Notes to Consolidated Financial Statements

(Dollars in thousands, except per share amounts)

Note A

Accounting Policies and Other Matters

The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information.  Accordingly, they do not include all of the information and notes required by accounting principles generally accepted in the United States of America for complete financial statements.

In the opinion of management, the consolidated financial statements contain all material adjustments necessary to present fairly the financial position of First Citizens BancShares, Inc. as of and for each of the periods presented, and all such adjustments are of a normal recurring nature.  The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period.  Actual results could differ from those estimates.

These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes included in the 2007 First Citizens BancShares, Inc. Form 10-K.  Certain amounts for prior periods have been reclassified to conform with statement presentations for 2008.  However, the reclassifications have no effect on shareholders’ equity or net income as previously reported.

At March 31, 2008, loans totaling $1,315,382 were pledged to secure debt obligations, compared to $265,548 at March 31, 2007.  ISB's home equity loans and residential mortgage loans were pledged to the Federal Home Loan Bank of Atlanta (FHLB) during both periods.  For March 31, 2008, ISB had also pledged its commercial real estate loans to the FHLB.

Note B

Operating Segments

BancShares conducts its banking operations through its two wholly-owned subsidiaries, First-Citizens Bank & Trust Company (FCB) and IronStone Bank (ISB).  Although FCB and ISB offer similar products and services to customers, each entity operates in distinct geographic markets and each entity operates under a separate charter.  The financial results and trends of ISB reflect the impact of the de novo nature of its growth.

 

FCB is a mature banking institution that operates under a state bank charter from its branch network in North Carolina, Virginia, West Virginia, Maryland and Tennessee.  ISB began operations in 1997 and currently operates in Georgia, Florida, Texas, Arizona, California, New Mexico, Colorado, Oregon and Washington under a federal thrift charter.

 

In the aggregate, FCB and its consolidated subsidiaries, which are integral to its branch operation, and ISB account for more than 90 percent of consolidated assets, revenues and net income.  Other includes activities of the parent company and Neuse, Incorporated, a subsidiary that owns real property used in the banking operation.

 

The adjustments in the accompanying tables represent the elimination of the impact of certain inter-company transactions.  The adjustments to interest income and interest expense neutralize the earnings and cost of inter-company borrowings.  The adjustments to noninterest income and noninterest expense reflect the elimination of management fees and other service fees paid by one company to another within BancShares’ consolidated group.

 

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		March 31, 2008
		ISB				FCB				Other				Total				Adjustments				Consolidated
		(thousands)
Interest income		$	35,899			$	178,948			$	8,410			$	223,257			$	(5,854	)		$	217,403
Interest expense			20,002				69,587				11,091				100,680				(5,854	)			94,826
Net interest income			15,897				109,361				(2,681	)			122,577				-				122,577
Provision for credit losses			5,716				4,402				-				10,118				-				10,118
Net interest income after provision for credit losses			10,181				104,959				(2,681	)			112,459				-				112,459
Noninterest income			3,133				83,189				(1	)			86,321				(2,653	)			83,668
Noninterest expense			20,658				127,012				624				148,294				(2,653	)			145,641
Income (loss) before income taxes			(7,344	)			61,136				(3,306	)			50,486				-				50,486
Income tax expense (credit)			(2,763	)			22,018				(1,154	)			18,101				-				18,101
Net income (loss)		$	(4,581	)		$	39,118			$	(2,152	)		$	32,385			$	-			$	32,385
At March 31, 2008:
Total assets		$	2,661,988			$	13,930,381			$	2,691,191			$	19,283,560			$	(2,537,042	)		$	16,746,518
Loans and leases			2,129,561				8,900,376				-				11,029,937				-				11,029,937
Allowance for loan and lease losses			27,715				113,876				-				141,591				-				141,591
Deposits			2,070,666				11,209,084				-				13,279,750				(52,759	)			13,226,991
		March 31, 2007
		ISB				FCB				Other				Total				Adjustments				Consolidated
		(thousands)
Interest income		$	33,808			$	181,867			$	9,851			$	225,526			$	(7,889	)		$	217,637
Interest expense			17,935				76,123				13,279				107,337				(7,889	)			99,448
Net interest income			15,873				105,744				(3,428	)			118,189				-				118,189
Provision for credit losses			318				3,214				-				3,532				-				3,532
Net interest income after provision for credit losses			15,555				102,530				(3,428	)			114,657				-				114,657
Noninterest income			3,201				69,022				(127	)			72,096				(3,065	)			69,031
Noninterest expense			19,105				122,436				119				141,660				(3,065	)			138,595
Income (loss) before income taxes			(349	)			49,116				(3,674	)			45,093				-				45,093
Income tax expense (credit)			(83	)			17,463				(1,271	)			16,109				-				16,109
Net income (loss)		$	(266	)		$	31,653			$	(2,403	)		$	28,984			$	-			$	28,984
At March 31, 2007:
Total assets		$	2,225,229			$	13,359,371			$	2,438,870			$	18,023,470			$	(2,169,692	)		$	15,853,778
Loans and leases			1,881,368				8,380,988				-				10,262,356				-				10,262,356
Allowance for loan and lease losses			22,580				110,060				-				132,640				-				132,640
Deposits			1,826,095				10,935,271				-				12,761,366				(38,834	)			12,722,532

