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): October 6, 1997
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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: (919) 977-4400
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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 October 6, 1997, Centura Banks, Inc. ("Centura") announced earnings for the
third quarter of 1997. Centura's net income increased to $21.7 million
compared to $20 million for the second quarter of 1997. Fully diluted
earnings per share increased to $.82 compared to $.76 in the second quarter of
1997. A press release is attached as Exhibit 99.
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: October 6, 1997 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 October 6, 1997 5
For Immediate Release
October 6, 1997
For more information contact: Steven Goldstein
Chief Financial Officer
919-977-8356
sgoldstein@centura.com
CENTURA BANKS INC. REPORTS RECORD THIRD QUARTER EARNINGS
ROCKY MOUNT, N.C. - - Centura Banks Inc. (NYSE:CBC) announced today
record net income of $21.7 million for the third quarter of 1997. Third quarter
net income was 14.5 percent greater than the third quarter of 1996, adjusted for
the one-time Savings Association Insurance Fund (SAIF) assessment in September
1996. (Net income in the third quarter increased 47.5 percent over third quarter
1996 including the effect of the SAIF assessment.) Fully diluted earnings per
share increased to $0.82 in the third quarter of 1997 from a SAIF-adjusted $0.73
in the comparable quarter of 1996 ($0.57 including the SAIF assessment).
For the first nine months of 1997, net income was $59.6 million or 10.6
percent greater than the SAIF-adjusted net income of $53.9 million ($49.6
million after SAIF) during the first nine months of 1996.
Return on average equity increased 58 basis points from the second
quarter of 1997 to 16.6 percent, and return on average assets was 1.28 percent,
up 4 basis points from the previous quarter. The efficiency ratio continued to
improve, declining 85 basis points from the second quarter of 1997 to 6l.5
percent, and the ratio of net charge-offs to average total loans remained
constant at 26 basis points in the second and third quarters.
"The third quarter results highlight Centura's continuing commitment to
improving both the composition and quantity of net income," commented
Cecil W. Sewell, Centura's chairman and chief executive officer. "Our success
in the third quarter
CENTURA REPORTS RECORD THIRD QUARTER EARNINGS
PAGE TWO
OCTOBER 6, 1997
of integrating thirteen banking offices from BBT/UCB while controlling operating
expenses and increasing non-interest income from a variety of sources is the
best indication that we are `on track' in the implementation of our strategy."
In August Centura finalized its acquisition of thirteen offices from
BBT/UCB. Also during the quarter Centura reached agreement to purchase $22
million in deposits held by the First Union banking office in Bakersville and
announced plans to merge a local insurance agency, Betts & Company, with Centura
Insurance Services Inc.
With assets of $6.9 billion, Centura provides a complete line of
banking, investment, insurance, leasing and trust services to individuals and
businesses throughout North Carolina and the Hampton Roads area of Virginia.
Services are provided through 188 financial centers, more than 265 ATMs at
financial centers, Wal-Mart stores and Sam's stores; the Centura Highway
telephone banking center; Centura's Internet site; and through leading online
money management software packages. Additional information about Centura is
available on its web site at www.centura.com.
FINANCIAL HIGHLIGHTS
CENTURA BANKS, INC. AND SUBSIDIARIES
3 Months 3 Months 9 Months 9 Months
Ended Ended Ended Ended
Sep 30 Sep 30 Sep 30 Sep 30
(In thousands, except share and per share data) 1997 1996 Change 1997 1996 Change
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EARNINGS
Interest income $ 131,844 $ 118,995 10.8% $ 377,953 $ 346,665 9.0%
Interest expense 64,385 55,201 16.6 181,143 162,665 11.4
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Net interest income 67,459 63,794 5.7 196,810 184,000 7.0
Provision for loan losses 3,486 2,400 45.3 9,569 6,850 39.7
Noninterest income 29,923 25,132 19.1 83,104 73,544 13.0
Noninterest expense 61,169 63,573 (3.8) 179,197 172,121 4.1
Income taxes 11,027 8,237 33.9 31,594 28,957 9.1
