SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Act of 1934
Date of Report (Date of earliest event reported): January 11, 2000
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CENTURA BANKS, INC.
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(Exact name of registrant as specified in charter)
North Carolina 1-10646 56-1688522
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(State of Incorporation) (Commission File Number) (IRS Employer Identification No.)
134 North Church Street, Rocky Mount, North Carolina 27804
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(Address of principal executive office) (Zip code)
Registrant's telephone number, including area code: (252) 454-4400
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N/A
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(Former name or former address, if changed since last report)
Exhibit Index on Page 4.
Item 5. Other Events
On January 11, 2000, Centura Banks, Inc. ("Centura") announced earnings for the
year ended December 31, 1999. Centura reported net income of $104.0 million or
$3.62 per diluted share. Before expenses totaling $8.4 million related to the
first quarter 1999 merger with First Coastal Bankshares, Inc., Centura earned
$109.6 million or $3.81 per diluted share compared to $100.3 million or $3.50
per diluted share reported for 1998.
A press release is attached as Exhibit 99.
This press release may contain various forward-looking statements that involve
risks and uncertainties that could cause actual results to differ from
estimates. A discussion of the various factors, including factors beyond
Centura's control, that could cause Centura's results to differ materially from
those expressed in such forward-looking statements is included in Centura's
filings with the Securities and Exchange Commission.
Item 7. Financial statements and Exhibits.
The exhibit listed in the Exhibit Index is filed herewith as part of this
Current Report on Form 8-K.
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.
CENTURA BANKS, INC.
Registrant
Date: January 11, 2000 By: /s/ Steven Goldstein
Steven Goldstein
Chief Financial Officer
EXHIBIT INDEX
Sequential
Page
Exhibit Description of Exhibit Number
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99 Press release dated January 11, 2000 5
For Immediate Release
January 11, 2000
For more information: Steven J. Goldstein
Chief Financial Officer
Centura Banks, Inc.
(252) 454-8356
sgoldstein@centura.com
CENTURA BANKS, INC. REPORTS FOURTH-QUARTER EARNINGS OF $1.05 PER DILUTED SHARE
Ends 1999 With Record EPS
Declares Dividend of $0.32 Per Share
ROCKY MOUNT, N.C., January 11, 2000 - Centura Banks, Inc. (NYSE: CBC)
today announced fourth quarter 1999 earnings of $29.9 million, or $1.05 per
diluted share. The fourth quarter diluted earnings per share increased 19.3
percent over the $0.88 earned in the year-ago quarter and 22.1 percent from the
$0.86 earned in the third quarter of 1999.
Centura also declared a dividend of $0.32 per share for the first
quarter of 2000, payable March 15, 2000, to shareholders of record on February
29, 2000.
The fourth quarter results produced a return on average assets of 1.32
percent and a return on average equity of 17.17 percent, compared with third
quarter 1999 ratios of 1.12 percent and 13.98 percent, respectively.
In addition, Centura's efficiency ratio declined to 56.93 percent in
the fourth quarter compared with 58.34 percent for the third quarter of 1999.
"We have been working diligently to effectively control expense growth,
and that is being reflected in our decreasing efficiency ratio," said Cecil W.
Sewell, Centura chairman and chief executive officer. "We expect this trend to
continue in the year 2000 as we finalize our in-market merger with Raleigh-based
Triangle Bancorp, Inc. and realize increased efficiencies."
"Overall, fourth quarter noninterest expense declined $5.9 million, or
7.8 percent from the third quarter, as almost every expense category declined
from the previous quarter," Sewell noted. "Approximately half of this decline,
however, was a direct result of our sale in the third quarter of CLG, Inc., our
technology equipment leasing operation, the associated expenses of which we no
longer carried in the fourth quarter.
"We also fully anticipated the associated $7.2 million decline in
noninterest income. This decline equaled about 17.4 percent, but was principally
a direct result of the third quarter sales of both CLG and our $395 million
Ginnie Mae mortgage servicing portfolio.
