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FORM 10-Q



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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549



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QUARTERLY REPORT UNDER SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF
1934



For the quarter ended June 30, 2004



Commission File Number 0-11172



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FIRST CITIZENS BANCORPORATION, INC.

(Exact name of registrant as specified in
its charter)



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



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



No
Change

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



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



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



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



|                                         |  |                             
|---------------------------------------- |  | ----------------------------
|Class                                    |  | Outstanding at July 31, 2004
|Voting Common Stock, $5.00 Par Value     |  | 864,538 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 par values)



|                                                                                                                                                                     |  |              |           |   |                  |   |           |              |  |   |           |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | --------- | - | ---------------- | - | --------- | ------------ |  | - | --------- | -
|                                                                                                                                                                     |  | JUNE 30,2004 |           |   | DECEMBER 31,2003 |   |           | JUNE 30,2003 | 
|ASSETS                                                                                                                                                               |  |              |           |   |                  |   |           |              |  |   |           |  
|Cash and due from banks                                                                                                                                              |  | $            | 157,924   |   |                  | $ | 179,951   |              |  | $ | 168,065   |  
|Federal funds sold                                                                                                                                                   |  |              | 138,638   |   |                  |   | 41,379    |              |  |   | 152,215   |  
|                                                                                                                                                                     |  |              |           |   |                  |   |           |              |  |   |           |  
|Total cash and cash equivalents                                                                                                                                      |  |              | 296,562   |   |                  |   | 221,330   |              |  |   | 320,280   |  
|                                                                                                                                                                     |  |              |           |   |                  |   |           |              |  |   |           |  
|Investment securities:                                                                                                                                               |  |              |           |   |                  |   |           |              |  |   |           |  
|Held-to-maturity, at amortized cost (fair value June 30, 2004-$16,616 December 31, 2003-$20,064; and June 30, 2003-$28,441)                                          |  |              | 16,550    |   |                  |   | 19,766    |              |  |   | 27,785    |  
|Available-for-sale, at fair value                                                                                                                                    |  |              | 860,457   |   |                  |   | 902,463   |              |  |   | 895,145   |  
|                                                                                                                                                                     |  |              |           |   |                  |   |           |              |  |   |           |  
|Total investment securities                                                                                                                                          |  |              | 877,007   |   |                  |   | 922,229   |              |  |   | 922,930   |  
|                                                                                                                                                                     |  |              |           |   |                  |   |           |              |  |   |           |  
|Gross loans                                                                                                                                                          |  |              | 3,052,840 |   |                  |   | 2,939,989 |              |  |   | 2,704,690 |  
|Less: Allowance for loan losses                                                                                                                                      |  |              | (52,188   | ) |                  |   | (51,268   | )            |  |   | (48,120   | )
|                                                                                                                                                                     |  |              |           |   |                  |   |           |              |  |   |           |  
|Net loans                                                                                                                                                            |  |              | 3,000,652 |   |                  |   | 2,888,721 |              |  |   | 2,656,570 |  
|                                                                                                                                                                     |  |              |           |   |                  |   |           |              |  |   |           |  
|Premises and equipment, net                                                                                                                                          |  |              | 148,867   |   |                  |   | 134,756   |              |  |   | 119,954   |  
|Interest receivable                                                                                                                                                  |  |              | 14,903    |   |                  |   | 16,429    |              |  |   | 16,947    |  
|Goodwill                                                                                                                                                             |  |              | 24,549    |   |                  |   | 24,525    |              |  |   | 25,624    |  
|Intangible assets                                                                                                                                                    |  |              | 41,829    |   |                  |   | 45,876    |              |  |   | 40,201    |  
|Other assets                                                                                                                                                         |  |              | 52,286    |   |                  |   | 47,594    |              |  |   | 44,337    |  
|                                                                                                                                                                     |  |              |           |   |                  |   |           |              |  |   |           |  
|Total assets                                                                                                                                                         |  | $            | 4,456,655 |   |                  | $ | 4,301,460 |              |  | $ | 4,146,843 |  
|                                                                                                                                                                     |  |              |           |   |                  |   |           |              |  |   |           |  
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                 |  |              |           |   |                  |   |           |              |  |   |           |  
|Liabilities:                                                                                                                                                         |  |              |           |   |                  |   |           |              |  |   |           |  
|Deposits:                                                                                                                                                            |  |              |           |   |                  |   |           |              |  |   |           |  
|Demand                                                                                                                                                               |  | $            | 695,824   |   |                  | $ | 651,332   |              |  | $ | 660,173   |  
|Time and savings                                                                                                                                                     |  |              | 3,094,268 |   |                  |   | 3,062,890 |              |  |   | 2,913,502 |  
|                                                                                                                                                                     |  |              |           |   |                  |   |           |              |  |   |           |  
|Total deposits                                                                                                                                                       |  |              | 3,790,092 |   |                  |   | 3,714,222 |              |  |   | 3,573,675 |  
|                                                                                                                                                                     |  |              |          
|Short-term borrowings and securities sold under agreements to repurchase                                                                                             |  |              | 170,363   |   |                  |   | 148,864   |              |  |   | 151,570   |  
|Long-term debt                                                                                                                                                       |  |              | 125,361   |   |                  |   | 73,814    |              |  |   | 72,357    |  
|Other liabilities                                                                                                                                                    |  |              | 25,008    |   |                  |   | 24,977    |              |  |   | 28,414    |  
|                                                                                                                                                                     |  |              |           |   |                  |   |           |              |  |   |           |  
|Total liabilities                                                                                                                                                    |  |              | 4,110,824 |   |                  |   | 3,961,877 |              |  |   | 3,826,016 |  
|                                                                                                                                                                     |  |              |           |   |                  |   |           |              |  |   |           |  
|Commitments and contingencies                                                                                                                                        |  |              |          |   |                  |   |          |              |  |   |          |  
|                                                                                                                                                                     |  |              |          
|Stockholders equity:                                                                                                                                                |  |              |           |   |                  |   |           |              |  |   |           |  
|Preferred stock                                                                                                                                                      |  |              | 3,111     |   |                  |   | 3,111     |              |  |   | 3,111     |  
|Non-voting common stock - $5.00 par value, authorized 1,000,000; issued and outstanding June 30, 2004, December 31, 2003 and June 30, 2003 -
36,409                  |  |              | 182       |   |                  |   | 182       |              |  |   | 182       |  
|Voting common stock - $5.00 par value, authorized 2,000,000; issued and outstanding June 30, 2004 - 865,542 December 31, 2003 - 869,072; and
June 30, 2003 - 871,392 |  |              | 4,328     |   |                  |   | 4,345     |              |  |   | 4,357     |  
|Surplus                                                                                                                                                              |  |              | 65,081    |   |                  |   | 65,081    |              |  |   | 65,081    |  
|Undivided profits                                                                                                                                                    |  |              | 261,364   |   |                  |   | 247,647   |              |  |   | 229,706   |  
|Accumulated other comprehensive income, net of deferred taxes of $6,335 at June 30, 2004; $10,348 at December 31, 2003; and $9,902 at June 30,
2003                  |  |              | 11,765    |   |                  |   | 19,217    |              |  |   | 18,390    |  
|                                                                                                                                                                     |  |              |           |   |                  |   |           |              |  |   |           |  
|Total stockholders equity                                                                                                                                           |  |              | 345,831   |   |                  |   | 339,583   |              |  |   | 320,827   |  
|                                                                                                                                                                     |  |              |           |   |                  |   |           |              |  |   |           |  
|Total liabilities and stockholders equity                                                                                                                           |  | $            | 4,456,655 |   |                  | $ | 4,301,460 |              |  | $ | 4,146,843 |  
|                                                                                                                                                                     |  |              |           |   |                  |   |           |              |  |   |           |  



