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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 September 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 by check mark whether the Registrant is a shell company (as defined
in Rule 12b-2 of the Act).    YES ̈NO  x



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



|                                         |  |                                
|---------------------------------------- |  | -------------------------------
|Class                                    |  | Outstanding at October 31, 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)



|                                                                                                                                          |  |                   |           |   |                  |   |           |  
|----------------------------------------------------------------------------------------------------------------------------------------- |  | ----------------- | --------- | - | ---------------- | - | --------- | -
|                                                                                                                                          |  | September 30,2005 |           |   | December 31,2004 |  
|ASSETS                                                                                                                                    |  |                   |           |   |                  |   |           |  
|Cash and due from banks                                                                                                                   |  | $                 | 188,945   |   |                  | $ | 162,620   |  
|Federal funds sold                                                                                                                        |  |                   | 115,882   |   |                  |   | 111,554   |  
|                                                                                                                                          |  |                   |           |   |                  |   |           |  
|Total cash and cash equivalents                                                                                                           |  |                   | 304,827   |   |                  |   | 274,174   |  
|                                                                                                                                          |  |                   |           |   |                  |   |           |  
|Investment securities:                                                                                                                    |  |                   |           |   |                  |   |           |  
|Held-to-maturity, at amortized cost (fair value: September 30, 2005 - $ 14,461; December 31, 2004 - $14,902)                              |  |                   | 14,562    |   |                  |   | 14,829    |  
|Available-for-sale, at fair value                                                                                                         |  |                   | 999,282   |   |                  |   | 889,590   |  
|                                                                                                                                          |  |                   |           |   |                  |   |           |  
|Total investment securities                                                                                                               |  |                   | 1,013,844 |   |                  |   | 904,419   |  
|                                                                                                                                          |  |                   |           |   |                  |   |           |  
|Loans and leases, net                                                                                                                     |  |                   | 3,620,862 |   |                  |   | 3,124,197 |  
|Less: Allowance for loan losses                                                                                                           |  |                   | (48,416   | ) |                  |   | (43,623   | )
|                                                                                                                                          |  |                   |           |   |                  |   |           |  
|Net loans and leases                                                                                                                      |  |                   | 3,572,446 |   |                  |   | 3,080,574 |  
|                                                                                                                                          |  |                   |           |   |                  |   |           |  
|Premises and equipment, net                                                                                                               |  |                   | 186,335   |   |                  |   | 154,823   |  
|Interest receivable                                                                                                                       |  |                   | 21,539    |   |                  |   | 16,460    |  
|Goodwill                                                                                                                                  |  |                   | 112,463   |   |                  |   | 24,549    |  
|Other intangible assets                                                                                                                   |  |                   | 40,724    |   |                  |   | 36,712    |  
|Other assets                                                                                                                              |  |                   | 66,619    |   |                  |   | 41,940    |  
|                                                                                                                                          |  |                   |           |   |                  |   |           |  
|Total assets                                                                                                                              |  | $                 | 5,318,797 |   |                  | $ | 4,533,651 |  
|                                                                                                                                          |  |                   |           |   |                  |   |           |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                      |  |                   |           |   |                  |   |           |  
|Liabilities:                                                                                                                              |  |                   |           |   |                  |   |           |  
|Deposits:                                                                                                                                 |  |                   |           |   |                  |   |           |  
|Demand                                                                                                                                    |  | $                 | 826,661   |   |                  | $ | 713,321   |  
|Time and savings                                                                                                                          |  |                   | 3,549,078 |   |                  |   | 3,135,052 |  
|                                                                                                                                          |  |                   |           |   |                  |   |           |  
|Total deposits                                                                                                                            |  |                   | 4,375,739 |   |                  |   | 3,848,373 |  
|                                                                                                                                          |  |                  
|Short-term borrowings                                                                                                                     |  |                   | 255,021   |   |                  |   | 164,547   |  
|Long-term debt                                                                                                                            |  |                   | 246,698   |   |                  |   | 125,361   |  
|Other liabilities                                                                                                                         |  |                   | 36,823    |   |                  |   | 25,914    |  
|                                                                                                                                          |  |                   |           |   |                  |   |           |  
|Total liabilities                                                                                                                         |  |                   | 4,914,281 |   |                  |   | 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 September 30, 2005 and December 31, 2004 -
36,409 |  |                   | 182       |   |                  |   | 182       |  
|Voting common stock - $5.00 par value, authorized 2,000,000; issued and outstanding September 30, 2005 and December 31, 2004 -
862,505    |  |                   | 4,313     |   |                  |   | 4,313     |  
|Surplus                                                                                                                                   |  |                   | 65,081    |   |                  |   | 65,081    |  
|Undivided profits                                                                                                                         |  |                   | 314,545   |   |                  |   | 279,401   |  
|Accumulated other comprehensive income                                                                                                    |  |                   | 17,284    |   |                  |   | 17,368    |  
|                                                                                                                                          |  |                   |           |   |                  |   |           |  
|Total stockholders equity                                                                                                                |  |                   | 404,516   |   |                  |   | 369,456   |  
|                                                                                                                                          |  |                   |           |   |                  |   |           |  
|Total liabilities and stockholders equity                                                                                                |  | $                 | 5,318,797 |   |                  | $ | 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 EndedSeptember 30, |         | For the Nine Months EndedSeptember 30,
|                                                    |  | 2005                               |         | 2004                                   |   | 2005    |  | 2004
|Interest income:                                    |  |                                    |         |                                        |   |         |  |      |         |  |   |        
|Interest and fees on loans                          |  | $                                  | 60,033  |                                        | $ | 45,044  |  | $    | 159,450 |  | $ | 131,566
|Interest on investment securities:                  |  |                                    |         |                                        |   |         |  |      |         |  |   |        
|Taxable                                             |  |                                    | 7,631   |                                        |   | 5,151   |  |      | 19,699  |  |   | 15,245 
|Non-taxable                                         |  |                                    | 171     |                                        |   | 91      |  |      | 346     |  |   | 305    
|Federal funds sold                                  |  |                                    | 985     |                                        |   | 442     |  |      | 4,662   |  |   | 1,139  
|                                                    |  |                                    |         |                                        |   |         |  |      |         |  |   |        
|Total interest income                               |  |                                    | 68,820  |                                        |   | 50,728  |  |      | 184,157 |  |   | 148,255
|                                                    |  |                                    |         |                                        |   |         |  |      |         |  |   |        
|Interest expense:                                   |  |                                    |         |                                        |   |         |  |      |         |  |   |        
|Interest on deposits                                |  |                                    | 15,818  |                                        |   | 9,451   |  |      | 41,026  |  |   | 27,890 
|Interest on short-term borrowings                   |  |                                    | 2,041   |                                        |   | 611     |  |      | 4,709   |  |   | 1,291  
|Interest on long-term debt                          |  |                                    | 3,659   |                                        |   | 1,955   |  |      | 8,893   |  |   | 5,214  
|                                                    |  |                                    |         |                                        |   |         |  |      |         |  |   |        
|Total interest expense                              |  |                                    | 21,518  |                                        |   | 12,017  |  |      | 54,628  |  |   | 34,395 
|                                                    |  |                                    |         |                                        |   |         |  |      |         |  |   |        
|Net interest income                                 |  |                                    | 47,302  |                                        |   | 38,711  |  |      | 129,529 |  |   | 113,860
|Provision for loan losses                           |  |                                    | 929     |                                        |   | 1,349   |  |      | 3,367   |  |   | 5,505  
|                                                    |  |                                    |         |                                        |   |         |  |      |         |  |   |        
|Net interest income after provision for loan losses |  |                                    | 46,373  |                                        |   | 37,362  |  |      | 126,162 |  |   | 108,355
|                                                    |  |                                    |         |                                        |   |         |  |      |         |  |   |        
|Noninterest income:                                 |  |                                    |         |                                        |   |         |  |      |         |  |   |        
|Service charges on deposits                         |  |                                    | 9,868   |                                        |   | 8,860   |  |      | 27,402  |  |   | 26,415 
|Commissions and fees from fiduciary activities      |  |                                    | 1,111   |                                        |   | 759     |  |      | 2,612   |  |   | 2,343  
|Mortgage income                                     |  |                                    | 2,091   |                                        |   | 684     |  |      | 4,826   |  |   | 3,277  
|Bankcard discount and fees                          |  |                                    | 2,018   |                                        |   | 1,820   |  |      | 5,461   |  |   | 5,046  
|Gain on sale of investment securities               |  |                                    | 533     |                                        |   |        |  |      | 474     |  |   | 852    
|Other                                               |  |                                    | 1,684   |                                        |   | 889     |  |      | 5,401   |  |   | 3,819  
|                                                    |  |                                    |         |                                        |   |         |  |      |         |  |   |        
|Total noninterest income                            |  |                                    | 17,305  |                                        |   | 13,012  |  |      | 46,176  |  |   | 41,752 
|                                                    |  |                                    |         |                                        |   |         |  |      |         |  |   |        
|Noninterest expense:                                |  |                                    |         |                                        |   |         |  |      |         |  |   |        
|Salaries and employee benefits                      |  |                                    | 20,250  |                                        |   | 18,221  |  |      | 57,792  |  |   | 55,066 
|Net occupancy expense                               |  |                                    | 3,589   |                                        |   | 3,176   |  |      | 10,185  |  |   | 9,099  
|Furniture and equipment expense                     |  |                                    | 2,456   |                                        |   | 2,110   |  |      | 6,997   |  |   | 6,086  
|Bankcard fees                                       |  |                                    | 2,195   |                                        |   | 1,940   |  |      | 6,110   |  |   | 5,550  
|Data processing fees                                |  |                                    | 3,429   |                                        |   | 3,238   |  |      | 10,237  |  |   | 9,623  
|Amortization expense                                |  |                                    | 2,296   |                                        |   | 2,252   |  |      | 6,344   |  |   | 6,768  
|Other                                               |  |                                    | 5,942   |                                        |   | 5,675   |  |      | 18,099  |  |   | 18,759 
|                                                    |  |                                    |         |                                        |   |         |  |      |         |  |   |        
|Total noninterest expense                           |  |                                    | 40,157  |                                        |   | 36,612  |  |      | 115,764 |  |   | 110,951
|                                                    |  |                                    |         |                                        |   |         |  |      |         |  |   |        
|Income before income tax expense                    |  |                                    | 23,521  |                                        |   | 13,762  |  |      | 56,574  |  |   | 39,156 
|Income tax expense                                  |  |                                    | 8,468   |                                        |   | 4,872   |  |      | 20,366  |  |   | 13,861 
|                                                    |  |                                    |         |                                        |   |         |  |      |         |  |   |        
|Net income                                          |  | $                                  | 15,053  |                                        | $ | 8,890   |  | $    | 36,208  |  | $ | 25,295 
|                                                    |  |                                    |         |                                        |   |         |  |      |         |  |   |        
|Net income per common share                         |  | $                                  | 16.70   |                                        | $ | 9.83    |  | $    | 40.15   |  | $ | 27.89  
|Weighted average common shares outstanding          |  |                                    | 898,914 |                                        |   | 899,899 |  |      | 898,914 |  |   | 902,760



