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 5, 1998
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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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NA
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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 5, 1998, Centura Banks, Inc. ("Centura") announced earnings for the
three and nine month periods ended September 30, 1998. Centura's net income
increased 15.8 percent to $25.1 million or $0.93 per diluted share for the three
months ended September 30, 1998 versus $21.7 million or $0.82 per diluted share
for the comparable quarter last year. Net income increased to $71.7 million or
$2.67 per diluted share for the nine months ended September 30, 1998 compared to
$59.6 million or $2.26 per diluted share for the comparable nine month period 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 5, 1998 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 5, 1998 5
For Immediate Release
October 5, 1998
For more information: Steven Goldstein
Chief Financial Officer
252-454-8356
sgoldstein@centura.com
CENTURA BANKS INC. REPORTS RECORD THIRD QUARTER EARNINGS
ROCKY MOUNT, N.C. - Centura Banks Inc. (NYSE:CBC) announced today net
income of $25.1 million for the third quarter of 1998, an increase of 15.8
percent over the third quarter of 1997. Diluted earnings per share in the
third quarter increased to $0.93 compared to $0.82 for the comparable quarter of
1997.
Net income was $71.7 million for the first nine months of 1998, an
increase of 20.3 percent from the first nine months of 1997. Return on average
assets improved three basis points from the second quarter of 1998 to 1.31
percent while the efficiency ratio improved 50 basis points to 61.52 percent.
Noninterest income increased 6.4 percent from the second to third
quarter and represents 31.2 percent of total revenues on a taxable equivalent
basis. Average loans outstanding increased at an annual rate of 7.2 percent and
average noninterest bearing deposits increased at an annual rate of 12.8 percent
during the third quarter.
"We are very pleased with our record third quarter financial results,"
said Cecil W. Sewell, Centura chairman and chief executive officer. "In
particular, we are pleased with the continued growth of noninterest income as a
percentage of total revenues, which included an increase in deposit and mortgage
service fees. The dramatic increase in deposit fees was the direct result of the
realignment of Centura's product offering during the third quarter, which
provided our customers with a broader array of prices, services and delivery
channels to meet their individual financial objectives. The third quarter
results reaffirm our strategic intent to be the primary provider of financial
services for each customer by building ourselves as a full-line retailer of
banking, investment and insurance services."
With assets of $7.8 billion, Centura provides a complete line of
banking, investment, leasing, insurance and trust services to individuals and
businesses throughout North Carolina, South Carolina and the Hampton Roads
region of Virginia. Services are provided through 211 full-service financial
service offices; more than 315 ATMs at financial centers, Wal-Mart stores and
Sam's outlets; Centura Highway; Centura's Internet site; and through Quicken(R),
Quickbooks(R), Microsoft(R) Money, and BankNow(TM), the leading online money
management software packages. Additional information about Centura is available
on its website at www.centura.com.
###
FINANCIAL HIGHLIGHTS
CENTURA BANKS, INC. AND SUBSIDIARIES
Three Months Ended September 30, Nine Months Ended September 30,
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(Dollars in thousands, except per share data) 1998 1997 Change 1998 1997 Change
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EARNINGS
Interest income $ 147,170 $ 131,844 11.6% $ 427,933 $ 377,953 13.2%
Interest expense 70,508 64,385 9.5 206,231 181,143 13.8
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Net interest income 76,662 67,459 13.6 221,702 196,810 12.6
Provision for loan losses 4,041 3,486 15.9 11,069 9,569 15.7