See accompanying
Notes to the 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 THEQUARTER ENDEDJUNE 30, |         | FOR THESIX MONTHS ENDEDJUNE 30,
|                                                             |  | 2004                         |         | 2003                            |   | 2004    |  | 2003
|Interest income:                                             |  |                              |         |                                 |   |         |  |      |         |  |   |        
|Interest and fees on loans                                   |  | $                            | 43,473  |                                 | $ | 43,345  |  | $    | 86,522  |  | $ | 83,509 
|Interest on investment securities:                           |  |                              |         |                                 |   |         |  |      |         |  |   |        
|Taxable                                                      |  |                              | 4,894   |                                 |   | 6,674   |  |      | 10,094  |  |   | 13,662 
|Non-taxable                                                  |  |                              | 96      |                                 |   | 133     |  |      | 213     |  |   | 275    
|Federal funds sold                                           |  |                              | 338     |                                 |   | 593     |  |      | 697     |  |   | 1,219  
|                                                             |  |                              |         |                                 |   |         |  |      |         |  |   |        
|Total interest income                                        |  |                              | 48,801  |                                 |   | 50,745  |  |      | 97,526  |  |   | 98,665 
|                                                             |  |                              |         |                                 |   |         |  |      |         |  |   |        
|Interest expense:                                            |  |                              |         |                                 |   |         |  |      |         |  |   |        
|Interest on deposits                                         |  |                              | 9,067   |                                 |   | 11,648  |  |      | 18,438  |  |   | 22,842 
|Interest on short-term borrowings                            |  |                              | 372     |                                 |   | 372     |  |      | 681     |  |   | 733    
|Interest on long-term debt                                   |  |                              | 1,767   |                                 |   | 1,452   |  |      | 3,259   |  |   | 2,532  
|                                                             |  |                              |         |                                 |   |         |  |      |         |  |   |        
|Total interest expense                                       |  |                              | 11,206  |                                 |   | 13,472  |  |      | 22,378  |  |   | 26,107 
|                                                             |  |                              |         |                                 |   |         |  |      |         |  |   |        
|Net interest income                                          |  |                              | 37,595  |                                 |   | 37,273  |  |      | 75,148  |  |   | 72,558 
|Provision for loan losses                                    |  |                              | 3,002   |                                 |   | 2,425   |  |      | 4,156   |  |   | 3,363  
|                                                             |  |                              |         |                                 |   |         |  |      |         |  |   |        
|Net interest income after provision for loan losses          |  |                              | 34,593  |                                 |   | 34,848  |  |      | 70,992  |  |   | 69,195 
|                                                             |  |                              |         |                                 |   |         |  |      |         |  |   |        
|Noninterest income:                                          |  |                              |         |                                 |   |         |  |      |         |  |   |        
|Service charges on deposits                                  |  |                              | 8,871   |                                 |   | 9,084   |  |      | 17,557  |  |   | 17,025 
|Commissions and fees from fiduciary activities               |  |                              | 816     |                                 |   | 846     |  |      | 1,583   |  |   | 1,657  
|Fees for other customer services                             |  |                              | 409     |                                 |   | 380     |  |      | 844     |  |   | 756    
|Mortgage income                                              |  |                              | 2,272   |                                 |   | 1,257   |  |      | 2,593   |  |   | 2,866  
|Bankcard discount and fees                                   |  |                              | 1,756   |                                 |   | 1,584   |  |      | 3,226   |  |   | 2,997  
|Insurance premiums                                           |  |                              | 493     |                                 |   | 568     |  |      | 949     |  |   | 1,034  
|Gain on sale of investment securities                        |  |                              | 570     |                                 |   | 720     |  |      | 852     |  |   | 720    
|Other                                                        |  |                              | 545     |                                 |   | 540     |  |      | 1,135   |  |   | 1,071  
|                                                             |  |                              |         |                                 |   |         |  |      |         |  |   |        
|Total noninterest income                                     |  |                              | 15,732  |                                 |   | 14,979  |  |      | 28,739  |  |   | 28,126 
|                                                             |  |                              |         |                                 |   |         |  |      |         |  |   |        
|Noninterest expense:                                         |  |                              |         |                                 |   |         |  |      |         |  |   |        
|Salaries and employee benefits                               |  |                              | 18,383  |                                 |   | 17,628  |  |      | 36,692  |  |   | 34,388 
|Net occupancy expense                                        |  |                              | 2,930   |                                 |   | 2,648   |  |      | 5,925   |  |   | 5,255  
|Furniture and equipment expense                              |  |                              | 1,998   |                                 |   | 1,665   |  |      | 3,977   |  |   | 3,245  
|Bankcard processing fees                                     |  |                              | 1,959   |                                 |   | 1,673   |  |      | 3,610   |  |   | 3,183  
|Data processing fees                                         |  |                              | 3,265   |                                 |   | 2,945   |  |      | 6,387   |  |   | 5,666  
|Amortization expense                                         |  |                              | 2,252   |                                 |   | 1,849   |  |      | 4,516   |  |   | 3,675  
|Other                                                        |  |                              | 7,030   |                                 |   | 5,431   |  |      | 13,232  |  |   | 10,450 
|                                                             |  |                              |         |                                 |   |         |  |      |         |  |   |        
|Total noninterest expense                                    |  |                              | 37,817  |                                 |   | 33,839  |  |      | 74,339  |  |   | 65,862 
|                                                             |  |                              |         |                                 |   |         |  |      |         |  |   |        
|Income before income tax expense                             |  |                              | 12,508  |                                 |   | 15,988  |  |      | 25,392  |  |   | 31,459 
|Income tax expense                                           |  |                              | 4,428   |                                 |   | 5,691   |  |      | 8,988   |  |   | 11,199 
|                                                             |  |                              |         |                                 |   |         |  |      |         |  |   |        
|Net income                                                   |  | $                            | 8,080   |                                 | $ | 10,297  |  | $    | 16,404  |  | $ | 20,260 
|                                                             |  |                              |         |                                 |   |         |  |      |         |  |   |        
|Net income per common share - basic and diluted              |  | $                            | 8.90    |                                 | $ | 11.31   |  | $    | 18.05   |  | $ | 22.22  
|Weighted average common shares outstanding-basic and diluted |  |                              | 903,703 |                                 |   | 908,855 |  |      | 904,202 |  |   | 909,224
|Cash dividends paid per common share                         |  | $                            | 0.35    |                                 | $ | 0.25    |  | $    | 0.70    |  | $ | 0.50   



See accompanying
Notes to the 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)



|                                                                                                     |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   |        |   |  |   |         |  
|---------------------------------------------------------------------------------------------------- |  | -------------- | ----- | - | ---------------------- | - | ----------------- |  | - | ------- | - | ---------------- | - | ------ | ------------------------------- | - | ------- | --------------------------- |  | - | ------ | - |  | - | ------- | -
|                                                                                                     |  | PREFERREDSTOCK |       |   | NON -VOTINGCOMMONSTOCK |   | VOTINGCOMMONSTOCK |  |   | SURPLUS |   | UNDIVIDEDPROFITS |   |        | COMPREHENSIVEINCOME/(LOSS), NET |   |         | TOTALSTOCK-  HOLDERSEQUITY | 
|Balance at December 31, 2002                                                                         |  | $              | 3,173 |   |                        | $ | 182               |  | $ | 4,374   |   |                  | $ | 65,081 |                                 | $ | 211,264 |                             |  | $ | 19,510 |   |  | $ | 303,584 |  
|Comprehensive income:                                                                                |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   |        |   |  |   |         |  
|Net income                                                                                           |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   | 20,260  |                             |  |   |        |   |  |   | 20,260  |  
|Change in net unrealized gains on investment securities available-for-sale, net of benefit of $603   |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   | (1,120 | ) |  |   | (1,120  | )
|                                                                                                     |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   |        |   |  |   |         |  
|Total comprehensive income                                                                           |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   |        |   |  |   | 19,140  |  
|                                                                                                     |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   |        |   |  |   |         |  
|Reacquired preferred stock                                                                           |  |                | (62   | ) |                        |   |                   |  |   |         |   |                  |   |        |                                 |   | 21      |                             |  |   |        |   |  |   | (41     | )
|Reacquired voting common stock                                                                       |  |                |       |   |                        |   |                   |  |   | (17     | ) |                  |   |        |                                 |   | (1,320  | )                           |  |   |        |   |  |   | (1,337  | )
|Common stock dividends                                                                               |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   | (437    | )                           |  |   |        |   |  |   | (437    | )
|Preferred stock dividends                                                                            |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   | (82     | )                           |  |   |        |   |  |   | (82     | )
|                                                                                                     |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   |        |   |  |   |         |  
|Balance at June 30, 2003                                                                             |  |                | 3,111 |   |                        |   | 182               |  |   | 4,357   |   |                  |   | 65,081 |                                 |   | 229,706 |                             |  |   | 18,390 |   |  |   | 320,827 |  
|Comprehensive income:                                                                                |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   |        |   |  |   |         |  
|Net income                                                                                           |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   | 19,623  |                             |  |   |        |   |  |   | 19,623  |  
|Change in net unrealized gains on investment securities available-for-sale, net of tax of $446       |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   | 827    |   |  |   | 827     |  
|                                                                                                     |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   |        |   |  |   |         |  
|Total comprehensive income                                                                           |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   |        |   |  |   | 20,450  |  
|                                                                                                     |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   |        |   |  |   |         |  
|Reacquired voting common stock                                                                       |  |                |       |   |                        |   |                   |  |   | (12     | ) |                  |   |        |                                 |   | (990    | )                           |  |   |        |   |  |   | (1,002  | )
|Common stock dividends                                                                               |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   | (609    | )                           |  |   |        |   |  |   | (609    | )
|Preferred stock dividends                                                                            |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   | (83     | )                           |  |   |        |   |  |   | (83     | )
|                                                                                                     |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   |        |   |  |   |         |  
|Balance at December 31, 2003                                                                         |  |                | 3,111 |   |                        |   | 182               |  |   | 4,345   |   |                  |   | 65,081 |                                 |   | 247,647 |                             |  |   | 19,217 |   |  |   | 339,583 |  
|Comprehensive income:                                                                                |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   |        |   |  |   |         |  
|Net income                                                                                           |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   | 16,404  |                             |  |   |        |   |  |   | 16,404  |  
|Change in net unrealized gains on investment securities available-for-sale, net of benefit of $4,013 |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   | (7,452 | ) |  |   | (7,452  | )
|                                                                                                     |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   |        |   |  |   |         |  
|Total comprehensive income                                                                           |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   |        |   |  |   | 8,952   |  
|                                                                                                     |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   |        |   |  |   |         |  
|Reacquired voting common stock                                                                       |  |                |       |   |                        |   |                   |  |   | (17     | ) |                  |   |        |                                 |   | (1,829  | )                           |  |   |        |   |  |   | (1,846  | )
|Common stock dividends                                                                               |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   | (777    | )                           |  |   |        |   |  |   | (777    | )
|Preferred stock dividends                                                                            |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   | (81     | )                           |  |   |        |   |  |   | (81     | )
|                                                                                                     |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   |        |   |  |   |         |  
|Balance at June 30, 2004                                                                             |  | $              | 3,111 |   |                        | $ | 182               |  | $ | 4,328   |   |                  | $ | 65,081 |                                 | $ | 261,364 |                             |  | $ | 11,765 |   |  | $ | 345,831 |  
|                                                                                                     |  |                |       |   |                        |   |                   |  |   |         |   |                  |   |        |                                 |   |         |                             |  |   |        |   |  |   |         |  