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 ofCommonShares |   |  | PreferredStock |       | Non-VotingCommonStock |   | VotingCommonStock |  |   | Surplus |   | UndividedProfits |   |        | Accumulated OtherComprehensiveIncome |   |         | TotalStock-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                                                                                                          |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   | 25,295  |                           |  |   |        |   |  |   | 25,295  |  
|Change in net unrealized gain on investment securities available-for-sale, net of tax benefit of $1,917             |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   | (3,559 | ) |  |   | (3,559  | )
|Reclassification adjustment for gains on securities available-for-sale included in net income, net of taxes of $298 |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   | (554   | ) |  |   | (554    | )
|                                                                                                                    |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   |        |   |  |   |         |  
|Total comprehensive income                                                                                          |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   |        |   |  |   | 21,182  |  
|                                                                                                                    |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   |        |   |  |   |         |  
|Reacquired voting common stock                                                                                      |  | (6,567                | ) |  |                |       |                       |   |                   |  |   | (32     | ) |                  |   |        |                                      |   | (3,381  | )                         |  |   |        |   |  |   | (3,413  | )
|Common stock dividends ($1.05 per share)                                                                            |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   | (1,093  | )                         |  |   |        |   |  |   | (1,093  | )
|Preferred stock dividends                                                                                           |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   | (121    | )                         |  |   |        |   |  |   | (121    | )
|                                                                                                                    |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   |        |   |  |   |         |  
|Balance at September 30, 2004                                                                                       |  | 898,914               |   |  |                | 3,111 |                       |   | 182               |  |   | 4,313   |   |                  |   | 65,081 |                                      |   | 268,347 |                           |  |   | 15,104 |   |  |   | 356,138 |  
|Comprehensive income:                                                                                               |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   |        |   |  |   |         |  
|Net income                                                                                                          |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   | 11,414  |                           |  |   |        |   |  |   | 11,414  |  
|Change in net unrealized gain on investment securities available-for-sale, net of taxes of $1,220                   |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   | 2,264  |   |  |   | 2,264   |  
|                                                                                                                    |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   |        |   |  |   |         |  
|Total comprehensive income                                                                                          |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   |        |   |  |   | 13,678  |  
|                                                                                                                    |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   |        |   |  |   |         |  
|Common stock dividends ($0.35 per share)                                                                            |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   | (315    | )                         |  |   |        |   |  |   | (315    | )
|Preferred stock dividends                                                                                           |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   | (45     | )                         |  |   |        |   |  |   | (45     | )
|                                                                                                                    |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   |        |   |  |   |         |  
|Balance at December 31, 2004                                                                                        |  | 898,914               |   |  |                | 3,111 |                       |   | 182               |  |   | 4,313   |   |                  |   | 65,081 |                                      |   | 279,401 |                           |  |   | 17,368 |   |  |   | 369,456 |  
|Comprehensive income:                                                                                               |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   |        |   |  |   |         |  
|Net income                                                                                                          |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   | 36,208  |                           |  |   |        |   |  |   | 36,208  |  
|Change in net unrealized gain on investment securities available-for-sale, net of taxes of $121                     |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   | 224    |   |  |   | 224     |  
|Reclassification adjustment for gains on securities available-for-sale included in net income, net of taxes of $166 |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   | (308   | ) |  |   | (308    | )
|                                                                                                                    |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   |        |   |  |   |         |  
|Total comprehensive income                                                                                          |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   |        |   |  |   | 36,124  |  
|                                                                                                                    |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   |        |   |  |   |         |  
|Common stock dividends ($1.05 per share)                                                                            |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   | (943    | )                         |  |   |        |   |  |   | (943    | )
|Preferred stock dividends                                                                                           |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   | (121    | )                         |  |   |        |   |  |   | (121    | )
|                                                                                                                    |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   |        |   |  |   |         |  
|Balance at September 30, 2005                                                                                       |  | 898,914               |   |  | $              | 3,111 |                       | $ | 182               |  | $ | 4,313   |   |                  | $ | 65,081 |                                      | $ | 314,545 |                           |  | $ | 17,284 |   |  | $ | 404,516 |  
|                                                                                                                    |  |                       |   |  |                |       |                       |   |                   |  |   |         |   |                  |   |        |                                      |   |         |                           |  |   |        |   |  |   |         |  



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 Nine Months EndedSeptember 30, |         
|                                                                                  |  | 2005                                   |          |   | 2004 |  
|Cash flows from operating activities:                                             |  |                                        |          |   |      |   |          |  
|Net income                                                                        |  | $                                      | 36,208   |   |      | $ | 25,295   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                                        |          |   |      |   |          |  
|Provision for loan losses                                                         |  |                                        | 3,367    |   |      |   | 5,505    |  
|Depreciation and amortization                                                     |  |                                        | 17,130   |   |      |   | 16,880   |  
|Net accretion of discount on investment securities                                |  |                                        | 1,409    |   |      |   | 2,479    |  
|Deferred income tax benefit                                                       |  |                                        | (59      | ) |      |   | (492     | )
|Gain on sales of premises and equipment                                           |  |                                        | (860     | ) |      |   | (130     | )
|Increase in interest receivable                                                   |  |                                        | (2,996   | ) |      |   | (1,077   | )
|Increase (decrease) in interest payable                                           |  |                                        | 2,879    |   |      |   | (989     | )
|Origination of mortgage loans held-for-resale                                     |  |                                        | (256,858 | ) |      |   | (155,739 | )
|Proceeds from sales of mortgage loans held-for-resale                             |  |                                        | 246,280  |   |      |   | 156,065  |  
|Gain on sale of mortgage loans held-for-resale                                    |  |                                        | (2,572   | ) |      |   | (1,845   | )
|Gain on sale of investment securities                                             |  |                                        | (474     | ) |      |   | (852     | )
|Increase in other assets                                                          |  |                                        | (4,524   | ) |      |   | (1,050   | )
|Increase in other liabilities                                                     |  |                                        | 5,399    |   |      |   | 583      |  
|                                                                                  |  |                                        |          |   |      |   |          |  
|Net cash provided by operating activities                                         |  |                                        | 44,329   |   |      |   | 44,633   |  
|                                                                                  |  |                                        |          |   |      |   |          |  
|Cash flows from investing activities:                                             |  |                                        |          |   |      |   |          |  
|Net increase in loans and leases                                                  |  |                                        | (153,420 | ) |      |   | (147,391 | )
|Calls, maturities and prepayments of investment securities held-to-maturity       |  |                                        | 8,177    |   |      |   | 6,415    |  
|Purchases of investment securities held-to-maturity                               |  |                                        | (3,994   | ) |      |   | (3,013   | )
|Proceeds from maturities and calls of investment securities available-for-sale    |  |                                        | 339,130  |   |      |   | 298,783  |  
|Proceeds from sales of investment securities available-for-sale                   |  |                                        | 15,395   |   |      |   | 173,542  |  
|Purchases of investment securities available-for-sale                             |  |                                        | (376,309 | ) |      |   | (462,206 | )
|Proceeds from sales of premises and equipment                                     |  |                                        | 2,959    |   |      |   | 450      |  
|Purchases of premises and equipment                                               |  |                                        | (36,092  | ) |      |   | (26,270  | )
|Decrease in other real estate owned                                               |  |                                        | 1,350    |   |      |   | 3,199    |  
|Investment in Federal Home Loan Bank stock                                        |  |                                        | (9,462   | ) |      |   |         |  
|Purchase of institutions, net of cash acquired                                    |  |                                        | (101,493 | ) |      |   |         |  
|                                                                                  |  |                                        |          |   |      |   |          |  
|Net cash used in investing activities                                             |  |                                        | (313,759 | ) |      |   | (156,491 | )
|                                                                                  |  |                                        |          |   |      |   |          |  
|Cash flows from financing activities:                                             |  |                                        |          |   |      |   |          |  
|Net increase in deposits                                                          |  |                                        | 142,453  |   |      |   | 72,425   |  
|Increase in short-term borrowings                                                 |  |                                        | 90,071   |   |      |   | 36,270   |  
|Increase in long-term debt, net                                                   |  |                                        | 68,623   |   |      |   | 51,547   |  
|Dividends paid                                                                    |  |                                        | (1,064   | ) |      |   | (1,214   | )
|Acquisition of common stock                                                       |  |                                        |         |   |      |   | (3,413   | )
|                                                                                  |  |                                        |          |   |      |   |          |  
|Net cash provided by financing activities                                         |  |                                        | 300,083  |   |      |   | 155,615  |  
|                                                                                  |  |                                        |          |   |      |   |          |  
|Net increase in cash and cash equivalents                                         |  |                                        | 30,653   |   |      |   | 43,757   |  
|Cash and cash equivalents at beginning of period                                  |  |                                        | 274,174  |   |      |   | 221,330  |  
|                                                                                  |  |                                        |          |   |      |   |          |  
|Cash and cash equivalents at end of period                                        |  | $                                      | 304,827  |   |      | $ | 265,087  |  
|                                                                                  |  |                                        |          |   |      |   |          |  