"Customer-focused preparations for the year 2000 resulted in some
transitory hiccups in certain financial categories as Centura, like other
financial institutions, moved to preserve liquidity to meet anticipated customer
demand for funds in the final weeks of the year," Sewell continued. "As a
result, our investment securities jumped, on average, 5.8 percent and our net
interest margin declined 9 basis points from the third quarter as Centura relied
on short-term borrowings to boost liquidity. We expect these categories to
return to normal now that our customers' Y2K concerns are being replaced by a
smooth transition into the new year."
When compared with the third quarter of 1999, average commercial loans
increased $80.3 million, representing an annualized rate of 9 percent, while the
retail loan portfolio grew at an annualized rate of 12.5 percent. The leasing
portfolio declined $96 million, principally due to the sale of CLG.
For the full-year 1999, Centura earned a record $109.6 million, or
$3.81 per diluted share, before expenses totaling $8.4 million related to the
merger with First Coastal Bankshares, Inc. In 1998, Centura earned $100.3
million, or $3.50 per diluted share. Centura completed the merger with First
Coastal during the first quarter of 1999.
At December 31, 1999, nonperforming assets totaled $31.8 million,
representing 0.54 percent of total loans and foreclosed properties compared with
$41.5 million and 0.72 percent, respectively, at September 30, 1999. The
reduction in nonperforming assets is principally the result of the collection
during the fourth quarter of $7.4 million of the
outstanding balance of the loan to Pluma, Inc., an Eden, North Carolina-based
manufacturer of fleece and jersey sportswear.
"The year 2000 represents an era of convergence for Centura," Sewell
noted."It is the beginning of a period when our strategic initiatives, products,
technologies, employees, customer relationships and insights begin to converge
into the ability to provide solutions that make a positive difference in our
customers' lives. We expect our impending merger with Triangle to accelerate
this process, providing Centura with access to 68,000 new households in key
North Carolina metropolitan areas where we already do business."
About Centura
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Upon completion of the acquisition of Triangle, expected to close
during the first quarter of 2000, Centura Banks Inc. will have assets of
approximately $11 billion. Centura provides a complete line of banking,
investment, insurance, leasing and asset management services to individuals and
businesses in North Carolina, South Carolina and Virginia. Centura's broad range
of financial solutions is provided through 228 full-service financial offices
and Centura Highway, the bank's multifaceted customer access system that
includes telephone banking, an extensive ATM network, PC banking, online bill
payment and centurahighway.com, the bank's suite of Internet products and
services. Additional information may be found on Centura's Web site at
www.centura.com.
This press release may contain various forward-looking statements. These
forward-looking statements involve risks and uncertainties and actual results
could differ from those described. A discussion of the various factors,
including factors beyond Centura's control, that could cause Centura's actual
results to differ materially from those expressed in such forward-looking
statements is included in Centura's filings with the Securities and Exchange
Commission.