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Net income $ 21,700 $ 14,716 47.5% $ 59,554 $ 49,616 20.0%
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Net interest income, taxable equivalent $ 69,585 $ 65,191 6.7% $ 202,632 $ 188,371 7.6%
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PER COMMON SHARE
Net income-primary $ 0.82 0.57 43.1% $ 2.26 1.91 18.3%
Net income-fully diluted 0.82 0.57 43.1 2.26 1.91 18.3
Cash dividends paid 0.27 0.25 8.0 0.79 0.75 5.3
Book value 20.45 18.04 13.4 20.45 18.04 13.4
Closing market price 55.0625 38.625 42.6 55.0625 38.625 42.6
FINANCIAL RATIOS
Return on average assets 1.28% 0.97% 31 bp 1.23% 1.13% 10 bp
Return on average shareholders' equity 16.58 12.81 377 15.83 14.81 102
Equity to assets (average) 7.70 7.59 11 7.79 7.62 17
AVERAGE BALANCES
Assets $ 6,738,633 $ 6,024,327 11.9% $ 6,461,140 $ 5,875,243 10.0%
Earning assets 6,177,675 5,544,087 11.4 5,933,940 5,411,660 9.7
Loans 4,372,404 4,097,846 6.7 4,223,754 3,958,127 6.7
Investment securities 1,771,094 1,407,955 25.8 1,679,043 1,417,816 18.4
Noninterest-bearing deposits 741,991 664,435 11.7 695,119 632,851 9.8
Core deposits 4,582,679 4,215,381 8.7 4,420,253 4,012,274 10.2
Total deposits 4,967,064 4,592,544 8.2 4,784,461 4,432,367 7.9
Interest-bearing liabilities 5,391,079 4,813,779 12.0 5,178,989 4,705,975 10.1
Shareholders' equity 519,175 457,072 13.6 503,049 447,455 12.4
PERIOD END BALANCES
Assets $ 6,891,281 $ 6,231,443 10.6% $ 6,891,281 $ 6,231,443 10.6%
Earning assets 6,227,309 5,708,257 9.1 6,227,309 5,708,257 9.1
Loans 4,511,074 4,206,297 7.2 4,511,074 4,206,297 7.2
Investment securities 1,693,347 1,478,440 14.5 1,693,347 1,478,440 14.5
Noninterest-bearing deposits 824,703 711,082 16.0 824,703 711,082 16.0
Core deposits 4,798,695 4,363,770 10.0 4,798,695 4,363,770 10.0
Total deposits 5,209,836 4,728,323 10.2 5,209,836 4,728,323 10.2
Shareholders' equity 529,464 468,383 13.0 529,464 468,383 13.0
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bp Change is measured as difference in basis points.
OTHER FINANCIAL DATA
CENTURA BANKS, INC. AND SUBSIDIARIES
3 Months 3 Months 9 Months 9 Months
Ended Ended Ended Ended
Sep 30 Sep 30 Sep 30 Sep 30
(In thousands, except share data) 1997 1996 Change 1997 1996 Change
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SHARES OUTSTANDING
Average primary 26,456,093 26,145,688 1.2% 26,346,768 26,054,116 1.1%
Average fully diluted 26,461,609 26,145,688 1.2 26,393,774 26,056,433 1.3
Outstanding 25,893,357 25,965,353 (0.3) 25,893,357 25,965,353 (0.3)
COMPOSITION RATIOS*
Earning assets to assets 91.68% 92.03% (35)bp 91.84% 92.11% (27)bp
Loans to earning assets 70.78 73.91 (313) 71.18 73.14 (196)
Interest-bearing liabilities to earning assets 87.27 86.83 44 87.28 86.96 32
Loans to total deposits 88.03 89.23 (120) 88.28 89.30 (102)
Noninterest-bearing deposits to total deposits 14.94 14.47 47 14.53 14.28 25
ALLOWANCE FOR LOAN LOSSES
Beginning balance $ 59,206 $ 58,011 2.1% $ 58,715 $ 55,070 6.6%
Provision for loan losses 3,486 2,400 45.3 9,569 6,850 39.7
Allowance of acquired financial institutions 2,410 1,240 94.4 2,410 1,240 94.4
Charge-offs (3,271) (1,953) 67.5 (10,527) (5,413) 94.5
Recoveries 451 631 (28.5) 2,115 2,582 (18.1)
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Net charge-offs (2,820) (1,322) 113.3 (8,412) (2,831) 197.1
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Ending balance $ 62,282 $ 60,329 3.2% $ 62,282 $ 60,329 3.2%
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Net charge-offs to average loans 0.26% 0.13% 13 bp 0.27% 0.10% 17 bp
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COMPOSITION OF RISK ASSETS
Nonaccrual loans $ 23,390 $ 16,489 41.9%
Restructured loans 0 609 (100.0)
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Nonperforming loans 23,390 17,098 36.8
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Foreclosed property 5,243 3,300 58.9
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Nonperforming assets $ 28,633 $ 20,398 40.4%
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ASSET QUALITY RATIOS**
Nonperforming assets to:
Loans and foreclosed property 0.36% 0.48% 15 bp
Total assets 0.42 0.33 9
Nonperforming loans to total loans 0.52 0.41 11
Allowance for loan losses to total loans 1.38 1.43 (5)
Allowance for loan losses to nonperforming loans 2.66x 3.53x (87)
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bp Change is measured as difference in basis points.