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 |       
|                                                                                   |  | September 30,2005     |        |   | June 30,2005 |   |        | March 31,2005 |  |   | December 31,2004 |   |  | September 30,2004 |       
|Allowance for loan losses:                                                         |  |                       |        |   |              |   |        |               |  |   |                  |   |  |                   |        |   |  |   |        |  
|Balance at beginning of period                                                     |  | $                     | 45,100 |   |              | $ | 43,690 |               |  | $ | 43,623           |   |  | $                 | 51,992 |   |  | $ | 52,188 |  
|Acquisition on May 1, 2005                                                         |  |                       |       |   |              |   | 1,125  |               |  |   |                 |   |  |                   |       |   |  |   |       |  
|Acquisition on July 1, 2005                                                        |  |                       | 3,350  |   |              |   |       |               |  |   |                 |   |  |                   |       |   |  |   |       |  
|Provision for loan losses                                                          |  |                       | 929    |   |              |   | 1,121  |               |  |   | 1,318            |   |  |                   | (4,807 | ) |  |   | 1,349  |  
|                                                                                   |  |                       |        |   |              |   |        |               |  |   |                  |   |  |                   |        |   |  |   |        |  
|Loans charged off                                                                  |  |                       | (1,558 | ) |              |   | (1,225 | )             |  |   | (1,562           | ) |  |                   | (1,889 | ) |  |   | (2,118 | )
|Recoveries on loans previously charged off                                         |  |                       | 595    |   |              |   | 389    |               |  |   | 311              |   |  |                   | 519    |   |  |   | 573    |  
|                                                                                   |  |                       |        |   |              |   |        |               |  |   |                  |   |  |                   |        |   |  |   |        |  
|Net charge-offs                                                                    |  |                       | (963   | ) |              |   | (836   | )             |  |   | (1,251           | ) |  |                   | (1,370 | ) |  |   | (1,545 | )
|Reclassification of allowance related to unfunded commitments to other liabilities |  |                       |       |   |              |   |       |               |  |   |                 |   |  |                   | (2,192 | ) |  |   |       |  
|                                                                                   |  |                       |        |   |              |   |        |               |  |   |                  |   |  |                   |        |   |  |   |        |  
|Balance at end of period                                                           |  | $                     | 48,416 |   |              | $ | 45,100 |               |  | $ | 43,690           |   |  | $                 | 43,623 |   |  | $ | 51,992 |  
|                                                                                   |  |                       |        |   |              |   |        |               |  |   |                  |   |  |                   |        |   |  |   |        |  



C. Goodwill and Other Intangibles



The carrying amount of goodwill increased from $24,549 at
December 31, 2004 to $112,463 at September 30, 2005 due to the acquisition of Peoples Community Capital Corporation (PCCC) on May 1, 2005 and Summit Financial Corporation (Summit) on July 1, 2005.
See further discussion of the PCCC and Summit acquisitions under Note E.



Page 6



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



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



|                                                         |  |                                  |        |   |                          |   |        |       |  |   |        |  
|-------------------------------------------------------- |  | -------------------------------- | ------ | - | ------------------------ | - | ------ | ----- |  | - | ------ | -
|                                                         |  | Core Depositand OtherIntangibles |        |   | MortgageServicingRights* |   |        | Total | 
|Balance - December 31, 2004                              |  | $                                | 30,386 |   |                          | $ | 6,326  |       |  | $ | 36,712 |  
|Amortization                                             |  |                                  | (6,344 | ) |                          |   | (1,391 | )     |  |   | (7,735 | )
|Net recapture of impairment of mortgage servicing rights |  |                                  |       |   |                          |   | 1,050  |       |  |   | 1,050  |  
|Servicing rights originated                              |  |                                  |       |   |                          |   | 1,902  |       |  |   | 1,902  |  
|PCCC acquisition                                         |  |                                  | 2,426  |   |                          |   |       |       |  |   | 2,426  |  
|Summit acquisition                                       |  |                                  | 5,630  |   |                          |   |       |       |  |   | 5,630  |  
|Acquisition of deposits                                  |  |                                  | 739    |   |                          |   |       |       |  |   | 739    |  
|                                                         |  |                                  |        |   |                          |   |        |       |  |   |        |  
|Balance - September 30, 2005                             |  | $                                | 32,837 |   |                          | $ | 7,887  |       |  | $ | 40,724 |  
|                                                         |  |                                  |        |   |                          |   |        |       |  |   |        |  

---

|* | Balance shown is net of valuation allowance. Valuation allowance for mortgage servicing rights was $606 and $1,656 as of September 30, 2005 and December 31, 2004,
respectively.
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Amortization expense on core deposit and other
intangibles was $6,344 and $6,768 for the nine months ended September 30, 2005 and 2004, respectively. Amortization expense on core deposit intangibles was $2,296 and $2,252 for the quarters ended September 30, 2005 and 2004, respectively



For the quarter ended September 30, 2005, amortization expense related to
mortgage servicing rights, included as a component of mortgage income in the Consolidated Statements of Income, was negative $129. Amortization expense of $508 was offset by the recapture of mortgage servicing rights impairment of $637. For the
quarter ended September 30, 2004, amortization expense related to mortgage servicing rights, included as a component of mortgage income in the Consolidated Statements of Income, was $855 which included mortgage servicing rights impairment of
$452.



For the nine months ended September 30, 2005, amortization expense
related to mortgage servicing rights, included as a component of mortgage income in the Consolidated Statements of Income, was $341. Amortization expense of $1,391 was offset by the recapture of mortgage servicing rights impairment of $1,050. For
the nine months ended September 30, 2004, amortization expense related to mortgage servicing rights, included as a component of mortgage income in the Consolidated Statements of Income, was $1,130 which included recapture of mortgage servicing
rights impairment of $229.



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 the 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 the 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. As of September 30, 2005, an investment in FHLB of $12,342 is reflected in Other Assets in the Consolidated Statements of Condition.



Page 7



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



E. Mergers and acquisitions



On May 1, 2005, First Citizens acquired 100% of the outstanding shares of PCCC, parent
of Peoples Community Bank of South Carolina. As a result of this acquisition, the Company expects to gain market share in Aiken county.



First Citizens paid $30.00 in cash for 1,179,237 shares of PCCCs common stock for an aggregate purchase price of $35,377. The purchase price resulted in $22,151
goodwill and $2,426 in core deposit and other intangibles. The core deposit intangible and other intangibles will be amortized over 53 and 60 months, respectively, using straight-line amortization.



On July 1, 2005, First Citizens acquired 100% of the outstanding shares of Summit,
parent of Summit National Bank. As a result of this acquisition, the Company expects to gain market share in Greenville and Spartanburg counties.



First Citizens paid $22.00 in cash for 4,939,214 shares of Summits common stock for an aggregate purchase price of $108,663. The purchase price resulted in $62,893
goodwill and $5,630 in core deposit and other intangibles. The core deposit intangible and other intangibles will be amortized over 64 and 36 months, respectively, using straight-line amortization.



Goodwill for both these acquisitions will not be amortized, but instead evaluated at least
annually for impairment. An additional $2,870 of incremental costs were capitalized in goodwill related to the acquisitions. Any future write down of goodwill and the amortization of intangible assets are not deductible for tax purposes.



The following table summarizes the fair value of assets acquired and liabilities assumed
at the date of acquisition for PCCC and Summit.



|                            |  |      |          |   |        |   |          |          |  |   |          |  
|--------------------------- |  | ---- | -------- | - | ------ | - | -------- | -------- |  | - | -------- | -
|                            |  | PCCC |          |   | Summit |   |          | Combined | 
|Cash and due from banks     |  | $    | 3,298    |   |        | $ | 30,584   |          |  | $ | 33,882   |  
|Investment securities       |  |      | 38,539   |   |        |   | 53,631   |          |  |   | 92,170   |  
|Loans and leases, net       |  |      | 79,990   |   |        |   | 251,739  |          |  |   | 331,729  |  
|Premises and equipment, net |  |      | 2,995    |   |        |   | 4,499    |          |  |   | 7,494    |  
|Goodwill                    |  |      | 22,151   |   |        |   | 62,893   |          |  |   | 85,044   |  
|Other intangible assets     |  |      | 2,426    |   |        |   | 5,630    |          |  |   | 8,056    |  
|Other assets                |  |      | 2,786    |   |        |   | 12,127   |          |  |   | 14,913   |  
|                            |  |      |          |   |        |   |          |          |  |   |          |  
|Total assets acquired       |  |      | 152,185  |   |        |   | 421,103  |          |  |   | 573,288  |  
|                            |  |      |         
|Deposits                    |  |      | (107,371 | ) |        |   | (267,713 | )        |  |   | (375,084 | )
|Short-term borrowings       |  |      | (2,903   | ) |        |   |         |          |  |   | (2,903   | )
|Long-term debt              |  |      | (6,500   | ) |        |   | (43,714  | )        |  |   | (50,214  | )
|Other liabilities           |  |      | (34      | ) |        |   | (1,013   | )        |  |   | (1,047   | )
|                            |  |      |          |   |        |   |          |          |  |   |          |  
|Total liabilities assumed   |  |      | (116,808 | ) |        |   | (312,440 | )        |  |   | (429,248 | )
|                            |  |      |          |   |        |   |          |          |  |   |          |  
|Net assets acquired         |  | $    | 35,377   |   |        | $ | 108,663  |          |  | $ | 144,040  |  
|                            |  |      |          |   |        |   |          |          |  |   |          |  