See accompanying
Notes to the 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 THESIX MONTHS ENDEDJUNE 30, |         
|                                                                                     |  | 2004                            |          |   | 2003 |  
|Cash flows from operating activities:                                                |  |                                 |          |   |      |   |          |  
|Net income                                                                           |  | $                               | 16,404   |   |      | $ | 20,260   |  
|Adjustments to reconcile net income to net cash provided by operating activities:    |  |                                 |          |   |      |   |          |  
|Provision for loan losses                                                            |  |                                 | 4,156    |   |      |   | 3,363    |  
|Depreciation and amortization                                                        |  |                                 | 10,566   |   |      |   | 10,910   |  
|Net accretion of discount (amortization of premium) on investment securities         |  |                                 | 1,556    |   |      |   | (355     | )
|Deferred income tax benefit                                                          |  |                                 | (757     | ) |      |   | (1,942   | )
|Gain on sale of premises and equipment                                               |  |                                 | (7       | ) |      |   | (146     | )
|Decrease in interest receivable                                                      |  |                                 | 1,526    |   |      |   | 749      |  
|Increase in interest payable                                                         |  |                                 | 1,277    |   |      |   | 1,533    |  
|Origination of mortgage loans held-for-resale                                        |  |                                 | (106,614 | ) |      |   | (221,262 | )
|Proceeds from sales of mortgage loans held-for-resale                                |  |                                 | 108,846  |   |      |   | 217,184  |  
|Gain on sales of mortgage loans held-for-resale                                      |  |                                 | (1,175   | ) |      |   | (3,848   | )
|Gain on sale of investment securities                                                |  |                                 | (852     | ) |      |   | (720     | )
|(Increase) decrease in other assets                                                  |  |                                 | (290     | ) |      |   | 3,955    |  
|Decrease in other liabilities                                                        |  |                                 | (1,246   | ) |      |   | (561     | )
|                                                                                     |  |                                 |          |   |      |   |          |  
|Net cash provided by operating activities                                            |  |                                 | 33,390   |   |      |   | 29,120   |  
|                                                                                     |  |                                 |          |   |      |   |          |  
|Cash flows from investing activities:                                                |  |                                 |          |   |      |   |          |  
|Net increase in loans                                                                |  |                                 | (118,112 | ) |      |   | (94,064  | )
|Calls, maturities and prepayments of investment securities, held-to-maturity         |  |                                 | 6,221    |   |      |   | 15,882   |  
|Purchases of investment securities, held-to-maturity                                 |  |                                 | (3,013   | ) |      |   | (4,520   | )
|Calls, maturities and prepayments of investment securities, available-for-sale       |  |                                 | 410,575  |   |      |   | 247,248  |  
|Purchases of investment securities, available-for-sale                               |  |                                 | (380,728 | ) |      |   | (248,103 | )
|Proceeds from sales of premises and equipment                                        |  |                                 | 13       |   |      |   | 116      |  
|Purchases of premises and equipment                                                  |  |                                 | (19,892  | ) |      |   | (11,053  | )
|Decrease in other real estate owned                                                  |  |                                 | 576      |   |      |   | 528      |  
|Increase in intangible assets                                                        |  |                                 | (10      | ) |      |   | (2,154   | )
|Purchase of institution, net of cash acquired                                        |  |                                 |         |   |      |   | (9,223   | )
|                                                                                     |  |                                 |          |   |      |   |          |  
|Net cash (used in) provided by investing activities                                  |  |                                 | (104,370 | ) |      |   | (105,343 | )
|                                                                                     |  |                                 |          |   |      |   |          |  
|Cash flows from financing activities:                                                |  |                                 |          |   |      |   |          |  
|Net increase in deposits                                                             |  |                                 | 75,870   |   |      |   | 89,817   |  
|Increase in short-term borrowings and securities sold under agreements To repurchase |  |                                 | 21,499   |   |      |   | 21,210   |  
|Increase in long-term debt                                                           |  |                                 | 51,547   |   |      |   |         |  
|Cash dividends paid                                                                  |  |                                 | (858     | ) |      |   | (519     | )
|Cash paid to reacquire preferred stock                                               |  |                                 |         |   |      |   | (41      | )
|Cash paid to reacquire common stock                                                  |  |                                 | (1,846   | ) |      |   | (1,337   | )
|                                                                                     |  |                                 |          |   |      |   |          |  
|Net cash provided by financing activities                                            |  |                                 | 146,212  |   |      |   | 109,130  |  
|                                                                                     |  |                                 |          |   |      |   |          |  
|Net increase in cash and cash equivalents                                            |  |                                 | 75,232   |   |      |   | 32,907   |  
|Cash and cash equivalents at beginning of period                                     |  |                                 | 221,330  |   |      |   | 287,373  |  
|                                                                                     |  |                                 |          |   |      |   |          |  
|Cash and cash equivalents at end of period                                           |  | $                               | 296,562  |   |      | $ | 320,280  |  
|                                                                                     |  |                                 |          |   |      |   |          |  



See accompanying
Notes to the Consolidated Financial Statements



Page 5



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

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 2003. The significant accounting policies used during the current quarter are unchanged from those disclosed in the 2003 Annual Report.



Basis of presentation



The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted
in the United States for interim financial statement preparation. In the opinion of management, all material adjustments necessary to present fairly the financial position of Bancorporation as of and for each of the periods presented, and all
adjustments comprising normal recurring accruals necessary for a fair presentation of the consolidated financial statements have been recorded. Certain immaterial amounts in prior periods have been reclassified to conform to the 2004 presentation.
Such reclassifications had no effect on shareholders equity or net income.



Change in Accounting Principles and Effects of New Accounting Pronouncements



In January 2003, the FASB issued FASB Interpretation No. 46, Consolidation of Variable Interest Entities (FIN 46). This Interpretation provides guidance with respect to the identification of
variable interest entities and when the assets, liabilities, noncontrolling interests, and results of operations of a variable interest entity need to be included in a companys consolidated financial statements. The Interpretation requires
consolidation by business enterprises of variable interest entities in cases where the equity investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial support from other parties,
which is provided through other interests that will absorb some or all of the expected losses of the entity, or in cases where the equity investors lack one or more of the essential characteristics of a controlling financial interest, which include
the ability to make decisions about the entitys activities through voting rights, the obligations to absorb the expected losses of the entity if they occur, or the right to receive the expected residual returns of the entity if they occur. Due
to significant implementation concerns, the FASB modified the wording of FIN 46 and issued FIN 46R in December of 2003. FIN 46R deferred the effective date for the provisions of FIN 46 to entities other than Special Purpose Entities
(SPEs) until financial statements are issued for periods ending after March 15, 2004. Management has evaluated investments in variable interest entities and potential variable interest entities or transactions, particularly a limited
liability partnership involved in low-income housing development (LIHTC) and trust preferred securities structures because these entities or transactions constitute Bancorporations primary FIN 46 and FIN 46R exposure. Under FIN 46,
it was determined that Bancorporation is not the primary beneficiary of the FCB/SC Capital Trust I or FCB/SC Capital Trust II, each of which issued trust preferred securities. Thus, trust preferred securities related to FCB/SC Capital Trust I were
deconsolidated as of December 31, 2003. FCB/SC Capital Trust II was not outstanding at December 31, 2003. During the quarter ended June 30, 2004, FCB/SC Capital Trust II issued trust preferred securities. Other assets and long-term debt reflect
$3,094 related to FCB/SC Capital Trust I and II in the Consolidated Statements of Condition. As of December 31, 2003, Bancorporation adopted FIN 46R. Adoption of FIN 46 and FIN 46R did not have a material effect on Bancorporations consolidated
financial position or consolidated results of operations beyond the impact of trust preferred securities because it was determined that Bancorporation is not the primary beneficiary of its LIHTC investments. Bancorporations involvement with
variable interest entities is limited to $1.5 million in outstanding balances in LIHTC investments with no additional monies in future funding commitments. Bancorporation has utilized LIHTC investments to invest in areas serving low to moderate
income communities since 2002. Interpretive guidance relating to FIN 46R is continuing to evolve and Bancorporations management will continue to assess various aspects of consolidations and variable interest entity accounting as additional
guidance becomes available.



In December 2003, the FASB issued SFAS No. 132
(revised 2003), Employers Disclosures about Pensions and Postretirement Benefits. This Statement requires additional disclosures about the assets, obligations and cash flows of defined benefit pension and postretirement plans, as
well as the expense recorded for such plans. The revised disclosures, which are required to be provided on a quarterly basis, are presented herein.



In December 2003, the Accounting Standards Executive Committee (AcSEC) issued Statement of Position (SOP) 03-3, Accounting for Certain Loans
or Debt Securities Acquired in a Transfer. The SOP is effective for loans acquired in fiscal years beginning after December 15, 2004. The SOP addresses accounting for differences between contractual cash flows and cash flows expected to be
collected from an investors initial investment in loans or debt securities (loans) acquired in a transfer if those differences are attributable, at least in part, to credit quality. It includes loans acquired in business combinations. The SOP
does not apply to loans originated by Bancorporation. Bancorporation intends to adopt the provisions of SOP 03-3 effective January 1, 2005, and does not expect the initial implementation to have a significant impact on Bancorporations
consolidated financial position or consolidated results of operations. Management is currently assessing the long-term effect of the SOP.



Page 6



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (continued)





On March 9,
2004, the SEC Staff issued Staff Accounting Bulletin No. 105, Application of Accounting Principles to Loan Commitments (SAB 105). SAB 105 clarifies existing accounting practices relating to the valuation of issued loan
commitments, including interest rate lock commitments (IRLC), subject to Derivative Implementation Group Issue C-13, When a Loan Commitment is included in the Scope of Statement 133, by requiring all registrants to begin
accounting for these commitments subject to SFAS No. 133. Furthermore, SAB 105 disallows the inclusion of the values of a servicing component and other internally developed intangible assets in the initial and subsequent IRLC valuation. The
provisions of SAB 105 were effective for loan commitments entered into after March 31, 2004. The implementation did not have a material impact on our results of operations.



Goodwill and Other Intangibles (Dollars in thousands)



In accordance with SFAS No.142, no goodwill amortization was recorded for the quarter or six months ended June 30, 2004. The changes in the
carrying amount of goodwill for the six months ended June 30, 2004, and the year ended December 31, 2003 are as follows:



|                             |  |   |        |  
|---------------------------- |  | - | ------ | -
|Balance, January 1, 2003     |  | $ | 4,479  |  
|First Banks acquisition      |  |   | 21,145 |  
|                             |  |   |        |  
|Balance, June 30, 2003       |  |   | 25,624 |  
|Purchase price adjustments * |  |   | (1,099 | )
|                             |  |   |        |  
|Balance, December 31, 2003   |  |   | 24,525 |  
|Purchase price adjustments * |  |   | 24     |  
|                             |  |   |        |  
|Balance, June 30, 2004       |  | $ | 24,549 |  
|                             |  |   |        |  

|* | The purchase price adjustments above reflect adjustments to the purchase price subsequent to the date of the acquisition.
|- | -------------------------------------------------------------------------------------------------------------------------



The following table relates to the carrying values of core deposit intangibles recorded in
Bancorporations consolidated financial statements, all of which are being amortized:



|                         |  |                   |         |   |                       |   |         |                   |  |   |         |  
|------------------------ |  | ----------------- | ------- | - | --------------------- | - | ------- | ----------------- |  | - | ------- | -
|                         |  | AS OFJUNE 30,2004 |         |   | AS OFDECEMBER 31,2003 |   |         | AS OFJUNE 30,2003 | 
|Gross carrying value     |  | $                 | 117,766 |   |                       | $ | 117,778 |                   |  | $ | 109,731 |  
|Accumulated amortization |  |                   | (82,876 | ) |                       |   | (78,360 | )                 |  |   | (73,710 | )
|                         |  |                   |         |   |                       |   |         |                   |  |   |         |  
|Balance at end of period |  | $                 | 34,890  |   |                       | $ | 39,418  |                   |  | $ | 36,021  |  
|                         |  |                   |         |   |                       |   |         |                   |  |   |         |  



Amortization expense on core deposit
intangibles was $4,516 and $3,675 for the six months ended June 30, 2004 and 2003, respectively. Amortization expense on core deposit intangibles was $2,252 and $1,849 for the quarters ended June 30, 2004 and 2003, respectively. The increase in
amortization expense during the periods is primarily due to an increase in core deposit intangibles related to an acquisition completed after June 30, 2003.