Noninterest income 35,641 28,385 25.6 100,724 77,759 29.5
Noninterest expense 70,223 59,631 17.8 202,996 173,852 16.8
Income taxes 12,904 11,027 17.0 36,695 31,594 16.1
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Net income $ 25,135 $ 21,700 15.8% $ 71,666 $ 59,554 20.3%
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Net interest income, taxable equivalent $ 78,513 $ 69,585 12.8% $ 227,170 $ 202,632 12.1%
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PER COMMON SHARE
Earnings per share-basic $ 0.95 $ 0.84 13.1% $ 2.72 $ 2.31 17.7%
Earnings per share-diluted 0.93 0.82 13.4 2.67 2.26 18.1
Cash dividends paid 0.29 0.27 7.4 0.85 0.79 7.6
Book value 23.28 20.45 13.8 23.28 20.45 13.8
Closing market price 63.0000 55.0625 14.4 63.0000 55.0625 14.4
FINANCIAL RATIOS
Return on average assets 1.31% 1.28% 3 bp 1.29% 1.23% 6 bp
Return on average shareholders' equity 16.45 16.58 (13) 16.42 15.83 59
Average equity to average assets 7.95 7.70 25 7.84 7.79 5
AVERAGE BALANCES
Assets $ 7,630,774 $ 6,738,633 13.2% $ 7,445,842 $ 6,461,140 15.2%
Earning assets 6,951,132 6,177,675 12.5 6,777,642 5,933,940 14.2
Loans 4,991,800 4,372,404 14.2 4,853,438 4,223,754 14.9
Investment securities 1,933,096 1,771,094 9.1 1,896,724 1,679,043 13.0
Noninterest-bearing deposits 856,126 741,991 15.4 820,719 695,119 18.1
Core deposits 5,028,351 4,582,679 9.7 4,940,268 4,420,253 11.8
Total deposits 5,560,743 4,967,064 12.0 5,443,800 4,784,461 13.8
Interest-bearing liabilities 6,044,908 5,391,079 12.1 5,926,261 5,178,989 14.4
Shareholders' equity 606,270 519,175 16.8 583,710 503,049 16.0
PERIOD END BALANCE
Assets $ 7,804,848 $ 6,891,281 13.3% $ 7,804,848 $ 6,891,281 13.3%
Earning assets 7,126,805 6,227,309 14.4 7,126,805 6,227,309 14.4
Loans 5,012,758 4,511,074 11.1 5,012,758 4,511,074 11.1
Investment secuties 2,094,469 1,693,347 23.7 2,094,469 1,693,347 23.7
Noninterest-bearing deposits 895,160 824,703 8.5 895,160 824,703 8.5
Core deposits 5,064,655 4,798,695 5.5 5,064,655 4,798,695 5.5
Total deposits 5,568,980 5,209,836 6.9 5,568,980 5,209,836 6.9
Shareholders' equity 618,388 529,464 16.8 618,388 529,464 16.8
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bp Change is measured as difference in basis points.
OTHER FINANCIAL DATA
CENTURA BANKS, INC. AND SUBSIDIARIES
Three Months Ended September 30, Nine Months Ended September 30,
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(Dollars in thousands) 1998 1997 Change 1998 1997 Change
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SHARES OUTSTANDING
Average basic 26,549,022 25,842,902 2.7% 26,364,975 25,779,234 2.3%
Average diluted 27,030,789 26,415,293 2.3 26,873,328 26,303,968 2.2
Outstanding at period end 26,560,264 25,893,357 2.6 26,560,264 25,893,357 2.6
COMPOSITION RATIOS *
Earning assets to total assets 91.09% 91.68% (59)bp 91.03% 91.84% (81)bp
Loans to earning assets 71.81 70.78 103 71.61 71.18 43
Interest-bearing liabilities to earning assets 86.96 87.27 (31) 87.44 87.28 16
Loans to total deposits 89.77 88.03 174 89.16 88.28 88
Noninterest-bearing deposits to total deposits 15.40 14.94 46 15.08 14.53 55
ALLOWANCE FOR LOAN LOSSES
Beginning balance $ 66,991 $ 59,206 13.1% $ 64,279 $ 58,715 9.5%
Provision for loan losses 4,041 3,486 15.9 11,069 9,569 15.7
Allowance of acquired financial institutions - 2,410 (100.0) 2,068 2,410 (14.2)
Charge-offs (4,636) (3,271) 41.7 (13,034) (10,527) 23.8
Recoveries 709 451 57.2 2,723 2,115 28.7
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Net charge-offs (3,927) (2,820) 39.3 (10,311) (8,412) 22.6
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Ending balance $ 67,105 $ 62,282 7.7% $ 67,105 $ 62,282 7.7%
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Net charge-offs to average loans 0.31% 0.26% 5 bp 0.28% 0.27% 1 bp
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COMPOSITION OF RISK ASSETS
Nonperforming loans $ 28,453 $ 23,390 21.6%
Foreclosed property 3,631 5,243 (30.7)
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Nonperforming assets $ 32,084 $ 28,633 12.1%
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ASSET QUALITY RATIOS **
Nonperforming assets to:
Loans and foreclosed property 0.64% 0.63% 1 bp
Total assets 0.41 0.42 (1)