Page 8



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



Operating results of PCCC and Summit are included in the consolidated
financial statements since the date of the respective acquisitions. The following table presents pro forma information as if the above acquisitions had occurred on January 1, 2004 and 2005. The pro forma information includes adjustments for
interest income on loans, amortization of intangibles arising from the transaction, interest expense on deposits assumed, interest expense on subordinated debt issued, and the related income tax affects. The 2005 historical results of Summit and
PCCC have been adjusted by $5,537, net of taxes, for the settlement of stock compensation expense prior to the merger triggered by the change in control. The pro forma financial information below is required in accordance with Statement of
Accounting Standards (SFAS) No. 141  Business Combinations and is not necessarily indicative of the results of operations as they would have been had the transactions been effected on the assumed dates.



|                    |  |                                        |         |      |   |        
|------------------- |  | -------------------------------------- | ------- | ---- | - | -------
|                    |  | For the nine months endedSeptember 30,
|                    |  | 2005                                   |         | 2004
|Net interest income |  | $                                      | 136,170 |      | $ | 122,652
|Net income          |  |                                        | 37,014  |      |   | 25,566 
|                    |  |                                       
|Earnings per share  |  | $                                      | 41.04   |      | $ | 28.31  



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 EndedSeptember 30, |        |   | For the Nine Months EndedSeptember 30, |  
|                               |  | 2005                               |        |   | 2004                                   |   |        | 2005 |  |   | 2004   |  
|Service costs                  |  | $                                  | 979    |   |                                        | $ | 813    |      |  | $ | 2,802  |   |  | $ | 2,415  |  
|Interest costs                 |  |                                    | 897    |   |                                        |   | 837    |      |  |   | 2,690  |   |  |   | 2,486  |  
|Expected return on plan assets |  |                                    | (1,227 | ) |                                        |   | (1,024 | )    |  |   | (3,680 | ) |  |   | (3,043 | )
|Recognized net actuarial loss  |  |                                    | 283    |   |                                        |   | 274    |      |  |   | 850    |   |  |   | 815    |  
|                               |  |                                    |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  
|Net pension expense            |  | $                                  | 932    |   |                                        | $ | 900    |      |  | $ | 2,662  |   |  | $ | 2,673  |  
|                               |  |                                    |        |   |                                        |   |        |      |  |   |        |   |  |   |        |  



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 $17,283 as of September 30, 2005 from $10,780 as of December 31, 2004.



G. Earnings per share



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



|                                           |  |                                    |         |   |                                        |   |         |      |  |   |         |   |  |   |         |  
|------------------------------------------ |  | ---------------------------------- | ------- | - | -------------------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                           |  | For the Quarter EndedSeptember 30, |         |   | For the Nine Months EndedSeptember 30, |  
|                                           |  | 2005                               |         |   | 2004                                   |   |         | 2005 |  |   | 2004    |  
|Net income                                 |  | $                                  | 15,053  |   |                                        | $ | 8,890   |      |  | $ | 36,208  |   |  | $ | 25,295  |  
|Less: Preferred stock dividends            |  |                                    | (40     | ) |                                        |   | (40     | )    |  |   | (121    | ) |  |   | (121    | )
|                                           |  |                                    |         |   |                                        |   |         |      |  |   |         |   |  |   |         |  
|Net income applicable to common stock      |  | $                                  | 15,013  |   |                                        | $ | 8,850   |      |  | $ | 36,087  |   |  | $ | 25,174  |  
|                                           |  |                                    |         |   |                                        |   |         |      |  |   |         |   |  |   |         |  
|Weighted average common shares outstanding |  |                                    | 898,914 |   |                                        |   | 899,899 |      |  |   | 898,914 |   |  |   | 902,760 |  
|                                           |  |                                    |         |  
|Net income per common share                |  | $                                  | 16.70   |   |                                        | $ | 9.83    |      |  | $ | 40.15   |   |  | $ | 27.89   |  



Page 9



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



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.



As a result of the PCCC and Summit acquisitions, Bancorporation had advances outstanding from the FHLB of $47,298 as of September 30, 2005. FHLB advances represent borrowings from the FHLB pursuant to a line of
credit collateralized by a blanket lien on qualifying loans secured by first mortgages on 1-4 family residences, home equity lines of credit, multi-family real estate, and commercial real estate. Advances have various maturity dates, terms and
repayment schedules with fixed or variable rates of interest, payable monthly on maturities of one year or less and payable quarterly on maturities over one year. These advances were collateralized by qualifying loans 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.



At September 30, 2005, fixed rate FHLB advances had initial maturities from one to ten
years. At September 30, 2005, included in the four, five and greater than five year maturities, detailed below, were advances totaling $19,382 subject to call provisions at the option of the FHLB with call dates ranging from December 2005 to
March 2008. Call provisions are more likely to be exercised by the FHLB when prevailing interest rates rise. Advances totaling $3,002 at September 30, 2005 were at variable rates based on three month LIBOR and were priced at from 3.83% to 3.92%
as of September 30, 2005, depending on the reset date.



Advances from the FHLB, including scheduled maturities subsequent to year end, at September 30 consist of the following:



|                                        |  |                       |        |               |      |  
|--------------------------------------- |  | --------------------- | ------ | ------------- | ---- | -
|                                        |  | At September 30, 2005 |       
|Maturing in the year ended December 31, |  | Amount                |        | Weighted Rate |     
|2005                                    |  | $                     | 1,302  |               | 3.97 | %
|2006                                    |  |                       | 9,792  |               | 3.67 |  
|2007                                    |  |                       | 6,362  |               | 3.49 |  
|2008                                    |  |                       | 13,146 |               | 3.14 |  
|2009                                    |  |                       | 5,054  |               | 2.76 |  
|Thereafter                              |  |                       | 11,642 |               | 3.40 |  
|                                        |  |                       |        |               |      |  
|                                        |  | $                     | 47,298 |               | 3.30 | %
|                                        |  |                       |        |               |      |  



I. Comprehensive Income



Comprehensive income was $15,851 and
$12,229 for the quarters ended September 30, 2005 and 2004, respectively.



J. Subsequent events



On October 20, 2005,
Bancorporations Board of Directors declared a $0.35 dividend on common stock to shareholders of record on November 15, 2005, payable November 25, 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)



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 THIRD QUARTER RESULTS



Following are the highlights of Bancorporations third 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 third quarter of 2005.



Financial Results



| |  |  | Since December 31, 2004, Bancorporations total assets have grown from $4,533,651 to $5,318,797, an increase of $785,146, or by 17.32%. The asset category that experienced
the largest increase was loans and leases which grew by $496,665, or by 15.90%, during the first nine months of 2005. On May 1, 2005 and July 1, 2005, First Citizens completed its acquisition of Peoples Community Capital Corporation
(PCCC) and Summit Financial Corporation (Summit), respectively. As a result of these acquisitions, gross loans totaling $81,115 and $255,089, respectively, were recorded.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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)



| |  |  | Due to the acquisitions of PCCC and Summit, goodwill increased by $87,914 since December 31, 2004.
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | Since December 31, 2004, Bancorporations total deposits have grown from $3,848,373 to $4,375,739, an increase of $527,366, or 13.70%. As a result of the PCCC and Summit
acquisitions, deposits totaling $107,371 and $267,713, respectively, were recorded.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Consolidated net income for the third quarter of 2005 totaled $15,053, an increase of 69.33% compared to the $8,890 earned during the third quarter of 2004. On a per share basis,
earnings for the quarter ended September 30, 2005, were $16.70, compared to $9.83 for the same quarter in 2004, an increase of 69.89%. Bancorporations earnings for the third quarter of 2005 produced an annualized return on average assets
of 1.13% and an annualized return on stockholders equity of 15.01% compared to .79% and 10.00%, respectively, for the third quarter of 2004.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Consolidated net income for the nine months ended September 30, 2005 totaled $36,208, an increase of 43.14% compared to the $25,295 earned for the nine months ended
September 30, 2004. On a per share basis, earnings for the nine months ended September 30, 2005, were $40.15, compared to $27.89 for the same period in 2004, an increase of 43.96%. Bancorporations earnings for the nine months ended
September 30, 2005 produced an annualized return on average assets of .97% and an annualized return on stockholders equity of 12.53% compared to .76% and 9.65%, respectively, for the same period in 2004.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



Other Developments



| |  |  | On September 13, 2005, the Board of Directors of Bancorporation (the Board) approved a going-private transaction in which holders of 170 or fewer shares of
Bancorporations voting common stock will generally receive $735.00 per share in cash for their shares, with holders of more than 170 shares of Bancorporations voting common stock retaining their shares. Bancorporation estimates that cash
of approximately $21,752 will be required to pay for the shares of its voting common stock being cashed out. Because the actual number of shares that will be cashed out in the transaction is not currently known, Bancorporation does not know the
total amount of cash that will ultimately be paid. The Board has reserved the right to decline to proceed with the transaction before it becomes effective if the Board deems it inadvisable to consummate the transaction.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The transaction will be effected by means of a merger of an interim
corporation with and into Bancorporation and is subject to approval by Bancorporations shareholders. The transaction is expected to be completed in the fourth quarter of 2005 or first quarter of 2006.



