
certain restrictions imposed by the Federal Reserve Act on extensions of credit
to the bank holding company or its nonbank subsidiary, on investments in their
securities and on the use of their securities as collateral for loans to any
borrower. Such restrictions may limit the Company's ability to obtain funds from
its bank subsidiary for its cash needs, including funds for acquisitions,
interest and operating expenses. Certain of these restrictions are not
applicable to transactions between a bank and a savings association owned by the
same bank holding company, provided that every bank and savings association
controlled by such bank holding company complies with all applicable capital
requirements without relying on goodwill.
In addition, under the BHCA and certain regulations of the
Federal Reserve, a bank holding company and its subsidiaries are prohibited from
engaging in certain tie-in arrangements in connection with any extension of
credit, lease or sale of property or furnishing of services. For example, a
subsidiary may not generally require a customer to obtain other services from
any other subsidiary or the Company, and may not require the customer to promise
not to obtain other services from a competitor, as a condition to an extension
of credit to the customer.
INTERSTATE BANKING
In 1986, South Carolina adopted legislation which permitted
banks and bank holding companies in certain southern states to acquire banks in
South Carolina to the extent that such other states had reciprocal legislation
which was applicable to South Carolina banks and bank holding companies. The
legislation resulted in a number of South Carolina banks being acquired by large
out-of-state bank holding companies.
In July 1994, South Carolina enacted legislation which
effectively provides that, after June 30, 1996, out-of-state bank holding
companies (including bank holding companies in the Southern Region, as defined
under the statute) may acquire other banks or bank holding companies having
offices in South Carolina upon the approval of the South Carolina State Board of
Financial Institutions and assuming compliance with certain other conditions,
including that the effect of the transaction not lessen competition and that the
laws of the state in which the out-of-state bank holding company filing the
applications has its principal place of business permit South Carolina bank
holding companies to acquire banks and bank holding companies in that state.
Although such legislation may increase takeover activity in South Carolina, the
Company does not believe that such legislation will have a material impact on
its competitive position. However, no assurance of such fact may be given.
Congress recently enacted the Riegle-Neal Interstate Banking
and Branching Efficiency Act of 1994 ("Riegle-Neal Act"), which will increase
the ability of bank holding companies and banks to operate across state lines.
Under the Riegle-Neal Act, the existing restrictions on interstate acquisitions
of banks by bank holding companies will be repealed one year following
enactment, such that the Company and any other bank holding company located in
South Carolina would be able to acquire a bank located in any other state, and a
bank holding company located outside South Carolina could acquire any South
Carolina-based bank, in either case subject to certain deposit percentage and
other restrictions. The legislation also provides that, unless an individual
state elects beforehand either (i) to accelerate the effective date or (ii) to
prohibit out-of-state banks from operating interstate branches within its
territory, on or after June 1, 1997, adequately capitalized and managed bank
holding companies will be able to consolidate their multistate bank operations
into a single bank subsidiary and to branch interstate through acquisitions. De
novo branching by an out-of-state bank would be
13
permitted only if it is expressly permitted by the laws of the host state. The
authority of a bank to establish and operate branches within a state will
continue to be subject to applicable state branching laws. The Company believes
that this legislation may result in increased takeover activity of South
Carolina financial institutions by out-of-state financial institutions. However,
the Company does not presently anticipate that such legislation will have a
material impact on its operations or future plans.
There is legislation pending before the General Assembly of
the State of South Carolina which is designed to implement the Riegle-Neal Act.
OTHER REGULATIONS
Interest and certain other charges collected or contracted for
by Carolina First Bank and CF Mortgage Company are subject to state usury laws
and certain federal laws concerning interest rates. Carolina First Bank's and CF
Mortgage Company's loan operations are also subject to certain federal laws
applicable to credit transactions, such as the federal Truth-In-Lending Act
governing disclosures of credit terms to consumer borrowers, CRA requiring
financial institutions to meet their obligations to provide for the total credit
needs of the communities they serve, including investing their assets in loans
to low- and moderate-income borrowers, the Home Mortgage Disclosure Act of 1975
requiring financial institutions to provide information to enable the public and
public officials to determine whether a financial institution is fulfilling its
obligation to help meet the housing needs of the community it serves, the Equal
Opportunity Act prohibiting discrimination on the basis of race, creed or other
prohibited factors in extending credit, the Fair Credit Reporting Act of 1978
governing the use and provision of information to credit reporting agencies, the
Fair Debt Collection Act governing the manner in which consumer debts may be
collected by collection agencies, and the rules and regulations of the various
federal agencies charged with the responsibility of implementing such federal
laws. The deposit operations of Carolina First Bank also are subject to the
Right to Financial Privacy Act, which imposes a duty to maintain confidentiality
of consumer financial records and prescribes procedures for complying with
administrative subpoenas of financial records, and the Electronic Funds Transfer
Act and Regulation E issued by the Federal Reserve to implement that act, which
govern automatic deposits to and withdrawals from deposit accounts and
customers' rights and liabilities arising from the use of automated teller
machines and other electronic services.
