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FORM 10-Q



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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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QUARTERLY REPORT UNDER SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934



For the quarter ended June 30, 2005



Commission File Number 0-11172



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FIRST CITIZENS BANCORPORATION, INC.

(Exact name of registrant as specified in its charter)



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|                                                               |  |                                  
|-------------------------------------------------------------- |  | ---------------------------------
|South Carolina                                                 |  | 57-0738665                       
|(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)
|                                                               | 
|1225 Lady Street Columbia, South Carolina                      |  | 29201                            
|(Address of principal executive offices)                       |  | (Zip Code)                       



Registrants
telephone number, including area code (803) 733-3456



No
Change

(Former name, former address and former fiscal year, if changed since last report.)



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Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES  x    NO ̈



Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the
Act).    YES  x    NO ̈



Indicate the number of shares outstanding of each of the issuers classes of common
stock, as of the latest practicable date.



|                                         |  |                             
|---------------------------------------- |  | ----------------------------
|Class                                    |  | Outstanding at July 31, 2005
|Voting Common Stock, $5.00 Par Value     |  | 862,505 Shares              
|Non-Voting Common Stock, $5.00 Par Value |  | 36,409 Shares               



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PART I - FINANCIAL INFORMATION



Item 1. Financial Statements



FIRST CITIZENS BANCORPORATION, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CONDITION - UNAUDITED (Dollars in thousands, except per share data)



|                                                                                                                                     |  |               |           |   |                   |   |           |  
|------------------------------------------------------------------------------------------------------------------------------------ |  | ------------- | --------- | - | ----------------- | - | --------- | -
|                                                                                                                                     |  | June 30, 2005 |           |   | December 31, 2004 |  
|ASSETS                                                                                                                               |  |               |           |   |                   |   |           |  
|Cash and due from banks                                                                                                              |  | $             | 192,982   |   |                   | $ | 162,620   |  
|Federal funds sold                                                                                                                   |  |               | 118,222   |   |                   |   | 111,554   |  
|                                                                                                                                     |  |               |           |   |                   |   |           |  
|Total cash and cash equivalents                                                                                                      |  |               | 311,204   |   |                   |   | 274,174   |  
|                                                                                                                                     |  |               |           |   |                   |   |           |  
|Investment securities:                                                                                                               |  |               |           |   |                   |   |           |  
|Held-to-maturity, at amortized cost (fair value: June 30, 2005 - $ 16,607; December 31, 2004 - $14,902)                              |  |               | 16,541    |   |                   |   | 14,829    |  
|Available-for-sale, at fair value                                                                                                    |  |               | 962,300   |   |                   |   | 889,590   |  
|                                                                                                                                     |  |               |           |   |                   |   |           |  
|Total investment securities                                                                                                          |  |               | 978,841   |   |                   |   | 904,419   |  
|                                                                                                                                     |  |               |           |   |                   |   |           |  
|Loans and leases, net                                                                                                                |  |               | 3,305,629 |   |                   |   | 3,124,197 |  
|Less: Allowance for loan losses                                                                                                      |  |               | (45,100   | ) |                   |   | (43,623   | )
|                                                                                                                                     |  |               |           |   |                   |   |           |  
|Net loans and leases                                                                                                                 |  |               | 3,260,529 |   |                   |   | 3,080,574 |  
|                                                                                                                                     |  |               |           |   |                   |   |           |  
|Premises and equipment, net                                                                                                          |  |               | 171,980   |   |                   |   | 154,823   |  
|Interest receivable                                                                                                                  |  |               | 17,113    |   |                   |   | 16,460    |  
|Goodwill                                                                                                                             |  |               | 48,058    |   |                   |   | 24,549    |  
|Other intangible assets                                                                                                              |  |               | 36,449    |   |                   |   | 36,712    |  
|Other assets                                                                                                                         |  |               | 167,172   |   |                   |   | 41,940    |  
|                                                                                                                                     |  |               |           |   |                   |   |           |  
|Total assets                                                                                                                         |  | $             | 4,991,346 |   |                   | $ | 4,533,651 |  
|                                                                                                                                     |  |               |           |   |                   |   |           |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                 |  |               |           |   |                   |   |           |  
|Liabilities:                                                                                                                         |  |               |           |   |                   |   |           |  
|Deposits:                                                                                                                            |  |               |           |   |                   |   |           |  
|Demand                                                                                                                               |  | $             | 781,457   |   |                   | $ | 713,321   |  
|Time and savings                                                                                                                     |  |               | 3,349,798 |   |                   |   | 3,135,052 |  
|                                                                                                                                     |  |               |           |   |                   |   |           |  
|Total deposits                                                                                                                       |  |               | 4,131,255 |   |                   |   | 3,848,373 |  
|                                                                                                                                     |  |              
|Short-term borrowings                                                                                                                |  |               | 235,200   |   |                   |   | 164,547   |  
|Long-term debt                                                                                                                       |  |               | 205,874   |   |                   |   | 125,361   |  
|Other liabilities                                                                                                                    |  |               | 29,999    |   |                   |   | 25,914    |  
|                                                                                                                                     |  |               |           |   |                   |   |           |  
|Total liabilities                                                                                                                    |  |               | 4,602,328 |   |                   |   | 4,164,195 |  
|                                                                                                                                     |  |               |           |   |                   |   |           |  
|Commitments and contingencies                                                                                                        |  |               |          |   |                   |   |          |  
|                                                                                                                                     |  |              
|Stockholders equity:                                                                                                                |  |               |           |   |                   |   |           |  
|Preferred stock                                                                                                                      |  |               | 3,111     |   |                   |   | 3,111     |  
|Non-voting common stock - $5.00 par value, authorized 1,000,000; issued and outstanding June 30, 2005 and December 31, 2004 -
36,409 |  |               | 182       |   |                   |   | 182       |  
|Voting common stock - $5.00 par value, authorized 2,000,000; issued and outstanding June 30, 2005 and December 31, 2004 -
862,505    |  |               | 4,313     |   |                   |   | 4,313     |  
|Surplus                                                                                                                              |  |               | 65,081    |   |                   |   | 65,081    |  
|Undivided profits                                                                                                                    |  |               | 299,845   |   |                   |   | 279,401   |  
|Accumulated other comprehensive income                                                                                               |  |               | 16,486    |   |                   |   | 17,368    |  
|                                                                                                                                     |  |               |           |   |                   |   |           |  
|Total stockholders equity                                                                                                           |  |               | 389,018   |   |                   |   | 369,456   |  
|                                                                                                                                     |  |               |           |   |                   |   |           |  
|Total liabilities and stockholders equity                                                                                           |  | $             | 4,991,346 |   |                   | $ | 4,533,651 |  
|                                                                                                                                     |  |               |           |   |                   |   |           |  



The accompanying
notes are an integral part of these consolidated financial statements.



Page 2



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FIRST CITIZENS BANCORPORATION, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED



(Dollars in thousands, except per share data)



|                                                    |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|--------------------------------------------------- |  | ------------------------------ | ------- | --------------------------------- | ---- | - | ------- |  | - | ------- | - |  | - | -------
|                                                    |  | For the Quarter Ended June 30, |         | For the Six Months Ended June 30,
|                                                    |  | 2005                           |         |                                   | 2004 |   | 2005    |  |   | 2004   
|Interest income:                                    |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|Interest and fees on loans                          |  | $                              | 51,629  |                                   |      | $ | 43,473  |  | $ | 99,417  |   |  | $ | 86,522 
|Interest on investment securities:                  |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|Taxable                                             |  |                                | 6,435   |                                   |      |   | 4,894   |  |   | 12,069  |   |  |   | 10,094 
|Non-taxable                                         |  |                                | 90      |                                   |      |   | 96      |  |   | 175     |   |  |   | 213    
|Federal funds sold                                  |  |                                | 2,227   |                                   |      |   | 338     |  |   | 3,677   |   |  |   | 697    
|                                                    |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|Total interest income                               |  |                                | 60,381  |                                   |      |   | 48,801  |  |   | 115,338 |   |  |   | 97,526 
|                                                    |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|Interest expense:                                   |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|Interest on deposits                                |  |                                | 13,325  |                                   |      |   | 9,067   |  |   | 25,209  |   |  |   | 18,438 
|Interest on short-term borrowings                   |  |                                | 1,543   |                                   |      |   | 372     |  |   | 2,668   |   |  |   | 681    
|Interest on long-term debt                          |  |                                | 3,231   |                                   |      |   | 1,767   |  |   | 5,234   |   |  |   | 3,259  
|                                                    |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|Total interest expense                              |  |                                | 18,099  |                                   |      |   | 11,206  |  |   | 33,111  |   |  |   | 22,378 
|                                                    |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|Net interest income                                 |  |                                | 42,282  |                                   |      |   | 37,595  |  |   | 82,227  |   |  |   | 75,148 
|Provision for loan losses                           |  |                                | 1,121   |                                   |      |   | 3,002   |  |   | 2,439   |   |  |   | 4,156  
|                                                    |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|Net interest income after provision for loan losses |  |                                | 41,161  |                                   |      |   | 34,593  |  |   | 79,788  |   |  |   | 70,992 
|                                                    |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|Noninterest income:                                 |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|Service charges on deposits                         |  |                                | 9,284   |                                   |      |   | 8,871   |  |   | 17,538  |   |  |   | 17,557 
|Commissions and fees from fiduciary activities      |  |                                | 761     |                                   |      |   | 816     |  |   | 1,501   |   |  |   | 1,583  
|Mortgage income                                     |  |                                | 926     |                                   |      |   | 2,272   |  |   | 2,734   |   |  |   | 2,593  
|Bankcard discount and fees                          |  |                                | 1,878   |                                   |      |   | 1,756   |  |   | 3,445   |   |  |   | 3,226  
|Gain (loss) on sale of investment securities        |  |                                | (92     | )                                 |      |   | 570     |  |   | (59     | ) |  |   | 852    
|Other                                               |  |                                | 1,613   |                                   |      |   | 1,447   |  |   | 3,712   |   |  |   | 2,928  
|                                                    |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|Total noninterest income                            |  |                                | 14,370  |                                   |      |   | 15,732  |  |   | 28,871  |   |  |   | 28,739 
|                                                    |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|Noninterest expense:                                |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|Salaries and employee benefits                      |  |                                | 19,180  |                                   |      |   | 18,460  |  |   | 37,543  |   |  |   | 36,842 
|Net occupancy expense                               |  |                                | 3,289   |                                   |      |   | 2,930   |  |   | 6,600   |   |  |   | 5,925  
|Furniture and equipment expense                     |  |                                | 2,247   |                                   |      |   | 1,998   |  |   | 4,540   |   |  |   | 3,977  
|Bankcard fees                                       |  |                                | 2,094   |                                   |      |   | 1,959   |  |   | 3,915   |   |  |   | 3,610  
|Data processing fees                                |  |                                | 3,427   |                                   |      |   | 3,265   |  |   | 6,808   |   |  |   | 6,387  
|Amortization expense                                |  |                                | 1,960   |                                   |      |   | 2,252   |  |   | 4,049   |   |  |   | 4,516  
|Other                                               |  |                                | 5,837   |                                   |      |   | 6,953   |  |   | 12,150  |   |  |   | 13,082 
|                                                    |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|Total noninterest expense                           |  |                                | 38,034  |                                   |      |   | 37,817  |  |   | 75,605  |   |  |   | 74,339 
|                                                    |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|Income before income tax expense                    |  |                                | 17,497  |                                   |      |   | 12,508  |  |   | 33,054  |   |  |   | 25,392 
|Income tax expense                                  |  |                                | 6,299   |                                   |      |   | 4,428   |  |   | 11,899  |   |  |   | 8,988  
|                                                    |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|Net income                                          |  | $                              | 11,198  |                                   |      | $ | 8,080   |  | $ | 21,155  |   |  | $ | 16,404 
|                                                    |  |                                |         |                                   |      |   |         |  |   |         |   |  |   |        
|Net income per common share                         |  | $                              | 12.41   |                                   |      | $ | 8.90    |  | $ | 23.44   |   |  | $ | 18.05  
|Weighted average common shares outstanding          |  |                                | 898,914 |                                   |      |   | 903,703 |  |   | 898,914 |   |  |   | 904,202



The accompanying
notes are an integral part of these consolidated financial statements.