Bancorporation projects the following aggregate amortization expense based on existing core deposit intangibles for each of the next five years:



For the year ended December 31:



|     |  |   |      
|---- |  | - | -----
|2004 |  | $ | 9,020
|2005 |  |   | 7,620
|2006 |  |   | 5,947
|2007 |  |   | 5,186
|2008 |  |   | 4,898



Mortgage servicing rights as of June
30, 2004, December 31, 2003 and June 30, 2003 were $6,939, $6,458, and $4,180, respectively.





Page 7



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (continued)



For the quarter ended June 30, 2004, amortization expense related to mortgage servicing
rights, included as a reduction of mortgage income in the Consolidated Statements of Income, was negative $741. This was the result of the recapture of $1,216 of previously recorded impairment partially offset by normal amortization. For the quarter
ended June 30, 2003, amortization was $1,836, consisting of $1,372 in impairment charges and the remainder consisting of normal amortization.



Amortization expense related to mortgage servicing rights, included as a reduction of mortgage income in the Consolidated Statements of Income, was $275 and $2,666 for
the six months ended June 30, 2004 and 2003, respectively. Amortization expense was reduced for $680 of net recapture of impairment of mortgage servicing rights for the six months ended June 30, 2004. For the six months ended June 30, 2003,
amortization expense was increased by $1,801 for impairment of mortgage servicing rights. Normal amortization was $955 and $865 for the six months ended June 30, 2004 and 2003, respectively.



Mergers and Acquisitions (Dollars in thousands)



There were no mergers or acquisitions completed during the six months ended June 30, 2004.



Employee benefits (Dollars in thousands)



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 THEQUARTER ENDEDJUNE 30, |      |   | FOR THE SIXMONTHS ENDEDJUNE 30, |  
|                                    |  | 2004                         |      |   | 2003                            |   |      | 2004 |  |   | 2003   |  
|Service costs                       |  | $                            | 786  |   |                                 | $ | 652  |      |  | $ | 1,603  |   |  | $ | 1,303  |  
|Interest costs                      |  |                              | 809  |   |                                 |   | 771  |      |  |   | 1,650  |   |  |   | 1,542  |  
|Expected return on plan assets      |  |                              | (990 | ) |                                 |   | (908 | )    |  |   | (2,019 | ) |  |   | (1,815 | )
|Amortization of prior service costs |  |                              |     |   |                                 |   | 21   |      |  |   |       |   |  |   | 42     |  
|Recognized net actuarial loss       |  |                              | 265  |   |                                 |   | 234  |      |  |   | 540    |   |  |   | 468    |  
|                                    |  |                              |      |   |                                 |   |      |      |  |   |        |   |  |   |        |  
|Net pension expense                 |  | $                            | 870  |   |                                 | $ | 770  |      |  | $ | 1,774  |   |  | $ | 1,540  |  
|                                    |  |                              |      |   |                                 |   |      |      |  |   |        |   |  |   |        |  



Bancorporation previously disclosed in
its consolidated financial statements for the year ended December 31, 2003 that the estimated employer contributions for 2004 was $3,710. In April 2004, Bancorporation made its entire 2004 contribution of $3,528.



Earnings per share (Dollars in thousands, except per share data)



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



|                                                             |  |                               |         |   |                                  |   |         |      |  |   |         |   |  |   |         |  
|------------------------------------------------------------ |  | ----------------------------- | ------- | - | -------------------------------- | - | ------- | ---- |  | - | ------- | - |  | - | ------- | -
|                                                             |  | FOR THE QUARTER ENDEDJUNE 30, |         |   | FOR THE SIX MONTHS ENDEDJUNE 30, |  
|                                                             |  | 2004                          |         |   | 2003                             |   |         | 2004 |  |   | 2003    |  
|Net income                                                   |  | $                             | 8,080   |   |                                  | $ | 10,297  |      |  | $ | 16,404  |   |  | $ | 20,260  |  
|Less: Preferred stock dividends                              |  |                               | (41     | ) |                                  |   | (41     | )    |  |   | (81     | ) |  |   | (82     | )
|Plus: Preferred stock redemption excess consideration        |  |                               |        |   |                                  |   | 21      |      |  |   |        |   |  |   | 21      |  
|                                                             |  |                               |         |   |                                  |   |         |      |  |   |         |   |  |   |         |  
|Net income applicable to common stock                        |  | $                             | 8,039   |   |                                  | $ | 10,277  |      |  | $ | 16,323  |   |  | $ | 20,199  |  
|                                                             |  |                               |         |   |                                  |   |         |      |  |   |         |   |  |   |         |  
|Weighted average common shares outstanding-basic and diluted |  |                               | 903,703 |   |                                  |   | 908,855 |      |  |   | 904,202 |   |  |   | 909,224 |  
|Net income per common share-basic and diluted                |  | $                             | 8.90    |   |                                  | $ | 11.31   |      |  | $ | 18.05   |   |  | $ | 22.22   |  



Page 8



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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (continued)



Long-term debt (Dollars in thousands)



On May 7, 2004, Bancorporation completed the sale of trust preferred securities in the
aggregate amount of $50,000. The securities were issued by FCB/SC Capital Trust II, an unconsolidated statutory trust subsidiary (Cap Trust II) formed by Bancorporation, and were sold in a private transaction pursuant to an applicable
exemption from registration under the Securities Act of 1933, as amended (the Act). These trust preferred securities have a variable rate of interest set at 3 month LIBOR plus 2.25% which will reset quarterly. The principal assets of Cap
Trust II will mature on June 15, 2034. The principal amount of these securities can be prepaid, subject to possible regulatory approval, in whole or part at any time on or after June 15, 2009. Additionally, Cap Trust II has issued to Bancorporation
$1,547 in liquidation amount of its common securities which constitute all of Cap Trust IIs outstanding securities.



These trust preferred securities are included in Tier I capital for regulatory capital adequacy purposes. The obligations of Bancorporation with respect to the issuance
of these trust preferred securities constitute a full and unconditional guarantee by Bancorporation of Cap Trust IIs obligations with respect to the trust preferred securities.



Subsequent events (Dollars in thousands)



On July 22, 2004, Bancorporations Board of Directors declared a $.35 dividend on common stock to shareholders of record on August 13, 2004, payable August 25, 2004.



Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations



Forward-Looking Statements



The following 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.



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 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, valuation of mortgage servicing rights, 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 2003 Annual Report on Form
10-K filed with the Securities and Exchange Commission.



Page 9



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)



EXECUTIVE OVERVIEW OF SECOND QUARTER RESULTS AND CURRENT TRENDS



Second quarter earnings experienced continued pressure from net interest
margin compression and a decline in mortgage refinancing activity. Net interest income continues to experience pressure caused by the current low interest rate environment. In addition, noninterest income has been hampered by a significant decline
in mortgage refinancing activity. Consequently, growth in net interest income and noninterest income has not been sufficient to offset the increase in operating expenses. Bancorporation expects that it will continue to experience margin compression
if interest rates remain at their current low levels.



Reference should be made
to the remainder of this Managements Discussion and Analysis and to the consolidated financial statements with respect to more detailed information about the financial condition and operating results of Bancorporation.



RESULTS OF OPERATIONS



Summary (Dollars in thousands)



Net income for the quarter and six months ended June 30, 2004 was $8,080 and $16,404,
respectively. Net income per common share (basic and diluted) was $8.90 and $18.05 for the quarter and six months ended June 30, 2004, respectively. Net income for the quarter and six months ended June 30, 2003 was $10,297 and $20,260, respectively.
Net income per common share (basic and diluted) was $11.31 and $22.22, respectively. The increase in net interest income during the quarter and six months ended June 30, 2004 was not sufficient to mitigate the increase in net noninterest expense
(noninterest income less noninterest expense). Consequently, net income is down for both comparable periods. See calculation of earnings per share in the Notes to the Consolidated Financial Statements.



Net interest income increased by $322 or by 0.86% over the comparable quarter in 2003
primarily due to earning asset growth. Earning asset growth was primarily attributable to internal growth. The effect of earning asset growth was significantly offset by the decline in the ratio of net interest income to average earning assets from
3.97% to 3.74% during the quarter.



Net interest income increased by $2,590 or
by 3.57% over the comparable six-month period in 2003 primarily due to internal growth in earning assets, as well as the First Banks acquisition on April 1, 2003. The effect of earning asset growth was significantly offset by the decline in the
ratio of net interest income to average earning assets from 4.02% to 3.76% during the comparable six-month period.



See Table 2 and Net interest income in Managements Discussion and Analysis of Financial Condition and Results of Operations for a detailed analysis and
discussion of net interest income.



For the quarter ended June 30, 2004,
noninterest income increased by $753, or by 5.03% over the comparable period in 2003, while noninterest expense increased by $3,978, or by 11.76% over the comparable period in 2003. Noninterest income increased by $613, or by 2.18%, while
noninterest expense increased by $8,477, or by 12.87% for the comparable six-month period. See Noninterest income and expense in Managements Discussion and Analysis of Financial Condition and Results of Operations for a detailed
discussion of noninterest income and expense.



Return on average
stockholders equity and average assets are key measures of earnings performance. Return on average stockholders equity for the quarters ended June 30, 2004 and June 30, 2003 was 9.27% and 12.99%, respectively. Return on average assets
decreased from 1.00% for the quarter ended June 30, 2003 to 0.73% for the quarter ended June 30, 2004.



Return on average stockholders equity for the six months ended June 30, 2004 and June 30, 2003 was 9.47% and 13.02%, respectively. Return on average assets decreased from 1.02% for the six months ended June 30,
2003 to 0.75% for the six months ended June 30, 2004.



The decline in return on
average assets and the decline in return on average stockholders equity for both periods was primarily due to net interest margin compression.