14
ITEM 1 - STATISTICAL DISCLOSURE
Comparative Average Balances -- Yields and Costs.................................................16
Rate/Volume Variance Analysis....................................................................17
Securities Held for Investment Composition.......................................................18
Securities Available for Sale Composition........................................................18
Trading Account Composition......................................................................18
Securities Held for Investment and Securities Available for Sale Maturity Schedule...............19
Loan Portfolio Composition.......................................................................20
Loan Maturity and Interest Sensitivity...........................................................20
Nonperforming Assets.............................................................................21
Summary of Loan Loss Experience..................................................................21
Composition of Allowance for Loan Losses.........................................................22
Types of Deposits................................................................................23
Certificates of Deposit Greater than $100,000....................................................23
Return on Equity and Assets......................................................................24
Short-Term Borrowings............................................................................25
Interest Rate Sensitivity........................................................................26
Noninterest Income...............................................................................27
Noninterest Expense..............................................................................27
15
Comparative Average Balances -- Yields and Costs
(dollars in thousands)
Years Ended December 31,
1995 1994 1993
Average/ Income/ Yield/ Average/ Income/ Yield/ Average/ Income/ Yield/
Balance Expense Rate Balance Expense Rate Balance xpense Rate
ASSETS
Earning assets
Loans (net of unearned income)(1)............$ 965,632 $92,731 9.60 % $ 781,503 $68,474 8.76 % $ 548,619 $ 46,312 8.44 %
Investment securities (taxable).............. 134,894 7,500 5.56 125,053 5,623 4.50 131,829 6,483 4.92
Investment securities (nontaxable)........... 22,930 1,674(2) 7.30 17,609 1,567(2) 8.90 8,252 731(2)8.86
Federal funds sold and resale agreements..... 5,870 360 6.13 15,810 603 3.81 21,154 638 3.02
Interest bearing deposits with other banks... 919 71 7.73 1,180 49 4.17 1,284 57 4.42
Total earning assets..................... 1,130,245 102,336 9.05 % 941,155 76,316 8.11 % 711,138 54,221 7.62 %
Non-earning assets........................... 139,512 115,799 71,413
Total assets.............................$1,269,757 $1,056,954 $ 782,551
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Interest-bearing liabilities
Interest-bearing deposits
Interest checking..........................$ 114,897 $ 2,332 2.03 % $ 101,558 $ 2,193 2.16 % $ 66,891 $ 1,523 2.28 %
Savings.................................... 75,407 2,235 2.96 87,919 2,619 2.98 60,854 1,848 3.04
Money market............................... 158,742 6,473 4.08 157,460 4,856 3.08 137,807 4,007 2.91
Certificates of deposit.................... 497,358 27,544 5.54 433,123 18,945 4.37 333,338 14,911 4.47
Other...................................... 45,850 2,595 5.66 44,347 2,137 4.82 34,733 1,766 5.09
Total interest-bearing deposits.......... 892,254 41,179 4.62 % 824,407 30,750 3.73 % 633,623 24,055 3.80 %
Short-term borrowings....................... 136,799 8,196 6.00 41,362 1,638 3.96 14,023 427 3.05
Long-term borrowings........................ 16,875 1,603 9.50 1,309 121 9.25 1,444 125 8.66
Total interest-bearing liabilities......... 1,045,928 50,978 4.87 % 867,078 32,509 3.75 % 649,090 24,607 3.79 %
Non-interest bearing liabilities
Non-interest bearing deposits.............. 130,775 101,209 61,550
Other non-interest liabilities............. 2,812 1,290 6,393
Total liabilities.......................... 1,179,515 969,577 717,033
Shareholders' equity........................... 90,242 87,377 65,518
Total liabilities and shareholders' equity...$1,269,757 $1,056,954 $ 782,551
Net interest margin........................... $51,358 4.54 % $43,807 4.65 % $ 29,614 4.16 %
- ---------------------------------
(1)Includes nonaccruing loans.
(2)Fully tax-equivalent basis at a 35% tax rate.
Note: Average balances are derived from daily balances.
16
Rate/Volume Variance Analysis
(dollars in thousands)
1995 Compared to 1994 1994 Compared to 1993
Amount Amount Amount Amount
Caused Caused Caused Caused
by by by by
Total Change in Change in Total Change in Change in
Change Volume Rate Change Volume Rate
Earning assets
Loans, net of unearned income........$ 24,257 $ 17,682 $ 6,575 $ 22,162 $ 20,405 $ 1,757
Securities, taxable.................. 1,877 547 1,330 (860) (310) (550)
Securities, nontaxable............... 107 388 (281) 836 820 16
Federal funds sold................... (243) (609) 366 (35) (234) 199
Interest-bearing deposits with
other banks....................... 22 (11) 33 (8) (6) (2)
Total interest income...... 26,020 17,997 8,023 22,095 20,675 1,420
Interest-bearing liabilities
Interest-bearing deposits
Interest checking................. 139 271 (132) 670 757 (87)
Savings........................... (384) (370) (14) 771 812 (41)
Money market...................... 1,617 52 1,565 849 602 247
Certificates of deposit........... 8,599 3,557 5,042 4,034 4,374 (340)
Other............................. 458 85 373 371 465 (94)
Total interest-bearing deposit 10,429 3,595 6,834 6,695 7,010 (315)
Short-term borrowings................... 6,558 5,718 840 1,211 1,049 162
Long-term borrowings.................... 1,482 1,479 3 (4) (9) 5
Total interest expense..... 18,469 10,792 7,677 7,902 8,050 (148)
Net interest income.....$ 7,551 $ 7,205 $ 346 $ 14,193 $ 12,625 $ 1,568
Note: Changes which are not solely attributable to volume or rate have been
allocated to volume and rate on a pro-rata basis.