Page 3



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FIRST CITIZENS BANCORPORATION, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY AND COMPREHENSIVE INCOME
- UNAUDITED



(Dollars in thousands, except per share data)



|                                                                                                                              |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   |        |   |  |   |         |  
|----------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------- | - |  | --------------- | ----- | ------------------------ | - | ------------------- |  | - | ------- | - | ----------------- | - | ------ | -------------------------------------- | - | ------- | ---------------------------- |  | - | ------ | - |  | - | ------- | -
|                                                                                                                              |  | Number of Common Stock Shares |   |  | Preferred Stock |       | Non- Voting Common Stock |   | Voting Common Stock |  |   | Surplus |   | Undivided Profits |   |        | Accumulated Other Comprehensive Income |   |         | Total Stock- holders Equity | 
|Balance at December 31, 2003                                                                                                  |  | 905,481                       |   |  | $               | 3,111 |                          | $ | 182                 |  | $ | 4,345   |   |                   | $ | 65,081 |                                        | $ | 247,647 |                              |  | $ | 19,217 |   |  | $ | 339,583 |  
|Comprehensive income:                                                                                                         |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   |        |   |  |   |         |  
|Net income                                                                                                                    |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   | 16,404  |                              |  |   |        |   |  |   | 16,404  |  
|Change in net unrealized gain on investment securities available-for-sale, net of tax benefit of $3,714                       |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   | (6,898 | ) |  |   | (6,898  | )
|Reclassification adjustment for gains on securities available-for-sale included in net income, net of taxes of $298           |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   | (554   | ) |  |   | (554    | )
|                                                                                                                              |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   |        |   |  |   |         |  
|Total comprehensive income                                                                                                    |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   |        |   |  |   | 8,952   |  
|                                                                                                                              |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   |        |   |  |   |         |  
|Reacquired voting common stock                                                                                                |  | (3,530                        | ) |  |                 |       |                          |   |                     |  |   | (17     | ) |                   |   |        |                                        |   | (1,829  | )                            |  |   |        |   |  |   | (1,846  | )
|Common stock dividends ($0.70 per share)                                                                                      |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   | (777    | )                            |  |   |        |   |  |   | (777    | )
|Preferred stock dividends                                                                                                     |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   | (81     | )                            |  |   |        |   |  |   | (81     | )
|                                                                                                                              |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   |        |   |  |   |         |  
|Balance at June 30, 2004                                                                                                      |  | 901,951                       |   |  |                 | 3,111 |                          |   | 182                 |  |   | 4,328   |   |                   |   | 65,081 |                                        |   | 261,364 |                              |  |   | 11,765 |   |  |   | 345,831 |  
|Comprehensive income:                                                                                                         |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   |        |   |  |   |         |  
|Net income                                                                                                                    |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   | 20,305  |                              |  |   |        |   |  |   | 20,305  |  
|Change in net unrealized loss on investment securities available-for-sale, net of taxes of $3,018                             |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   | 5,603  |   |  |   | 5,603   |  
|                                                                                                                              |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   |        |   |  |   |         |  
|Total comprehensive income                                                                                                    |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   |        |   |  |   | 25,908  |  
|                                                                                                                              |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   |        |   |  |   |         |  
|Reacquired voting common stock                                                                                                |  | (3,037                        | ) |  |                 |       |                          |   |                     |  |   | (15     | ) |                   |   |        |                                        |   | (1,552  | )                            |  |   |        |   |  |   | (1,567  | )
|Common stock dividends ($0.70 per share)                                                                                      |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   | (631    | )                            |  |   |        |   |  |   | (631    | )
|Preferred stock dividends                                                                                                     |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   | (85     | )                            |  |   |        |   |  |   | (85     | )
|                                                                                                                              |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   |        |   |  |   |         |  
|Balance at December 31, 2004                                                                                                  |  | 898,914                       |   |  |                 | 3,111 |                          |   | 182                 |  |   | 4,313   |   |                   |   | 65,081 |                                        |   | 279,401 |                              |  |   | 17,368 |   |  |   | 369,456 |  
|Comprehensive income:                                                                                                         |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   |        |   |  |   |         |  
|Net income                                                                                                                    |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   | 21,155  |                              |  |   |        |   |  |   | 21,155  |  
|Change in net unrealized gain on investment securities available-for-sale, net of tax benefit of $496                         |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   | (920   | ) |  |   | (920    | )
|Reclassification adjustment for net losses on securities available-for-sale included in net income, net of tax benefit of $21 |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   | 38     |   |  |   | 38      |  
|                                                                                                                              |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   |        |   |  |   |         |  
|Total comprehensive income                                                                                                    |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   |        |   |  |   | 20,273  |  
|                                                                                                                              |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   |        |   |  |   |         |  
|Common stock dividends ($0.70 per share)                                                                                      |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   | (630    | )                            |  |   |        |   |  |   | (630    | )
|Preferred stock dividends                                                                                                     |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   | (81     | )                            |  |   |        |   |  |   | (81     | )
|                                                                                                                              |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   |        |   |  |   |         |  
|Balance at June 30, 2005                                                                                                      |  | 898,914                       |   |  | $               | 3,111 |                          | $ | 182                 |  | $ | 4,313   |   |                   | $ | 65,081 |                                        | $ | 299,845 |                              |  | $ | 16,486 |   |  | $ | 389,018 |  
|                                                                                                                              |  |                               |   |  |                 |       |                          |   |                     |  |   |         |   |                   |   |        |                                        |   |         |                              |  |   |        |   |  |   |         |  



The accompanying
notes are an integral part of these consolidated financial statements.



Page 4



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FIRST CITIZENS BANCORPORATION, INC. AND SUBSIDIARIES



CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED (Dollars in thousands)



|                                                                                  |  |                                   |          |   |      |   |          |  
|--------------------------------------------------------------------------------- |  | --------------------------------- | -------- | - | ---- | - | -------- | -
|                                                                                  |  | For the Six Months Ended June 30, |         
|                                                                                  |  | 2005                              |          |   | 2004 |  
|Cash flows from operating activities:                                             |  |                                   |          |   |      |   |          |  
|Net income                                                                        |  | $                                 | 21,155   |   |      | $ | 16,404   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                   |          |   |      |   |          |  
|Provision for loan losses                                                         |  |                                   | 2,439    |   |      |   | 4,156    |  
|Depreciation and amortization                                                     |  |                                   | 11,365   |   |      |   | 10,566   |  
|Net accretion of discount on investment securities                                |  |                                   | 1,082    |   |      |   | 1,556    |  
|Deferred income tax expense (benefit)                                             |  |                                   | 1,553    |   |      |   | (757     | )
|Gain on sales of premises and equipment                                           |  |                                   | (732     | ) |      |   | (7       | )
|(Increase) decrease in interest receivable                                        |  |                                   | (30      | ) |      |   | 1,526    |  
|Decrease in interest payable                                                      |  |                                   | 2,451    |   |      |   | 1,277    |  
|Origination of mortgage loans held-for-resale                                     |  |                                   | (148,212 | ) |      |   | (106,614 | )
|Proceeds from sales of mortgage loans held-for-resale                             |  |                                   | 143,432  |   |      |   | 108,846  |  
|Gain on sale of mortgage loans held-for-resale                                    |  |                                   | (1,500   | ) |      |   | (1,175   | )
|Loss (gain) on sale of investment securities                                      |  |                                   | 59       |   |      |   | (852     | )
|Increase in other assets                                                          |  |                                   | (7,554   | ) |      |   | (300     | )
|Increase (decrease) in other liabilities                                          |  |                                   | 1,802    |   |      |   | (1,246   | )
|                                                                                  |  |                                   |          |   |      |   |          |  
|Net cash provided by operating activities                                         |  |                                   | 27,310   |   |      |   | 33,380   |  
|                                                                                  |  |                                   |          |   |      |   |          |  
|Cash flows from investing activities:                                             |  |                                   |          |   |      |   |          |  
|Net increase in loans and leases                                                  |  |                                   | (98,112  | ) |      |   | (118,235 | )
|Calls, maturities and prepayments of investment securities held-to-maturity       |  |                                   | 6,213    |   |      |   | 6,221    |  
|Purchases of investment securities held-to-maturity                               |  |                                   | (3,994   | ) |      |   | (3,013   | )
|Proceeds from maturities and calls of investment securities available-for-sale    |  |                                   | 257,051  |   |      |   | 237,035  |  
|Proceeds from sales of investment securities available-for-sale                   |  |                                   | 1,029    |   |      |   | 173,540  |  
|Purchases of investment securities available-for-sale                             |  |                                   | (299,152 | ) |      |   | (380,728 | )
|Proceeds from sales of premises and equipment                                     |  |                                   | 2,707    |   |      |   | 13       |  
|Purchases of premises and equipment                                               |  |                                   | (22,512  | ) |      |   | (19,892  | )
|Decrease in other real estate owned                                               |  |                                   | 1,126    |   |      |   | 699      |  
|Funding of trust account for pending acquisition                                  |  |                                   | (108,663 | ) |      |   |         |  
|Investment in Federal Home Loan Bank stock                                        |  |                                   | (9,462   | ) |      |   |         |  
|Purchase of institution, net of cash acquired                                     |  |                                   | (23,245  | ) |      |   |         |  
|                                                                                  |  |                                   |          |   |      |   |          |  
|Net cash used in investing activities                                             |  |                                   | (297,014 | ) |      |   | (104,360 | )
|                                                                                  |  |                                   |          |   |      |   |          |  
|Cash flows from financing activities:                                             |  |                                   |          |   |      |   |          |  
|Net increase in deposits                                                          |  |                                   | 165,682  |   |      |   | 75,870   |  
|Increase in short-term borrowings                                                 |  |                                   | 70,250   |   |      |   | 21,499   |  
|Increase in long-term debt, net                                                   |  |                                   | 71,513   |   |      |   | 51,547   |  
|Dividends paid                                                                    |  |                                   | (711     | ) |      |   | (858     | )
|Acquisition of common stock                                                       |  |                                   |         |   |      |   | (1,846   | )
|                                                                                  |  |                                   |          |   |      |   |          |  
|Net cash provided by financing activities                                         |  |                                   | 306,734  |   |      |   | 146,212  |  
|                                                                                  |  |                                   |          |   |      |   |          |  
|Net increase in cash and cash equivalents                                         |  |                                   | 37,030   |   |      |   | 75,232   |  
|Cash and cash equivalents at beginning of period                                  |  |                                   | 274,174  |   |      |   | 221,330  |  
|                                                                                  |  |                                   |          |   |      |   |          |  
|Cash and cash equivalents at end of period                                        |  | $                                 | 311,204  |   |      | $ | 296,562  |  
|                                                                                  |  |                                   |          |   |      |   |          |  



The accompanying
notes are an integral part of these consolidated financial statements.