Page 10



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)



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



Table 1: Selected Summary Information (Dollars in thousands,
except per share data)



|                                                                        |  |                                          |           |   |                                             |   |           |      |  |   |           |   |  |   |           |  
|----------------------------------------------------------------------- |  | ---------------------------------------- | --------- | - | ------------------------------------------- | - | --------- | ---- |  | - | --------- | - |  | - | --------- | -
|                                                                        |  | AS OF AND FOR THE QUARTER ENDED JUNE 30, |           |   | AS OF AND FOR THE SIX MONTHS ENDED JUNE 30, |  
|                                                                        |  | 2004                                     |           |   | 2003                                        |   |           | 2004 |  |   | 2003      |  
|Selected ratios:                                                        |  |                                          |           |   |                                             |   |           |      |  |   |           |   |  |   |           |  
|Return on average assets                                                |  |                                          | 0.73      | % |                                             |   | 1.00      | %    |  |   | 0.75      | % |  |   | 1.02      | %
|Return on average stockholders equity                                  |  |                                          | 9.27      | % |                                             |   | 12.99     | %    |  |   | 9.47      | % |  |   | 13.02     | %
|Net interest income to average interest-earning assets (tax equivalent) |  |                                          | 3.74      | % |                                             |   | 3.97      | %    |  |   | 3.76      | % |  |   | 4.02      | %
|Average loans to average deposits                                       |  |                                          | 79.59     | % |                                             |   | 74.47     | %    |  |   | 78.69     | % |  |   | 73.66     | %
|Allowance for loan losses to total loans                                |  |                                          | 1.71      | % |                                             |   | 1.78      | %    |  |   | 1.71      | % |  |   | 1.78      | %
|Average stockholders equity to average total assets                    |  |                                          | 7.90      | % |                                             |   | 7.70      | %    |  |   | 7.88      | % |  |   | 7.87      | %
|Average common stockholders equity to average total assets             |  |                                          | 7.83      | % |                                             |   | 7.62      | %    |  |   | 7.81      | % |  |   | 7.79      | %
|                                                                        |  |                                          |           |  
|Dividends per common share                                              |  | $                                        | 0.35      |   |                                             | $ | 0.25      |      |  | $ | 0.70      |   |  | $ | 0.50      |  
|Total risk-based capital ratio                                          |  |                                          | 13.69     | % |                                             |   | 12.35     | %    |  |   | 13.69     | % |  |   | 12.35     | %
|Tier I risk-based capital ratio                                         |  |                                          | 12.03     | % |                                             |   | 10.38     | %    |  |   | 12.03     | % |  |   | 10.38     | %
|Tier I leverage ratio                                                   |  |                                          | 8.55      | % |                                             |   | 7.14      | %    |  |   | 8.55      | % |  |   | 7.14      | %
|                                                                        |  |                                          |           |  
|Selected average balances:                                              |  |                                          |           |   |                                             |   |           |      |  |   |           |   |  |   |           |  
|Total assets                                                            |  | $                                        | 4,438,984 |   |                                             | $ | 4,130,999 |      |  | $ | 4,420,678 |   |  | $ | 3,987,271 |  
|Interest-earning assets                                                 |  |                                          | 4,061,043 |   |                                             |   | 3,793,182 |      |  |   | 4,042,782 |   |  |   | 3,661,959 |  
|Investment securities                                                   |  |                                          | 904,207   |   |                                             |   | 947,474   |      |  |   | 913,320   |   |  |   | 929,595   |  
|Loans                                                                   |  |                                          | 3,016,043 |   |                                             |   | 2,648,775 |      |  |   | 2,983,888 |   |  |   | 2,528,637 |  
|Deposits                                                                |  |                                          | 3,789,529 |   |                                             |   | 3,556,858 |      |  |   | 3,791,960 |   |  |   | 3,432,643 |  
|Noninterest-bearing deposits                                            |  |                                          | 691,817   |   |                                             |   | 634,456   |      |  |   | 675,517   |   |  |   | 604,628   |  
|Interest-bearing deposits                                               |  |                                          | 3,097,712 |   |                                             |   | 2,922,402 |      |  |   | 3,116,443 |   |  |   | 2,828,015 |  
|Interest-bearing liabilities                                            |  |                                          | 3,371,086 |   |                                             |   | 3,149,516 |      |  |   | 3,370,777 |   |  |   | 3,040,634 |  
|Stockholders equity                                                    |  |                                          | 350,743   |   |                                             |   | 318,033   |      |  |   | 348,195   |   |  |   | 313,831   |  
|                                                                        |  |                                          |           |  
|Selected year-to-date balances:                                         |  |                                          |           |   |                                             |   |           |      |  |   |           |   |  |   |           |  
|Total assets                                                            |  | $                                        | 4,456,655 |   |                                             | $ | 4,146,843 |      |  | $ | 4,456,655 |   |  | $ | 4,146,843 |  
|Interest-earning assets                                                 |  |                                          | 4,068,485 |   |                                             |   | 3,779,835 |      |  |   | 4,068,485 |   |  |   | 3,779,835 |  
|Investment securities                                                   |  |                                          | 877,007   |   |                                             |   | 922,930   |      |  |   | 877,007   |   |  |   | 922,930   |  
|Loans                                                                   |  |                                          | 3,052,840 |   |                                             |   | 2,704,690 |      |  |   | 3,052,840 |   |  |   | 2,704,690 |  
|Deposits                                                                |  |                                          | 3,790,092 |   |                                             |   | 3,573,675 |      |  |   | 3,790,092 |   |  |   | 3,573,675 |  
|Noninterest-bearing deposits                                            |  |                                          | 695,824   |   |                                             |   | 660,173   |      |  |   | 695,824   |   |  |   | 660,173   |  
|Interest-bearing deposits                                               |  |                                          | 3,094,268 |   |                                             |   | 2,913,502 |      |  |   | 3,094,268 |   |  |   | 2,913,502 |  
|Interest-bearing liabilities                                            |  |                                          | 3,389,992 |   |                                             |   | 3,137,429 |      |  |   | 3,389,992 |   |  |   | 3,137,429 |  
|Stockholders equity                                                    |  |                                          | 345,831   |   |                                             |   | 320,827   |      |  |   | 345,831   |   |  |   | 320,827   |  



Page 11



---

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(continued)



Net interest income (Dollars in thousands)



Net interest income represents the principal source of earnings for Bancorporation. Tables 2 and 3 compare average balance sheet items and analyzes net interest income on a tax equivalent basis for the quarters and six months ended June 30,
2004 and 2003.



Table 2: Comparative Average Balance Sheets and Tax
Equivalent Rate/Volume Variance (Dollars in thousands)



AS OF AND FOR THE QUARTER ENDED JUNE 30,



|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|---------------------------------------------- |  | --------------- | --------- | ---------------- | - | ---------- |  | ---- | ----------------- | ---- | - | ----------------------- | ---- | ---- | - | ----------- | ---- | - | ------ | -- | ------ | - |  | - | ----- | - |  | - | ------ | -
|                                               |  | AVERAGE BALANCE |           | INTEREST/EXP (1) |   | YIELD/RATE |  |      | CHANGE DUE TO (2) |      |   | NET INCREASE (DECREASE) |     
|                                               |  | 2004            |           | 2003             |   | 2004       |  | 2003 |                   | 2004 |   |                         | 2003 |      |   | YIELD /RATE |      |   | VOLUME |    |       
|Interest-earning assets:                       |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Loans (3)                                      |  | $               | 3,016,043 |                  | $ | 2,648,775  |  | $    | 43,626            |      | $ | 43,522                  |      | 5.82 | % |             | 6.59 | % |        | $  | (5,240 | ) |  | $ | 5,344 |   |  | $ | 104    |  
|Investment securities:                         |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Taxable                                        |  |                 | 894,919   |                  |   | 933,869    |  |      | 4,894             |      |   | 6,674                   |      | 2.20 |   |             | 2.87 |   |        |    | (1,566 | ) |  |   | (214  | ) |  |   | (1,780 | )
|Non-taxable                                    |  |                 | 9,288     |                  |   | 13,605     |  |      | 147               |      |   | 205                     |      | 6.33 |   |             | 6.03 |   |        |    | 10     |   |  |   | (68   | ) |  |   | (58    | )
|Federal funds sold                             |  |                 | 140,793   |                  |   | 196,933    |  |      | 338               |      |   | 593                     |      | 0.97 |   |             | 1.21 |   |        |    | (119   | ) |  |   | (136  | ) |  |   | (255   | )
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Total interest-earning assets                  |  |                 | 4,061,043 |                  |   | 3,793,182  |  |      | 49,005            |      |   | 50,994                  |      | 4.85 |   |             | 5.39 |   |        |    | (6,915 | ) |  |   | 4,926 |   |  |   | (1,989 | )
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Noninterest-earning assets:                    |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Cash and due from banks                        |  |                 | 155,573   |                  |   | 138,957    |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Premises and equipment                         |  |                 | 144,978   |                  |   | 118,228    |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Other, less allowance for loan losses          |  |                 | 77,390    |                  |   | 80,632     |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Total noninterest-earning assets               |  |                 | 377,941   |                  |   | 337,817    |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Total assets                                   |  | $               | 4,438,984 |                  | $ | 4,130,999  |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Interest-bearing liabilities:                  |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Deposits                                       |  | $               | 3,097,712 |                  | $ | 2,922,402  |  | $    | 9,067             |      | $ | 11,648                  |      | 1.18 | % |             | 1.60 | % |        | $  | (3,098 | ) |  | $ | 517   |   |  | $ | (2,581 | )
|Securities sold under agreements to repurchase |  |                 | 170,797   |                  |   | 154,757    |  |      | 372               |      |   | 372                     |      | 0.88 |   |             | 0.96 |   |        |    | (35    | ) |  |   | 35    |   |  |   |       |  
|Long-term debt                                 |  |                 | 102,577   |                  |   | 72,357     |  |      | 1,767             |      |   | 1,452                   |      | 6.89 |   |             | 8.03 |   |        |    | (206   | ) |  |   | 521   |   |  |   | 315    |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Total interest-bearing liabilities             |  |                 | 3,371,086 |                  |   | 3,149,516  |  |      | 11,206            |      |   | 13,472                  |      | 1.34 |   |             | 1.72 |   |        |    | (3,339 | ) |  |   | 1,073 |   |  |   | (2,266 | )
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Noninterest-bearing liabilities:               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Demand deposits                                |  |                 | 691,817   |                  |   | 634,456    |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Other liabilities                              |  |                 | 25,338    |                  |   | 28,994     |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Total noninterest-bearing liabilities          |  |                 | 717,155   |                  |   | 663,450    |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Total liabilities                              |  |                 | 4,088,241 |                  |   | 3,812,966  |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Stockholders equity                           |  |                 | 350,743   |                  |   | 318,033    |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Total liabilities and stockholders equity     |  | $               | 4,438,984 |                  | $ | 4,130,999  |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Net interest spread                            |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      | 3.51 | % |             | 3.67 | % |        |    |        |   |  |   |       |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|Net interest income:                           |  |                 |           |                  |   |            |  | $    | 37,799            |      | $ | 37,522                  |      |      |   |             |      |   |        | ($ | 3,576  | ) |  | $ | 3,853 |   |  | $ | 277    |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|to average assets                              |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      | 3.42 | % |             | 3.64 | % |        |    |        |   |  |   |       |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  
|to average interest-earning assets             |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      | 3.74 | % |             | 3.97 | % |        |    |        |   |  |   |       |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |        |   |  |   |       |   |  |   |        |  

---

|(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 $204 and $249 for the quarters ended June 30, 2004 and 2003, 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.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------



Page 12



---

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)



Table 3: Comparative Average Balance Sheets and Tax Equivalent Rate/Volume Variance
(Dollars in thousands)