17
Securities Held for Investment Composition
(dollars in thousands)
December 31, (at amortized cost)
1995 1994 1993
U.S. Treasury securities....................................$ 0 $ 6,189 $ 8,906
Obligations of U.S. Government agencies and corporations.... 0 42,936 37,636
Obligations of states and political subdivisions............ 25,937 21,086 11,907
Other securities............................................ 352 53 6,043
$ 26,289 $ 70,264 $ 64,492
Securities Available for Sale Composition
(dollars in thousands)
December 31, (at carrying value)
1995 1994 1993
U.S. Treasury securities....................................$ 97,140 $ 26,534 $ 11,523
Obligations of U.S. Government agencies and corporations.... 36,706 26,879 51,357
Other securities............................................ 12,426 7,135 1,991
$ 146,272 $ 60,548 $ 64,871
Trading Account Composition
(dollars in thousands)
December 31, (at carrying value)
1995 1994 1993
U.S. Treasury and Government agencies.......................$ 4,954 $ 178 $ 0
State and political subdivisions............................ 851 977 250
$ 5,805 $ 1,155 $ 250
18
Securities Held for Investment and
Securities Available for Sale Maturity Schedule
(dollars in thousands)
Held for Investment -- Book Value
After One After Five
But But
Within Within Within After
One Year Five Years Ten Years Ten Years Total
U.S Treasury...........................................$ 0 $ 0 $ 0 $ 0 $ 0
U.S. Government agencies
and corporations.................................... 0 0 0 0 0
States and political subdivisions.................... 2,668 9,831 10,253 3,185 25,937
Other securities....................................... 0 0 0 352 352
$ 2,668 $ 9,831 $ 10,253 $ 3,537 $ 26,289
Weighted average yield
U.S Treasury........................................... 0.00 % 0.00 % 0.00 % 0.00 % 0.00 %
U.S. Government agencies
and corporations.................................... 0.00 0.00 0.00 0.00 0.00
States and political subdivisions...................... 4.01 4.29 4.76 5.29 4.57
Other securities....................................... 0.00 0.00 0.00 2.74 2.74
4.01 % 4.29 % 4.76 % 5.04 % 4.55 %
Available for Sale -- Book Value
After One After Five
But But
Within Within Within After
One Year Five Years Ten Years Ten Years Total
U.S Treasury...........................................$ 97,118 $ 0 $ 0 $ 0 $ 97,118
U.S. Government agencies
and corporations.................................... 1,400 35,341 0 0 36,741
States and political subdivisions...................... 0 0 0 0 0
Other securities....................................... 12,322 0 0 0 12,322
$ 110,840 $ 35,341 $ 0 $ 0 $ 146,181
Weighted average yield
U.S Treasury........................................... 5.40 % 0.00 % 0.00 % 0.00 % 5.40 %
U.S. Government agencies
and corporations.................................... 5.33 6.18 0.00 0.00 6.15
States and political subdivisions...................... 0.00 0.00 0.00 0.00 0.00
Other securities....................................... 5.13 0.00 0.00 0.00 5.13
5.37 % 6.18 % 0.00 % 0.00 % 5.57 %
19
Loan Portfolio Composition
(dollars in thousands)
December 31,
1995 1994 1993 1992 1991
Commercial, financial and agricultural..$ 188,255 $ 179,876 $ 137,340 $ 112,241 $ 96,061
Real Estate
Construction......................... 31,552 24,039 22,752 18,269 21,682
Mortgage
Residential.......................... 217,899 206,980 157,460 123,636 124,162
Commercial and multifamily (1)....... 234,153 275,083 157,528 94,084 69,492
Consumer................................ 149,216 129,106 89,788 73,883 64,570
Credit cards............................ 86,901 36,954 53,305 30,702 23,034
Lease financing receivables............. 36,740 208 ------ 7 18
Loans held for sale..................... 125,000 71,695 7,700 6,801 ------
Total gross loans.................$ 1,069,716 $ 923,941 $ 625,873 $ 459,623 $ 399,019
Unearned income......................... (7,056) (873) (2,227) (3,973) (3,883)
Total loans net of unearned income 1,062,660 923,068 623,646 455,650 395,136
Allowance for loan losses............... (8,661) (6,002) (6,679) (5,276) (4,520)
Total net loans...................$ 1,053,999 $ 917,066 $ 616,967 $ 450,374 $ 390,616
- ---------------------------------------
(1) The majority of these loans are made to operating businesses where
real property has been taken as additional collateral.
Loan Maturity and Interest Sensitivity
(dollars in thousands)
Over One
But Over
One Year Less Than Five
or Less Five Years Years Total
Commercial, financial, agricultural and
commercial real estate.............................$ 308,358 $ 88,706 $ 25,344 $ 422,408
Real estate -- construction........................... 26,819 4,733 0 31,552
Total of loans with:
Predetermined interest rates....................... 82,049 37,874 25,344 145,267
Floating interest rates............................ 253,128 55,565 0 308,693
20
Nonperforming Assets
(dollars in thousands)
December 31,
1995 1994 1993 1992 1991
Nonaccrual loans..................................$ 1,275 $ 2,051 $ 2,487 $ 2,474 $ 1,879
Restructured loans................................ 1,085 675 0 0 0
Total nonperforming loans............... 2,360 2,726 2,487 2,474 1,879
Other real estate owned........................... 2,508 1,996 2,879 2,804 1,471
Total nonperforming assets..............$ 4,868 $ 4,722 $ 5,366 $ 5,278 $ 3,350
Loans past due 90 days still accruing interest....$ 2,748 $ 1,285 $ 2,060 $ 2,127 $ 1,784
Total nonperforming assets as a percentage
of loans and other real estate owned.......... 0.46 % 0.51 % 0.86 % 1.23 % 0.84%
Allowance for loan losses as a percentage
of nonperforming loans......................... 366.99 % 220.18 % 268.59 % 186.63 % 240.55%
Summary of Loan Loss Experience
(dollars in thousands)
December 31,
1995 1994 1993 1992 1991
Loan loss reserve at beginning of period..........$ 6,002 $ 6,679 $ 5,276 $ 4,520 $ 2,960
Blue Ridge merger................................. 128 0 0 0 0
Valuation allowance for loans acquired............ 633 1,077 1,811 255 450
Charge-offs:
Commercial, financial and agricultural........ 1,201 519 401 1,450 418
Real estate - construction................... 0 85 0 30 31
Real estate - mortgage....................... 85 263 267 195 108
Consumer..................................... 1,437 583 423 235 257
Credit cards................................. 2,536 1,641 488 0 0
Total loans charged-off.............. 5,259 3,091 1,579 1,910 814
Recoveries:
Commercial, financial and agricultural....... 180 69 23 48 0
Real estate - construction.................. 0 0 0 1 0
Real estate - mortgage...................... 14 9 23 18 0
Consumer.................................... 114 62 19 26 34
Credit cards................................ 3 0 0 0 0
Total loans recovered............... 311 140 65 93 34
Net charge-offs................................... 4,948 2,951 1,514 1,817 780
Provision charged to expense................ 6,846 1,197 1,106 2,318 1,890
Loan loss reserve at end of period................$ 8,661 $ 6,002 $ 6,679 $ 5,276 $ 4,520
Average loans.....................................$ 965,632 $ 781,503 $ 548,619 $ 432,282 $ 355,944
Total loans, net of unearned income (period end).. 1,062,660 923,068 623,646 455,650 395,136
Net charge-offs as a percentage of average loans.. 0.51 % 0.38 % 0.28 % 0.42 % 0.22%
Allowance for loan losses as a percentage of loans 0.82 0.65 1.07 1.16 1.14
21
Composition of Allowance for Loan Losses
(dollars in thousands)
Allowance Breakdown
December 31,
1995 1994 1993 1992 1991
Commercial, financial and
agricultural.......................$ 2,287 $ 1,730 $ 1,866 $ 1,783 $ 1,220
Real Estate
Construction....................... 151 130 148 356 273
Mortgage:
Residential...................... 233 135 145 288 126
Commercial and
multifamily................... 946 581 627 1,223 1,485
Consumer................................ 1,535 1,071 1,965 845 765
Credit cards............................ 2,643 1,757 1,262 254 199
Unallocated............................. 866 598 666 527 452
Total........................$ 8,661 $ 6,002 $ 6,679 $ 5,276 $ 4,520
Percentage of Loans in Category
December 31,
1995 1994 1993 1992 1991
Commercial, financial and
agricultural....................... 17.60 % 19.47 % 21.94 % 24.44 % 24.07 %
Real Estate
Construction....................... 2.95 2.60 3.64 3.97 5.43
Mortgage:
Residential...................... 20.37 22.64 26.39 28.38 31.13
Commercial and
multifamily................... 33.58 29.77 25.16 20.46 17.42
Consumer................................ 13.95 13.97 14.35 16.07 16.18
Credit cards............................ 8.12 11.53 8.52 6.68 5.77
Lease financing receivables............. 3.43 0.02 0.00 0.00 0.00
Total........................ 100.00 % 100.00 % 100.00 % 100.00 % 100.00 %
Note: The breakdown is based on a number of qualitative factors and the
amounts presented are not necessarily indicative of actual amounts
which will be charged to any particular category.