Page 5



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Dollars in thousands, except per share data)



SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES



A summary of the significant accounting policies of First Citizens Bancorporation, Inc.
(Bancorporation) is set forth in Note 1 to the Consolidated Financial Statements in Bancorporations Annual Report on Form 10-K for 2004. The significant accounting policies used during the current quarter are unchanged from those
disclosed in the 2004 Annual Report.



A. Basis of Presentation



The accompanying unaudited consolidated financial statements have been
prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statement preparation. In the opinion of management, all adjustments necessary for a fair statement of financial position of
Bancorporation as of and for each of the periods presented and all adjustments comprising normal recurring accruals necessary for a fair statement of the consolidated financial statements have been recorded. Certain immaterial amounts in prior
periods have been reclassified to conform to the 2005 presentation. Such reclassifications had no effect on Bancorporations stockholders equity or net income as previously reported.



B. Allowance for Loan Losses



|                                                                                   |  |                       |        |   |                |   |        |                   |  |   |                    |   |  |               |        |   |  |   |        |  
|---------------------------------------------------------------------------------- |  | --------------------- | ------ | - | -------------- | - | ------ | ----------------- |  | - | ------------------ | - |  | ------------- | ------ | - |  | - | ------ | -
|                                                                                   |  | For the quarter ended |       
|                                                                                   |  | June 30, 2005         |        |   | March 31, 2005 |   |        | December 31, 2004 |  |   | September 30, 2004 |   |  | June 30, 2004 |       
|Allowance for loan losses:                                                         |  |                       |        |   |                |   |        |                   |  |   |                    |   |  |               |        |   |  |   |        |  
|Balance at beginning of period                                                     |  | $                     | 43,690 |   |                | $ | 43,623 |                   |  | $ | 51,992             |   |  | $             | 52,188 |   |  | $ | 50,892 |  
|Acquisition on May 1, 2005                                                         |  |                       | 1,125  |   |                |   |       |                   |  |   |                   |   |  |               |       |   |  |   |       |  
|Provision for loan losses                                                          |  |                       | 1,121  |   |                |   | 1,318  |                   |  |   | (4,807             | ) |  |               | 1,349  |   |  |   | 3,002  |  
|                                                                                   |  |                       |        |   |                |   |        |                   |  |   |                    |   |  |               |        |   |  |   |        |  
|Loans charged off                                                                  |  |                       | (1,225 | ) |                |   | (1,562 | )                 |  |   | (1,889             | ) |  |               | (2,118 | ) |  |   | (2,295 | )
|Recoveries on loans previously charged off                                         |  |                       | 389    |   |                |   | 311    |                   |  |   | 519                |   |  |               | 573    |   |  |   | 589    |  
|                                                                                   |  |                       |        |   |                |   |        |                   |  |   |                    |   |  |               |        |   |  |   |        |  
|Net charge-offs                                                                    |  |                       | (836   | ) |                |   | (1,251 | )                 |  |   | (1,370             | ) |  |               | (1,545 | ) |  |   | (1,706 | )
|Reclassification of allowance related to unfunded commitments to other liabilities |  |                       |       |   |                |   |       |                   |  |   | (2,192             | ) |  |               |       |   |  |   |       |  
|                                                                                   |  |                       |        |   |                |   |        |                   |  |   |                    |   |  |               |        |   |  |   |        |  
|Balance at end of period                                                           |  | $                     | 45,100 |   |                | $ | 43,690 |                   |  | $ | 43,623             |   |  | $             | 51,992 |   |  | $ | 52,188 |  
|                                                                                   |  |                       |        |   |                |   |        |                   |  |   |                    |   |  |               |        |   |  |   |        |  



C. Goodwill and Other Intangibles



The carrying amount of goodwill increased from $24,549 at December 31,
2004 to $48,058 at June 30, 2005 due to the acquisition of Peoples Community Capital Corporation (PCCC) on May 1, 2005. See further discussion of the PCCC acquisition under Note E.



The changes in the carrying amounts of other intangible assets for the six months ended June
30, 2005 are as follows:



|                                                         |  |                                    |        |   |                            |   |       |       |  |   |        |  
|-------------------------------------------------------- |  | ---------------------------------- | ------ | - | -------------------------- | - | ----- | ----- |  | - | ------ | -
|                                                         |  | Core Deposit and Other Intangibles |        |   | Mortgage Servicing Rights* |   |       | Total | 
|Balance, December 31, 2004                               |  | $                                  | 30,386 |   |                            | $ | 6,326 |       |  | $ | 36,712 |  
|Amortization                                             |  |                                    | (4,049 | ) |                            |   | (884  | )     |  |   | (4,933 | )
|Net recapture of impairment of mortgage servicing rights |  |                                    |       |   |                            |   | 413   |       |  |   | 413    |  
|Servicing rights originated                              |  |                                    |       |   |                            |   | 1,132 |       |  |   | 1,132  |  
|PCCC acquisition                                         |  |                                    | 2,426  |   |                            |   |      |       |  |   | 2,426  |  
|Acquisition of deposits                                  |  |                                    | 699    |   |                            |   |      |       |  |   | 699    |  
|                                                         |  |                                    |        |   |                            |   |       |       |  |   |        |  
|Balance, June 30, 2005                                   |  | $                                  | 29,462 |   |                            | $ | 6,987 |       |  | $ | 36,449 |  
|                                                         |  |                                    |        |   |                            |   |       |       |  |   |        |  

---

|* | Balance shown is net of valuation allowance. Valuation allowance for mortgage servicing rights was $1,243 and $1,656 as of June 30, 2005 and December 31, 2004, respectively.
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 6



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Dollars in thousands, except per share data) (continued)



Amortization expense on core deposit intangibles was $4,049 and $4,516
for the six months ended June 30, 2005 and 2004, respectively. Amortization expense on core deposit intangibles was $1,960 and $2,252 for the quarters ended June 30, 2005 and 2004, respectively



For the quarter ended June 30, 2005, amortization expense related to mortgage servicing
rights, included as a reduction of mortgage income in the Consolidated Statements of Income, was $704. For the quarter ended June 30, 2004, amortization expense related to mortgage servicing rights, included as a reduction of mortgage income in the
Consolidated Statements of Income, was negative $741. The increase in amortization expense was primarily related to the recording of impairment during the quarter ended June 30, 2005 totaling $307 compared to recapture of impairment of $1,216
recorded during the quarter ended June 30, 2004.



Amortization expense related
to mortgage servicing rights was $471 and $275 for the six months ended June 30, 2005 and 2004, respectively. Amortization expense was reduced by $413 of net recapture of impairment of mortgage servicing rights for the six months ended June 30,
2005. For the six months ended June 30, 2004, amortization expense was reduced by $680 of net recapture of impairment of mortgage servicing rights.



D. Federal Home Loan Bank Stock



On June 13, 2005, First Citizens Bank and Trust Company, Inc. (First Citizens), a wholly-owned subsidiary of Bancorporation, was approved to become a member
of Federal Home Loan Bank of Atlanta (FHLB). As a condition of membership, on June 29, 2005, First Citizens purchased $9,462 of capital stock of FHLB. The capital stock cannot be sold as long as First Citizens is a member of the FHLB.
The amount of the investment will increase as additional borrowings are made. Due to the redemptive provisions of the FHLB, this stock is carried at cost. The investment in FHLB is reflected in Other Assets in the Consolidated Statements of
Condition.



E. Mergers and Acquisitions



On May 1, 2005, First Citizens completed its acquisition of PCCC. As a result of the
acquisition, total loans of $81,432, deposits of $106,840, goodwill of $23,509, and core deposits and other intangibles of $2,426 were recorded.



F. Employee benefits



The following table details the components of pension expense recognized as a component of salaries and employee benefits in Bancorporations Consolidated Statements of Income:



|                               |  |                                |        |   |                                   |   |      |      |  |   |        |   |  |   |        |  
|------------------------------ |  | ------------------------------ | ------ | - | --------------------------------- | - | ---- | ---- |  | - | ------ | - |  | - | ------ | -
|                               |  | For the Quarter Ended June 30, |        |   | For the Six Months Ended June 30, |  
|                               |  | 2005                           |        |   | 2004                              |   |      | 2005 |  |   | 2004   |  
|Service costs                  |  | $                              | 911    |   |                                   | $ | 786  |      |  | $ | 1,823  |   |  | $ | 1,603  |  
|Interest costs                 |  |                                | 897    |   |                                   |   | 809  |      |  |   | 1,794  |   |  |   | 1,650  |  
|Expected return on plan assets |  |                                | (1,227 | ) |                                   |   | (990 | )    |  |   | (2,454 | ) |  |   | (2,019 | )
|Recognized net actuarial loss  |  |                                | 283    |   |                                   |   | 265  |      |  |   | 566    |   |  |   | 540    |  
|                               |  |                                |        |   |                                   |   |      |      |  |   |        |   |  |   |        |  
|Net pension expense            |  | $                              | 864    |   |                                   | $ | 870  |      |  | $ | 1,729  |   |  | $ | 1,774  |  
|                               |  |                                |        |   |                                   |   |      |      |  |   |        |   |  |   |        |  



Bancorporation previously disclosed in
its consolidated financial statements for the year ended December 31, 2004 that the estimated employer contribution for 2005 was $4,000. In March 2005 and April 2005, Bancorporation made an additional contribution of $5,035 related to 2004 and its
entire 2005 contribution of $4,130, respectively, which resulted in prepaid pension cost increasing to $18,216 as of June 30, 2005 from $10,780 as of December 31, 2004.