Nonperforming loans to total loans 0.57 0.52 5
Allowance for loan losses to total loans 1.34 1.38 (4)
Allowance for loan losses to nonperforming loans 2.36 x 2.66 x (0.3) x
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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
Three Months Ended September 30, Nine Months Ended September 30,
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As a Percent of As a Percent of
Average Assets* Average Assets*
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(Dollars in thousands) 1998 1997 Change 1998 1997 1998 1997 Change 1998 1997
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NONINTEREST INCOME
Service charges on deposit accounts $ 12,786 $ 10,744 19.0% 0.66% 0.63% $ 34,909 $ 29,588 18.0% 0.63% 0.61%
Credit card and related fees 2,333 1,951 19.6 0.12 0.11 5,927 4,721 25.5 0.11 0.10
Insurance and brokerage commissions 4,718 3,305 42.8 0.25 0.19 14,982 10,086 48.5 0.27 0.21
Other service charges, commissions and fees 2,838 2,119 33.9 0.15 0.12 7,595 5,680 33.7 0.14 0.12
Fees for trust services 2,400 1,830 31.2 0.12 0.11 6,900 5,730 20.4 0.12 0.12
Mortgage income 4,691 2,801 67.5 0.24 0.16 12,516 8,268 51.4 0.22 0.17
Negative goodwill amortization 334 334 - 0.02 0.02 1,003 1,003 - 0.02 0.02
Operating lease fees, net 1,754 1,268 38.3 0.09 0.08 5,464 3,234 69.0 0.10 0.07
Other noninterest income 3,446 3,872 (11.0) 0.18 0.24 10,858 9,414 15.3 0.19 0.19
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Noninterest income, excluding securities
transactions 35,300 28,224 25.1 1.83 1.66 100,154 77,724 28.9 1.80 1.61
Securities gains, net 341 161 111.8 0.02 0.01 570 35 1,528.6 0.01 -
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Total noninterest income $ 35,641 $ 28,385 25.6% 1.85% 1.67% $100,724 $ 77,759 29.5% 1.81% 1.61%
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NONINTEREST EXPENSE
Salaries and overtime $ 28,119 $ 23,392 20.2% 1.46% 1.38% $ 80,529 $ 66,985 20.2% 1.45% 1.39%
Fringe benefits and other personnel costs 5,941 5,216 13.9 0.31 0.31 18,050 16,536 9.2 0.32 0.34
Occupancy 4,084 3,618 12.9 0.21 0.21 11,794 10,399 13.4 0.21 0.22
Equipment 5,191 5,455 (4.8) 0.27 0.32 15,711 15,920 (1.3) 0.28 0.33
Foreclosed real estate losses and related
operating expense 336 265 26.8 0.02 0.02 930 987 (5.8) 0.02 0.02
Marketing 2,165 2,053 5.5 0.11 0.12 6,815 6,199 9.9 0.12 0.13
Fees for outsourced services 3,399 2,215 53.5 0.18 0.13 9,470 5,888 60.8 0.17 0.12
Professional fees 3,712 4,677 (20.6) 0.19 0.28 9,836 11,230 (12.4) 0.18 0.23
Other administrative 2,110 2,132 (1.0) 0.11 0.13 7,000 6,149 13.8 0.13 0.13
FDIC insurance 338 321 5.3 0.02 0.02 1,041 960 8.4 0.02 0.02
Deposit intangible and goodwill amortization 2,243 1,611 39.2 0.12 0.09 6,684 4,447 50.3 0.12 0.09
Office supplies, postage and telephone 5,396 3,946 36.8 0.28 0.23 15,040 12,517 20.2 0.27 0.26
Other operating 7,189 4,730 52.0 0.37 0.27 20,096 15,635 28.5 0.36 0.32
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Total noninterest expense $ 70,223 $ 59,631 17.8% 3.65% 3.51% $202,996 $173,852 16.8% 3.65% 3.60%
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OTHER PERFORMANCE RATIOS
Pretax operating profit margin ** 34.94% 35.58% (64)bp 34.72% 34.58% 14 bp
Efficiency ratio *** 61.52% 60.87 65 bp 61.91% 62.00% (9)bp
Net interest income analysis-taxable equivalent:
Selected average yields/rates:
Loans 9.22% 9.38% (16)bp 9.24% 9.37% (13)bp
Taxable securities 6.64 6.63 1 6.64 6.63 1
Tax-exempt securities 8.74 8.94 (20) 8.88 8.89 (1)
Short-term investments 5.86 5.23 63 5.43 5.38 5
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Interest-earning assets 8.50 8.59 (9) 8.51 8.59 (8)
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Total interest-bearing deposits 4.33 4.40 (7) 4.34 4.40 (6)
Borrowed funds 5.25 5.39 (14) 5.26 5.20 6
Long-term debt 6.22 6.95 (73) 6.49 6.57 (8)
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Total interest-bearing liabilities 4.61 4.72 (11) 4.64 4.66 (2)
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Interest rate spread 3.89 3.87 2 3.87 3.93 (6)
Net interest margin 4.48 4.46 2 4.45 4.52 (7)
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bp Change is measured as difference in basis points.