*Balance sheet amounts used in calculations are based on average balances.
**Balance sheet amounts used in calculations are based on period end balances.
OTHER FINANCIAL DATA, continued
CENTURA BANKS, INC. AND SUBSIDIARIES
3 Months 3 Months As a Percent of 9 Months 9 Months As a Percent of
Ended Ended Average Assets# Ended Ended Average Assets
Sep 30 Sep 30 ------------ Sep 30 Sep 30 --------------
(Dollars in thousands) 1997 1996 Change 1997 1996 1997 1996 Change 1997 1996
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NONINTEREST INCOME
Service charges on deposit accounts $10,744 $ 8,618 24.7% 0.63% 0.57% $ 29,588 $ 25,357 16.7% 0.61% 0.58%
Credit card and related fees 1,951 1,479 31.9 0.11 0.10 4,721 3,588 31.6 0.10 0.08
Insurance & brokerage commissions 3,305 2,702 22.3 0.19 0.18 10,086 8,149 23.8 0.21 0.19
Other service charges, commissions and fees 2,119 1,610 31.6 0.12 0.11 5,680 3,979 42.8 0.12 0.09
Fees for trust services 1,830 1,650 10.9 0.11 0.11 5,730 4,941 16.0 0.12 0.11
Mortgage income 2,801 2,708 3.4 0.16 0.18 8,268 8,895 (7.1) 0.17 0.20
Negative goodwill amortization 334 334 0.0 0.02 0.02 1,003 1,003 0.0 0.02 0.02
Operating lease fees 2,806 3,019 (7.1) 0.17 0.20 8,579 9,519 (9.9) 0.18 0.22
Other noninterest income 3,872 2,609 48.4 0.24 0.16 9,414 6,431 46.4 0.19 0.14
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Noninterest income, excluding securities
transactions 29,762 24,729 20.4 1.75 1.63 83,069 71,862 15.6 1.72 1.63
Securities gains (losses), net 161 403 (60.1) 0.01 0.03 35 1,682 (97.9) 0.00 0.04
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Total noninterest income $29,923 $25,132 19.1% 1.76% 1.66% $ 83,104 $ 73,544 13.0% 1.72% 1.67%
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NONINTEREST EXPENSE
Salaries and overtime $23,392 $21,771 7.5% 1.38% 1.44% $ 66,985 $ 64,296 4.2% 1.39% 1.46%
Fringe benefits and other personnel 5,216 5,661 (7.9) 0.31 0.37 16,536 16,364 1.1 0.34 0.37
Occupancy 3,618 3,260 11.0 0.21 0.22 10,399 9,448 10.1 0.22 0.21
Equipment 5,455 4,831 12.9 0.32 0.32 15,920 14,119 12.8 0.33 0.32
Foreclosed real estate losses and related
operating expense 265 148 79.1 0.02 0.01 987 457 116.0 0.02 0.01
Marketing 2,053 1,693 21.3 0.12 0.11 6,199 4,819 28.6 0.13 0.11
Professional fees 6,892 3,327 107.2 0.41 0.22 17,118 9,136 87.4 0.35 0.21
Other administrative 2,132 2,724 (21.7) 0.13 0.18 6,149 6,731 (8.7) 0.13 0.15
FDIC insurance 321 8,398 (96.2) 0.02 0.55 960 10,201 (90.6) 0.02 0.23
Deposit intangible and goodwill amortization 1,611 1,281 25.8 0.09 0.08 4,447 3,691 20.5 0.09 0.08
Office supplies, postage and telephone 3,946 4,037 (2.3) 0.23 0.27 12,517 11,945 4.8 0.26 0.27
Depreciation on leased equipment 1,538 2,202 (30.2) 0.09 0.15 5,345 6,587 (18.9) 0.11 0.15
Other operating 4,730 4,240 11.6 0.27 0.28 15,635 14,327 9.1 0.32 0.34
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Total noninterest expense $61,169 $63,573 (3.8)% 3.60% 4.20% $179,197 $172,121 4.1% 3.71% 3.91%
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OTHER PERFORMANCE RATIOS
Pretax operating profit margin + 35.03% 26.96% 807 bp 33.94% 31.67% 227 bp
Efficiency ratio*** 61.47% 70.38% (891)bp 62.71% 65.72% (301)bp
Net interest income analysis-taxable equivalent:
Selected average yields/rates:
Loans 9.38% 9.30% 8 bp 9.37% 9.35% 2 bp
Taxable securities 6.63 6.43 20 6.63 6.42 21
Tax-exempt securities 8.94 8.89 5 8.89 8.84 5
Short-term investments 5.23 5.74 (51) 5.38 5.03 35
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Interest-earning assets 8.59 8.56 3 8.59 8.58 1
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Total interest-bearing deposits 4.40 4.37 3 4.40 4.39 1
Borrowed funds 5.39 5.02 37 5.20 5.15 5
Long-term debt 6.95 6.12 83 6.57 6.27 30
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Total interest-bearing liabilities 4.72 4.56 16 4.66 4.62 4
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Interest rate spread 3.87 4.00 (13) 3.93 3.96 (3)
Net interest margin 4.46 4.61 (15) 4.52 4.57 (5)
================================================================================================================================
bp Change is measured as difference in basis points.