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)



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 September 30, |           |   | As of and for the Nine Months EndedSeptember 30, |  
|                                                                        |  | 2005                                          |           |   | 2004                                             |   |           | 2005                     |  |   | 2004                    |  
|Selected performance ratios:                                            |  |                                               |           |   |                                                  |   |           |                          |  |   |                         |   |  |   |           |  
|Return on average assets (annualized)                                   |  |                                               | 1.13      | % |                                                  |   | .79       | %                        |  |   | .97                     | % |  |   | .76       | %
|Return on average stockholders equity (annualized)                     |  |                                               | 15.01     | % |                                                  |   | 10.00     | %                        |  |   | 12.53                   | % |  |   | 9.65      | %
|Net interest income to average interest-earning assets (tax equivalent) |  |                                               | 3.98      | % |                                                  |   | 3.78      | %                        |  |   | 3.84                    | % |  |   | 3.77      | %
|Dividends per common share                                              |  | $                                             | 0.35      |   |                                                  | $ | 0.35      |                          |  | $ | 1.05                    |   |  | $ | 1.05      |  
|                                                                        |  |                                               |           |  
|Selected average balances:                                              |  |                                               |           |   |                                                  |   |           |                          |  |   |                         |   |  |   |           |  
|Total assets                                                            |  | $                                             | 5,291,739 |   |                                                  | $ | 4,473,202 |                          |  | $ | 4,991,135               |   |  | $ | 4,438,468 |  
|Interest-earning assets                                                 |  |                                               | 4,735,957 |   |                                                  |   | 4,096,434 |                          |  |   | 4,529,605               |   |  |   | 4,060,796 |  
|Investment securities                                                   |  |                                               | 1,020,378 |   |                                                  |   | 897,088   |                          |  |   | 974,703                 |   |  |   | 907,870   |  
|Loans and leases, net                                                   |  |                                               | 3,600,051 |   |                                                  |   | 3,071,607 |                          |  |   | 3,335,101               |   |  |   | 3,013,341 |  
|Deposits                                                                |  |                                               | 4,362,276 |   |                                                  |   | 3,791,227 |                          |  |   | 4,157,546               |   |  |   | 3,791,867 |  
|Noninterest-bearing deposits                                            |  |                                               | 826,662   |   |                                                  |   | 712,241   |                          |  |   | 777,529                 |   |  |   | 688,000   |  
|Interest-bearing deposits                                               |  |                                               | 3,535,614 |   |                                                  |   | 3,078,986 |                          |  |   | 3,380,017               |   |  |   | 3,103,867 |  
|Interest-bearing liabilities                                            |  |                                               | 4,035,537 |   |                                                  |   | 3,382,019 |                          |  |   | 3,797,125               |   |  |   | 3,374,552 |  
|Stockholders equity                                                    |  |                                               | 397,817   |   |                                                  |   | 353,555   |                          |  |   | 386,218                 |   |  |   | 349,995   |  
|                                                                        |  |                                               |           |  
|                                                                        |  |                                               |           |   |                                                  |   |           | As of September 30, 2005 |  |   | As of December 31, 2004 |  
|Capital ratios:                                                         |  |                                               |           |   |                                                  |   |           |                          |  |   |                         |   |  |   |           |  
|Total capital                                                           |  |                                               |           |   |                                                  |   |           |                          |  |   | 13.53                   | % |  |   | 14.18     | %
|Tier I capital                                                          |  |                                               |           |   |                                                  |   |           |                          |  |   | 9.79                    | % |  |   | 12.44     | %
|Tier I leverage                                                         |  |                                               |           |   |                                                  |   |           |                          |  |   | 6.64                    | % |  |   | 8.88      | %
|                                                                        |  |                                               |           |  
|Selected period-end balances:                                           |  |                                               |           |   |                                                  |   |           |                          |  |   |                         |   |  |   |           |  
|Total assets                                                            |  |                                               |           |   |                                                  |   |           |                          |  | $ | 5,318,797               |   |  | $ | 4,533,651 |  
|Interest-earning assets                                                 |  |                                               |           |   |                                                  |   |           |                          |  |   | 4,750,588               |   |  |   | 4,140,170 |  
|Investment securities                                                   |  |                                               |           |   |                                                  |   |           |                          |  |   | 1,013,844               |   |  |   | 904,419   |  
|Loans and leases, net                                                   |  |                                               |           |   |                                                  |   |           |                          |  |   | 3,620,862               |   |  |   | 3,124,197 |  
|Deposits                                                                |  |                                               |           |   |                                                  |   |           |                          |  |   | 4,375,739               |   |  |   | 3,848,373 |  
|Noninterest-bearing deposits                                            |  |                                               |           |   |                                                  |   |           |                          |  |   | 826,661                 |   |  |   | 713,321   |  
|Interest-bearing deposits                                               |  |                                               |           |   |                                                  |   |           |                          |  |   | 3,549,078               |   |  |   | 3,135,052 |  
|Interest-bearing liabilities                                            |  |                                               |           |   |                                                  |   |           |                          |  |   | 4,050,797               |   |  |   | 3,424,960 |  
|Long-term debt                                                          |  |                                               |           |   |                                                  |   |           |                          |  |   | 246,698                 |   |  |   | 125,361   |  
|Stockholders equity                                                    |  |                                               |           |   |                                                  |   |           |                          |  |   | 404,516                 |   |  |   | 369,456   |  



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)



ANALYSIS OF FINANCIAL
CONDITION



Acquisitions



Goodwill increased from $24,549 at December 31, 2004 to $112,463 at September 30,
2005, or by $87,914. The increase related to the goodwill recorded as a result of the acquisitions of PCCC and Summit by First Citizens on May 1, 2005 and July 1, 2005, respectively. In addition to goodwill, total loans of $336,204,
deposits of $375,084 and core deposit and other intangibles of $8,056 were recorded in these acquisitions.



Investment securities



As of
September 30, 2005, the investment portfolio totaled $1,013,844 compared to $904,419 at December 31, 2004 (an increase of 12.10%). The increase in the investment portfolio since December 31, 2004 was primarily due to investments
acquired from PCCC and Summit. As of September 30, 2005, $73,723 of investments related to these acquisitions were recorded in the Consolidated Statements of Condition. The remainder of the increase related to the purchase of additional
securities to collateralize both municipal deposits and short-term borrowings in the form of repurchase agreements with customers. Short-term borrowings and municipal deposits have increased by $99,213 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 92.11% and 91.24% U.S. government and agency securities as of
September 30, 2005 and December 31, 2004, respectively. The remainder of the investment portfolio consisted of corporate bonds, mortgage-backed securities, municipal bonds, and equity securities.



On September 30, 2005, Bancorporation held certain investments having continuous
unrealized loss positions for more than 12 months with a fair market value totaling $330,732 and an unrealized loss position totaling $4,132. 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 September 30, 2005, loans and leases (net of deferred fees and costs) totaled $3,620,862, compared to $3,124,197 at December 31, 2004, an annualized increase
of 21.20%. Of the $496,665 increase since December 31, 2004, $81,115 was the result of the PCCC acquisition on May 1, 2005, and $255,089 was the result of the Summit acquisition on July 1, 2005. The remainder of the growth in loans
was attributable to internal growth in the commercial and home equity loan portfolios. 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.



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)



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 September 30, 2005. For the quarter ended September 30, 2005, provision for loan losses totaled $929, a decline from $1,349 taken during the quarter ended September 30, 2004. The
decline in provision was primarily due to a $582 decline in net charge-offs and continued improvement in overall net charge-off trends. The percentage of annualized net charge-offs to average loans and leases (net charge-off ratio)
declined from .20% for the quarter ended September 30, 2004 to .11% for the quarter ended September 30, 2005. In addition, the year to date annualized net charge-off ratio declined from .21% for the nine months ended September 30,
2004 to .12% for the nine months ended September 30, 2005 indicating improvement in net charge-off trends. Nonaccrual loans to total loans declined slightly during the quarter from .32% to .30%. Management believes that the provision taken
during the quarter ended September 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.