 

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Note C

Employee Benefits

BancShares recognized pension expense totaling $1,666 and $2,625, respectively, in the three-month periods ended March 31, 2008 and 2007.  Pension expense is included as a component of employee benefit expense.

 

		Three month periods ended March 31,
Components of Net Periodic Benefit Cost		2008				2007
Service cost		$	5,457			$	4,235
Interest cost			9,087				5,250
Expected return on assets			(12,975	)			(7,442	)
Amortization of prior service cost			97				59
Amortization of net actuarial loss			-				523
Total net periodic benefit cost		$	1,666			$	2,625

The expected long-term rate of return on plan assets for 2008 is 8.50 percent, and the assumed discount rate is 6.25 percent.

Note D

Fair Value Disclosures

BancShares adopted the provisions of SFAS No. 157 Fair Value Measurements (Statement 157) and SFAS No. 159 The Fair Value Option for Financial Assets and Liabilities (Statement 159) on January 1, 2008.

Statement 157 defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements.  Statement 157 does not require any new fair value measurements, but clarifies and standardizes some divergent practices that have emerged since prior guidance was issued.  Statement 157 creates a three-level hierarchy under which individual fair value estimates are to be ranked based on the relative reliability of the inputs used in the valuation.

Statement 157 defines fair value as the price that would be received to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, BancShares considers the principal or most advantageous market in which those assets or liabilities are sold and considers assumptions that market participants would use when pricing those assets or liabilities.  Fair values determined using level 1 inputs rely on active and observable markets to price identical assets or liabilities. In situations where identical assets and liabilities are not traded in active markets, fair values may be determined based on level 2 inputs, which exist when observable data exists for similar assets and liabilities.  Fair values for assets and liabilities that are not actively traded in observable markets are based on level 3 inputs, which are considered to be unobservable.

Among BancShares’ assets and liabilities, investment securities available for sale and an interest rate swap accounted for as a cash flow hedge are reported at their fair values on a recurring basis.  Certain other assets are adjusted to their fair value on a nonrecurring basis, including loans held for sale, which are carried at the lower of cost or market, and goodwill and other intangible assets, which are periodically tested for impairment.  Loans held for investment, deposits, short-term borrowings and long-term obligations are not reported at fair value.