FINANCIAL HIGHLIGHTS
CENTURA BANKS, INC. AND SUBSIDIARIES
Three Months Ended December 31, Year Ended December 31,
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(Dollars in thousands, except per share data) 1999 1998 Change 1999 1998 Change
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EARNINGS
Interest income $ 168,540 $ 158,137 6.6 % $ 646,559 $ 621,718 4.0 %
Interest expense 82,249 76,185 8.0 307,093 303,627 1.1
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Net interest income 86,291 81,952 5.3 339,466 318,091 6.7
Provision for loan losses 5,900 4,575 29.0 32,977 15,644 110.8
Noninterest income 34,243 36,564 (6.3) 152,693 140,521 8.7
Noninterest expense 69,675 74,919 (7.0) 302,063 290,397 4.0
Income taxes 15,040 13,625 10.4 53,091 52,257 1.6
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Net income $ 29,919 $ 25,397 17.8 % $ 104,028 $ 100,314 3.7 %
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Net interest income, taxable equivalent $ 88,154 $ 83,784 5.2 % $ 346,773 $ 325,391 6.6 %
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PER COMMON SHARE
Earnings per share - basic $ 1.06 $ 0.90 17.8 % $ 3.66 $ 3.57 2.5 %
Earnings per share - diluted 1.05 0.88 19.3 3.62 3.50 3.4
Cash dividends paid 0.32 0.29 10.3 1.25 1.14 9.6
Book value per share 24.53 23.88 2.7 24.53 23.88 2.7
Closing market price 44.125 74.375 (40.7) 44.125 74.375 (40.7)
FINANCIAL RATIOS
Return on average assets 1.32 % 1.18 % 14 bp 1.18 % 1.23 % (5)bp
Return on average equity 17.17 14.97 220 14.96 15.68 (72)
Average equity to average assets 7.71 7.86 (15) 7.89 7.82 7
AVERAGE BALANCES
Assets $ 8,961,713 $ 8,561,203 4.7 % $ 8,821,034 $ 8,185,344 7.8 %
Earning assets 8,213,144 7,813,496 5.1 8,072,713 7,470,742 8.1
Loans 5,890,907 5,591,347 5.4 5,869,276 5,377,042 9.2
Investment securities 2,247,088 2,179,818 3.1 2,145,605 2,059,250 4.2
Noninterest-bearing deposits 943,338 920,445 2.5 928,097 864,354 7.4
Core deposits 5,454,151 5,469,465 (0.3) 5,437,979 5,377,707 1.1
Total deposits 6,109,236 5,984,683 2.1 6,035,906 5,888,984 2.5
Interest-bearing liabilities 7,201,630 6,826,099 5.5 7,067,314 6,555,650 7.8
Shareholders' equity 691,128 673,130 2.7 695,557 639,787 8.7
PERIOD END BALANCES
Assets $ 9,123,248 $ 8,795,560 3.7 % $ 9,123,248 $ 8,795,560 3.7 %
Earning assets 8,372,236 8,034,316 4.2 8,372,236 8,034,316 4.2
Loans 5,979,383 5,833,670 2.5 5,979,383 5,833,670 2.5
Investment securities 2,264,865 2,161,037 4.8 2,264,865 2,161,037 4.8
Noninterest-bearing deposits 924,159 979,346 (5.6) 924,159 979,346 (5.6)
Core deposits 5,490,796 5,548,589 (1.0) 5,490,796 5,548,589 (1.0)
Total deposits 6,167,835 6,068,649 1.6 6,167,835 6,068,649 1.6
Shareholders' equity 689,725 676,205 2.0 689,725 676,205 2.0
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bp Change is measured as difference in basis points.
All prior period financial data has been restated for the "pooling" with First
Coastal Bankshares, Inc.