Page 7



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (Dollars in thousands, except per share data) (continued)



G. Earnings per share



Bancorporations earnings per common share were calculated as follows:



|                                                      |  |                                |         |   |                                   |   |         |      |  |   |         |   |  |   |         |  
|----------------------------------------------------- |  | ------------------------------ | ------- | - | --------------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                      |  | For the Quarter Ended June 30, |         |   | For the Six Months Ended June 30, |  
|                                                      |  | 2005                           |         |   | 2004                              |   |         | 2005 |  |   | 2004    |  
|Net income                                            |  | $                              | 11,198  |   |                                   | $ | 8,080   |      |  | $ | 21,155  |   |  | $ | 16,404  |  
|Less: Preferred stock dividends                       |  |                                | (41     | ) |                                   |   | (41     | )    |  |   | (81     | ) |  |   | (81     | )
|Plus: Preferred stock redemption excess consideration |  |                                |        |   |                                   |   |        |      |  |   |        |   |  |   |        |  
|                                                      |  |                                |         |   |                                   |   |         |      |  |   |         |   |  |   |         |  
|Net income applicable to common stock                 |  | $                              | 11,157  |   |                                   | $ | 8,039   |      |  | $ | 21,074  |   |  | $ | 16,323  |  
|                                                      |  |                                |         |   |                                   |   |         |      |  |   |         |   |  |   |         |  
|Weighted average common shares outstanding            |  |                                | 898,914 |   |                                   |   | 903,703 |      |  |   | 898,914 |   |  |   | 904,202 |  
|                                                      |  |                                |         |  
|Net income per common share                           |  | $                              | 12.41   |   |                                   | $ | 8.90    |      |  | $ | 23.44   |   |  | $ | 18.05   |  



H. Long-term debt



On April 5, 2005, Bancorporation completed the issuance and sale of an aggregate of
$75,000 principal amount of 6.80% Subordinated Notes. The notes are unsecured and subordinated in right of payment to all of our senior indebtedness, and call for payment in full at maturity on April 1, 2015, with interest payable semi-annually (at
an annual rate of 6.80%) on April 1 and October 1 each year, beginning October 1, 2005.



I. Federal Home Loan Bank Advances



As a result of the PCCC
acquisition, Bancorporation has advances outstanding from the FHLB of $6,500 as of June 30, 2005. These advances were collateralized by investments held by First Citizens. Additional borrowings are available by pledging additional collateral and
purchasing additional stock in FHLB. The advances are subject to prepayment penalties and the convertible advance is subject to call at the option of the FHLB.



|                    |  |         |       |              |      |   |               |                  
|------------------- |  | ------- | ----- | ------------ | ---- | - | ------------- | -----------------
|FHLB Description    |  | Balance |       | Current Rate |      |   | Maturity Date
|Convertible advance |  | $       | 2,500 |              | 3.65 | % |               | April 16, 2007   
|Fixed rate credit   |  |         | 2,000 |              | 2.41 | % |               | August 22, 2005  
|Fixed rate credit   |  |         | 2,000 |              | 2.70 | % |               | February 21, 2006



J. Comprehensive Income



Comprehensive income (loss) was $14,060 and $(838) for the quarters ended
June 30, 2005 and 2004, respectively.



K. Subsequent events



On July 1, 2005, First Citizens completed its acquisition of Summit Financial
Corporation, parent company of Summit National Bank. Total assets of $351,686, total loans of $255,418 and total deposits of $267,617 were acquired as a result of the transaction. Management is in the process of completing its purchase price
allocation; however, we estimate goodwill and other intangibles of approximately $68,000 of which the majority will be recorded as goodwill.



On July 21, 2005, Bancorporations Board of Directors declared a $.35 dividend on common stock to shareholders of record on August 15, 2005, payable August 25, 2005.



Page 8



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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations (Dollars in
thousands, except per share data)



This discussion may contain statements
that could be deemed forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act, which statements are inherently subject to risks and uncertainties.
Forward-looking statements are statements that include projections, predictions, expectations or beliefs about future events or results, or otherwise are not statements of historical fact. Such statements are often characterized by the use of the
qualifying words (and their derivatives) such as expect, believe, estimate, plan, project, anticipate, or other statements concerning opinions or judgments of Bancorporation and
its management about future events. Factors that could influence the accuracy of such forward-looking statements include, but are not limited to, the financial success or changing strategies of Bancorporations customers, competition, deposit
attrition, actions of government regulators, the level of market interest rates, and general economic conditions, and risks, uncertainties, and other factors described from time to time in Bancorporations periodic reports filed with the United
States Securities and Exchange Commission.



Critical Accounting Policies



The accounting and reporting policies of Bancorporation and its
subsidiaries are in accordance with accounting principles generally accepted in the United States of America and conform to general practices within the banking industry. Bancorporations financial position and results of operations are
affected by managements application of accounting policies, including judgments made to arrive at the carrying value of assets and liabilities and amounts reported for revenues, expenses and related disclosures. Different assumptions in the
application of these policies could result in material changes in Bancorporations consolidated financial position and/or consolidated results of operations. The more critical accounting and reporting policies include Bancorporations
accounting for the allowance for loan losses, pension, goodwill and intangible assets associated with mergers and acquisitions and income taxes. Bancorporations accounting policies are fundamental to understanding Managements Discussion
and Analysis of Financial Condition and Results of Operations. Accordingly, Bancorporations significant accounting policies are discussed in detail in Bancorporations 2004 Annual Report on Form 10-K filed with the Securities and Exchange
Commission.



EXECUTIVE OVERVIEW OF SECOND QUARTER RESULTS



Following are the highlights of Bancorporations second quarter
results. Please refer to the following sections for a further discussion of factors causing the fluctuations in major balance sheet and income statement categories for the second quarter of 2005.



Financial Results



| |  |  | Since December 31, 2004, Bancorporations total assets have grown from $4,533,651 to $4,991,346, an increase of $457,695, or 10.10%. The asset category that experienced the
largest increase was loans and leases which grew by $181,432, or 5.81%, during the first six months of 2005. On May 1, 2005, First Citizens Bank and Trust Company, Inc. (First Citizens) completed its acquisition of Peoples
Community Capital Corporation (PCCC). As a result of the acquisition, loans totaling $81,432 were recorded.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Since December 31, 2004, Bancorporations total deposits have grown from $3,848,373 to $4,131,255, an increase of $282,882, or 7.35%. As a result of the PCCC acquisition,
deposits totaling $106,840 were recorded.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Consolidated net income for the second quarter of 2005 totaled $11,198, an increase of 38.59% compared to the $8,080 earned during the second quarter of 2004. On a per share basis,
earnings for the quarter ended June 30, 2005, were $12.41, compared to $8.90 for the same quarter in 2004, an increase of 39.44%. Bancorporations earnings for the second quarter of 2005 produced an annualized return on average assets of .91%
and an annualized return on stockholders equity of 11.67% compared to .73% and 9.27%, respectively, for the second quarter of 2004.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 9



---

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands,
except per share data) (continued)



| |  |  | Consolidated net income for the six months ended June 30, 2005 totaled $21,155, an increase of 28.96% compared to the $16,404 earned for the six months ended June 30, 2004. On a per
share basis, earnings for the six months ended June 30, 2005, were $23.44, compared to $18.05 for the same period in 2004, an increase of 29.86%. Bancorporations earnings for the six months ended June 30, 2005 produced an annualized return on
average assets of .88% and an annualized return on stockholders equity of 11.22% compared to .75% and 9.47%, respectively, for the same period in 2004.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Results for the quarter and six months ended June 30, 2005 compared to the same periods last year reflect continued growth in net interest income, continued improvement in credit
quality trends (particularly net charge-off trends), disciplined noninterest expense growth and continued earning asset growth.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Other Developments



| |  |  | During the quarter, First Citizens became a member of the Federal Home Loan Bank of Atlanta (FHLB). As a condition of membership, First Citizens purchased $9,462 of FHLB
capital stock. This provides First Citizens with additional borrowing ability to fund earning asset growth.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | During the quarter, Bancorporation completed the issuance and sale of an aggregate of $75,000 principal amount of 6.80% subordinated notes. The notes mature on April 1, 2015, with
interest payable semi-annually. The proceeds of the notes were used to infuse additional capital into First Citizens. First Citizens used the cash in order to complete its acquisition of Summit Financial Corporation on July 1, 2005.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Page 10



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands,
except per share data) (continued)



Table 1 provides summary information
on selected ratios, and average and year-to-date balances.



Table 1:
Selected Summary Information



|                                                                        |  |                                          |           |   |                                             |   |           |      |  |   |           |   |  |   |           |  
|----------------------------------------------------------------------- |  | ---------------------------------------- | --------- | - | ------------------------------------------- | - | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                                        |  | As of and for the Quarter Ended June 30, |           |   | As of and for the Six Months Ended June 30, |  
|                                                                        |  | 2005                                     |           |   | 2004                                        |   |           | 2005 |  |   | 2004      |  
|Selected ratios:                                                        |  |                                          |           |   |                                             |   |           |      |  |   |           |   |  |   |           |  
|Return on average assets                                                |  |                                          | 0.91      | % |                                             |   | 0.73      | %    |  |   | 0.88      | % |  |   | 0.75      | %
|Return on average stockholders equity                                  |  |                                          | 11.67     | % |                                             |   | 9.27      | %    |  |   | 11.22     | % |  |   | 9.47      | %
|Net interest income to average interest-earning assets (tax equivalent) |  |                                          | 3.76      | % |                                             |   | 3.74      | %    |  |   | 3.76      | % |  |   | 3.76      | %
|Average loans to average deposits                                       |  |                                          | 79.06     | % |                                             |   | 79.59     | %    |  |   | 78.95     | % |  |   | 78.69     | %
|Allowance for loan losses to total loans                                |  |                                          | 1.36      | % |                                             |   | 1.71      | %    |  |   | 1.36      | % |  |   | 1.71      | %
|Average stockholders equity to average total assets                    |  |                                          | 7.76      | % |                                             |   | 7.90      | %    |  |   | 7.86      | % |  |   | 7.88      | %
|Average common stockholders equity to average total assets             |  |                                          | 7.70      | % |                                             |   | 7.83      | %    |  |   | 7.80      | % |  |   | 7.81      | %
|                                                                        |  |                                          |           |  
|Dividends per common share                                              |  | $                                        | 0.35      |   |                                             | $ | 0.35      |      |  | $ | 0.70      |   |  | $ | 0.70      |  
|                                                                        |  |                                          |           |  
|Selected average balances:                                              |  |                                          |           |   |                                             |   |           |      |  |   |           |   |  |   |           |  
|Total assets                                                            |  | $                                        | 4,957,747 |   |                                             | $ | 4,439,195 |      |  | $ | 4,838,359 |   |  | $ | 4,420,910 |  
|Interest-earning assets                                                 |  |                                          | 4,532,136 |   |                                             |   | 4,061,043 |      |  |   | 4,424,721 |   |  |   | 4,042,782 |  
|Investment securities                                                   |  |                                          | 972,982   |   |                                             |   | 904,207   |      |  |   | 951,488   |   |  |   | 913,320   |  
|Loans                                                                   |  |                                          | 3,252,600 |   |                                             |   | 3,016,043 |      |  |   | 3,200,431 |   |  |   | 2,983,888 |  
|Deposits                                                                |  |                                          | 4,114,019 |   |                                             |   | 3,789,739 |      |  |   | 4,053,502 |   |  |   | 3,792,192 |  
|Noninterest-bearing deposits                                            |  |                                          | 774,403   |   |                                             |   | 692,027   |      |  |   | 752,573   |   |  |   | 675,746   |  
|Interest-bearing deposits                                               |  |                                          | 3,339,616 |   |                                             |   | 3,097,712 |      |  |   | 3,300,929 |   |  |   | 3,116,446 |  
|Interest-bearing liabilities                                            |  |                                          | 3,768,892 |   |                                             |   | 3,371,086 |      |  |   | 3,675,942 |   |  |   | 3,370,780 |  
|Stockholders equity                                                    |  |                                          | 384,870   |   |                                             |   | 350,743   |      |  |   | 380,319   |   |  |   | 348,195   |  