22
Types of Deposits
(dollars in thousands)
Balance as of December 31,
1995 1994 1993 1992 1991
Demand deposit accounts.................$ 160,393 $ 126,974 $ 72,950 $ 44,553 $ 29,238
NOW accounts............................ 132,063 117,271 85,910 40,779 28,740
Savings accounts........................ 66,552 94,774 70,897 26,758 18,119
Money market accounts................... 178,662 155,695 156,519 133,904 121,263
Time deposits........................... 403,914 371,169 297,499 224,279 216,222
Time deposits of $100,000 or
over................................. 153,907 135,865 120,774 85,351 66,476
Total deposits.....................$ 1,095,491 $ 1,001,748 $ 804,549 $ 555,624 $ 480,058
Percent of Deposits as of December 31,
1995 1994 1993 1992 1991
Demand deposit accounts................. 14.64 % 12.68 % 9.07 % 8.02 % 6.09 %
NOW accounts............................ 12.06 11.71 10.68 7.34 5.99
Savings accounts........................ 6.07 9.46 8.81 4.82 3.77
Money market accounts................... 16.31 15.54 19.45 24.10 25.26
Time deposits........................... 36.87 37.05 36.98 40.36 45.04
Time deposits of $100,000 or
over................................. 14.05 13.56 15.01 15.36 13.85
Total deposits..................... 100.00 % 100.00 % 100.00 % 100.00 % 100.00 %
Certificates of Deposit Greater than $100,000
(dollars in thousands)
Maturing in three months or less...............................$ 53,844
Maturing in over three through six months...................... 45,513
Maturing in over six through twelve months..................... 31,516
Maturing in over twelve months................................. 23,034
Total................................................$ 153,907
23
Return on Equity and Assets
Years Ended December 31,
1995 1994 1993 1992 1991
Return on average assets................ 0.74 % (0.16)% 0.69 % 0.44 % 0.41 %
Return on average equity................ 10.43 (1.99) 8.27 5.22 4.89
Return on average common equity......... 17.07 (3.08) 12.60 6.10 4.89
Average equity as a percentage of
average assets....................... 7.11 8.27 8.37 8.39 8.32
Dividend payout ratio................... 24.51 n/m 0.00 0.00 0.00
24
Short Term Borrowings
(dollars in thousands)
Maximum Average
Outstanding Average Interest
At Any Average Interest Ending Rate at
Year Ended December 31, Month End Balance Rate Balance Year End
1995
Federal funds purchased............$ 40,750 $ 12,727 6.95 % $ 31,000 6.01 %
Securities sold under
repurchase agreements........... 66,967 50,884 5.36 60,532 5.30
Advances from the FHLB............. 90,000 70,526 6.11 90,000 5.75
Commercial paper................... 2,405 37 6.76 2,405 6.76
Other.............................. 2,852 2,625 9.00 2,852 9.00
$ 202,974 $ 136,799 6.00 % $ 186,789 5.71 %
1994
Federal funds purchased............$ 16,000 $ 5,474 4.50 % $ 16,000 5.58 %
Securities sold under
repurchase agreements........... 17,986 15,870 3.80 17,986 5.23
Advances from the FHLB............. 72,000 19,933 3.94 72,000 6.03
Other.............................. 88 85 9.00 88 9.00
$ 106,074 $ 41,362 3.96 % $ 106,074 5.84 %
1993
Federal funds purchased............$ 6,953 $ 3,571 2.68 % $ 400 2.99 %
Securities sold under
repurchase agreements........... 16,325 5,827 2.49 16,325 2.74
Advances from the FHLB............. 15,550 4,625 4.04 0 0.00
Other.............................. 54 54 5.74 54 5.74
$ 38,882 $ 14,077 3.06 % $ 16,779 2.76 %
25
Interest Rate Sensitivity
(dollars in thousands)
Over One
Total Year or
0-3 4-6 7-12 Within Non-
Months Months Months One Year Sensitive Total
Assets
Earning assets
Loans, net of unearned income.............$ 547,879 $ 36,161 $ 70,239 $ 654,279 $ 408,381 $ 1,062,660
Investment securities, taxable............ 20,379 19,576 75,959 115,914 35,664 151,578
Investment securities, nontaxable......... 100 2,455 114 2,669 24,119 26,788
Federal funds sold........................ 0 0 0 0 0 0
Interest bearing deposits with
other banks............................. 750 250 0 1,000 0 1,000
Total earning assets.......... 569,108 58,442 146,312 773,862 468,164 1,242,026
Non-earning assets, net...................... 0 0 0 0 172,896 172,896
Total assets..................$ 569,108 $ 58,442 $ 146,312 $ 773,862 $ 641,060 $ 1,414,922
Liabilities and Stockholders' Equity
Liabilities
Interest-bearing liabilities
Interest-bearing deposits
Interest Checking..................$ 132,063 $ 0 $ 0 $ 132,063 $ 0 $ 132,063
Savings............................ 66,552 0 0 66,552 0 66,552
Money Market....................... 178,662 0 0 178,662 0 178,662
Certificates of Deposit............ 158,158 151,217 119,801 429,176 81,230 510,406
Other.............................. 14,691 14,048 11,129 39,868 7,546 47,414
Total interest-bearing deposits.. 550,126 165,265 130,930 846,321 88,776 935,097
Short-term borrowings.................. 186,789 0 0 186,789 0 186,789
Long-term borrowings................... 0 0 0 0 26,347 26,347
Total interest-bearing liabilitie 736,915 165,265 130,930 1,033,110 115,123 1,148,233
Noninterest bearing liabilities
Noninterest bearing deposits........... 0 0 0 0 160,394 160,394