OTHER FINANCIAL DATA
CENTURA BANKS, INC. AND SUBSIDIARIES
Three Months Ended December 31, Year Ended December 31,
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(Dollars in thousands) 1999 1998 Change 1999 1998 Change
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SHARES OUTSTANDING
Average basic 28,187,721 28,284,084 (0.3)% 28,397,523 28,115,907 1.0 %
Average diluted 28,413,524 28,835,245 (1.5) 28,764,663 28,674,665 0.3
Outstanding at period end 28,117,897 28,318,226 (0.7) 28,117,897 28,318,226 (0.7)
COMPOSITION RATIOS (1)
Earning assets to total assets 91.65 % 91.27 % 38 bp 91.52 % 91.27 % 25 bp
Loans to earning assets 71.73 71.56 17 72.71 71.97 74
Interest-bearing liabilities to earning assets 87.68 87.36 32 87.55 87.75 (20)
Loans to total deposits 96.43 93.43 300 97.24 91.31 593
Noninterest-bearing deposits to total deposits 15.44 15.38 6 15.38 14.68 70
ALLOWANCE FOR LOAN LOSSES (AFLL)
Beginning balance $ 72,619 $ 71,390 1.7 % $ 72,310 $ 68,576 5.4 %
AFLL related to loans sold and subsidiary
sale - - - (556) - -
Provision for loan losses 5,900 4,575 29.0 32,977 15,644 110.8
Allowance of acquired financial institutions - - - 605 2,068 (70.7)
Charge-offs (5,806) (4,288) 35.4 (34,679) (17,358) 99.8
Recoveries 805 633 27.2 2,861 3,380 (15.4)
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Net charge-offs (5,001) (3,655) 36.8 (31,818) (13,978) 127.6
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Ending balance $ 73,518 $ 72,310 1.7 % $ 73,518 $ 72,310 1.7 %
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Net charge-offs to average loans(3) 0.34 % 0.26 % 8 bp 0.55 % 0.26 % 29 bp
Net charge-offs to average loans(3)(5) 0.35 0.26 9
COMPOSITION OF RISK ASSETS
Nonperforming loans $ 27,824 $ 32,293 (13.8)%
Foreclosed property 4,012 5,812 (31.0)
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Nonperforming assets $ 31,836 $ 38,105 (16.5)%
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ASSET QUALITY RATIOS (4)
Nonperforming assets to:
Loans and foreclosed property(2) 0.54 % 0.67 % (13)bp
Total assets 0.35 0.43 (8)
Nonperforming loans to total loans(2) 0.47 0.57 (10)
Allowance for loan losses to total loans(2) 1.25 1.27 (2)
Allowance for loan losses to nonperforming loans 2.64 x 2.24 x 40
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bp Change is measured as difference in basis points.
(1) Balance sheet amounts used in calculations are based on average balances.
(2) Excludes mortgage loans held-for-sale of $84.1 million and $158.8 million at
December 31, 1999 and 1998, respectively.
(3) Excludes mortgage loans held-for-sale, on average, of $73.4 and
$110.0 for the three months ended December 31, 1999 and 1998, respectively
and $96.6 and $96.3 for the years ended December 31, 1999 and 1998, respectively.
(4) Balance sheet amounts used in calculations are based on period end balances.
(5) Ratio excludes an $11.8 million isolated charge-off incurred during the
third quarter related to the Pluma credit.
All prior period financial data has been restated for the "pooling" with First
Coastal Bankshares, Inc.
OTHER FINANCIAL DATA, continued
CENTURA BANKS, INC. AND SUBSIDIARIES
Three Months Ended December 31, Year Ended December 31,
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As a Percent of As a Percent of
Average Assets (1) Average Assets(1)
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(Dollars in thousands) 1999 1998 Change 1999 1998 1999 1998 Change 1999 1998
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NONINTEREST INCOME
Service charges on deposit accounts $14,126 $13,551 4.2 % 0.63 % 0.63 % $ 54,291 $49,184 10.4 % 0.62 % 0.60 %
Credit card and related fees 2,103 1,716 22.6 0.09 0.08 8,237 6,358 29.6 0.09 0.08