AS OF AND FOR THE SIX MONTHS
ENDED JUNE 30,



|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|---------------------------------------------- |  | --------------- | --------- | ---------------- | - | ---------- |  | ---- | ----------------- | ---- | - | ----------------------- | ---- | ---- | - | ----------- | ---- | - | ------ | -- | ------- | - |  | - | ------ | - |  | - | ------ | -
|                                               |  | AVERAGE BALANCE |           | INTEREST/EXP (1) |   | YIELD/RATE |  |      | CHANGE DUE TO (2) |      |   | NET INCREASE (DECREASE) |     
|                                               |  | 2004            |           | 2003             |   | 2004       |  | 2003 |                   | 2004 |   |                         | 2003 |      |   | YIELD /RATE |      |   | VOLUME |    |        
|Interest-earning assets:                       |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Loans (3)                                      |  | $               | 2,983,888 |                  | $ | 2,528,637  |  | $    | 86,836            |      | $ | 83,879                  |      | 5.85 | % |             | 6.69 | % |        | $  | (10,359 | ) |  | $ | 13,316 |   |  | $ | 2,957  |  
|Investment securities:                         |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Taxable                                        |  |                 | 903,201   |                  |   | 916,850    |  |      | 10,094            |      |   | 13,662                  |      | 2.25 |   |             | 3.00 |   |        |    | (3,414  | ) |  |   | (154   | ) |  |   | (3,568 | )
|Non-taxable                                    |  |                 | 10,119    |                  |   | 12,745     |  |      | 329               |      |   | 423                     |      | 6.50 |   |             | 6.64 |   |        |    | (9      | ) |  |   | (85    | ) |  |   | (94    | )
|Federal funds sold                             |  |                 | 145,574   |                  |   | 203,727    |  |      | 697               |      |   | 1,219                   |      | 0.96 |   |             | 1.21 |   |        |    | (243    | ) |  |   | (279   | ) |  |   | (522   | )
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Total interest-earning assets                  |  |                 | 4,042,782 |                  |   | 3,661,959  |  |      | 97,956            |      |   | 99,183                  |      | 4.87 |   |             | 5.46 |   |        |    | (14,025 | ) |  |   | 12,798 |   |  |   | (1,227 | )
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Noninterest-earning assets:                    |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Cash and due from banks                        |  |                 | 158,342   |                  |   | 141,753    |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Premises and equipment                         |  |                 | 141,917   |                  |   | 114,786    |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Other, less allowance for loan losses          |  |                 | 77,637    |                  |   | 68,773     |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Total noninterest-earning assets               |  |                 | 377,896   |                  |   | 325,312    |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Total assets                                   |  | $               | 4,420,678 |                  | $ | 3,987,271  |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Interest-bearing liabilities:                  |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Deposits                                       |  | $               | 3,116,443 |                  | $ | 2,828,015  |  | $    | 18,438            |      | $ | 22,842                  |      | 1.19 | % |             | 1.63 | % |        | $  | (6,120  | ) |  | $ | 1,716  |   |  | $ | (4,404 | )
|Securities sold under agreements to repurchase |  |                 | 166,867   |                  |   | 149,822    |  |      | 681               |      |   | 733                     |      | 0.82 |   |             | 0.99 |   |        |    | (122    | ) |  |   | 70     |   |  |   | (52    | )
|Long-term debt                                 |  |                 | 87,467    |                  |   | 62,797     |  |      | 3,259             |      |   | 2,532                   |      | 7.45 |   |             | 8.06 |   |        |    | (192    | ) |  |   | 919    |   |  |   | 727    |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Total interest-bearing liabilities             |  |                 | 3,370,777 |                  |   | 3,040,634  |  |      | 22,378            |      |   | 26,107                  |      | 1.33 |   |             | 1.73 |   |        |    | (6,434  | ) |  |   | 2,705  |   |  |   | (3,729 | )
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Noninterest-bearing liabilities:               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Demand deposits                                |  |                 | 675,517   |                  |   | 604,628    |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Other liabilities                              |  |                 | 26,189    |                  |   | 28,178     |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Total noninterest-bearing liabilities          |  |                 | 701,706   |                  |   | 632,806    |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Total liabilities                              |  |                 | 4,072,483 |                  |   | 3,673,440  |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Stockholders equity                           |  |                 | 348,195   |                  |   | 313,831    |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Total liabilities and stockholders equity     |  | $               | 4,420,678 |                  | $ | 3,987,271  |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Net interest spread                            |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      | 3.54 | % |             | 3.73 | % |        |    |         |   |  |   |        |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|Net interest income:                           |  |                 |           |                  |   |            |  | $    | 75,578            |      | $ | 73,076                  |      |      |   |             |      |   |        | ($ | 7,591   | ) |  | $ | 10,093 |   |  | $ | 2,502  |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|to average assets                              |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      | 3.44 | % |             | 3.70 | % |        |    |         |   |  |   |        |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  
|to average interest-earning assets             |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      | 3.76 | % |             | 4.02 | % |        |    |         |   |  |   |        |   |  |   |        |  
|                                               |  |                 |           |                  |   |            |  |      |                   |      |   |                         |      |      |   |             |      |   |        |    |         |   |  |   |        |   |  |   |        |  

---



|(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 $430 and $518 for the six months ended June 30, 2004 and 2003, respectively.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

|(4) | Nonaccrual loans are included in the average loan balances. Interest income on nonaccrual loans is generally recognized on a cash basis.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------





Page 13



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(continued)



Net interest income (continued)



Current quarter compared to prior year quarter



Net
interest income on a tax equivalent basis increased $277 or 0.74% for the quarter ended June 30, 2004, over the comparable period in 2003. The increase in net interest income was due to 7.06% earning asset growth during the comparable periods,
partially offset by a decline in the ratio of net interest income to average interest-earning assets.



Net interest income to average interest-earning assets decreased from 3.97% for the quarter ended June 30, 2003 to 3.74% for the quarter ended June 30, 2004. This was primarily attributable to a decrease in the net
interest spread from 3.67% for the quarter ended June 30, 2003 to 3.51% for the quarter ended June 30, 2004. The decrease in the net interest spread was due to the decrease in the ratio of interest income to interest-earning assets exceeding the
decrease in the ratio of interest expense to interest-bearing liabilities. The yield on interest-earning assets decreased from 5.39% for the quarter ended June 30, 2003 to 4.85% for the quarter ended June 30, 2004, or by 54 basis points, while the
cost of interest-bearing liabilities decreased from 1.72% to 1.34%, or by 38 basis points. The decrease in the yield on interest-earning assets was primarily due to decreases in the yields on loans (from 6.59% for the quarter ended June 30, 2003 to
5.82% for the quarter ended June 30, 2004) and investment securities (from 2.91% for the quarter ended June 30, 2003 to 2.24% for the quarter ended June 30, 2004). The decrease in the cost of interest-bearing liabilities was primarily due to a
decrease in the rates paid on interest-bearing deposits (from 1.60% for the quarter ended June 30, 2003 to 1.18% for the quarter ended June 30, 2004). Decreases in yields on interest-earning assets have occurred as rates have declined significantly
on new loans and investments added to replace those that were refinanced or called away, respectively. Decreases in rates paid on interest-bearing deposits are primarily due to lower rates paid on new and matured time deposits.



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



Net interest income on a tax equivalent basis increased $2,502 or 3.42% for the six
months ended June 30, 2004, over the comparable period in 2003. The increase in net interest income was due to 10.40% earning asset growth during the comparable periods, partially offset by a decline in net interest income to average
interest-earning assets.



Net interest income to average interest-earning
assets decreased from 4.02% for the six months ended June 30, 2003 to 3.76% for the six months ended June 30, 2004. This was primarily attributable to a decrease in the net interest spread from 3.73% for the six months ended June 30, 2003 to 3.54%
for the six months ended June 30, 2004. The decrease in the net interest spread was due to the decrease in the ratio of interest income to interest-earning assets exceeding the decrease in the ratio of interest expense to interest-bearing
liabilities. The yield on interest-earning assets decreased from 5.46% for the six months ended June 30, 2003 to 4.87% for the six months ended June 30, 2004, or by 59 basis points, while the cost of interest-bearing liabilities decreased from 1.73%
to 1.33%, or by 40 basis points. The decrease in the yield on interest-earning assets was primarily due to decreases in the yields on loans (from 6.69% for the six months ended June 30, 2003 to 5.85% for the six months ended June 30, 2004) and
investment securities (from 3.06% for the six months ended June 30, 2003 to 2.30% for the six months ended June 30, 2004). The decrease in the cost of interest-bearing liabilities was primarily due to a decrease in the rates paid on interest-bearing
deposits (from 1.63% for the six months ended June 30, 2003 to 1.19% for the six months ended June 30, 2004). Decreases in yields on interest-earning assets have occurred as rates have declined significantly on new loans and investments added to
replace those that were refinanced or called away, respectively. Decreases in rates paid on interest-bearing deposits are primarily due to lower rates paid on new and matured time deposits.



Page 14



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(continued)



Noninterest income and expense (Dollars in thousands)



Current quarter compared to prior year quarter



Noninterest income increased by $753 or by 5.03% for the quarter ended June 30, 2004, compared to the same period in 2003. Mortgage income increased by $1,015 or by 80.75% primarily due to the recapture of impairment
on mortgage servicing rights as a result of increased mortgage interest rates since the first quarter 2004. The increase in mortgage income included a $2,568 increase in servicing income and a $1,553 decrease in the gain on sale of mortgage loans
held for sale. Servicing income benefited from the recapture of mortgage servicing rights impairment of $1,216 for the quarter ended June 30, 2004, compared to a $1,372 impairment charge for the quarter ended June 30, 2003. Adjusting for mortgage
servicing rights recapture recorded during the quarter ended June 30, 2004 and impairment recorded during the quarter ended June 30, 2003, mortgage income would have been down $1,572 for the quarter ended June 30, 2004. The decline in the gain on
sale of mortgage loans held for sale was primarily due to a decline in the volume of mortgage loans originated and sold into the secondary market during the quarter. Originations of mortgage loans held for sale declined by $73,917, or by 54.71% for
the comparable quarter of 2003.