Other noninterest bearing liabilities, 0 0 0 0 11,328 11,328
Total liabilities................ 736,915 165,265 130,930 1,033,110 286,845 1,319,955
Stockholders'equity.......................... 0 0 0 0 94,967 94,967
Total liabilities and stockholder
equity........................$ 736,915 $ 165,265 $ 130,930 $ 1,033,110 $ 381,812 $ 1,414,922
Interest sensitive gap.......................$ (167,807)$ (106,823)$ 15,382 $ (259,248)$ 259,248 $ ------
Cumulative interest sensitive gap............$ (167,807)$ (274,630)$ (259,248)$ 259,248 ------ ------
26
Noninterest Income
(dollars in thousands)
Years Ended December 31,
1995 1994 1993 1992 1991
Service charges on deposits..................$ 5,524 $ 4,089 $ 2,916 $ 1,791 $ 1,116
Credit card trust income..................... 2,775 0 0 0 0
Mortgage banking income:
Origination fees.......................... 1,086 954 1,051 778 461
Gain on sale of mortgage loans............ 699 112 509 496 0
Servicing and other....................... 377 572 228 0 0
Fees for trust services...................... 1,042 919 542 305 197
Gain on sale of securities................... 769 75 680 633 733
Gain on sale of mortgage servicing rights.... 2,943 0 0 0 0
Sundry....................................... 2,111 1,505 839 113 236
Total noninterest income...........$ 17,326 $ 8,226 $ 6,765 $ 4,116 $ 2,743
Noninterest Expense
(dollars in thousands)
Years Ended December 31,
1995 1994 1993 1992 1991
Salaries and wages...........................$ 17,524 $ 15,023 $ 10,630 $ 6,870 $ 4,788
Benefits..................................... 4,584 4,375 2,510 1,596 1,576
Occupancy.................................... 4,209 3,728 2,301 1,496 1,075
Furniture and equipment...................... 3,182 2,577 1,933 1,536 1,187
Federal deposit insurance premiums........... 1,983 2,114 1,605 1,097 838
Credit card solicitation charges............. 1,910 0 0 0 0
Intangibles amortization..................... 1,774 2,410 875 462 214
Credit card restructuring charges............ 0 12,214 0 0 0
Sundry....................................... 11,716 9,398 7,440 5,840 4,197
Total noninterest expense..........$ 46,882 $ 51,839 $ 27,294 $ 18,897 $ 13,875
27
ITEM 2 - PROPERTIES
At December 31, 1995, the Company conducted business through
55 locations in South Carolina. At December 31, 1995, the total net tangible
book value of the premises and equipment and leasehold improvements owned by the
Company was $40,320,000. The Company believes that its physical facilities are
adequate for its current operations.
The Company's headquarters are located on Main Street in
Greenville's downtown commercial area. The headquarters, which were built in
1900, are owned by the Company and have been substantially renovated to suit
their present purposes. The Company's headquarters also serve as the Bank's
headquarters. The headquarters contain approximately 160,000 square feet, of
which approximately 67,000 square feet is currently being utilized by the
Company. The balance of the building will be renovated as necessary to
accommodate future expansion of the Company. In October 1993, the Bank purchased
another office building, with approximately 27,000 square feet, in downtown
Greenville, which houses Carolina First Bank's trust department, a CF Mortgage
mortgage origination office and various administrative functions. Blue Ridge
headquarters are located in an office park in Greenville and occupy
approximately 3,000 square feet.
In February 1993, the Company entered into a lease on a 42,000
square foot building in Columbia, South Carolina. This facility houses the
Company's operations center, regional administrative offices, investments
division and a Columbia main office branch, which opened in September 1993. In
September 1993, the Company purchased an office building in Columbia, South
Carolina for its mortgage banking operations. CF Mortgage's headquarters are
located in this building. In June 1994, the Company completed the construction
of a 16,000 square foot main office branch in Myrtle Beach which serves as the
regional headquarters for the coastal offices.
The Company's subsidiaries operate through 55 locations, which
include the buildings described above. The Company or a subsidiary of the
Company owns 24 locations and leases 31 locations. The rental payments due under
the leases approximate the market rates. Leases generally have options for
extensions under substantially the same terms as in the original lease period
with certain rate escalations. The leases generally provide that the lessee pay
property taxes, insurance and maintenance costs.
All locations of the Company and its subsidiaries are
considered suitable and adequate for their intended purposes. Individually, none
of the above leases are considered material.
ITEM 3 - LEGAL PROCEEDINGS
The Company and its subsidiaries are from time to time parties
to various legal actions arising in the normal course of business. Such items
are not expected to have any material adverse effect on the business or
financial position of the Company or any of its subsidiaries.