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



Table 2: Analysis of the Allowance for loan losses



|                                                                                   |  |                   |        |   |              |   |        |               |  |   |                  |   |  |                   |        |   |  |   |        |  
|---------------------------------------------------------------------------------- |  | ----------------- | ------ | - | ------------ | - | ------ | ------------- |  | - | ---------------- | - |  | ----------------- | ------ | - |  | - | ------ | -
|                                                                                   |  | September 30,2005 |        |   | June 30,2005 |   |        | March 31,2005 |  |   | December 31,2004 |   |  | September 30,2004 |       
|Allowance for loan losses:                                                         |  |                   |        |   |              |   |        |               |  |   |                  |   |  |                   |        |   |  |   |        |  
|Balance at beginning of period                                                     |  | $                 | 45,100 |   |              | $ | 43,690 |               |  | $ | 43,623           |   |  | $                 | 51,992 |   |  | $ | 52,188 |  
|PCCC acquisition  May 1 ,2005                                                     |  |                   |       |   |              |   | 1,125  |               |  |   |                 |   |  |                   |       |   |  |   |       |  
|Summit acquisition  July 1, 2005                                                  |  |                   | 3,350  |   |              |   |       |               |  |   |                 |   |  |                   |       |   |  |   |       |  
|Provision for loan losses                                                          |  |                   | 929    |   |              |   | 1,121  |               |  |   | 1,318            |   |  |                   | (4,807 | ) |  |   | 1,349  |  
|                                                                                   |  |                   |        |   |              |   |        |               |  |   |                  |   |  |                   |        |   |  |   |        |  
|Loans charged off                                                                  |  |                   | (1,558 | ) |              |   | (1,225 | )             |  |   | (1,562           | ) |  |                   | (1,889 | ) |  |   | (2,118 | )
|Recoveries on loans previously charged off                                         |  |                   | 595    |   |              |   | 389    |               |  |   | 311              |   |  |                   | 519    |   |  |   | 573    |  
|                                                                                   |  |                   |        |   |              |   |        |               |  |   |                  |   |  |                   |        |   |  |   |        |  
|Net charge-offs                                                                    |  |                   | (963   | ) |              |   | (836   | )             |  |   | (1,251           | ) |  |                   | (1,370 | ) |  |   | (1,545 | )
|Reclassification of allowance related to unfunded commitments to other liabilities |  |                   |       |   |              |   |       |               |  |   |                 |   |  |                   | (2,192 | ) |  |   |       |  
|                                                                                   |  |                   |        |   |              |   |        |               |  |   |                  |   |  |                   |        |   |  |   |        |  
|Balance at end of period                                                           |  | $                 | 48,416 |   |              | $ | 45,100 |               |  | $ | 43,690           |   |  | $                 | 43,623 |   |  | $ | 51,992 |  
|                                                                                   |  |                   |        |   |              |   |        |               |  |   |                  |   |  |                   |        |   |  |   |        |  
|Nonperforming assets:                                                              |  |                   |        |   |              |   |        |               |  |   |                  |   |  |                   |        |   |  |   |        |  
|Nonaccrual loans                                                                   |  | $                 | 10,964 |   |              | $ | 10,590 |               |  | $ | 8,133            |   |  | $                 | 6,587  |   |  | $ | 5,641  |  
|Foreclosed real estate                                                             |  |                   | 1,773  |   |              |   | 1,697  |               |  |   | 1,925            |   |  |                   | 1,890  |   |  |   | 2,268  |  
|                                                                                   |  |                   |        |   |              |   |        |               |  |   |                  |   |  |                   |        |   |  |   |        |  
|Total nonperforming assets                                                         |  | $                 | 12,737 |   |              | $ | 12,287 |               |  | $ | 10,058           |   |  | $                 | 8,477  |   |  | $ | 7,909  |  
|                                                                                   |  |                   |        |   |              |   |        |               |  |   |                  |   |  |                   |        |   |  |   |        |  
|Asset quality ratios:                                                              |  |                   |        |   |              |   |        |               |  |   |                  |   |  |                   |        |   |  |   |        |  
|Nonaccrual loans to total loans                                                    |  |                   | 0.30   | % |              |   | 0.32   | %             |  |   | 0.26             | % |  |                   | 0.21   | % |  |   | 0.18   | %
|Nonperforming assets to total loans                                                |  |                   | 0.35   | % |              |   | 0.37   | %             |  |   | 0.32             | % |  |                   | 0.27   | % |  |   | 0.26   | %
|Nonperforming assets to total assets                                               |  |                   | 0.24   | % |              |   | 0.25   | %             |  |   | 0.21             | % |  |                   | 0.19   | % |  |   | 0.18   | %



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)



|                                                                                         |  |                   |   |  |              |   |  |               |   |  |                  |   |  |                   |  
|---------------------------------------------------------------------------------------- |  | ----------------- | - |  | ------------ | - |  | ------------- | - |  | ---------------- | - |  | ----------------- | -
|                                                                                         |  | September 30,2005 |   |  | June 30,2005 |   |  | March 31,2005 |   |  | December 31,2004 |   |  | September 30,2004 |  
|Annualized net charge-offs as a percentage of average loans and leases - quarter to date |  | 0.11              | % |  | 0.10         | % |  | 0.16          | % |  | 0.18             | % |  | 0.20              | %
|                                                                                         |  |                   |   |  |             
|Annualized net charge-offs as a percentage of average loans and leases - year to date    |  | 0.12              | % |  | 0.13         | % |  | 0.16          | % |  | 0.20             | % |  | 0.21              | %
|                                                                                         |  |                   |   |  |             
|Annualized net charge-offs as a percentage of total loans and leases - quarter to date   |  | 0.11              | % |  | 0.10         | % |  | 0.16          | % |  | 0.18             | % |  | 0.20              | %
|                                                                                         |  |                   |   |  |             
|Annualized net charge-offs as a percentage of total loans and leases - year to date      |  | 0.11              | % |  | 0.13         | % |  | 0.16          | % |  | 0.20             | % |  | 0.21              | %
|                                                                                         |  |                   |   |  |             
|Allowance to total loans and leases                                                      |  | 1.34              | % |  | 1.36         | % |  | 1.38          | % |  | 1.40             | % |  | 1.69              | %
|                                                                                         |  |                   |   |  |             
|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 |  | 12.18x            |   |  | 13.60x       |   |  | 8.63x         |   |  | 7.78x            |   |  | 8.45x             |  
|                                                                                         |  |                   |   |  |             
|Annualized net charge-offs as a percentage of average loans and leases  year to date    |  | 11.17x            |   |  | 10.46x       |   |  | 8.63x         |   |  | 7.00x            |   |  | 8.05x             |  
|                                                                                         |  |                   |   |  |             
|Nonaccrual loans to total loans                                                          |  | 4.62x             |   |  | 4.25x        |   |  | 5.31x         |   |  | 6.67x            |   |  | 9.39x             |  



Premises and equipment



As of September 30, 2005, premises and equipment totaled $186,335,
compared to $154,823 at December 31, 2004, an increase of 20.35%. The increase from December 31, 2004 to September 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 $3,601 and $3,210 for the quarters ended September 30, 2005 and 2004, respectively, and $10,445 and $8,982 for the nine months ended September 30, 2005 and 2004,
respectively.



Liquidity



Deposits



Bancorporation continues to have liquidity necessary to meet cash flow requirements. Bancorporations primary source of funds is its
deposit base. As of September 30, 2005, deposits totaled $4,375,739, compared to $3,848,373 at December 31, 2004, an annualized increase of 18.27%. Of the $527,366 increase in deposits since December 31, 2004, $107,371 was the result
of the PCCC acquisition on May 1, 2005, and $267,713 was the result of the Summit acquisition on July 1, 2005. The remainder was primarily the result of internal growth experienced in municipal deposits, NOW accounts, certificate of
deposits and demand deposit accounts..



Short-term borrowings



Short-term borrowings in the form of securities sold under agreements to
repurchase are another source of funds. As of September 30, 2005, short-term borrowings totaled $255,021, compared to $164,547 at December 31, 2004, an increase of 54.98%.



Page 16



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



Expected impact of the going private
transaction on liquidity



Bancorporation estimates that the going private
transaction will require cash of $21,752 to be paid to holders of 170 or fewer shares of Bancorporations voting common stock. Bancorporation does not expect that the payment to shareholders receiving cash in the going private transaction will
have a material adverse effect on our liquidity or cash flow. However, because the actual number of shares that will be cashed out is not currently known, Bancorporation does not know the total amount of cash that will ultimately be paid.



Long-term debt



Long-term debt increased from $125,361 at December 31, 2004 to $246,698 at
September 30, 2005, or by $121,337. 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 and Summit acquisitions.



Capital resources



Capital ratios



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. 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 September 30, 2005 and December 31, 2004.



|                |  |                   |   |  |                  |  
|--------------- |  | ----------------- | - |  | ---------------- | -
|                |  | September 30,2005 |   |  | December 31,2004 |  
|Capital ratios: |  |                   |   |  |                  |  
|Total capital   |  | 13.53             | % |  | 14.18            | %
|Tier I capital  |  | 9.79              | % |  | 12.44            | %
|Tier I leverage |  | 6.64              | % |  | 8.88             | %



Expected impact of going private
transaction on capital



The $21,752 estimated to be paid to shareholders
in the going private transaction is not expected to have a material adverse effect on Bancorporations capital adequacy or results of operations. Bancorporation anticipates that it and its subsidiaries will remain well-capitalized
for regulatory purposes after the going private transaction is consummated.



The transaction is expected to be completed in the fourth quarter of 2005 or first quarter of 2006.



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)



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 nine months ended September 30, 2005, Bancorporation did not repurchase any shares of its
outstanding classes of stock pursuant to that authority.



Page 18



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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 3
and 4 compare average balance sheet items and analyzes net interest income on a tax equivalent basis for the quarters and nine month periods ended September 30, 2005 and 2004.