Noninterest expense increased by $3,978, or by
11.76% for the quarter ended June 30, 2004 over the comparable period in 2003 due to increases in salaries and employee benefits, costs associated with the introduction of First Citizens new brand, amortization expense related to core deposit
intangibles, and in other operating expenses as a result of the on-going growth of the franchise. Salaries and employee benefits increased by $755, or by 4.28%, during the quarter primarily due to an increase in the number of employees (primarily
due to new branch offices) and merit increases. During the quarter, expense of $1,017 was incurred relating to the promotion of First Citizens new brand. These costs are included in the Other category under noninterest expense in
the Consolidated Statements of Income. Amortization expense related to core deposit intangibles increased by $403, or by 21.80% during the quarter primarily due to acquisitions consummated after the second quarter of 2003. The remainder of
noninterest expense increased primarily due to increases in occupancy (primarily depreciation expense discussed in Premises and equipment in Financial Condition below), furniture and fixtures, and data processing expenses. These costs
increased primarily due to expansion through acquisitions and construction of new branch offices and an increase in the number of accounts processed by third parties.



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



Noninterest income increased by $613 or by 2.18% for the six months ended June 30, 2004,
compared to the same period in 2003. Service charges on deposits increased by $532 or by 3.12% over the comparable period primarily due to overall deposit growth. Gain on sale of investment securities increased by $132. These increases were offset
by a $273 decrease in mortgage income primarily due to a decline in mortgage refinancing activity during the first six months of 2004. The decrease in mortgage income included a $2,673 decrease in the gain on sale of mortgage loans held for sale.
Servicing income was reduced by amortization expense on mortgage servicing rights of $275 and $2,666 for the six months ended June 30, 2004 and 2003 respectively. Adjusting for mortgage servicing rights recapture recorded during the six months ended
June 30, 2004 and impairment recorded during the six months ended June 30, 2003, mortgage income would have been down $2,754 for the six months ended June 30, 2004. The decline in the gain on sale of mortgage loans held for sale was primarily due to
a decline in the volume of mortgage loans originated and sold into the secondary market during the six months. Originations of mortgage loans held for sale declined by $154,753, or by 59.21% during the six months ended June 30, 2004.



Noninterest expense increased by $8,477, or by 12.87%, for the six months
ended June 30, 2004 over the comparable period in 2003 primarily due to increases in salaries and employee benefits, costs associated with the introduction of First Citizens new brand, amortization expense related to core deposit intangibles,
and in other operating expenses as a result of the on-going growth of the franchise. Salaries and employee benefits increased by $2,304, or by 6.70%, during the six months primarily due to an increase in the number of employees (primarily due to new
branch offices) and merit increases. During the six months ended June 30, 2004, expense of $2,078 was incurred relating to the introduction of First Citizens new brand. The majority of these costs related to promotion of the new brand and the
write-off of existing signage. These costs are included in the Other category under noninterest expense in the Consolidated Statements of Income. Amortization expense related to core deposit intangibles increased by $841, or 22.88%
during the six months ended June 30, 2004 primarily due to acquisitions consummated after June 30, 2003. The remainder of the increase in noninterest expense was primarily due to increases in occupancy (primarily depreciation expense discussed in
Premises and equipment in Financial Condition below), furniture and fixtures and data processing expenses. These costs increased primarily due to expansion through acquisitions and construction of new branch offices and an increase in
the number of accounts processed by third parties.



Page 15



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)



Income taxes (Dollars in thousands)



Total income tax expense decreased by $1,263 or 22.19% for the quarter ended June 30, 2004
compared to the same period in 2003. Total income tax expense decreased by $2,211 or 19.74% for the six months ended June 30, 2004 compared to the same period in 2003. The effective tax rate was 35.40% and 35.60% for the quarters and six months
ending June 30, 2004 and June 30, 2003, respectively.



FINANCIAL CONDITION



Investment securities (Dollars in
thousands)



As of June 30, 2004, the investment portfolio totaled
$877,007, compared to $922,229 at December 31, 2003 (a decrease of 4.90%) and $922,930 at June 30, 2003 (a decrease of 4.98%), respectively. Bancorporation continues to invest primarily in short-term U.S. government obligations and agency securities
to minimize credit, interest rate and liquidity risks. The investment portfolio consisted of 91.71%, 92.16% and 92.46% U.S. government and agency securities as of June 30, 2004, December 31, 2003, and June 30, 2003, respectively. The remainder of
the investment portfolio consisted of municipal bonds and equity securities.



Loans (Dollars in thousands)



As of June 30, 2004, loans
totaled $3,052,840, compared to $2,939,989 at December 31, 2003 (an increase of 3.84%) and $2,704,690 at June 30, 2003 (an increase of 12.87%), respectively. Most of the growth in loans was experienced in the commercial and consumer direct loan
portfolios. The composition of the loan portfolio has not shifted significantly since June 30, 2003 or December 31, 2003. Loan growth was funded through core deposits and short-term borrowed funds in the form of repurchase agreements with customers.



Allowance for loan losses and asset quality (Dollars in thousands)



Bancorporations allowance for loan losses represented 1.71% of
gross loans at June 30, 2004, compared to 1.74% at December 31, 2003 and 1.78% at June 30, 2003. The percentage is unchanged from the previous quarter. Provision for loan losses of $3,002 was charged to operations for the quarter ended June 30, 2004
compared to $2,425 for the quarter ended June 30, 2003, an increase of 23.79%. Provision for loan losses of $4,156 was charged to operations for the six months ended June 30, 2004 compared to $3,363 for the six months ended June 30, 2003, an
increase of 23.58%. The increases were primarily due to increases in the dollar amount of net charge-offs for the quarter and six months ended June 30, 2004. The ratio of net charge-offs to total loans remained relatively stable. Overall, credit
quality remained strong during the quarter.



Bancorporation believes that its
allowance for loan losses is adequate to cover losses inherent in its portfolio at June 30, 2004. Management believes that the provision taken during the quarter ended June 30, 2004 was appropriate to provide an allowance for loan losses which
considers the past experience and current trend of charge-offs, the level of past due and nonaccrual loans, the size and mix of the loan portfolio, credit classifications and general economic conditions affecting Bancorporations market areas.



Page 16



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)





An analysis
of activity in the allowance for loan losses as of June 30, 2004 and 2003 is presented below. The allowance for loan losses is maintained through charges to the provision for loan losses. Loan charge-offs and recoveries are charged or credited
directly to the allowance for loan losses.



|                                                        |  |                                        |        |   |                                           |   |        |      |  |   |        |   |  |   |        |  
|------------------------------------------------------- |  | -------------------------------------- | ------ | - | ----------------------------------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                                        |  | AS OF AND FORTHE QUARTERENDED JUNE 30, |        |   | AS OF AND FORTHE SIX MONTHSENDED JUNE 30, |  
|                                                        |  | 2004                                   |        |   | 2003                                      |   |        | 2004 |  |   | 2003   |  
|Allowance for loan losses:                              |  |                                        |        |   |                                           |   |        |      |  |   |        |   |  |   |        |  
|Balance at beginning of period                          |  | $                                      | 50,892 |   |                                           | $ | 43,304 |      |  | $ | 51,268 |   |  | $ | 43,305 |  
|Addition related to acquisitions                        |  |                                        |       |   |                                           |   | 3,776  |      |  |   |       |   |  |   | 3,776  |  
|Provision for loan losses                               |  |                                        | 3,002  |   |                                           |   | 2,425  |      |  |   | 4,156  |   |  |   | 3,363  |  
|                                                        |  |                                        |        |   |                                           |   |        |      |  |   |        |   |  |   |        |  
|Charge-offs                                             |  |                                        | (2,295 | ) |                                           |   | (1,796 | )    |  |   | (4,178 | ) |  |   | (3,257 | )
|Recoveries                                              |  |                                        | 589    |   |                                           |   | 411    |      |  |   | 942    |   |  |   | 933    |  
|                                                        |  |                                        |        |   |                                           |   |        |      |  |   |        |   |  |   |        |  
|Net charge-offs                                         |  |                                        | (1,706 | ) |                                           |   | (1,385 | )    |  |   | (3,236 | ) |  |   | (2,324 | )
|                                                        |  |                                        |        |   |                                           |   |        |      |  |   |        |   |  |   |        |  
|Balance at end of period                                |  | $                                      | 52,188 |   |                                           | $ | 48,120 |      |  | $ | 52,188 |   |  | $ | 48,120 |  
|                                                        |  |                                        |        |   |                                           |   |        |      |  |   |        |   |  |   |        |  
|Nonperforming assets:                                   |  |                                        |        |   |                                           |   |        |      |  |   |        |   |  |   |        |  
|Nonperforming loans                                     |  | $                                      | 6,623  |   |                                           | $ | 5,674  |      |  | $ | 6,623  |   |  | $ | 5,674  |  
|Foreclosed real estate                                  |  |                                        | 3,421  |   |                                           |   | 2,119  |      |  |   | 3,421  |   |  |   | 2,119  |  
|                                                        |  |                                        |        |   |                                           |   |        |      |  |   |        |   |  |   |        |  
|Total nonperforming assets                              |  | $                                      | 10,044 |   |                                           | $ | 7,793  |      |  | $ | 10,044 |   |  | $ | 7,793  |  
|                                                        |  |                                        |        |   |                                           |   |        |      |  |   |        |   |  |   |        |  
|Asset quality ratios:                                   |  |                                        |        |   |                                           |   |        |      |  |   |        |   |  |   |        |  
|Nonperforming loans to total loans                      |  |                                        | .22    | % |                                           |   | .21    | %    |  |   | .22    | % |  |   | .21    | %
|Nonperforming assets to total assets                    |  |                                        | .23    | % |                                           |   | .19    | %    |  |   | .23    | % |  |   | .19    | %
|Annualized net charge-offs to average loans             |  |                                        | .23    | % |                                           |   | .21    | %    |  |   | .22    | % |  |   | .18    | %
|Annualized net charge-offs to total loans               |  |                                        | .22    | % |                                           |   | .20    | %    |  |   | .21    | % |  |   | .17    | %
|Allowance for loan losses to annualized net charge-offs |  |                                        | 7.65   | x |                                           |   | 8.69   | x    |  |   | 8.06   | x |  |   | 10.35  | x
|Allowance for loan losses to nonperforming loans        |  |                                        | 7.88   | x |                                           |   | 8.48   | x    |  |   | 7.88   | x |  |   | 8.48   | x



First Banks (acquired on April 1,
2003) contributed $554 of the increase in charge-offs and $109 of the increase in recoveries for the six months ended June 30, 2004 compared to $73 of the increase in charge-offs and $8 of the increase in recoveries for the six months ended June 30,
2003.



Premises and equipment (Dollars in thousands)



As of June 30, 2004, premises and equipment totaled $148,867, compared to $134,756 at
December 31, 2003 (an increase of 10.47%) and $119,954 at June 30, 2003 (an increase of 24.10%), respectively. The increase from June 30, 2003 to June 30, 2004 was primarily due to acquisitions after June 30, 2003 and construction of new branch
offices. Provisions for depreciation included in noninterest expense were $2,893 and $2,330 for the quarters ended June 30, 2004 and 2003, respectively. Provisions for depreciation included in noninterest expense were $5,775 and $4,569 for the six
months ended June 30, 2004 and 2003, respectively.