|                              |  |                     |           |   |                         |   |           |  
|----------------------------- |  | ------------------- | --------- | - | ----------------------- | - | --------- | -
|                              |  | As of June 30, 2005 |           |   | As of December 31, 2004 |  
|Capital ratios:               |  |                     |           |   |                         |   |           |  
|Total capital                 |  |                     | 14.90     | % |                         |   | 14.18     | %
|Tier I capital                |  |                     | 11.20     | % |                         |   | 12.44     | %
|Tier I leverage               |  |                     | 8.09      | % |                         |   | 8.88      | %
|                              |  |                    
|Selected period end balances: |  |                     |           |   |                         |   |           |  
|Total assets                  |  | $                   | 4,991,346 |   |                         | $ | 4,533,651 |  
|Interest-earning assets       |  |                     | 4,402,692 |   |                         |   | 4,140,170 |  
|Investment securities         |  |                     | 978,841   |   |                         |   | 904,419   |  
|Loans                         |  |                     | 3,305,629 |   |                         |   | 3,124,197 |  
|Deposits                      |  |                     | 4,131,255 |   |                         |   | 3,848,373 |  
|Noninterest-bearing deposits  |  |                     | 781,457   |   |                         |   | 713,321   |  
|Interest-bearing deposits     |  |                     | 3,349,798 |   |                         |   | 3,135,052 |  
|Interest-bearing liabilities  |  |                     | 3,790,872 |   |                         |   | 3,424,960 |  
|Long-term debt                |  |                     | 205,874   |   |                         |   | 125,361   |  
|Stockholders equity          |  |                     | 389,018   |   |                         |   | 369,456   |  



Page 11



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands,
except per share data) (continued)



ANALYSIS OF FINANCIAL
CONDITION



Acquisition



Goodwill increased from $24,549 at December 31, 2004 to $48,058 at June 30, 2005, an
increase of $23,509. The increase related to the goodwill recorded as a result of the acquisition of PCCC by First Citizens on May 1, 2005. In addition to goodwill, total loans of $81,432, deposits of $106,840 and core deposit and other intangibles
of $2,426 were recorded.



Investment securities



As of June 30, 2005, the investment portfolio totaled $978,841 compared to $904,419 at
December 31, 2004 (an increase of 8.23%). The increase in the investment portfolio since December 31, 2004 was primarily due to the purchase of $40,000 in additional securities to collateralize both municipal deposits and short-term borrowings in
the form of repurchase agreements with customers. The remainder of the increase primarily related to investments purchased as a result of the PCCC acquisition. Municipal deposits have increased by $50,297 and short-term borrowings have increased by
$70,653 since December 31, 2004. Bancorporation continues to invest primarily in short-term U.S. government obligations and agency securities to minimize credit, interest rate and liquidity risks. The investment portfolio consisted of 91.35% and
91.24% U.S. government and agency securities as of June 30, 2005 and December 31, 2004. The remainder of the investment portfolio consisted of municipal bonds and equity securities.



On June 30, 2005, Bancorporation held certain investments having continuous unrealized loss positions for more than 12 months with a fair
market value totaling $391,130 and an unrealized loss position totaling $4,289. Substantially all of these investments were in U.S. government agencies and entities and we expect that these securities would not be settled at a price less than their
amortized cost. Because the decline in market value was caused by interest rate increases and not credit quality, and because Bancorporation has the ability and intent to hold these investments until a recovery of fair value, which may be maturity,
Bancorporation has not recognized any other-than-temporary impairment in connection with these investments.



Loans



At June 30, 2005, loans and
leases totaled $3,305,629, compared to $3,124,197 at December 31, 2004, an annualized increase of 11.61%. The majority of the growth in loans was attributable to internal growth in the commercial and home equity loan portfolios. Of the $181,432
increase in loans and leases since December 31, 2004, $81,432 was the result of the PCCC acquisition on May 1, 2005. Loan growth was primarily funded through core deposits and short-term borrowings in the form of repurchase agreements with
customers. The composition of the loan portfolio has not shifted significantly since December 31, 2004.



Allowance for loan losses and asset quality



Bancorporation believes that its allowance for loan losses is adequate to cover losses inherent in its portfolio at June 30, 2005. For the quarter ended June 30, 2005, provision for loan losses totaled $1,121, a decline from $3,002 taken
during the quarter ended June 30, 2004. The decline in provision was primarily due to a $870 decline in net charge-offs and continued improvement in overall net charge-off trends. The percentage of net charge-offs to average loans (net
charge-off ratio) and leases declined from .23% for the quarter ended June 30, 2004 to .10% for the quarter ended June 30, 2005. In addition, the year to date net charge-off ratio declined from .22% for the six months ended June 30, 2004 to
..13% for the six months ended June 30, 2005 indicating continual improvement in net charge-off trends. While nonaccrual loans increased during the quarter, management believes that overall reserves allocated to these loans are adequate to cover
estimated losses. Management believes that the provision taken during the quarter ended June 30, 2005 was appropriate to provide an allowance for loan losses which considers the past experience and current trend of charge-offs, the level of past due
and nonaccrual loans, the size and mix of the loan portfolio, credit classifications and general economic conditions affecting Bancorporations market areas.



Page 12



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands,
except per share data) (continued)



Refer to the following table for a
complete analysis of the allowance for loan losses for the past five quarters.



|                                                                                         |  |               |        |   |                |   |        |                   |  |   |                    |   |  |               |        |   |  |   |        |  
|---------------------------------------------------------------------------------------- |  | ------------- | ------ | - | -------------- | - | ------ | ----------------- |  | - | ------------------ | - |  | ------------- | ------ | - |  | - | ------ | -
|                                                                                         |  | June 30, 2005 |        |   | March 31, 2005 |   |        | December 31, 2004 |  |   | September 30, 2004 |   |  | June 30, 2004 |       
|Allowance for loan losses:                                                               |  |               |        |   |                |   |        |                   |  |   |                    |   |  |               |        |   |  |   |        |  
|Balance at beginning of period                                                           |  | $             | 43,690 |   |                | $ | 43,623 |                   |  | $ | 51,992             |   |  | $             | 52,188 |   |  | $ | 50,892 |  
|PCCC acquisition  May 1, 2005                                                           |  |               | 1,125  |   |                |   |       |                   |  |   |                   |   |  |               |       |   |  |   |       |  
|Provision for loan losses                                                                |  |               | 1,121  |   |                |   | 1,318  |                   |  |   | (4,807             | ) |  |               | 1,349  |   |  |   | 3,002  |  
|                                                                                         |  |               |        |   |                |   |        |                   |  |   |                    |   |  |               |        |   |  |   |        |  
|Loans charged off                                                                        |  |               | (1,225 | ) |                |   | (1,562 | )                 |  |   | (1,889             | ) |  |               | (2,118 | ) |  |   | (2,295 | )
|Recoveries on loans previously charged off                                               |  |               | 389    |   |                |   | 311    |                   |  |   | 519                |   |  |               | 573    |   |  |   | 589    |  
|                                                                                         |  |               |        |   |                |   |        |                   |  |   |                    |   |  |               |        |   |  |   |        |  
|Net charge-offs                                                                          |  |               | (836   | ) |                |   | (1,251 | )                 |  |   | (1,370             | ) |  |               | (1,545 | ) |  |   | (1,706 | )
|Reclassification of allowance related to unfunded commitments to other liabilities       |  |               |       |   |                |   |       |                   |  |   | (2,192             | ) |  |               |       |   |  |   |       |  
|                                                                                         |  |               |        |   |                |   |        |                   |  |   |                    |   |  |               |        |   |  |   |        |  
|Balance at end of period                                                                 |  | $             | 45,100 |   |                | $ | 43,690 |                   |  | $ | 43,623             |   |  | $             | 51,992 |   |  | $ | 52,188 |  
|                                                                                         |  |               |        |   |                |   |        |                   |  |   |                    |   |  |               |        |   |  |   |        |  
|Nonperforming assets:                                                                    |  |               |        |   |                |   |        |                   |  |   |                    |   |  |               |        |   |  |   |        |  
|Nonaccrual loans                                                                         |  | $             | 10,590 |   |                | $ | 8,133  |                   |  | $ | 6,587              |   |  | $             | 5,641  |   |  | $ | 6,623  |  
|Foreclosed real estate                                                                   |  |               | 1,697  |   |                |   | 1,925  |                   |  |   | 1,890              |   |  |               | 2,268  |   |  |   | 3,421  |  
|                                                                                         |  |               |        |   |                |   |        |                   |  |   |                    |   |  |               |        |   |  |   |        |  
|Total nonperforming assets                                                               |  | $             | 12,287 |   |                | $ | 10,058 |                   |  | $ | 8,477              |   |  | $             | 7,909  |   |  | $ | 10,044 |  
|                                                                                         |  |               |        |   |                |   |        |                   |  |   |                    |   |  |               |        |   |  |   |        |  
|Asset quality ratios:                                                                    |  |               |        |   |                |   |        |                   |  |   |                    |   |  |               |        |   |  |   |        |  
|Nonaccrual loans to total loans                                                          |  |               | 0.32   | % |                |   | 0.26   | %                 |  |   | 0.21               | % |  |               | 0.18   | % |  |   | 0.22   | %
|Nonperforming assets to total loans                                                      |  |               | 0.37   | % |                |   | 0.32   | %                 |  |   | 0.27               | % |  |               | 0.26   | % |  |   | 0.33   | %
|Nonperforming assets to total assets                                                     |  |               | 0.25   | % |                |   | 0.21   | %                 |  |   | 0.19               | % |  |               | 0.18   | % |  |   | 0.23   | %
|                                                                                         |  |               |        |   |               
|Annualized net charge-offs as a percentage of average loans and leases - quarter to date |  |               | 0.10   | % |                |   | 0.16   | %                 |  |   | 0.18               | % |  |               | 0.20   | % |  |   | 0.23   | %
|                                                                                         |  |               |        |   |               
|Annualized net charge-offs as a percentage of average loans and leases - year to date    |  |               | 0.13   | % |                |   | 0.16   | %                 |  |   | 0.20               | % |  |               | 0.21   | % |  |   | 0.22   | %
|                                                                                         |  |               |        |   |               
|Annualized net charge-offs as a percentage of total loans and leases - quarter to date   |  |               | 0.10   | % |                |   | 0.16   | %                 |  |   | 0.18               | % |  |               | 0.20   | % |  |   | 0.22   | %
|                                                                                         |  |               |        |   |               
|Annualized net charge-offs as a percentage of total loans and leases - year to date      |  |               | 0.13   | % |                |   | 0.16   | %                 |  |   | 0.20               | % |  |               | 0.21   | % |  |   | 0.21   | %
|                                                                                         |  |               |        |   |               
|Allowance to total loans and leases                                                      |  |               | 1.36   | % |                |   | 1.38   | %                 |  |   | 1.40               | % |  |               | 1.69   | % |  |   | 1.71   | %
|                                                                                         |  |               |        |   |               
|Ratio of allowance to total loans and leases to ratio of:                                |  |               |        |   |                |   |        |                   |  |   |                    |   |  |               |        |   |  |   |        |  
|Annualized net charge-offs as a percentage of average loans and leases  quarter to date |  |               | 13.60  | x |                |   | 8.63   | x                 |  |   | 7.78               | x |  |               | 8.45   | x |  |   | 7.43   | x
|Annualized net charge-offs as a percentage of average loans and leases  year to date    |  |               | 10.46  | x |                |   | 8.63   | x                 |  |   | 7.00               | x |  |               | 8.05   | x |  |   | 7.77   | x
|Nonaccrual loans to total loans                                                          |  |               | 4.25   | x |                |   | 5.31   | x                 |  |   | 6.67               | x |  |               | 9.39   | x |  |   | 7.77   | x