Insurance and brokerage commissions 5,811 4,595 26.5 0.26 0.21 23,145 19,577 18.2 0.26 0.24
Other service charges, commissions and fees 2,788 2,964 (5.9) 0.12 0.14 11,505 11,333 1.5 0.13 0.14
Fees for trust services 2,572 2,404 7.0 0.11 0.11 10,340 9,304 11.1 0.12 0.11
Mortgage income 3,122 6,305 (50.5) 0.14 0.29 23,074 22,560 2.3 0.26 0.28
Negative goodwill amortization 334 334 - 0.01 0.02 1,337 1,337 - 0.02 0.02
Operating lease income, net 679 2,034 (66.6) 0.03 0.09 6,163 7,498 (17.8) 0.07 0.09
Other noninterest income 2,033 2,637 (22.9) 0.10 0.12 15,134 12,684 19.3 0.17 0.15
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Noninterest income, excluding securities
transactions 33,568 36,540 (8.1) 1.49 1.69 153,226 139,835 9.6 1.74 1.71
Securities gains (losses), net 675 24 2,712.5 0.03 - (533) 686 (177.7) (0.01) 0.01
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Total noninterest income $34,243 $36,564 (6.3)% 1.52 % 1.69 % $152,693 $140,521 8.7 % 1.73 % 1.72 %
==================================================================================================================================
NONINTEREST EXPENSE
Salaries and overtime $29,331 $31,740 (7.6)% 1.30 % 1.47 %$ 121,342 $117,698 3.1 % 1.38 % 1.44 %
Fringe benefits and other personnel costs 6,451 6,215 3.8 0.29 0.29 27,751 25,742 7.8 0.31 0.31
Occupancy 4,849 4,802 1.0 0.21 0.22 19,720 18,410 7.1 0.22 0.22
Equipment 4,479 5,547 (19.3) 0.20 0.26 20,279 22,225 (8.8) 0.23 0.27
Foreclosed real estate losses and related
operating expense 338 268 26.1 0.01 0.01 1,611 1,258 28.1 0.02 0.02
Marketing 509 1,659 (69.3) 0.02 0.08 6,520 9,024 (27.8) 0.07 0.11
Fees for outsourced services 3,905 3,588 8.8 0.17 0.17 14,964 13,058 14.6 0.17 0.16
Professional and legal fees 3,162 3,157 0.2 0.14 0.15 13,643 13,380 2.0 0.15 0.16
Other administrative 2,470 2,814 (12.2) 0.11 0.13 10,036 10,125 (0.9) 0.11 0.12
FDIC insurance 61 388 (84.3) - 0.02 1,169 1,617 (27.7) 0.01 0.02
Deposit intangible and goodwill amortization 2,624 2,263 16.0 0.12 0.10 10,443 8,948 16.7 0.12 0.11
Office supplies, postage and telephone l4,827 5,169 (6.6) 0.21 0.24 20,641 20,815 (0.8) 0.23 0.25
Merger-related expenses - - - - - 6,858 - - 0.08 -
Other operating 6,669 7,309 (8.7) 0.30 0.33 27,086 28,097 (3.6) 0.32 0.36
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Total noninterest expense $69,675 $74,919 (7.0)% 3.08 % 3.47 % $302,063 $290,397 4.0 % 3.42 % 3.55 %
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OTHER PERFORMANCE RATIOS
Pretax operating profit margin, excluding
merger-related expenses(2) 38.25 % 33.95 % 430 bp 34.29 % 34.31 % (2)bp
Efficiency ratio, excluding merger-
related expenses(3) 56.93 % 62.25 % (532)bp 59.10 % 62.33 % (323)bp
Net interest income analysis-taxable equivalent:
Selected average yields/rates:
Loans 8.80 % 8.81 % (1)bp 8.71 % 9.16 % (45)bp
Taxable securities 6.57 6.38 19 6.43 6.56 (13)
Tax-exempt securities 8.66 8.53 13 8.77 8.77 -
Short-term investments 5.77 4.80 97 5.54 5.24 30
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Interest-earning assets 8.16 8.13 3 8.09 8.44 (35)
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Total interest-bearing deposits 4.10 4.12 (2) 3.97 4.32 (35)
Borrowed funds 5.23 5.08 15 4.94 5.55 (61)
Long-term debt 6.09 5.60 49 5.97 5.83 14
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Total interest-bearing liabilites 4.51 4.41 10 4.35 4.63 (28)
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Interest rate spread 3.65 3.72 (7) 3.74 3.81 (7)
Net interest margin 4.23 4.26 (3) 4.29 4.37 (8)
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bp Change is measured as difference in basis points.
(1) Data presented is annualized.