Funding sources (Dollars
in thousands)



Bancorporations primary source of funds is its
deposit base. As of June 30, 2004, deposits totaled $3,790,092, compared to $3,714,222 at December 31, 2003 ( an increase of 2.04%) and $3,573,675 at June 30, 2003 (an increase of 6.06%), respectively. Of the growth from June 30, 2003 to June 30,
2004, $69,616 was due to acquisitions completed during 2003. Most of the growth in deposits was experienced in NOW accounts, time deposits and money market demand accounts. Average deposits were $3,791,960 and $3,432,643 at June 30, 2004 and June
30, 2003, respectively.



Short-term borrowings in the form of securities sold
under agreements to repurchase are another source of funds. As of June 30, 2004, short-term borrowings totaled $170,363, compared to $148,864 at December 31, 2003 (an increase of 14.44%) and $151,570 at June 30, 2003 (an increase of 12.40%),
respectively. Average short-term borrowings were $166,867 and $149,822 at June 30, 2004 and June 30, 2003, respectively.



Capital resources



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



Page 17



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)



Tier I capital (common shareholders equity excluding unrealized gains or losses of
securities available-for-sale, net of deferred taxes, less nonqualifying intangible assets) is required to be at least 4% of risk-weighted assets, and total regulatory 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 ratio of 6%, a total capital ratio of 10% and Tier I leverage ratio of 5% are considered well-capitalized by regulatory standards.



The following table details Bancorporations capital ratios at June 30, 2004 and 2003.



|                           |  |                |   |  |       |  
|-------------------------- |  | -------------- | - |  | ----- | -
|                           |  | AS OF JUNE 30, |  
|                           |  | 2004           |   |  | 2003  |  
|Risk-based capital ratios: |  |                |   |  |       |  
|Total capital              |  | 13.69          | % |  | 12.35 | %
|Tier I capital             |  | 12.03          | % |  | 10.38 | %
|Tier I leverage ratio      |  | 8.55           | % |  | 7.14  | %



Repurchases of equity securities
(Dollars in thousands, except average price per share data)



The following
table contains information regarding repurchases by Bancorporation of shares of its outstanding voting common stock during the quarter ended June 30, 2004.



|                               |  |                                      |  |                            |  |                                                                  |  |                                                               
|------------------------------ |  | ------------------------------------ |  | -------------------------- |  | ---------------------------------------------------------------- |  | --------------------------------------------------------------
|Period                         |  | Total Numberof SharesRepurchased (1) |  | Average PricePaid perShare |  | Total Number ofSharesPurchased asPart of PubliclyAnnounced Plans |  | MaximumNumber of Sharesthat may yet bePurchased Underthe Plans
|Month #4                       |  |                                      |  |                            |  |                                                                  |  |                                                               
|April 1 through April 30, 2004 |  |                                     |  | N/A                        |  | N/A                                                              |  | N/A                                                           
|Month #5:                      |  |                                      |  |                            |  |                                                                  |  |                                                               
|May 1 through May 31, 2004     |  | 156                                  |  | 515.00                     |  | N/A                                                              |  | N/A                                                           
|Month #6:                      |  |                                      |  |                            |  |                                                                  |  |                                                               
|June 1 through June 30, 2004   |  | 2,102                                |  | 516.79                     |  | N/A                                                              |  | N/A                                                           
|                               |  |                                      |  |                            |  |                                                                  |  |                                                               
|Total                          |  | 2,258                                |  | 516.66                     |  |                                                                  |  |                                                               
|                               |  |                                      |  |                            |  |                                                                  |  |                                                               

---

|(1) | All purchases were made pursuant to general authority that is given each year by Bancorporations Board of Directors and not pursuant to a formal repurchase plan or program.
Under that authority, Bancorporation is authorized 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. Under similar authority during the six months ended
June 30, 2004 and June 30, 2003, Bancorporation repurchased an aggregate of 3,530 and 3,443 shares of its voting common stock for an aggregate price of $1,846 and $1,337 respectively.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



With respect to other classes of Bancorporations capital stock, there were no
repurchases during the quarter ended June 30, 2004 and aggregate repurchases during the quarter ended June 30, 2003 totaled 1,242 shares for an aggregate repurchase price of $41. Repurchases of shares during both periods had an immaterial impact on
Bancorporations capital.



Item 3. Quantitative and Qualitative
Disclosures about Market Risk



There have been no material changes in
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, 2003.



Page 18



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MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (continued)



Item 4. Controls and Procedures



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



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



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



There were no changes in Bancorporations internal control over financial reporting that occurred during our most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect, Bancorporations internal control over financial reporting.



PART II - OTHER INFORMATION



Item 1. Legal Proceedings



Not Applicable.



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



The information required by Item 703 of Regulation S-K regarding Bancorporations repurchases of equity securities is incorporated herein by reference to the
information in Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operation under the caption Repurchases of equity securities on page 18 of this report.



Item 3. Defaults upon Senior Securities



Not Applicable.



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



The annual meeting of shareholders of Bancorporation was held on April 22, 2004. At the meeting, Shareholders voted to elect 20 directors
for terms of one year or until their respective successors are duly elected and qualified. The 20 Nominees, listed below, were elected as Directors for a term of 1 year.



|                     |  |         |  |          |  |                 
|-------------------- |  | ------- |  | -------- |  | ----------------
|Nominees             |  | For     |  | Withheld |  | Broker Non-Votes
|C.H. Ames            |  | 849,152 |  | 305      |  |                
|J.B. Apple           |  | 849,152 |  | 305      |  |                
|R.W. Blackmon        |  | 848,861 |  | 340      |  | 256             
|P.M. Bristow         |  | 849,152 |  | 305      |  |                
|G.H. Broadrick       |  | 846,894 |  | 340      |  | 2,223           
|W.C. Cottingham      |  | 849,117 |  | 340      |  |                
|D.E. Dukes           |  | 848,896 |  | 305      |  | 256             
|M.C. Garner, Jr.     |  | 848,896 |  | 305      |  | 256             
|W.E. Hancock, III    |  | 849,142 |  | 350      |  |                
|R.B. Haynes          |  | 849,152 |  | 305      |  |                
|W.E. Haynes          |  | 849,152 |  | 305      |  |                
|L.M. Henderson       |  | 848,896 |  | 305      |  | 256             
|F.B. Holding         |  | 847,475 |  | 340      |  | 1,967           
|D.H. Jordan          |  | 848,861 |  | 340      |  | 256             
|K.B. Marsh           |  | 848,896 |  | 305      |  | 256             
|C.S. McLaurin, III   |  | 848,896 |  | 305      |  | 256             
|N.W. Morrisette, Jr. |  | 848,861 |  | 340      |  | 256             
|E.P. Palmer          |  | 849,117 |  | 340      |  |                
|W.E. Sellars         |  | 846,894 |  | 305      |  | 2,223           
|H.F. Sherrill        |  | 846,894 |  | 340      |  | 2,223           



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



Item 5. Other Information



Not Applicable.



Item 6. Exhibits and Reports on Form 8-K



|    |  |                                                                                                                                                                                                                                                               |  |                                                                                                                                                                          
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) |  | Exhibits  The following exhibits are either attached hereto or incorporated by reference:                                                                                                                                                                   
|    |  |                                                                                                                                                                                                                                                              
|    |  | 4.1                                                                                                                                                                                                                                                           |  | Amended and Restated Trust Agreement of FCB/SC Capital Trust II (filed herewith)                                                                                         
|    |  | 4.2                                                                                                                                                                                                                                                           |  | Form of Guaranty Agreement between Bancorporation, as Guarantor, and Deutsche Bank Trust Company Americas, as Guarantee Trustee, dated as of May 7, 2004 (filed herewith)
|    |  | 4.3                                                                                                                                                                                                                                                           |  | Junior Subordinated Indenture between Bancorporation and Deutsche Bank Trust Company Americas, as Debenture Trustee, dated as of May 7, 2004 (filed herewith)            
|    |  | 4.4                                                                                                                                                                                                                                                           |  | Form of Certificate evidencing trust preferred securities issued by FCB/SC Capital Trust II (filed herewith)                                                             
|    |  | 4.5                                                                                                                                                                                                                                                           |  | Form of Junior Subordinated Debentures issued by Bancorporation to FCB/SC Capital Trust II (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)                                                                                                      
|    | 
|(b) |  | The following Form 8-Ks were filed or furnished during the quarter ended June 30, 2004.                                                                                                                                                                     
|    | 
|    |  | Form 8-K furnished on April 23, 2004, reporting that Bancorporation had announced its results of operations for the year and quarter ended March 31, 2004.                                                                                                   
|    | 
|    |  | Form 8-K furnished on April 27, 2004, announcing that Bancorporations wholly-owned subsidiary, First Citizens Bank and Trust Company, Inc., plans to build a nine-story
corporate headquarters complex.                                                     
|    | 
|    |  | Form 8-K furnished on May 7, 2004, announcing that Bancorporation had completed the private placement of $50 million aggregate liquidation amount of floating rate trust preferred
securities issued by its newly formed subsidiary, FCB/SC Capital Trust II.



Page 20



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SIGNATURES



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



|                      |  |                                     |  |                        
|--------------------- |  | ----------------------------------- |  | -----------------------
|                      |  | FIRST CITIZENS BANCORPORATION, INC.
|                      |  | (Registrant)                       
|                      |  |                                    
|Dated: August 9, 2004 |  |                                     |  |                        
|                      |  | By:                                 |  | /s/ Craig L. Nix       
|                      |  |                                     |  | Craig L. Nix           
|                      |  |                                     |  | Chief Financial Officer



Page 21



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EXHIBIT INDEX



|     |  |                                                                                                                                                                          
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.1  |  | Amended and Restated Trust Agreement of FCB/SC Capital Trust II (filed herewith)                                                                                         
|     | 
|4.2  |  | Form of Guaranty Agreement between Bancorporation, as Guarantor, and Deutsche Bank Trust Company Americas, as Guarantee Trustee, dated as of May 7, 2004 (filed herewith)
|     | 
|4.3  |  | Junior Subordinated Indenture between Bancorporation and Deutsche Bank Trust Company Americas, as Debenture Trustee, dated as of May 7, 2004 (filed herewith)            
|     | 
|4.4  |  | Form of Certificate evidencing trust securities issued by FCB/SC Capital Trust II (filed herewith)                                                                       
|     | 
|4.5  |  | Form of Junior Subordinated Debentures issued by Bancorporation to FCB/SC Capital Trust II (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)                                                                                                      



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