* Data presented is annualized.
** Sum of income before taxes plus the taxable equivalent adjustment divided
by the sum of taxable equivalent net interest income plus noninterest
income.
*** Noninterest expense divided by sum of taxable equivalent net interest
income plus noninterest income.
QUARTERLY FINANCIAL TRENDS
CENTURA BANKS, INC. AND SUBSIDIARIES
1998 1997 3rd Qtr 98
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Third Second First Fourth Third vs.
(Dollars in thousands, except per share data) Quarter Quarter Quarter Quarter Quarter 2nd Qtr 98
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FINANCIAL SUMMARY *
Assets $ 7,630,774 $ 7,530,503 $ 7,171,199 $ 7,016,355 $ 6,738,633 1.3%
Earning assets 6,951,132 6,839,222 6,538,033 6,416,636 6,177,675 1.6
Loans 4,991,800 4,905,005 4,659,863 4,562,210 4,372,404 1.8
Investment securities 1,933,096 1,909,105 1,847,024 1,824,878 1,771,094 1.3
Total deposits 5,560,743 5,439,886 5,328,216 5,240,681 4,967,064 2.2
Interest-bearing liabilities 6,044,908 6,000,169 5,730,250 5,603,768 5,391,079 0.7
Shareholders' equity 606,270 584,778 559,568 531,935 519,175 3.7
Total market capitalization (period end) 1,673,297 1,658,538 1,892,382 1,784,504 1,425,753 0.9
Net income 25,135 24,054 22,477 23,504 21,700 4.5
PROFITABILITY/PERFORMANCE SUMMARY *
Pretax operating profit margin *** 34.94% 34.66% 34.52% 34.44% 35.58% 28 bp
Efficiency ratio + 61.52 62.02 62.22 61.90 60.87 (50)
Net interest margin 4.48 4.43 4.43 4.51 4.46 5
Return on average assets 1.31 1.28 1.27 1.33 1.28 3
Return on average equity 16.45 16.50 16.29 17.53 16.58 (5)
Equity to assets (average) 7.95 7.77 7.80 7.58 7.70 18
PER SHARE SUMMARY
Earnings per share - basic $ 0.95 $ 0.91 $ 0.87 $ 0.91 $ 0.84 4.4%
Earnings per share - diluted 0.93 0.89 0.85 0.89 0.82 4.5
Cash dividends paid 0.29 0.29 0.27 0.27 0.27 -
Book value per share 23.28 22.22 21.62 20.82 20.45 4.8
Closing market price 63.0000 62.5000 71.2500 69.0000 55.0625 0.8
KEY INTANGIBLE ASSETS **
Goodwill $ 104,671 $ 105,204 $ 107,293 $ 106,108 $ 97,027 (0.5)%
Mortgage servicing rights 31,197 29,917 28,147 28,238 28,275 4.3
ASSET QUALITY SUMMARY **
Nonperforming assets $ 32,084 $ 33,418 $ 33,199 $ 27,877 $ 28,633 (4.0)%
Allowance for loan losses 67,105 66,991 66,828 64,279 62,282 0.2
Nonperforming assets to total assets 0.41% 0.44% 0.44% 0.39% 0.42% (3)bp
Allowance for loan losses to total loans 1.34 1.36 1.38 1.40 1.38 (2)
Net charge-offs to average loans 0.31 0.28 0.25 0.22 0.26 3
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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.
*** Sum of income before taxes plus the taxable equivalent adjustment divided
by the sum of taxable equivalent net interest income plus noninterest
income.
+ Noninterest expense divided by sum of taxable equivalent net interest income
plus noninterest income.