(2) Sum of income before taxes plus the taxable equivalent adjustment divided by
the sum of taxable equivalent net interest income plus noninterest income.
(3) Noninterest expense divided by sum of taxable equivalent net interest income
plus noninterest income.
All prior period financial data has been restated for the "pooling" with First
Coastal Bankshares, Inc.
QUARTERLY FINANCIAL TRENDS
CENTURA BANKS, INC. AND SUBSIDIARIES
1999 1998 4th Qtr 99
--------------------------------------------- --------- vs.
Fourth Third Second First Fourth
(Dollars in thousands, except per share data) Quarter Quarter Quarter Quarter Quarter 3rd Qtr 99
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FINANCIAL SUMMARY (1)
Assets $ 8,961,713 $ 8,776,455 $ 8,774,091 $ 8,770,262 $ 8,561,203 2.1 %
Earning assets 8,213,144 8,044,674 8,022,462 8,008,631 7,813,496 2.1
Loans 5,890,907 5,863,879 5,872,026 5,849,901 5,591,347 0.5
Investment securities 2,247,088 2,124,579 2,101,580 2,107,805 2,179,818 5.8
Total deposits 6,109,236 6,012,293 6,014,766 6,006,459 5,984,683 1.6
Interest-bearing liabilities 7,201,630 7,015,865 7,015,157 7,035,344 6,826,099 2.6
Shareholders' equity 691,128 702,101 696,366 692,576 673,130 (1.6)
Total market capitalization (period end) 1,240,702 1,179,048 1,604,735 1,658,039 2,106,168 5.2
Net income 29,919 24,743 28,789 20,577 25,397 20.9
PROFITABILITY/PERFORMANCE SUMMARY(1)
Pretax operating profit margin(2) 38.25 % 30.55 % 35.56 % 33.01 % 33.95 % 770 bp
Efficiency ratio(2) 56.93 58.34 59.30 61.88 62.25 (141)
Net interest margin 4.23 4.32 4.26 4.22 4.26 (9)
Return on average assets 1.32 1.12 1.32 0.95 1.18 20
Return on average equity 17.17 13.98 16.58 12.05 14.97 319
Average equity to average assets 7.71 8.00 7.94 7.90 7.86 (29)
PER SHARE SUMMARY
Earnings per share - basic $ 1.06 $ 0.87 $ 1.01 $ 0.72 $ 0.90 21.8 %
Earnings per share - diluted 1.05 0.86 1.00 0.71 0.88 22.1
Cash dividends paid 0.32 0.32 0.32 0.29 0.29 -
Book value per share 24.53 24.51 24.16 24.30 23.88 0.1
Closing market price 44.125 41.375 56.375 58.188 74.375 6.6
KEY INTANGIBLE ASSETS (3)
Goodwill $ 114,885 $ 117,510 $ 119,651 $ 121,162 $ 102,858 (2.2)%
Mortgage servicing rights 32,303 33,422 39,673 37,468 33,464 (3.3)
ASSET QUALITY SUMMARY(3)
Nonperforming assets $ 31,836 $ 41,518 $ 59,952 $ 41,979 $ 38,105 (23.3)%
Allowance for loan losses 73,518 72,619 75,519 74,139 72,310 1.2
Nonperforming assets to total assets 0.35 % 0.47 % 0.68 % 0.48 % 0.43 % (12)bp
Allowance for loan losses to total loans(4) 1.25 1.26 1.31 1.30 1.27 (1)
Net charge-offs to average loans (4) 0.34 1.16 0.34 0.36 0.26 (82)
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bp Change is measured as difference in basis points.
(1) Balance sheet amounts are based on average balances unless otherwise noted.
(2) Excludes merger-related expenses.
(3) Balance sheet amounts are based on period end balances unless otherwise
noted.
(4) Excludes mortgage loans held-for-sale.
All prior period financial data has been restated for the "pooling" with First
Coastal Bankshares, Inc.