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



|                                           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|------------------------------------------ | ---- | --------------------------------------------- | --------- | -------------------- | ---- | ----------- | ---- | - | ----------------- |  | - | ---------------------- |  | ---- | ----------- |  | ---- | ------ |  | - | ----- | - |  | - | ----- | - |  | - | ------
|                                           |      | As of and for the Quarter Ended September 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)                                  |      | $                                             | 3,600,051 |                      | $    | 3,071,607   |      | $ | 60,169            |  | $ | 45,207                 |  | 6.63 | %           |  | 5.86 | %      |  | $ | 6,203 |   |  | $ | 8,759 |   |  | $ | 14,962
|Investment securities: (4)                 |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Taxable                                    |      |                                               | 1,004,029 |                      |      | 888,136     |      |   | 7,631             |  |   | 5,151                  |  | 3.03 |             |  | 2.31 |        |  |   | 1,602 |   |  |   | 878   |   |  |   | 2,480 
|Non-taxable                                |      |                                               | 16,349    |                      |      | 8,952       |      |   | 263               |  |   | 140                    |  | 6.43 |             |  | 6.26 |        |  |   | 4     |   |  |   | 119   |   |  |   | 123   
|Federal funds sold                         |      |                                               | 115,528   |                      |      | 127,739     |      |   | 985               |  |   | 442                    |  | 3.38 |             |  | 1.38 |        |  |   | 646   |   |  |   | (103  | ) |  |   | 543   
|                                           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Total interest-earning assets              |      |                                               | 4,735,957 |                      |      | 4,096,434   |      |   | 69,048            |  |   | 50,940                 |  | 5.79 | %           |  | 4.95 | %      |  |   | 8,455 |   |  |   | 9,653 |   |  |   | 18,108
|                                           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Noninterest-earning assets:                |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Cash and due from banks                    |      |                                               | 189,258   |                      |      | 150,416     |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Premises and equipment                     |      |                                               | 180,471   |                      |      | 150,864     |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Other, less allowance for loan losses      |      |                                               | 186,053   |                      |      | 75,488      |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|                                           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Total noninterest-earning assets           |      |                                               | 555,782   |                      |      | 376,768     |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|                                           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Total assets                               |      | $                                             | 5,291,739 |                      | $    | 4,473,202   |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|                                           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Interest-bearing liabilities:              |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Deposits                                   |      | $                                             | 3,535,614 |                      | $    | 3,078,986   |      | $ | 15,818            |  | $ | 9,451                  |  | 1.77 | %           |  | 1.22 | %      |  | $ | 4,346 |   |  | $ | 2,021 |   |  | $ | 6,367 
|Short-term borrowings                      |      |                                               | 251,223   |                      |      | 180,618     |      |   | 2,041             |  |   | 611                    |  | 3.22 |             |  | 1.35 |        |  |   | 862   |   |  |   | 568   |   |  |   | 1,430 
|Long-term debt                             |      |                                               | 248,700   |                      |      | 122,415     |      |   | 3,659             |  |   | 1,955                  |  | 5.89 |             |  | 6.39 |        |  |   | (156  | ) |  |   | 1,860 |   |  |   | 1,704 
|                                           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Total interest-bearing liabilities         |      |                                               | 4,035,537 |                      |      | 3,382,019   |      |   | 21,518            |  |   | 12,017                 |  | 2.12 | %           |  | 1.41 | %      |  |   | 5,052 |   |  |   | 4,449 |   |  |   | 9,501 
|                                           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Noninterest-bearing liabilities:           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Demand deposits                            |      |                                               | 826,662   |                      |      | 712,241     |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Other liabilities                          |      |                                               | 31,723    |                      |      | 25,387      |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|                                           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Total noninterest-bearing liabilities      |      |                                               | 858,385   |                      |      | 737,628     |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|                                           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Total liabilities                          |      |                                               | 4,893,922 |                      |      | 4,119,647   |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|                                           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Stockholders equity                       |      |                                               | 397,817   |                      |      | 353,555     |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|                                           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Total liabilities and stockholders equity |      | $                                             | 5,291,739 |                      |      | 4,473,202   |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|                                           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Net interest spread                        |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  | 3.67 | %           |  | 3.54 | %      |  |   |       |   |  |   |       |   |  |   |       
|                                           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|Net interest income:                       |      |                                               |           |                      |      |             |      | $ | 47,530            |  | $ | 38,923                 |  |      |             |  |      |        |  | $ | 3,403 |   |  | $ | 5,204 |   |  | $ | 8,607 
|                                           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|to average assets                          |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  | 3.56 | %           |  | 3.46 | %      |  |   |       |   |  |   |       |   |  |   |       
|                                           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       
|to average interest-earning assets         |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  | 3.98 | %           |  | 3.78 | %      |  |   |       |   |  |   |       |   |  |   |       
|                                           |      |                                               |           |                      |      |             |      |   |                   |  |   |                        |  |      |             |  |      |        |  |   |       |   |  |   |       |   |  |   |       

---

|(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 $227 and $212 for the quarters ended September 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 19



---

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



Table 4: Comparative Average Balance
Sheets and Tax Equivalent Rate/Volume Variance - Year to Date



|                                           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|------------------------------------------ | ---- | ------------------------------------------------- | --------- | -------------------- | ---- | ----------- | ---- | - | ----------------- |  | --------------------- | ------- |  | ---- | ----------- |  | ---- | ------ |  | - | ------ | - |  | - | ------ |  | - | ------
|                                           |      | As of and for the Nine Months Ended September 30,
|                                           |      | Average Balance                                   |           | Interest Inc/Exp (1) |      | Yield/ Rate |      |   | Change Due To (2) |  | NetIncrease(Decrease)
|                                           | 2005 |                                                   | 2004      |                      | 2005 |             | 2004 |   | 2005              |  |                       | 2004    |  |      | Yield /Rate |  |      | Volume | 
|Interest-earning assets:                   |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Loans (3)                                  |      | $                                                 | 3,335,101 |                      |      | 3,013,341   |      | $ | 159,863           |  | $                     | 132,043 |  | 6.41 | %           |  | 5.85 | %      |  | $ | 12,351 |   |  | $ | 15,469 |  | $ | 27,820
|Investment securities: (4)                 |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Taxable                                    |      |                                                   | 963,429   |                      |      | 898,143     |      |   | 19,699            |  |                       | 15,245  |  | 2.73 |             |  | 2.27 |        |  |   | 3,117  |   |  |   | 1,337  |  |   | 4,454 
|Non-taxable                                |      |                                                   | 11,274    |                      |      | 9,727       |      |   | 532               |  |                       | 469     |  | 6.29 |             |  | 6.43 |        |  |   | (10    | ) |  |   | 73     |  |   | 63    
|Federal funds sold                         |      |                                                   | 219,801   |                      |      | 139,585     |      |   | 4,662             |  |                       | 1,139   |  | 2.84 |             |  | 1.09 |        |  |   | 1,814  |   |  |   | 1,709  |  |   | 3,523 
|                                           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Total interest-earning assets              |      |                                                   | 4,529,605 |                      |      | 4,060,796   |      |   | 184,756           |  |                       | 148,896 |  | 5.45 | %           |  | 4.90 | %      |  |   | 17,272 |   |  |   | 18,588 |  |   | 35,860
|                                           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Noninterest-earning assets:                |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Cash and due from banks                    |      |                                                   | 172,789   |                      |      | 155,686     |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Premises and equipment                     |      |                                                   | 168,469   |                      |      | 144,921     |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Other, less allowance for loan losses      |      |                                                   | 120,272   |                      |      | 77,065      |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|                                           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Total noninterest-earning assets           |      |                                                   | 461,530   |                      |      | 377,672     |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|                                           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Total assets                               |      | $                                                 | 4,991,135 |                      | $    | 4,438,468   |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|                                           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Interest-bearing liabilities:              |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Deposits                                   |      | $                                                 | 3,380,017 |                      | $    | 3,103,867   |      | $ | 41,026            |  | $                     | 27,890  |  | 1.62 | %           |  | 1.20 | %      |  | $ | 9,781  |   |  | $ | 3,355  |  | $ | 13,136
|Short-term borrowings                      |      |                                                   | 255,148   |                      |      | 171,484     |      |   | 4,709             |  |                       | 1,291   |  | 2.80 |             |  | 1.01 |        |  |   | 2,291  |   |  |   | 1,127  |  |   | 3,418 
|Long-term debt                             |      |                                                   | 191,960   |                      |      | 99,201      |      |   | 8,893             |  |                       | 5,214   |  | 6.18 |             |  | 7.01 |        |  |   | (620   | ) |  |   | 4,299  |  |   | 3,679 
|                                           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Total interest-bearing liabilities         |      |                                                   | 3,797,125 |                      |      | 3,374,552   |      |   | 54,628            |  |                       | 34,395  |  | 1.92 | %           |  | 1.36 | %      |  |   | 11,452 |   |  |   | 8,871  |  |   | 20,233
|                                           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Noninterest-bearing liabilities:           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Demand deposits                            |      |                                                   | 777,529   |                      |      | 688,000     |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Other liabilities                          |      |                                                   | 30,263    |                      |      | 25,922      |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|                                           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Total non-interest-bearing liabilities     |      |                                                   | 807,792   |                      |      | 713,922     |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|                                           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Total liabilities                          |      |                                                   | 4,604,917 |                      |      | 4,088,474   |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|                                           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Stockholders equity                       |      |                                                   | 386,218   |                      |      | 349,994     |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|                                           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Total liabilities and stockholders equity |      | $                                                 | 4,991,135 |                      | $    | 4,438,467   |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|                                           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Net interest spread                        |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  | 3.53 | %           |  | 3.54 | %      |  |   |        |   |  |   |        |  |   |       
|                                           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|Net interest income:                       |      |                                                   |           |                      |      |             |      | $ | 130,128           |  | $                     | 114,501 |  |      |             |  |      |        |  | $ | 5,820  |   |  | $ | 9,807  |  | $ | 15,627
|                                           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|to average assets                          |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  | 3.49 | %           |  | 3.45 | %      |  |   |        |   |  |   |        |  |   |       
|                                           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       
|to average interest-earning assets         |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  | 3.84 | %           |  | 3.77 | %      |  |   |        |   |  |   |        |  |   |       
|                                           |      |                                                   |           |                      |      |             |      |   |                   |  |                       |         |  |      |             |  |      |        |  |   |        |   |  |   |        |  |   |       

---

|(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 $600 and $641 for the nine months ended September 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 20



---

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 $8,607 or by 22.11% for the
quarter ended September 30, 2005, over the comparable period in 2004. The increase in net interest income was due to an increase in net interest income to average interest-earning assets (net interest margin) from 3.78% to 3.98% and
15.61% growth in average interest-earning assets.