On October 31, 1994, JW Charles Clearing Corp. filed a lawsuit
against the Bank in the Court of Common Pleas in Lexington County, South
Carolina. Such action, in general, claims that the Bank improperly paid
approximately $600,000 in checks to Harold McCarley and/or McCarley and
Associates, Inc. The complaint seeks actual and punitive damages in an amount to
be determined by a jury, plus interest on the damages and other costs. The Bank
has answered the complaint and is vigorously defending such complaint. The Bank
believes that there are valid defenses available to it. In connection with the
litigation, the Bank also
28
expects to make a claim under insurance policies for any losses it may suffer
which, if determined to cover the loss, could pay for substantially all of the
actual damages, if any, determined to be appropriate by a jury. However, no
assurance can be given at this time regarding whether it will be determined that
any losses suffered in this litigation will be covered by the insurance policy.
Furthermore, the Company is not in a position at this time to assess the likely
outcome of the litigation or any damages for which it may become liable.
On September 26, 1995, David W. Bowers and E. Monte Bowers
filed a lawsuit against the Company and Carolina First Bank in the Court of
Common Pleas in Newberry County, South Carolina. The complaint alleges breach of
contract, breach of contract accompanied by a fraudulent act and fraud in the
inducement. The allegations arise from Carolina First Bank's alleged breach of
written employment agreements with David Bowers and Monte Bowers. The Bowers
demand judgment against Carolina First Bank in the amount of $912,000 plus
punitive damages, attorneys' fees and costs. It is the Company's position that
it has not breached the relevant employment contracts and it is vigorously
defending this lawsuit. The Company has asked the Court for permission to file
a counterclaim which alleges, among other things, securities law violations.
However, the Company is not in a position at this time to assess the
likelihood the Bowers will prevail on their claim, amount of liability, if any,
or the probability of the Company's success on its counterclaim.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of security holders by
solicitation of proxies or otherwise during the fourth quarter of 1995.
29
PART II
ITEM 5 - MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED SHAREHOLDER
MATTERS
In November 1993, the Board of Directors announced an initial
quarterly cash dividend of $0.05 per share payable on the common stock. A cash
dividend of $0.05 per share was paid to common shareholders each quarter in
1994. In November 1994, the Board of Directors increased the quarterly cash
dividend on the common stock to $0.06 per share, which was paid each quarter of
1995. In December 1995, the Board approved an increase in the quarterly cash
dividend to $0.07 per share. On February 1, 1996, this dividend was paid. The
Company presently intends to continue to pay this quarterly cash dividend on the
common stock; however, future dividends will depend upon the Company's financial
performance and capital requirements.
The Company generates cash to pay dividends primarily through
dividends paid to it by its subsidiaries. South Carolina's banking regulations
restrict the amount of dividends that may be paid from Carolina First Bank. All
dividends paid from Carolina First Bank are subject to prior approval by the
S.C. Commissioner of Banking and are payable only from the undivided profits of
Carolina First Bank. At December 31, 1995, Carolina First Bank's retained
earnings were $24.1 million. However, the payments of any such dividends would
be subject to receipt of appropriate regulatory approvals.
The Board of Directors approved a 5% common stock dividend,
issued on August 15, 1995, to common stockholders of record as of August 1,
1995. This dividend resulted in the issuance of 291,603 shares of the Company's
$1.00 par value common stock. Per share data of prior periods have been restated
to this dividend. This is the seventh consecutive year that the Company has
issued a 5% common stock dividend.
The remaining information required by Item 5 is set forth on
page 44 of the Company's 1995 Annual Report to Shareholders and is incorporated
by reference herein. In February 1996, the Company redeemed its 7.50%
Noncumulative Convertible Preferred Stock Series 1993 ("Series 1993 Preferred
Stock") and its 7.32% Noncumulative Convertible Preferred Stock Series 1994
("Series 1994 Preferred Stock"). In connection with the redemptions,
substantially all of the outstanding Series 1993 Preferred Stock and Series 1994
Preferred Stock was converted into the Company's $1.00 par value common stock
("Common Stock"). As of March 25, 1996, there were 3,103 common shareholders of
record, which includes the preferred shareholders who elected to convert their
shares into Common Stock as described above.
30
ITEM 6 - SELECTED FINANCIAL DATA
The following table sets forth selected financial data for the last five years.
All per share data have been restated to reflect 5% common stock dividends
issued on the common stock in the last seven years. All prior year information
has been restated to reflect acquisitions consummated during 1995 accounted for
under the pooling-of-interests method of accounting.
YEARS ENDED DECEMBER 31,
1995 1994 1993 1992 1991
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Income Statement:
Net interest income ............... $ 50,772 $ 43,260 $ 29,358 $ 20,749 $ 15,351
Provision for loan losses ......... 6,846 1,197 1,106 2,318 1,890
Noninterest income, excluding
securities transactions and sale
of mortgage servicing rights ... 13,614 8,151 6,085 3,483 2,010
Securities transactions ........... 769 75 680 633 733
Gain on sale of mortgage servicing
rights ......................... 2,943 -- -- -- --
Noninterest expenses .............. 46,882 51,839 27,294 18,897 13,875
Net income (loss) ................. 9,414 (1,740)1 5,418 2,466 1,871
Per Common Share Data:
Net income(loss) .................. $ 1.04 $ (0.71) $ 0.76 $ 0.41 $ 0.41
Cash dividends declared ........... 0.25 0.20 0.05 -- --
Balance Sheet (Period End):
Total assets ...................... $ 1,414,922 $ 1,204,350 $ 904,474 $ 616,288 $ 528,472
Loans-net of unearned income ...... 1,062,660 923,068 623,646 455,650 395,136
Nonperforming assets .............. 4,868 4,722 5,366 5,631 3,350
Total earning assets .............. 1,242,026 1,059,455 814,579 555,871 482,130
Total deposits .................... 1,095,491 1,001,748 804,549 555,624 480,058
Short-term borrowings ............. 186,789 106,074 16,779 2,591 2,755
Long-term debt .................... 26,347 1,162 1,274 1,492 1,753
Shareholders' equity .............. 94,967 86,482 70,415 51,288 38,989
Balance Sheet (Averages):
Total assets ...................... $ 1,269,757 $ 1,056,954 $ 782,551 $ 562,369 $ 459,900
Shareholders' equity .............. 90,242 87,377 65,518 47,206 38,279
1 After fourth quarter 1994 restructuring charges of $9,415
(after tax).