Premises and equipment



As of June 30, 2005, premises and equipment totaled $171,980, compared to
$154,823 at December 31, 2004, an increase of 11.08%. The increase from December 31, 2004 to June 30, 2005 was primarily due to the continued construction of the new headquarters building. Depreciation expense included in net occupancy and furniture
and fixtures expense was $3,419 and $2,891 for the quarters ended June 30, 2005 and 2004, respectively, and $6,845 and $5,772 for the six months ended June 30, 2005 and 2004, respectively.



Page 13



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands,
except per share data) (continued)



Other assets



Other assets increased from $41,940 as of December 31, 2004 to $167,172 as of June 30, 2005.
Of the $125,232 increase, $108,663 related to the funding of a trust account on June 30, 2005 by First Citizens to pay shareholders in connection with the acquisition of Summit Financial Corporation which became effective on July 1, 2005. The
remainder of the increase primarily related to additional funding of the prepaid pension cost in the amount of $9,165 and the investment of $9,462 in the Federal Home Loan Bank by First Citizens when it became a member on June 29, 2005.



Deposits and short-term borrowings



Bancorporation continues to have liquidity necessary to meet cash flow requirements.
Bancorporations primary source of funds is its deposit base. As of June 30, 2005, deposits totaled $4,131,255, compared to $3,848,373 at December 31, 2004, an annualized increase of 14.70%. Most of the growth in deposits from December 31, 2004
to June 30, 2005 was experienced in municipal deposits, NOW accounts, certificate of deposits and demand deposit accounts. Of the $282,882 increase in deposits since December 31, 2004, $106,840 was the result of the PCCC acquisition on May 1, 2005.



Short-term borrowings in the form of securities sold under agreements to
repurchase are another source of funds. As of June 30, 2005, short-term borrowings totaled $235,200, compared to $164,547 at December 31, 2004, an increase of 42.94%.



Long-term debt



Long-term debt increased from $125,361 at December 31, 2004 to $205,874 at June 30, 2005, or by $80,513. The increase primarily related to the issuance and sale on April
5, 2005 of $75,000 principal amount of 6.80% subordinated notes due April 1, 2015. The remainder of the increase related to long-term debt acquired in the PCCC acquisition.



Capital resources



Bank holding companies and their respective subsidiaries are subject to regulatory requirements with respect to risk-based capital adequacy. The risk-weighted values of
both balance sheet and off-balance sheet items are determined in accordance with risk factors specified by federal bank regulatory pronouncements.



Tier I capital (common shareholders equity excluding unrealized gains or losses of securities available-for-sale, net of deferred taxes, less nonqualifying
intangible assets) is required to be at least 4% of risk-weighted assets, and total capital (the sum of Tier I capital, a qualifying portion of the allowance for loan losses and qualifying subordinated debt) must be at least 8% of risk-weighted
assets, with one half of the minimum consisting of Tier I capital.



In addition
to the risk-based capital measures described above, bank regulators have also established minimum leverage capital requirements for banking organizations. The minimum required Tier I leverage ratio is 3%.



Banks which meet or exceed a Tier I capital ratio of 6%, a total capital ratio of 10% and
Tier I leverage ratio of 5% are considered well-capitalized by regulatory standards.



The following table details Bancorporations capital ratios at June 30, 2005 and December 31, 2004.



|                |  |               |   |  |                   |  
|--------------- |  | ------------- | - |  | ----------------- | -
|                |  | June 30, 2005 |   |  | December 31, 2004 |  
|Capital ratios: |  |               |   |  |                   |  
|Total capital   |  | 14.90         | % |  | 14.18             | %
|Tier I capital  |  | 11.20         | % |  | 12.44             | %
|Tier I leverage |  | 8.09          | % |  | 8.88              | %



Page 14



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands,
except per share data) (continued)



Repurchases of equity securities



Each year the Board of Directors authorizes Bancorporation to repurchase
shares of its capital stock from time to time in unsolicited private and/or open market transactions. Purchases are subject to various conditions, including price and volume limitations (including, in the case of purchases of Bancorporations
voting common stock, an annual limit of up to 5% of outstanding shares), and compliance with applicable South Carolina law. During the quarter and six months ended June 30, 2005, Bancorporation did not repurchase any shares of its outstanding
classes of stock pursuant to that authority.



Page 15



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands,
except per share data) (continued)



ANALYSIS OF RESULTS
OF OPERATIONS



Net interest income



Net interest income represents the principal source of earnings for Bancorporation. Tables 2
and 3 compare average balance sheet items and analyzes net interest income on a tax equivalent basis for the quarters and six month periods ended June 30, 2005 and 2004.



Table 2: Comparative Average Balance Sheets and Tax Equivalent Rate/Volume Variance



|                                           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|------------------------------------------ |  | ---------------------------------------- | --------- | -------------------- | - | ----------- |  | ---- | ----------------- | ---- | - | ----------------------- | ---- | ---- | - | ----------- | ---- | - | ------ | - | ----- | - |  | - | ----- | - |  | - | ------ | -
|                                           |  | As of and for the Quarter Ended June 30, |          
|                                           |  | Average Balance                          |           | Interest Inc/Exp (1) |   | Yield/ Rate |  |      | Change Due To (2) |      |   | Net Increase (Decrease) |     
|                                           |  | 2005                                     |           | 2004                 |   | 2005        |  | 2004 |                   | 2005 |   |                         | 2004 |      |   | Yield /Rate |      |   | Volume |   |      
|Interest-earning assets:                   |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Loans (3)                                  |  | $                                        | 3,252,600 |                      | $ | 3,016,043   |  | $    | 51,756            |      | $ | 43,626                  |      | 6.38 | % |             | 5.82 | % |        | $ | 4,358 |   |  | $ | 3,773 |   |  | $ | 8,131  |  
|Investment securities: (4)                 |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Taxable                                    |  |                                          | 963,916   |                      |   | 894,919     |  |      | 6,435             |      |   | 4,894                   |      | 2.67 |   |             | 2.19 |   |        |   | 1,079 |   |  |   | 461   |   |  |   | 1,540  |  
|Non-taxable                                |  |                                          | 9,066     |                      |   | 9,288       |  |      | 139               |      |   | 147                     |      | 6.13 |   |             | 6.33 |   |        |   | (5    | ) |  |   | (3    | ) |  |   | (8     | )
|Federal funds sold                         |  |                                          | 306,554   |                      |   | 140,793     |  |      | 2,227             |      |   | 338                     |      | 2.91 |   |             | 0.97 |   |        |   | 683   |   |  |   | 1,206 |   |  |   | 1,889  |  
|                                           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Total interest-earning assets              |  |                                          | 4,532,136 |                      |   | 4,061,043   |  |      | 60,557            |      |   | 49,005                  |      | 5.36 | % |             | 4.85 | % |        |   | 6,115 |   |  |   | 5,437 |   |  |   | 11,552 |  
|                                           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Noninterest-earning assets:                |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Cash and due from banks                    |  |                                          | 159,750   |                      |   | 155,577     |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Premises and equipment                     |  |                                          | 166,470   |                      |   | 144,978     |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Other, less allowance for loan losses      |  |                                          | 99,391    |                      |   | 77,597      |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Total noninterest-earning assets           |  |                                          | 425,611   |                      |   | 378,152     |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Total assets                               |  | $                                        | 4,957,747 |                      | $ | 4,439,195   |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Interest-bearing liabilities:              |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Deposits                                   |  | $                                        | 3,339,616 |                      | $ | 3,097,712   |  | $    | 13,325            |      | $ | 9,067                   |      | 1.60 | % |             | 1.18 | % |        | $ | 3,290 |   |  | $ | 968   |   |  |   | 4,258  |  
|Short-term borrowings                      |  |                                          | 228,813   |                      |   | 170,797     |  |      | 1,543             |      |   | 372                     |      | 2.70 |   |             | 0.88 |   |        |   | 779   |   |  |   | 392   |   |  |   | 1,171  |  
|Long-term debt                             |  |                                          | 200,463   |                      |   | 102,577     |  |      | 3,231             |      |   | 1,767                   |      | 6.45 |   |             | 6.89 |   |        |   | (114  | ) |  |   | 1,578 |   |  |   | 1,464  |  
|                                           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Total interest-bearing liabilities         |  |                                          | 3,768,892 |                      |   | 3,371,086   |  |      | 18,099            |      |   | 11,206                  |      | 1.93 | % |             | 1.34 | % |        |   | 3,955 |   |  |   | 2,938 |   |  |   | 6,893  |  
|                                           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Noninterest-bearing liabilities:           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Demand deposits                            |  |                                          | 774,403   |                      |   | 692,027     |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Other liabilities                          |  |                                          | 29,582    |                      |   | 25,339      |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Total noninterest-bearing liabilities      |  |                                          | 803,985   |                      |   | 717,366     |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Total liabilities                          |  |                                          | 4,572,877 |                      |   | 4,088,452   |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Stockholders equity                       |  |                                          | 384,870   |                      |   | 350,743     |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Total liabilities and stockholders equity |  | $                                        | 4,957,747 |                      | $ | 4,439,195   |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Net interest spread                        |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      | 3.43 | % |             | 3.51 | % |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Net interest income:                       |  |                                          |           |                      |   |             |  | $    | 42,458            |      | $ | 37,799                  |      |      |   |             |      |   |        | $ | 2,160 |   |  | $ | 2,499 |   |  | $ | 4,659  |  
|                                           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|to average assets                          |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      | 3.44 | % |             | 3.42 | % |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|to average interest-earning assets         |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      | 3.76 | % |             | 3.74 | % |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                          |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  