For assets and liabilities carried at fair value, the following table provides fair value information as of March 31, 2008:

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		Fair value measurements at March 31, 2008 using:
Description	Fair value at March 31, 2008	Quoted prices in active markets for identical assets and liabilities (Level 1 inputs)	Quoted prices for similar assets and liabilities (Level 2 inputs)	Significant unobservable inputs (Level 3 inputs)
Assets measured at fair value	(thousands)
Investment securities available for sale	$            3,198,948	$               3,071,031	$                    79,521	$                    48,396
Liabilities measured at fair value
Cash flow hedge	8,974	-	8,974	-

Prices for US Treasury and government agency securities are readily available in the active markets in which those securities are traded, and the resulting fair values are shown in the ‘Level 1 input’ column.  Prices for mortgage-backed securities and for state, county and municipal securities are obtained for similar securities, and the resulting fair values are shown in the ‘Level 2 input’ column.  Prices for all other securities, which include a residual interest that was retained from a securitization transaction and other non-marketable investments, are determined based on various assumptions that are not observable.  The fair values for these investment securities are shown in the ‘Level 3 input’ column.  With respect to the residual interest in the asset securitization, the assumed prepayment speed, discount rate and credit spread are not observable in the market due to illiquidity and the uniqueness of the underlying assets. Non-marketable investment securities, which are carried at their purchase price, include those that may only be redeemed by the issuer.

Under the terms of the existing cash flow hedge, BancShares pays a fixed payment to the counterparty in exchange for receipt of a variable payment that is determined based on the 3-month LIBOR rate.  The fair value of the cash flow hedge is therefore based on projected LIBOR rates for the duration of the hedge, values that, while observable in the market, are subject to adjustment due to pricing considerations for the specific instrument.

For those investment securities available for sale with fair values that are determined by reliance on significant unobservable inputs, the following table identifies the factors causing the change in fair value from January 1, 2008 to March 31, 2008:

 

Description	Investment securities available for sale with fair values based on significant unobservable inputs
	(thousands)
Beginning balance, January 1, 2008	$                                    40,016
Total gains (losses), realized or unrealized:
Included in earnings
Included in other comprehensive income	411
Purchases, sales, issuances and settlements, net	7,969
Transfers in/out of Level 3	-
Ending balance, March 31, 2008	$                                    48,396

No gains or losses were reported for the three-month period ended March 31, 2008 that relate to fair values estimated based on significant unobservable inputs.

Statement 159 allows an entity to elect to measure certain financial assets and liabilities at fair value with changes in fair value recognized in the income statement each period. The statement also requires additional disclosures to identify the effects of an entity’s fair value election on its earnings.  Upon the adoption of Statement 159, BancShares did not elect to report any assets and liabilities at fair value.

 

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

 

INTRODUCTION

Management's discussion and analysis of earnings and related financial data are presented to assist in understanding the financial condition and results of operations of First Citizens BancShares, Inc. and Subsidiaries (BancShares).  This discussion and analysis should be read in conjunction with the unaudited Consolidated Financial Statements and related notes presented within this report.   Intercompany accounts and transactions have been eliminated. Although certain amounts for prior years have been reclassified to conform to statement presentations for 2008, the reclassifications have no effect on shareholders' equity or net income as previously reported.

OVERVIEW

BancShares is a financial holding company with two wholly owned banking subsidiaries: First-Citizens Bank & Trust Company (FCB), a North Carolina-chartered bank, and IronStone Bank (ISB), a federally-chartered thrift institution.  FCB operates branches in North Carolina, Virginia, West Virginia, Maryland and Tennessee.  ISB operates in Georgia, Florida, Texas, New Mexico, Arizona, California, Oregon, Washington, Colorado, Oklahoma, Missouri and Kansas.  Unless otherwise noted, the terms we, us and BancShares refer to the consolidated financial position and consolidated results of operations for BancShares.

BancShares’ earnings and cash flows are derived primarily from the commercial banking activities conducted by its banking subsidiaries.  These activities include commercial and consumer lending, deposit and cash management products, cardholder, merchant, wealth management services as well as various other products and services typically offered by commercial banks.  FCB and ISB gather interest-bearing and noninterest-bearing deposits from retail and commercial customers.  BancShares and its subsidiaries also secure funding through various non-deposit sources.   We invest the liquidity generated from these funding sources in various types of interest-earning assets such as loans and leases, investment securities and overnight investments.  We also invest in bank premises, furniture and equipment used to conduct the subsidiaries’ commercial banking business.