31
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The information required by this item is set forth on pages 10
through 19 in the Company's 1995 Annual Report to Shareholders, which
information is incorporated herein by reference.
ITEM 8 - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The information required by this item is set forth on pages 20
through 41 in the Company's 1995 Annual Report to Shareholders, which
information is incorporated herein by reference.
ITEM 9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
From inception through the 1994 fiscal year, the Company had
engaged Elliott, Davis & Company, LLP ("ED&C") as its independent public
accountants. In March 1995, the Board of Directors determined to dismiss ED&C
and engage KPMG Peat Marwick LLP ("KPMG"). The change in auditors resulted from
the Board's decision that it was in the Company's best interest to utilize a
national accounting firm, with its attendant size, experience and expertise.
ED&C's report on the financial statements for the past two years has not
contained an adverse opinion or a disclaimer of opinion, nor was it qualified or
modified as to uncertainty, audit scope, or accounting principles. The
determination to change the Company's principal accounting firm was recommended
to the Board of Directors by the Company's Audit Committee. During the past two
years and subsequent interim periods, there were no "reportable events" within
the meaning of Item 304 of Regulation S-K promulgated by the SEC.
During 1994, KPMG provided accounting research to assist in
evaluating certain policies and procedures related to: (1) intangibles -
capitalization, cost allocation and amortization (premium for credit card
purchases, branch acquisitions, mortgage banking acquisitions and acquisition
related conversion costs and other deferred costs), (2) FAS 109 calculations and
disclosure and (3) a possible sale or securitization of Carolina First Bank's
credit card portfolio. (A securitization of the credit card portfolio was
consummated January 24, 1995.) The presentation consisted primarily of a summary
of current accounting practices prescribed by the FASB, EITF, SEC or other
relevant sources. This accounting research was presented jointly to the
Company's management, the Audit Committee and ED&C. There was no disagreement by
ED&C with the research by KPMG.
32
PART III
ITEM 10 - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information required by this item is set forth on pages 2
through 4 and page 13 of the Company's Proxy Statement for the 1996 Annual
Meeting of Shareholders and is incorporated herein by reference.
ITEM 11 - EXECUTIVE COMPENSATION
The information required by this item may be found on pages 4
through 10 of the Company's Proxy Statement for the 1996 Annual Meeting of
Shareholders and is incorporated herein by reference.
ITEM 12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required by this item is set forth on pages 11
and 12 of the Company's Proxy Statement for the 1996 Annual Meeting of the
Shareholders and is incorporated herein by reference.
ITEM 13 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by this item is set forth on page 12
of the Company's Proxy Statement for the 1996 Annual Meeting of the Shareholders
and is incorporated herein by reference.
33
PART IV
ITEM 14 - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) Certain documents filed as part of this Form 10-K:
1. FINANCIAL STATEMENTS
The information required by this item is set forth on pages 20
through 41 in the Company's 1995 Annual Report to
Shareholders, which information is incorporated herein by
reference. The Report of Independent Auditors, dated January
26, 1996 of KPMG Peat Marwick LLP is included on page 20 of
the Company's 1995 Annual Report to Shareholders, which
information is incorporated herein by reference.
2. FINANCIAL STATEMENT SCHEDULES
All other financial statements or schedules have been omitted
since the required information is included in the consolidated
financial statements or notes thereto, or is not applicable or
required.
3. LISTING OF EXHIBITS
3.1-- Articles of Incorporation: Incorporated by reference to Exhibit 3.1
of the Company's Registration Statement on Form S-4, Commission File
No.57389
3.2-- Bylaws: Incorporated by reference to Exhibit 4.2 of Carolina First
Corporation's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1993, Commission File No. 0-15083.
4.1-- Specimen CFC Common Stock certificate: Incorporated by reference to
Exhibit 4.1 of Carolina First Corporation's Registration Statement on
Form S-1, Commission File No. 33-7470.
4.2-- Specimen Convertible Preferred Stock Series 1993B certificate:
Incorporated by reference to Exhibit 4.3 from Carolina First
Corporation's Registration Statement on Form S-2, Commission File No.
33-75458.
4.3-- Articles of Incorporation: Included as Exhibit 3.1.
4.4-- Bylaws: Included as Exhibit 3.2.
4.5-- Common Stock Dividend Reinvestment Plan: Incorporated by reference to
the Prospectus in Carolina First Corporation's Registration Statement
on Form S-3, Commission File No. 33-73280.
4.6-- Shareholders' Rights Agreement: Incorporated by reference to Exhibit
2 of Carolina First Corporation's Current Report on Form 8-K dated
November 9, 1993, Commission File No. 0-15083.
4.7-- Form of Indenture between Carolina First Corporation and First
American Trust Company, N.A., as Trustee: Incorporated by reference
to Exhibit 4.11 of the Company's Registration Statement on Form S-3,
Commission File No. 22-58879.
10.1-- Carolina First Corporation Amended and Restated Restricted Stock
Plan: Incorporated by reference to Exhibit 99.1 from the Company's
Registration Statement on Form S-8, Commission File No. 33-
82668/82670.
10.2-- Carolina First Corporation Employee Stock Ownership Plan:
Incorporated by reference to Exhibit 10.2 of Carolina First
Corporation's Annual Report on Form 10-K for the year ended December
31, 1991, Commission File No. 0-15083.
10.3-- Carolina First Corporation Amended and Restated Stock Option Plan:
Incorporated by reference to Exhibit 99.1 from the Company's
Registration Statement on Form S-8, Commission File No. 33- 80822.
10.4-- Carolina First Corporation Salary Reduction Plan: Incorporated by
reference to Exhibit 28.1 of
34
Carolina First Corporation's Registration Statement on Form S-8,
Commission File No. 33-25424.