*** Noninterest expense divided by sum of taxable equivalent net interest income plus noninterest income.
+ Sum of income before taxes plus the taxable equivalent adjustment divided by the sum of taxable equivalent
net interest income plus noninterest income.
# Data presented is annualized.
QUARTERLY FINANCIAL TRENDS
CENTURA BANKS, INC. AND SUBSIDIARIES
1997 1996 3rd Qtr 97
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Third Second First Fourth Third vs.
(Dollars in thousands) Quarter Quarter Quarter Quarter Quarter 2nd Qtr 97
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FINANCIAL SUMMARY *
Assets $ 6,738,633 $ 6,453,981 $ 6,184,718 $ 6,197,670 $ 6,024,327 4.4%
Earning assets 6,177,675 5,926,035 5,692,783 5,703,321 5,544,087 4.2
Loans 4,372,404 4,188,811 4,107,133 4,181,963 4,097,846 4.4
Investment securities 1,771,094 1,710,960 1,552,675 1,491,008 1,407,955 3.5
Total deposits 4,967,064 4,725,511 4,657,405 4,723,099 4,592,544 5.1
Interest-bearing liabilities 5,391,079 5,185,562 4,955,541 4,944,155 4,813,779 4.0
Stockholders' equity 519,175 501,027 488,609 472,484 457,072 3.6
Total market capitalization (period end) 1,425,753 1,183,788 1,004,335 1,145,458 1,002,912 20.4
Net income 21,700 19,980 17,874 18,535 14,716 8.6
PROFITABILITY/PERFORMANCE SUMMARY *
Pretax operating profit margin + 35.03% 34.31% 32.37% 32.02% 26.96% 72 bp
Efficiency ratio *** 61.47 62.32 64.47 65.09 70.38 (85)
Net interest margin # 4.46 4.52 4.58 4.66 4.61 (6)
Return on average assets # 1.28 1.24 1.17 1.19 0.97 4
Return on average equity # 16.58 16.00 14.84 15.61 12.81 58
Equity to assets (average) 7.70 7.76 7.90 7.62 7.59 (6)
PER SHARE SUMMARY
Earnings per share - primary $ 0.82 $ 0.76 $ 0.68 $ 0.70 $ 0.57 7.9%
Earnings per share - fully diluted 0.82 0.76 0.68 0.70 0.57 7.9
Cash dividends paid 0.27 0.27 0.25 0.25 0.25 0.0
Book value per share 20.45 19.46 19.08 18.51 18.04 5.1
Closing market price 55.0625 45.875 39.000 44.625 38.625 20.0
KEY INTANGIBLE ASSETS **
Goodwill $ 95,012 $ 61,833 $ 63,122 $ 64,411 $ 66,348 53.7%
Deposit base premium 2,015 2,143 2,272 2,401 2,742 (6.0)
Mortgage servicing rights 28,275 23,028 21,481 21,046 19,712 22.8
ASSET QUALITY SUMMARY **
Nonperforming assets $ 28,633 $ 27,740 $ 26,768 $ 22,873 $ 20,398 3.2%
Allowance for loan losses 62,282 59,206 58,762 58,715 60,329 5.2
Nonperforming assets to total assets 0.42% 0.42% 0.42% 0.36% 0.33% 0 bp
Allowance for loan losses to loans 1.38 1.40 1.42 1.43 1.43 (2)
Net charge-offs to average loans # 0.26 0.26 0.28 0.41 0.13 0
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bp Change is measured as difference in basis points.
* Balance sheet amounts are based on average balances unless otherwise
noted. ** Balance sheet amounts are based on period end balances unless
otherwise noted.
***Noninterest expense divided by sum of noninterest income plus net interest
income, taxable equivalent basis. + Sum of income before taxes plus the
taxable equivalent adjustment divided by the sum of taxable equivalent
net interest income plus noninterest income.
# Data presented is annualized.