---

|(1) | Non-taxable interest income has been adjusted to a tax equivalent amount using the incremental statutory federal income tax rate of 35%. The net tax equivalent adjustment amounts
included in the above table were $176 and $204 for the quarters ended June 30, 2005 and 2004, respectively.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Yield/rate-volume changes have been allocated to each category based on the percentage of each to the total change.
|--- | -------------------------------------------------------------------------------------------------------------------

|(3) | Nonaccrual loans are included in the average loan balances. Interest income on nonaccrual loans is generally recognized on a cash basis.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------

|(4) | Yields on available-for-sale securities calculated based on amortized cost.
|--- | ---------------------------------------------------------------------------



Page 16



---

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands,
except per share data) (continued)



Table 3: Comparative Average
Balance Sheets and Tax Equivalent Rate/Volume Variance



|                                           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|------------------------------------------ |  | ------------------------------------------- | --------- | -------------------- | - | ----------- |  | ---- | ----------------- | ---- | - | ----------------------- | ---- | ---- | - | ----------- | ---- | - | ------ | - | ----- | - |  | - | ----- | - |  | - | ------ | -
|                                           |  | As of and for the Six Months Ended June 30, |          
|                                           |  | Average Balance                             |           | Interest Inc/Exp (1) |   | Yield/ Rate |  |      | Change Due To (2) |      |   | Net Increase (Decrease) |     
|                                           |  | 2005                                        |           | 2004                 |   | 2005        |  | 2004 |                   | 2005 |   |                         | 2004 |      |   | Yield /Rate |      |   | Volume |   |      
|Interest-earning assets:                   |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Loans (3)                                  |  | $                                           | 3,200,431 |                      | $ | 2,983,888   |  | $    | 99,693            |      | $ | 86,836                  |      | 6.28 | % |             | 5.85 | % |        | $ | 6,058 |   |  | $ | 6,799 |   |  | $ | 12,857 |  
|Investment securities: (4)                 |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Taxable                                    |  |                                             | 942,793   |                      |   | 903,201     |  |      | 12,069            |      |   | 10,094                  |      | 2.57 |   |             | 2.25 |   |        |   | 1,466 |   |  |   | 509   |   |  |   | 1,975  |  
|Non-taxable                                |  |                                             | 8,695     |                      |   | 10,119      |  |      | 269               |      |   | 329                     |      | 6.19 |   |             | 6.50 |   |        |   | (16   | ) |  |   | (44   | ) |  |   | (60    | )
|Federal funds sold                         |  |                                             | 272,802   |                      |   | 145,574     |  |      | 3,677             |      |   | 697                     |      | 2.72 |   |             | 0.96 |   |        |   | 1,250 |   |  |   | 1,730 |   |  |   | 2,980  |  
|                                           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Total interest-earning assets              |  |                                             | 4,424,721 |                      |   | 4,042,782   |  |      | 115,708           |      |   | 97,956                  |      | 5.27 | % |             | 4.87 | % |        |   | 8,758 |   |  |   | 8,994 |   |  |   | 17,752 |  
|                                           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Noninterest-earning assets:                |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Cash and due from banks                    |  |                                             | 164,436   |                      |   | 158,349     |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Premises and equipment                     |  |                                             | 162,368   |                      |   | 141,917     |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Other, less allowance for loan losses      |  |                                             | 86,834    |                      |   | 77,862      |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Total noninterest-earning assets           |  |                                             | 413,638   |                      |   | 378,128     |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Total assets                               |  | $                                           | 4,838,359 |                      | $ | 4,420,910   |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Interest-bearing liabilities:              |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Deposits                                   |  | $                                           | 3,300,929 |                      | $ | 3,116,446   |  | $    | 25,209            |      | $ | 18,438                  |      | 1.54 | % |             | 1.19 | % |        | $ | 5,350 |   |  | $ | 1,421 |   |  | $ | 6,771  |  
|Short-term borrowings                      |  |                                             | 211,894   |                      |   | 166,867     |  |      | 2,668             |      |   | 681                     |      | 2.54 |   |             | 0.82 |   |        |   | 1,415 |   |  |   | 572   |   |  |   | 1,987  |  
|Long-term debt                             |  |                                             | 163,119   |                      |   | 87,467      |  |      | 5,234             |      |   | 3,259                   |      | 6.42 |   |             | 7.45 |   |        |   | (453  | ) |  |   | 2,428 |   |  |   | 1,975  |  
|                                           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Total interest-bearing liabilities         |  |                                             | 3,675,942 |                      |   | 3,370,780   |  |      | 33,111            |      |   | 22,378                  |      | 1.81 | % |             | 1.33 | % |        |   | 6,312 |   |  |   | 4,421 |   |  |   | 10,733 |  
|                                           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Noninterest-bearing liabilities:           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Demand deposits                            |  |                                             | 752,573   |                      |   | 675,746     |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Other liabilities                          |  |                                             | 29,525    |                      |   | 26,189      |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Total non-interest-bearing liabilities     |  |                                             | 782,098   |                      |   | 701,935     |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Total liabilities                          |  |                                             | 4,458,040 |                      |   | 4,072,715   |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Stockholders equity                       |  |                                             | 380,319   |                      |   | 348,195     |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Total liabilities and stockholders equity |  | $                                           | 4,838,359 |                      | $ | 4,420,910   |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Net interest spread                        |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      | 3.46 | % |             | 3.54 | % |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|Net interest income:                       |  |                                             |           |                      |   |             |  | $    | 82,597            |      | $ | 75,578                  |      |      |   |             |      |   |        | $ | 2,446 |   |  | $ | 4,573 |   |  | $ | 7,019  |  
|                                           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|to average assets                          |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      | 3.44 | % |             | 3.44 | % |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  
|to average interest-earning assets         |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      | 3.76 | % |             | 3.76 | % |        |   |       |   |  |   |       |   |  |   |        |  
|                                           |  |                                             |           |                      |   |             |  |      |                   |      |   |                         |      |      |   |             |      |   |        |   |       |   |  |   |       |   |  |   |        |  

---

|(1) | Non-taxable interest income has been adjusted to a tax equivalent amount using the incremental statutory federal income tax rate of 35%. The net tax equivalent adjustment amounts
included in the above table were $370 and $430 for the six months ended June 30, 2005 and 2004, respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) | Yield/rate-volume changes have been allocated to each category based on the percentage of each to the total change.
|--- | -------------------------------------------------------------------------------------------------------------------

|(3) | Nonaccrual loans are included in the average loan balances. Interest income on nonaccrual loans is generally recognized on a cash basis.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------

|(4) | Yields on available-for-sale securities calculated based on amortized cost.
|--- | ---------------------------------------------------------------------------



Page 17



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands,
except per share data) (continued)



Net interest income (continued)



Current quarter compared to prior year quarter



Net interest income on a tax equivalent basis increased $4,659 or by 12.33% for the
quarter ended June 30, 2005, over the comparable period in 2004. The increase in net interest income was primarily due to an increase in net interest income to average interest-earning assets (net interest margin) and 11.60% growth in
average interest-earning assets during the comparable periods.



Net interest
margin increased from 3.74% for the quarter ended June 30, 2004 to 3.76% for the quarter ended June 30, 2005. The net interest spread (the difference between the yield on interest-earning assets and the cost of interest-bearing liabilities) declined
by 8 basis points from 3.51% for the quarter ended June 30, 2004 to 3.43% for the quarter ended June 30, 2005. The decrease in the net interest spread during the quarter was due to the increase in the cost of interest-bearing liabilities exceeding
the increase in the yield on interest-earning assets. The decline in the net interest spread was offset by the fact that average interest-earning assets exceeded average interest-bearing liabilities by $763,244 for the quarter ended June 30, 2005,
causing the net interest margin to improve by 2 basis points (the impact of excess average interest-earning assets over average interest-bearing liabilities offset the 8 basis point decline in the net interest spread by 10 basis points when
calculating the net interest margin). The excess of average interest-earning assets over average interest-bearing liabilities is primarily driven by demand deposit growth.



The yield on interest-earning assets increased from 4.85% for the quarter ended June 30, 2004 to 5.36% for the quarter ended June 30, 2005,
or by 51 basis points, while the cost of interest-bearing liabilities increased from 1.34% to 1.93%, or by 59 basis points. The increase in the yield on interest-earning assets was primarily due to increases in the yields on loans (from 5.82% for
the quarter ended June 30, 2004 to 6.38% for the quarter ended June 30, 2005) and investment securities (from 2.24% for the quarter ended June 30, 2004 to 2.70% for the quarter ended June 30, 2005). The increase in yields on interest-earning assets
is due to the increasing interest rate environment. See discussion about the rising interest rate environment at the end of the next paragraph.



The increase in the cost of interest-bearing liabilities was primarily due to an increase in the rates paid on interest-bearing deposits (from 1.18% for the quarter ended
June 30, 2004 to 1.60% for the quarter ended June 30, 2005) and an increase in rates paid on short-term borrowings (from .88% for the quarter ended June 30, 2004 to 2.70% for the quarter ended June 30, 2005). The increase in the rates paid on
interest-bearing deposits was due primarily to an increase in the rates paid on municipal deposits (from .99% for the quarter ended June 30, 2004 to 2.66% for the quarter ended June 30, 2005) and an increase in rates paid on certificate of deposits
(from 1.90% for the quarter ended June 30, 2004 to 2.31% for the quarter ended June 30, 2005). Rates paid on short-term borrowings and municipal deposits are tied to the three month Treasury bill rate, the rate on which increased from 1.31% at June
30, 2004 to 3.06% at June 30, 2005. Rates paid on interest-bearing deposits have also increased due to the rising interest rate environment. Since June 30, 2004, the Federal Reserve has raised the federal funds rate 9 times from 1.25% to 3.25% at
June 30, 2005. The prime interest rate has increased from 4.00% to 6.25% over that same period.



Current year-to-date period compared to prior year-to-date period



Net interest income on a tax equivalent basis increased $7,019 or by 9.29% for the six months ended June 30, 2005, over the comparable period in 2004. The increase in net
interest income was primarily due to 9.45% average interest-earning asset growth during the comparable periods.



Net interest margin was 3.76% for the six months ended June 30, 2005 and June 30, 2004. The net interest spread decreased from 3.54% to 3.46% or by 8 basis points. The
decline in the net interest spread was offset by the same factor discussed in the previous section.



The decrease in the net interest spread during the period was due to the increase in the cost of interest-bearing liabilities exceeding the increase in the yield on interest-earning assets. The yield on
interest-earning assets increased from 4.87% for the six months ended June 30, 2004 to 5.27% for the six months ended June 30, 2005, or by 40 basis points, while the cost of interest-bearing liabilities increased from 1.33% to 1.81%, or by 48 basis
points. The increase in the yield on interest-earning assets was primarily due to increases in the yields on loans (from 5.85% for the six months ended June 30, 2004 to 6.28% for the six months ended June 30, 2005) and investment securities (from
2.30% for the six months ended June 30, 2004 to 2.60% for the six months ended June 30, 2005).