10.5 -- Amended and Restated Noncompetition and Severance Agreement dated
February 21, 1996, between Carolina First Corporation and Mack I.
Whittle, Jr.
10.6 -- Amended and Restated Noncompetition and Severance Agreement dated
February 21, 1996, between Carolina First Corporation and William S.
Hummers III.
10.7 -- Amended and Restated Noncompetition and Severance Agreement dated
February 21, 1996, between Carolina First Corporation and James W.
Terry, Jr.
10.8 -- Noncompetition and Severance Agreement dated February 21, 1996,
between Carolina First Corporation and David L. Morrow.
10.9 -- Short-Term Performance Plan: Incorporated by reference to Exhibit
10.3 of Carolina First Corporation's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1993, Commission File No.
0-15083.
10.10 -- Carolina First Corporation Long-Term Management Performance Plan.
10.11 -- Carolina First Corporation Employee Stock Purchase Plan:
Incorporated by reference to Exhibit 99.1 from the Company's
Registration Statement on Form S-8, Commission File No. 33-79668.
10.12 -- Carolina First Corporation Directors Stock Option Plan:
Incorporated by reference to Exhibit 99.1 from the Company's
Registration Statement on Form S-8, Commission File No.
33-82668/82670.
10.13 -- Pooling and Servicing Agreement dated as of December 31, 1994
between Carolina First Bank, as Seller and Master Servicer, and The
Chase Manhattan Bank, as Trustee. Incorporated by reference to
Exhibit 28.1 of Carolina First Corporation's Current Report on Form
8-K dated as of January 24, 1995.
10.14 -- 1994-A Supplement dated as of December 31, 1994 between Carolina
First Bank, as Seller and Master Servicer, and The Chase Manhattan
Bank, as Trustee. Incorporated by reference to Exhibit 28.2 of
Carolina First Corporation's Current Report on Form 8-K dated as of
January 24, 1995.
10.15 -- Servicing Rights Purchase Agreement between Bank of America, F.S.B.
and Carolina First Bank dated as of March 31, 1995: Incorporated by
reference to Exhibit 10.17 of Amendment No. 1 to Carolina First
Corporation's Annual Report on Form 10-K for the year ended, December
31, 1994, Commission File No. 0-15083.
10.16 -- Warrant to Purchase Common Stock of Affinity Financial Group, Inc.
and Amendment No. 1 with respect to Warrant to Purchase Common Stock
of Affinity Financial Group, Inc.
11.1 -- Computation of Per Share Earnings.
12.1 -- Ratio of Earnings to Fixed Charges and Ratio of Earnings to Fixed
Charges and Preferred Stock Dividends.
13.1 -- 1995 Annual Report to Shareholders of the Company
13.2 -- Independent Report of Elliott, Davis & Company, L.L.P.
21.1 -- Subsidiaries of the Registrant: Carolina First Bank, Carolina
First Mortgage Company and Blue Ridge Finance Company.
23.1 -- Consent of KPMG Peat Marwick LLP.
27.1 -- Financial Data Schedules.
(b) None.
(c) Exhibits required to be filed with this Form 10-K by Item 601 of
Regulation S-K are filed herewith or incorporated by reference herein.
(d) Certain additional financial statements. Not applicable.
35
SIGNATURES
Pursuant to the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
CAROLINA FIRST CORPORATION
Signature Title Date
/s/ Mack I. Whittle, Jr. President, Chief March 20, 1996
- ------------------------------- Executive Officer and Director
Mack I. Whittle, Jr.
/s/ William S. Hummers Executive Vice President and March 20, 1996
- --------------------------- Secretary
William S. Hummers, III (Principal Accounting and
Principal Financial Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities on the dates indicated:
Signature Title Date
/s/ William R. Timmons, Jr. Director March 20, 1996
- ---------------------------
William R. Timmons, Jr.
/s/ Mack I. Whittle, Jr. Director March 20, 1996
- --------------------------------
Mack I. Whittle, Jr.
/s/ William S. Hummers Director March 20, 1996
- ----------------------------
William S. Hummers III
/s/ Judd B. Farr Director March 20, 1996
- -----------------------------------
Judd B. Farr
/s/ C. Claymon Grimes, Jr. Director March 20, 1996
- -----------------------------
C. Claymon Grimes, Jr.
/s/ M. Dexter Hagy Director March 20, 1996
- --------------------------------
M. Dexter Hagy
/s/ Robert E. Hamby, Jr. Director March 20, 1996
- -------------------------------
Robert E. Hamby, Jr.
Director March , 1996
R. Glenn Hilliard
/s/ Richard E. Ingram Director March 20, 1996
- ---------------------------------
Richard E. Ingram
36
/s/ Charles B. Schooler Director March 20, 1996
- ---------------------------------
Charles B. Schooler
Director March , 1996
Edward J. Sebastian
/s/ Elizabeth P. Stall Director March 20, 1996
- ------------------------------------
Elizabeth P. Stall
37
INDEX TO EXHIBITS
Exhibit
Number Description
10.5 Amended and Restated Noncompetition and Severance
Agreement dated February 21, 1996, between Carolina First
Corporation and Mack I. Whittle, Jr.
10.6 Amended and Restated Noncompetition and Severance
Agreement dated February 21, 1996, between Carolina
First Corporation and William S. Hummers III.
10.7 Amended and Restated Noncompetition and Severance
Agreement dated February 21, 1996, between Carolina First
Corporation and James W. Terry, Jr.
10.8 Noncompetition and Severance Agreement dated February
21, 1996, between Carolina First Corporation and David
L. Morrow.
10.16 Warrant to Purchase Common Stock of Affinity Financial
Group, Inc. and Amendment No. 1 with respect to Warrant
to Purchase Common Stock of Affinity Financial Group,
Inc.
11.1 Computation of Per Share Earnings.
12.1 Ratio of Earnings to Fixed Charges and Ratio of Earnings
to Fixed Charges and Preferred Stock Dividends.
13.1 1995 Annual Report to Shareholders of the Company.
13.2 Independent Auditor Report of Elliott, Davis & Company,
L.L.P.
23.1 Consent of KPMG Peat Marwick LLP.
38