Various external factors influence customer demand for our loan, lease and deposit products.  In an effort to stimulate and control the rate of growth of economic activity and inflation, monetary actions by the Federal Reserve are significant to the interest rate environment in which we operate.  Interest rate decisions by the Federal Reserve have a significant impact on the pricing of and demand for loan, deposit and cash management products.

In addition to the interest rate environment, the general strength of the economy influences demand as well as the quality and collectibility of our loan and lease portfolio.  External economic indicators such as consumer bankruptcy rates and business debt service capacity closely follow trends in the economic cycle.

Although we are unable to control the external factors that influence our business, through the utilization of various liquidity, interest rate and credit risk management tools, we seek to minimize the potentially adverse risks of unforeseen and unfavorable economic trends and take advantage of favorable economic conditions when appropriate.

Financial institutions frequently focus their strategic and operating emphasis on maximizing profitability and therefore measure their relative success by reference to profitability measures such as return on average assets or return on average shareholders’ equity.  BancShares’ profitability measures have historically compared unfavorably to the returns of similar-sized financial holding companies.  Instead, we place primary emphasis upon asset quality, balance sheet liquidity and capital conservation, even when those priorities may be detrimental to short-term profitability.

Based on our organization’s competitive position and strategic focus within the financial services industry, we believe opportunities for significant growth and expansion exist.  We operate in diverse and growing geographic markets and believe that by offering competitive products and superior customer service, we can increase our business volumes and profitability.  In recent years, we have focused our efforts on customers who own their own businesses, medical and other professionals and financially active individuals.

We seek to increase fee income in areas such as cardholder and merchant services, insurance, cash management and wealth management services.  Leveraging our investments in technology, we also focus on opportunities to generate income by providing processing services to other banks.

 

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Financial Summary									Table 1
	2008		2007
	First		Fourth		Third		Second		First
	Quarter		Quarter		Quarter		Quarter		Quarter
Summary of Operations	(thousands, except share data and ratios)
Interest income	$      217,403		$      230,826		$      232,120		$      223,473		$      217,637
Interest expense	94,826		109,197		111,185		103,884		99,448
Net interest income	122,577		121,629		120,935		119,589		118,189
Provision for credit losses	10,118		11,795		17,333		934		3,532
Net interest income after provision
for credit losses	112,459		109,834		103,602		118,655		114,657
Noninterest income	83,668		76,534		77,285		72,620		69,031
Noninterest expense	145,641		146,285		146,906		142,878		138,595
Income before income taxes	50,486		40,083		33,981		48,397		45,093
Income taxes	18,101		13,920		11,362		17,546		16,109
Net income	$        32,385		$        26,163		$        22,619		$        30,851		$        28,984
Net interest income-taxable equivalent	$      124,430		$      123,666		$      122,980		$      121,409		$      119,964
Selected Quarterly Averages
Total assets	$ 16,307,994		$ 16,276,649		$ 16,092,009		$ 15,725,976		$ 15,572,613
Investment securities	3,183,636		3,272,015		3,162,011		3,047,753		3,092,261
Loans and leases	10,961,706		10,831,571		10,623,247		10,360,913		10,230,858
Interest-earning assets	14,691,141		14,655,309		14,476,247		14,118,884		13,908,622
Deposits	12,905,651		12,876,549		12,728,527		12,524,786		12,502,206
Interest-bearing liabilities	12,309,132		12,216,067		12,052,307		11,698,285		11,557,940
Long-term obligations	475,732		404,367		405,101		405,339		408,277
Shareholders' equity	$   1,466,411		$   1,420,348		$   1,385,284		$   1,353,739		$   1,323,327
Shares outstanding	10,434,453		10,434,453		10,434,453		10,434,453		10,434,453
Selected Quarter-End Balances
Total assets	$ 16,746,518		$ 16,212,107		$ 16,311,870		$ 16,008,605		$ 15,853,778
Investment securities	3,206,137		3,236,835		3,266,150		3,023,799		3,031,798
Loans and leases	11,029,937		10,963,904		10,763,158		10,513,041		10,262,356
Interest-earning assets	15,039,574		14,466,948		14,542,241		14,232,802		14,094,002
Deposits	13,226,991		12,928,544		12,980,447		12,772,322		12,722,532
Interest-bearing liabilities	12,566,799		12,118,967		12,170,559		11,830,904		11,671,127
Long-term obligations	609,335		404,392		404,266		405,314		405,356
Shareholders' equity	$   1,486,034		$   1,441,208		$   1,401,575		$   1,367,980		$   1,342,327
Shares outstanding	10,434,453		10,434,453		10,434,453		10,434,453		10,434,453
Profitability Ratios (averages)
Rate of return (annualized) on:
Total assets	0.80	%	0.64	%	0.56	%	0.79	%	0.75	%
Shareholders' equity	8.88		7.31		6.48		9.14		8.88
Dividend payout ratio	8.87		10.96		12.67		9.29		9.89
Liquidity and Capital Ratios (averages)
Loans and leases to deposits	84.94	%	84.12	%	83.46	%	82.72	%	81.83	%
Shareholders' equity to total assets	8.99		8.73		8.61		8.61		8.50
Time certificates of $100,000 or more to
total deposits	18.13		18.04		17.67		16.95		16.60
Per Share of Stock
Net income	$            3.10		$            2.51		$            2.17		$            2.96		$            2.78
Cash dividends	0.275		0.275		0.275		0.275		0.275
Book value at period end	142.42		138.12		134.32		131.10		128.64
Tangible book value at period end	132.07		127.72		123.88		120.61		118.10