Net interest margin
increased from 3.78% for the quarter ended September 30, 2004 to 3.98% for the quarter ended September 30, 2005 primarily due to the increase in the net interest spread. The net interest spread (the difference between the yield on
interest-earning assets and the cost of interest-bearing liabilities) increased by 13 basis points from 3.54% for the quarter ended September 30, 2004 to 3.67% for the quarter ended September 30, 2005. The 13 basis points increase in the
net interest spread during the quarter was due to an 84 basis point increase in the yield on interest-earning assets, only partially offset by a 71 basis point increase in the cost of interest-bearing liabilities. See discussion below regarding
capitalization of interest expense on long-term debt and its impact on the cost of long-term debt and net interest margin.



The yield on interest-earning assets increased from 4.95% for the quarter ended September 30, 2004 to 5.79% for the quarter ended September 30, 2005, or by 84
basis points, while the cost of interest-bearing liabilities increased from 1.41% to 2.12%, or by 71 basis points. The increase in the yield on interest-earning assets was primarily due to increases in the yields on loans (from 5.86% for the quarter
ended September 30, 2004 to 6.63% for the quarter ended September 30, 2005) and taxable investment securities (from 2.31% for the quarter ended September 30, 2004 to 3.03% for the quarter ended September 30, 2005). The increase
in yields on interest-earning assets is due to the increasing interest rate environment. Since September 30, 2004, the Federal Reserve has raised the federal funds rate 8 times from 1.75% to 3.75% at September 30, 2005. The prime interest
rate has increased from 4.75% to 6.75% over that same period.



The increase in
the cost of interest-bearing liabilities was primarily due to an increase in the rates paid on interest-bearing deposits (from 1.22% for the quarter ended September 30, 2004 to 1.77% for the quarter ended September 30, 2005. The rate paid
on long-term debt declined from 6.39% for the quarter ended September 30, 2004 to 5.89% for the quarter ended September 30, 2005 primarily due to the capitalization of interest expense related to the construction of the main headquarters
building. Without capitalization of interest expense, the rate paid on long-term debt would have been 6.49% for the quarter ended September 30, 2005, or an increase of 10 basis points compared to the same period in 2004. The capitalization of
interest expense did not significantly impact the net interest margin for the quarter ended September 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 1.34% for the quarter ended
September 30, 2004 to 2.99% for the quarter ended September 30, 2005), money markets (from .83% for the quarter ended September 30, 2004 to 1.74% for the quarter ended September 30, 2005), and certificates of deposit (from 1.94%
for the quarter ended September 30, 2004 to 2.61% for the quarter ended September 30, 2005). Rates paid on municipal deposits are generally tied to the three month Treasury bill rate, which increased from 1.71% on September 30, 2004
to 3.55% on September 30, 2005. Rates paid on other interest-bearing deposits have also increased due to the rising interest rate environment.



Page 21



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



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



Net interest income on a tax
equivalent basis increased $15,627 or by 13.65% for the nine months ended September 30, 2005, over the comparable period in 2004. The increase in net interest income was due to an increase in net interest margin from 3.77% to 3.84% and 11.54%
growth in average interest-earning assets. See discussion below regarding capitalization of interest expense on long-term debt and its impact on the cost of long-term debt and net interest margin.



While the net interest spread decreased by 1 basis point during the quarter (from 3.54% to
3.53%) due to the cost of interest-bearing liabilities increasing by 56 basis points (from 1.36% to 1.92%) while yields on earning assets increased by 55 basis points (from 4.90% to 5.45%), the net interest margin increased from 3.77% to 3.84%, or
by 7 basis points. The 7 basis points increase in net interest margin was due to the yield on earning assets increasing by 55 basis points while the cost of funding earning assets (interest expense divided by average interest-earning assets)
increased by 48 basis points (from 1.13% to 1.61%).



The yield on
interest-earning assets and the cost of interest bearing liabilities increased due to similar reasons noted in the previous section discussing the quarter. See discussion of the rising interest rate environment in the previous section. Without
capitalization of interest expense on long-term debt as discussed in the previous section, the rate paid on long-term debt would have been 6.67% for the nine months ended September 30, 2005, or a decrease of 34 basis points from 7.01% for the
nine months ended September 30, 2004. The capitalization of interest expense did not significantly impact the net interest margin for the nine months ended September 30, 2005.



Noninterest income and expense



Current quarter compared to prior year quarter



Noninterest income increased by $4,293 or by 32.99% for the quarter ended September 30, 2005, compared to the same period in 2004. The most significant components of
the change in noninterest income were a $1,407 increase in mortgage income, a $1,008 increase in service charges on deposits, a $533 increase in the gain on sale of investment securities, and a $616 decline in losses on sale of real estate owned.



The increase in mortgage income was primarily related to increased mortgage
production and a decline in amortization expense on mortgage serving rights. Mortgage servicing rights amortization expense includes amounts recorded for impairment (increases amortization expense) and recapture of mortgage servicing rights
impairment (decreases amortization expense). Mortgage servicing rights impairment of $452 was recorded during the quarter ended September 30, 2004, compared to the recapture of mortgage servicing rights impairment of $637 recorded during the
current quarter, resulting in a $1,089 increase in mortgage income. The remainder of the increase was due to an increase in the gain on sale of mortgage loans related to increased production.



The increase in service charges on deposits was primarily due to an increase in
non-sufficient funds (NSF) fees. NSF fees increased by $1,460, partially offset by a decrease in business and personal service charges.



Noninterest expense increased by $3,546 or by 9.69% for the quarter ended September 30, 2005 over the comparable period in 2004. The most significant components of
the change in noninterest expense were a $2,029 increase in salaries and employee benefits, a $413 increase in net occupancy expense, and a $346 increase in furniture and equipment expense. The increase in salary expense was primarily due to
increases in salaries related to the PCCC and Summit acquisitions and an increase in incentive program expense. The increase in net occupancy and furniture and equipment expense relates primarily to an increase in depreciation expense of $393 due to
construction of new branch offices and expansion through acquisitions.



Page 22



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



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



Noninterest income increased by
$4,424 or by 10.60% for the nine months ended September 30, 2005, compared to the same period in 2004. The more significant changes in noninterest income consisted of a $1,549 increase in mortgage income, a $987 increase in service charges on
deposits, a $730 increase in gain on the sale of fixed assets, and a $581 decline in losses on sale of real estate owned, partially offset by a decrease in the gain on sale of investment securities of $378.



Mortgage income increased primarily due to the same reasons noted above for the quarter. For
the nine months ended September 30, 2005, recapture of mortgage servicing rights impairment was $1,050 compared to recapture of $229 during the comparable period in 2004, causing mortgage income to increase by $821. The remainder of the
increase was due to an increase in the gain on sale of mortgage loans related to increased production. Service charges on deposit accounts increased for the same reasons noted above for the quarter.



Noninterest expense increased by $4,813, or by 4.34%, for the nine months ended
September 30, 2005 over the comparable period in 2004. The most significant components of the change in noninterest expense were a $2,726 increase in salaries and employee benefits, a $1,086 increase in net occupancy expense, and a $911
increase in furniture and equipment expense. The changes in noninterest expense were due to the same reasons explained above for the quarter ended September 30, 2005.



Income taxes



Total income tax expense increased by $3,596 or by 73.81% for the quarter ended September 30, 2005 compared to the same period in 2004. Total income tax expense
increased by $6,505 or by 46.93% for the nine months ended September 30, 2005 compared to the same period in 2004. The effective tax rate was 36.00% and 35.40% for the quarters and nine months ending September 30, 2005 and
September 30, 2004, respectively.



Item 3. Quantitative and
Qualitative Disclosures about Market Risk



Management has considered the
effects of the PCCC and Summit acquisitions 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.



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.



Page 23



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PART II - OTHER INFORMATION



Item 1. Legal Proceedings



Not Applicable.



Item 2. Unregistered Sales of Equity Securities and Use of Proceeds



Not Applicable.



Item 3. Defaults upon Senior Securities



Not Applicable.



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



Not Applicable.



Item 5. Other Information



Not Applicable.



Item 6. Exhibits



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



|     |  |                                                                                                                                                                                                         
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1 |  | Employee Death Benefit and Post-Retirement Noncompetition and Consultation Agreement dated August 1, 2005, between First Citizens Bank and Trust Company, Inc. and William A. Loadholdt
(filed herewith)
|     | 
|31.1 |  | Certification of Chief Executive Officer required by Rule 13a-14(a) (filed herewith)                                                                                                                    
|     | 
|31.2 |  | Certification of Chief Financial Officer required by Rule 13a-14(a) (filed herewith)                                                                                                                    
|     | 
|32   |  | Certification (Pursuant to 18 U.S.C. Section 1350) (filed herewith)                                                                                                                                     



---

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: November 8, 2005 |  |                                     |  |                        
|                        |  |                                    
|                        |  | By:                                 |  | /s/ Craig L. Nix       
|                        |  |                                     |  | Craig L. Nix           
|                        |  |                                     |  | Chief Financial Officer



---

EXHIBIT INDEX



| | 10.1 | Employee Death Benefit and Post-Retirement Noncompetition and Consultation Agreement dated August 1, 2005, between First Citizens Bank and Trust Company, Inc. and William A.
Loadholdt (filed herewith)
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 31.1 | Certification of Chief Executive Officer required by Rule 13a-14(a) (filed herewith)
| | ---- | ------------------------------------------------------------------------------------



| | 31.2 | Certification of Chief Financial Officer required by Rule 13a-14(a) (filed herewith)
| | ---- | ------------------------------------------------------------------------------------



| | 32 | Certification (Pursuant to 18 U.S.C. Section 1350) (filed herewith)
| | -- | -------------------------------------------------------------------