Page 18



---

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands,
except per share data) (continued)



The increase in the cost of
interest-bearing liabilities was primarily due to an increase in the rates paid on interest-bearing deposits (from 1.19% for the six months ended June 30, 2004 to 1.54% for the six months ended June 30, 2005) and an increase in rates paid on
short-term borrowings (from 0.82% for the six months ended June 30, 2004 to 2.54% for the six months ended June 30, 2005). The increase in the rates paid on interest-bearing deposits was due primarily to an increase in the rates paid on municipal
deposits (from .94% for the six months ended June 30, 2004 to 2.46% for the six months ended June 30, 2005) and an increase in rates paid on certificate of deposits (from 1.91% for the six months ended June 30, 2004 to 2.24% for the six months ended
June 30, 2005). Rates paid on interest-bearing deposits and short-term borrowings increased due to the same factors discussed in the previous section.



Noninterest income and expense



Current quarter compared to prior year quarter



Noninterest income decreased by $1,362 or by 8.66% for the quarter ended June 30, 2005, compared to the same period in 2004. The most significant components of the change
in noninterest income were a $1,346 decrease in mortgage income and a $662 decrease in the gain on sale of investment securities, partially offset by an increase of $413 in service charges on deposits.



The decrease in mortgage income was primarily related to a $1,445 increase in amortization
expense on mortgage serving rights. The increase in amortization expense was primarily related to the recording of impairment during the quarter ended June 30, 2005 totaling $307 compared to recapture of impairment of $1,216 recorded during the
quarter ended June 30, 2004.



Noninterest expense increased by $217 or by 0.57%
for the quarter ended June 30, 2005 over the comparable period in 2004. The most significant components of the change in noninterest expense were a $720 increase in salaries and employee benefits, a $359 increase in net occupancy expense and a $249
increase in furniture and equipment expense, partially offset by a decrease of $1,116 in other noninterest expense and a net decrease of $292 in amortization expense. The increase in salary expense was primarily due to increases in salaries related
to the PCCC acquisition and increases in employee benefits costs. The increase in net occupancy and furniture and equipment expense relates primarily to an increase in depreciation expense of $529. Other noninterest expense declined primarily due to
$1,017 in branding campaign expenses incurred in the second quarter of 2004 which were not incurred in 2005. The net decrease in amortization expense is primarily due to the run off of core deposit intangible on prior acquisitions.



Current year-to-date period compared to prior year-to-date period



Noninterest income increased by $132 or by 0.46% for the six months ended June 30, 2005,
compared to the same period in 2004. The more significant changes in noninterest income consisted of a $725 increase in the gain on sale of fixed assets and a $219 increase in bankcard fees, partially offset by a decrease in the gain on sale of
investment securities of $911.



Noninterest expense increased by $1,266, or by
1.70%, for the six months ended June 30, 2005 over the comparable period in 2004. The most significant components of the change in noninterest expense were a $701 increase in salaries and employee benefits, a $675 increase in net occupancy expense
and a $563 increase in furniture and equipment expense, partially offset by a $932 decrease in other noninterest expense and a net decrease of $467 in amortization expense. The changes in noninterest expense were due to the same reasons explained
above for the quarter ended June 30, 2005.



Income taxes



Total income tax expense increased by $1,871 or 42.25% for the quarter ended June 30, 2005
compared to the same period in 2004. Total income tax expense increased by $2,911 or 32.39% for the six months ended June 30, 2005 compared to the same period in 2004. The effective tax rate was 36.00% and 35.40% for the quarters and six months
ending June 30, 2005 and June 30, 2004, respectively.



Item 3. Quantitative
and Qualitative Disclosures about Market Risk



Management has considered
the effects of the PCCC acquisition and the issuance of the $75,000 subordinated debt as part of the market risk exposures that affect the quantitative and qualitative disclosures presented as part of Bancorporations Annual Report on Form 10-K
for the year ended December 31, 2004 and believes there are no material changes.



Page 19



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Dollars in thousands,
except per share data) (continued)



Item 4. Controls and Procedures



|(a) | Evaluation of Disclosure Controls and Procedures
|--- | ------------------------------------------------



Bancorporations Chief Executive Officer and Chief Financial Officer, after evaluating the effectiveness of Bancorporations disclosure
controls and procedures (as defined in the Securities Exchange Act of 1934 rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this quarterly report, have concluded that Bancorporations disclosure controls and
procedures were effective as of the end of that period.



|(b) | Changes in Internal Control Over Financial Reporting
|--- | ----------------------------------------------------



In connection with the above evaluation of the effectiveness of Bancorporations disclosure controls and procedures, no change in
Bancorporations internal control over financial reporting was identified during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, Bancorporations internal control over financial
reporting.



PART II - OTHER INFORMATION



Item 1. Legal Proceedings



Not Applicable.



Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities



Not applicable.



Item 3. Defaults upon Senior Securities



Not Applicable.



Item 4. Submission of Matters to a Vote of Security Holders



The annual meeting of shareholders of Bancorporation was held on April 21, 2005. At the meeting, shareholders voted to elect 19 directors for terms of one year or until their respective successors are duly elected and
qualified. The 19 nominees, listed below, were elected as directors for a term of 1 year.



|                     |  |         |  |          |  |                 
|-------------------- |  | ------- |  | -------- |  | ----------------
|Nominees             |  | For     |  | Withheld |  | Broker Non-Votes
|C.H. Ames            |  | 830,090 |  | 2,093    |  | 1,757           
|J.B. Apple           |  | 828,928 |  | 3,255    |  | 1,757           
|R.W. Blackmon        |  | 831,717 |  | 466      |  | 75              
|P.M. Bristow         |  | 828,977 |  | 3,206    |  | 1,757           
|G.H. Broadrick       |  | 830,035 |  | 2,148    |  | 1,757           
|W.C. Cottingham      |  | 831,737 |  | 446      |  | 75              
|D.E. Dukes           |  | 830,090 |  | 2,093    |  | 1,757           
|M.C. Garner, Jr.     |  | 831,772 |  | 411      |  | 75              
|W.E. Hancock, III    |  | 831,772 |  | 411      |  | 75              
|R.B. Haynes          |  | 830,090 |  | 2,093    |  | 1,757           
|W.E. Haynes          |  | 830,090 |  | 2,093    |  | 1,757           
|L.M. Henderson       |  | 831,772 |  | 411      |  | 75              
|F.B. Holding         |  | 828,922 |  | 3,261    |  | 1,757           
|K.B. Marsh           |  | 831,772 |  | 411      |  | 75              
|C.S. McLaurin, III   |  | 830,055 |  | 2,128    |  | 1,757           
|N.W. Morrisette, Jr. |  | 831,717 |  | 466      |  | 75              
|E.P. Palmer          |  | 831,737 |  | 446      |  | 75              
|W.E. Sellars         |  | 830,035 |  | 2,148    |  | 1,757           
|H.F. Sherrill        |  | 830,035 |  | 2,148    |  | 1,757           



No other matters were voted on at the
meeting, and there was no solicitation in opposition to managements Nominees listed in the Proxy Statement.



Page 20



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Item 5. Other Information



Not Applicable.



Item 6. Exhibits



Exhibits  The following exhibits are either attached hereto or incorporated by reference:



|     |  |                                                                                                                                                                                                                                                                               
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1  |  | Registrants Bylaws, as amended (incorporated herein by reference from exhibits to Registrants Current Report on Form 8-K dated April 21, 2005).                                                                                                                             
|     | 
|4.1  |  | Indenture dated April 5, 2005, between First Citizens Bancorporation, Inc., as Issuer, and Deutsche Bank Trust Company America, as Trustee (incorporated herein by reference from exhibits to
Registrants Current Report on Form 8-K dated April 5, 2005).                   
|     | 
|4.2  |  | First Supplemental Indenture dated April 5, 2005, between First Citizens Bancorporation, Inc., as Issuer, and Deutsche Bank Trust Company America, as Trustee (incorporated herein by reference
from exhibits to Registrants Current Report on Form 8-K dated April 5, 2005).
|     | 
|10.1 |  | Consulting Agreement between Tommy B. Wessinger, Peoples Community Bank of South Carolina and First Citizens Bank and Trust Company, Inc. (incorporated herein by reference from exhibits
to Registrants Current Report on Form 8-K dated May 11, 2005).                    
|     | 
|31.1 |  | Certification of Chief Executive Officer required by Rule 13a-14(a) (filed herewith)                                                                                                                                                                                          
|     | 
|31.2 |  | Certification of Chief Financial Officer required by Rule 13a-14(a) (filed herewith)                                                                                                                                                                                          
|     | 
|32   |  | Certification (Pursuant to 18 U.S.C. Section 1350) (filed herewith)                                                                                                                                                                                                           



---

SIGNATURES



Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.



|                      |  |                                     |  |                        
|--------------------- |  | ----------------------------------- |  | -----------------------
|                      |  | FIRST CITIZENS BANCORPORATION, INC.
|                      |  | (Registrant)                       
|                      |  |                                    
|Dated: August 9, 2005 |  |                                     |  |                        
|                      |  |                                    
|                      |  | By:                                 |  | /s/ Craig L. Nix       
|                      |  |                                     |  | Craig L. Nix           
|                      |  |                                     |  | Chief Financial Officer



---

EXHIBIT INDEX



|     |  |                                                                                                                                                                                                                                                                               
|---- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1  |  | Registrants Bylaws, as amended (incorporated herein by reference from exhibits to Registrants Current Report on Form 8-K dated April 21, 2005).                                                                                                                             
|     | 
|4.1  |  | Indenture dated April 5, 2005, between First Citizens Bancorporation, Inc., as Issuer, and Deutsche Bank Trust Company America, as Trustee (incorporated herein by reference from exhibits to
Registrants Current Report on Form 8-K dated April 5, 2005).                   
|     | 
|4.2  |  | First Supplemental Indenture dated April 5, 2005, between First Citizens Bancorporation, Inc., as Issuer, and Deutsche Bank Trust Company America, as Trustee (incorporated herein by reference
from exhibits to Registrants Current Report on Form 8-K dated April 5, 2005).
|     | 
|10.1 |  | Consulting Agreement between Tommy B. Wessinger, Peoples Community Bank of South Carolina and First Citizens Bank and Trust Company, Inc. (incorporated herein by reference from exhibits
to Registrants Current Report on Form 8-K dated May 11, 2005).                    
|     | 
|31.1 |  | Certification of Chief Executive Officer required by Rule 13a-14(a) (filed herewith)                                                                                                                                                                                          
|     | 
|31.2 |  | Certification of Chief Financial Officer required by Rule 13a-14(a) (filed herewith)                                                                                                                                                                                          
|     | 
|32   |  | Certification (Pursuant to 18 U.S.C. Section 1350) (filed herewith)