 

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We attempt to mitigate certain of the risks that can endanger our profitability and growth prospects.  While we are attentive to all areas of risk, economic risk is especially problematic due to the lack of control and the potential material impact upon our financial results.  Specific economic risks include recession, rapid movements in interest rates, changes in the yield curve and significant shifts in inflation expectations.

PERFORMANCE SUMMARY

BancShares realized an increase in earnings during the first quarter of 2008 compared to the first quarter of 2007.  Consolidated net income during the first quarter of 2008 equaled $32.4 million compared to $29.0 million earned during the corresponding period of 2007.   The annualized return on average assets was 0.80 percent during the first quarter of 2008, compared to 0.75 percent during the same period of 2007.  The annualized return on average equity was 8.88 percent during 2008, unchanged from 2007.  Net income per share during the first quarter of 2008 totaled $3.10, compared to $2.78 during the first quarter of 2007, an 11.5 percent increase.

The $3.4 million or 11.7 percent earnings increase resulted primarily from a gain arising from the redemption of Visa, Inc. stock in conjunction with its initial public offering and the reversal of an accrued liability for Visa member bank liabilities established in 2007.   Significantly higher provision for credit losses reduced current period earnings.

INTEREST-EARNING ASSETS

Interest-earning assets include loans and leases, investment securities and overnight investments, all of which reflect varying interest rates based on the risk level and repricing characteristics of the underlying asset.  Riskier investments typically carry a higher interest rate, but expose the investor to potentially higher levels of default.  We have historically focused on maintaining high asset quality, which results in a loan and lease portfolio subjected to strenuous underwriting and monitoring procedures.   Our investment securities portfolio includes high-quality assets, primarily United States Treasury and government agency securities.  Generally, the investment securities portfolio grows and shrinks based on trends among loans and leases, deposits and borrowings.  When growth among deposits and borrowings exceeds loan and lease demand, we invest excess funds in the securities portfolio.  Conversely, when loan and lease demand exceeds growth in deposit and borrowings, we use proceeds from maturing securities to fund loan and lease demand. Overnight investments are selectively made with other financial institutions that are within our risk tolerance.

During the first quarter of 2008, interest-earning assets averaged $14.69 billion, an increase of $782.5 million or 5.6 percent from the first quarter of 2007.  This increase primarily reflects growth in the loan and lease portfolio.

Loans and leases.  At March 31, 2008 and 2007, loans and leases totaled $11.03 billion and $10.26 billion, respectively.  The $767.6 million or 7.5 percent growth from March 31, 2007 to March 31, 2008 resulted from growth within the commercial mortgage, revolving mortgage and commercial and industrial loan portfolios.

Commercial real estate loans totaled $4.05 billion at March 31, 2008, representing 36.8 percent of total loans and leases.  This balance represents an increase of $313.8 million or 8.4 percent since March 31, 2007.  Demand for loans secured by owner-occupied medical and professional facilities remained reasonably strong, particularly in expansion markets.  These loans are underwritten based primarily upon the cash flow from the operation of the business rather than the value of the real estate collateral.

Commercial and industrial loans equaled $1.72 billion or 15.6 percent of total loans and leases outstanding.  These loans have increased $170.4 million or 11.0 percent since March 31, 2007.  Customer demand and expansion markets have supported the growth of these loans.

At March 31, 2008, revolving mortgage loans totaled $1.52 billion, representing 13.8 percent of total loans outstanding, an increase of $219.9 million or 16.9 percent compared to March 31, 2007.  Retail customers have increased utilization of home equity loans due to lower market rates compared to other consumer debt alternatives.

Construction and land development loans totaled $817.8 million or 7.4 percent of total loans at March 31, 2008, an increase of $38.1 million or 4.9 percent since March 31, 2007.   Given the continuing softening of real estate markets, we have lessened our focus on growth of this area of lending, particularly in the Atlanta, Georgia and Southwest Florida markets.

 

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Loans and Leases					Table 2
	2008	2007
	First	Fourth	Third	Second	First
	Quarter	Quarter	Quarter	Quarter	Quarter
Real estate:	(thousands)
Construction and land development	$         817,832	$         810,818	$         816,328	$         784,960	$         779,718
Commercial mortgage	4,053,773	3,982,496	3,899,289	3,815,113	3,739,948
Residential mortgage	1,027,469	1,029,030	1,037,460	1,038,602	1,020,945
Revolving mortgage	1,521,191	1,494,431	1,454,659	1,374,212	1,301,311
Other mortgage	147,082	145,552	153,487	159,421	157,576
Total real estate loans	7,567,347	7,462,327	7,361,223	7,172,308	6,999,498
Commercial and industrial	1,721,927	1,707,394	1,615,550	1,589,519	1,551,532
Consumer	1,308,269	1,368,228	1,375,001	1,362,356	1,345,631
Lease financing	340,620	340,601	329,535	315,965	302,581
Other	91,774	85,354	81,849	72,893	63,114
Total loans and leases	11,029,937	10,963,904	10,763,158	10,513,041	10,262,356
Less allowance for loan and lease losses	141,591	136,974	133,576	129,276	132,640
Net loans and leases	$    10,888,346	$    10,826,930	$    10,629,582	$    10,383,765	$    10,129,716

We anticipate moderate growth in commercial mortgage and commercial and industrial loans in 2008, as our expansion into new markets continues to generate higher levels of loan and lease demand among our business customers.  All growth projections are subject to change as a result of economic deterioration or improvement, competitive forces and other external factors.

Investment securities.  Investment securities available for sale equaled $3.20 billion at March 31, 2008, compared to $2.93 billion at March 31, 2007.  The $264.0 million or 9.0 percent increase resulted from growth in deposits and borrowings that was not absorbed by loan and lease growth.  Available-for-sale securities are reported at their aggregate fair value.  Investment securities held to maturity totaled $7.2 million at March 31, 2008, compared to $96.8 million at March 31, 2007.  In order to augment liquidity, we continued to reinvest proceeds from maturities of held-to-maturity securities into securities designated as available-for sale.  Securities that are classified as held to maturity reflect BancShares’ ability and positive intent to hold those investments until maturity.

Income on interest-earning assets.  Interest income amounted to $217.4 million during the first quarter of 2008, a $234,000 decrease from the first quarter of 2007.  During the first quarter of 2008, the impact of lower asset yields more than offset the impact of balance sheet growth when compared to the same period of 2007.  The taxable-equivalent yield on interest-earning assets equaled 6.00 percent for the first quarter of 2008, compared to 6.38 percent for the corresponding period of 2007.

Loan and lease interest income for the first quarter of 2008 equaled $177.2 million, an increase of $564,000 from the first quarter of 2007, the combined result of lower yields offset by favorable growth in average loan and lease balances.  The taxable-equivalent yield was 6.51 percent during the first quarter of 2008, a 50 basis point reduction from the same period of 2007.  The reduced yields resulted from new loans and leases originated at current market rates and repricing of outstanding variable-rate loans.  Average loans and leases increased $730.8 million or 7.1 percent from 2007 to 2008.

 

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Investment Securities																														Table 3
		March 31, 2008																March 31, 2007
										Average				Taxable												Average				Taxable
						Fair				Maturity				Equivalent								Fair				Maturity				Equivalent
		Cost				Value				(Yrs./Mos.)				Yield				Cost				Value				(Yrs./Mos.)				Yield
		(thousands)
Investment securities available for sale:
U. S. Government:
Within one year		$	1,575,484			$	1,596,864				0/6				4.85	%		$	1,522,251			$	1,515,123				0/6				4.06	%
One to five years			1,407,293				1,443,238				1/7				3.77				1,267,976				1,268,807				1/7				4.92
Five to ten years			4,362				4,376				5/8				4.85				6,335				6,139				6/4				4.88
Over ten years			75,168				75,776				26/9				5.47				71,151				70,047				27/5				5.45
Total			3,062,307				3,120,254				1/8				4.37				2,867,713				2,860,116				1/0				5.45
State, county and municipal:
Within one year			1,072				1,075				0/6				3.81				871				870				0/3				3.02
One to five years			1,875				1,877				2/4				4.23				2,726				2,692				2/6				3.97
Five to ten years			356				373				5/0				4.95				470				476				5/11				4.90
Over ten years			66				66				20/8				4.44				211				211				24/4				3.46
Total			3,369				3,391				2/4				4.15				4,278				4,249				3/6				3.86
Other
Within one year			-				-								-				-				-				-
One to five years			-				-								-				-				-				-
Five to ten years			-				-								-				-				-				-
Over ten years			7,053				8,672				12/1				11.13				9,566				10,039				11/2				10.66
Total			7,053				8,672				11/2				11.13				9,566				10,039				11/2				10.66
Equity securities			42,714				66,631												34,297				60,591
Total investment securities
available for sale		$	3,115,443			$	3,198,948											$	2,915,854			$	2,934,995
Investment securities held to maturity:
U. S. Government:
Within one year		$	-			$	-				-				-			$	88,294			$	87,889				0/4				3.71	%
One to five years			-				-				-				-				3				3				2/11				8.00
Five to ten years			5,163				5,267				9/0				5.54	%			1,175				1,165				9/11				5.71
Over ten years			191				226				19/3				6.31				5,500				5,502				10/1				5.59
Total			5,354				5,493				9/5				5.56				94,972				94,559				1/0				3.85
State, county and municipal:
Within one year			-				-												-				-
One to five years			149				153				1/1				5.88				149				154				4/1				5.88
Five to ten years			-				-												-				-
Over ten years			1,436				1,520				10/1				6.02				1,432				1,548				12/1				6.02
Total			1,585				1,673				9/3				6.01				1,581				1,702				10/3				6.01
Other
Within one year			-				-												-				-
One to five years			250				250				0/4				3.25				250				250				1/4				3.25
Five to ten years			-				-												-				-
Total			250				250				0/4				3.25				250				250				1/4				3.25
Total investment securities
held to maturity			7,189				7,416				9/1				5.58				96,803				96,511				1/0				3.88
Total investment securities		$	3,122,632			$