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): July 7, 1999
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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 July 7, 1999, Centura Banks, Inc. ("Centura") announced earnings for the
three and six month periods ended June 30, 1999. Centura reported net income of
$28.8 million or $1.00 per diluted share for the second quarter which
represented a 14.8 percent increase over 1998's second quarter net income of
$25.1 million or $0.87 per diluted share. For the six months ended June 30, 1999
and 1998, net income was $49.4 million and $48.6 million respectively, or $1.71
and $1.70 per diluted share.
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
Form 10-K for the year ended December 31, 1998 as filed 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: July 8, 1999 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 July 7, 1999 5
For Immediate Release
July 7, 1999
For more information: Steven J. Goldstein
Chief Financial Officer
Centura Banks, Inc.
(252) 454-8356
sgoldstein@centura.com
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CENTURA BANKS, INC. ANNOUNCES RECORD EARNINGS OF $1.00 PER
DILUTED SHARE FOR THE SECOND QUARTER OF 1999
ROCKY MOUNT, N.C. - Centura Banks, Inc. (NYSE: CBC) today announced record
second-quarter 1999 earnings of $28.8 million, or $1.00 per diluted share.
Earnings per diluted share increased 14.9% over the $0.87 cents earned in the
comparable prior year quarter and 11.1% over the $0.90 earned in the first
quarter of 1999 excluding nonrecurring charges.
These results produced a return on average assets of 1.32% and a
return on average equity of 16.58%, compared with first-quarter 1999 ratios of
1.20% and 15.25%, respectively, excluding nonrecurring charges.
"Our second-quarter performance reflects the successful integration of
our merger with First Coastal Bankshares, Inc., which was completed March 26,
1999," said Cecil W. Sewell, Centura chairman and chief executive officer.
"Noninterest expense savings related to the First Coastal merger exceeded our
expectations, while core banking revenue growth continued as projected, making
the acquisition accretive to earnings in the quarter immediately following the
merger.
"The efficient integration of First Coastal demonstrates Centura's
ability to execute on its stated objectives," Sewell said. "We remain solidly on
track with our strategy of creating shareholder value by conducting business as
a full-line retailer of financial services. We are executing on our commitment
to provide our customers a broad range of banking, investment and insurance
solutions in a way that adds value for our shareholders."
When compared with the first quarter of 1999, the net interest margin
improved four basis points principally due to changes in deposit pricing
resulting in a 10 basis point reduction in funding costs. Average commercial
loans increased $107 million, representing an annualized rate of 12.5%, while
the retail loan portfolio grew at an annualized rate of 12.2%. The mortgage
portfolio was reduced by $96 million from the first quarter in response to
balance-sheet repositioning in anticipation of higher interest rates and the
decrease in the mortgage pipeline. As expected, the leasing portfolio declined
$28 million, principally due to the decreased emphasis on the auto leasing
product line, which had failed to meet EVA(TM) objectives.
At June 30, 1999, nonperforming assets totaled $60.0 million,
representing 0.68% of total assets compared with $42 million and 0.48%,
respectively, at March 31, 1999. The increase is due to Centura's decision to
place on nonperforming status $23 million of loans outstanding to Pluma, Inc.,
an Eden, N.C.-based manufacturer and distributor of fleece and jersey
sportswear. "Pluma is an isolated incident," Sewell said. "While $23 million is
certainly substantial, Centura's total textile-related lending represents less
than 2% of our loan portfolio." Centura is continuing to review and evaluate
Pluma and although Centura has made provisions for this credit, it is possible
that additional provision for losses may be required in the third or fourth
quarter.
Excluding $8.4 million of nonrecurring charges related to the First
Coastal merger, Centura earned $54.8 million, or $1.90 per diluted share, for
the first six months of 1999. These earnings represent an increase of 12.9% and
11.8%, respectively, over the same period a year ago.
With assets of $8.8 billion, Centura provides a complete line of
banking, investment, insurance, leasing and trust services to individuals and
businesses in North Carolina, South Carolina and Virginia. Centura's broad range
of financial services are provided through a variety of delivery channels,
including 226 full-service financial offices, more than 240 ATMs, the Centura
Highway telephone banking center, Centura's Internet site, and through leading
online money management packages. Additional information may be found on
Centura's website at www.centura.com.
# # #
FINANCIAL HIGHLIGHTS
CENTURA BANKS, INC. AND SUBSIDIARIES
Three Months Ended June 30, Six Months Ended June 30,
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(Dollars in thousands, except per share data) 1999 1998 Change 1999 1998 Change
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EARNINGS
Interest income $ 157,982 $ 156,045 1.2 % $ 315,554 $ 305,021 3.5 %
Interest expense 73,877 76,758 (3.8) 148,662 150,256 (1.1)
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Net interest income 84,105 79,287 6.1 166,892 154,765 7.8
Provision for loan losses 6,411 3,635 76.4 12,677 7,028 80.4
Noninterest income 38,758 34,625 11.9 76,990 66,939 15.0
Noninterest expense 73,968 72,425 2.1 156,784 141,087 11.1
Income taxes 13,695 12,770 7.2 25,055 25,019 0.1
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Net income $ 28,789 $ 25,082 14.8 % $ 49,366 $ 48,570 1.6 %
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Net interest income, taxable equivalent $ 85,971 $ 81,104 6.0 % $ 170,484 $ 158,382 7.6 %
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PER COMMON SHARE
Earnings per share - basic $ 1.01 $ 0.89 13.5 % $ 1.73 $ 1.74 (0.6)%
Earnings per share - diluted 1.00 0.87 14.9 1.71 1.70 0.5
Cash dividends paid 0.32 0.29 10.3 0.61 0.56 8.9
Book value per share 24.16 22.49 7.4 24.16 22.49 7.4
Closing market price 56.375 62.500 (9.8) 56.375 62.500 (9.8)
FINANCIAL RATIOS
Return on average assets 1.32 % 1.23 % 9 bp 1.13 % 1.23 % (10) bp
Return on average equity 16.58 15.98 60 14.33 15.89 (156)
Average equity to average assets 7.94 7.73 21 7.92 7.73 19
AVERAGE BALANCES
Assets $ 8,774,091 $ 8,148,591 7.7 % $ 8,772,187 $ 7,974,296 10.0 %
Earning assets 8,022,462 7,433,697 7.9 8,015,585 7,290,999 9.9
Loans 5,872,026 5,372,738 9.3 5,861,025 5,252,490 11.6
Investment securities 2,101,580 2,032,376 3.4 2,104,675 2,006,116 4.9
Noninterest-bearing deposits 928,753 853,748 8.8 916,224 825,868 10.9
Core deposits 5,436,079 5,370,210 1.2 5,456,277 5,305,863 2.8
Total deposits 6,014,766 5,860,150 2.6 6,010,635 5,801,571 3.6
Interest-bearing liabilities 7,015,157 6,544,009 7.2 7,025,195 6,416,270 9.5
Shareholders' equity 696,366 629,539 10.6 694,482 616,528 12.6
PERIOD END BALANCES
Assets $ 8,756,753 $ 8,203,475 6.7 % $ 8,756,753 $ 8,203,475 6.7 %
Earning assets 8,013,228 7,462,508 7.4 8,013,228 7,462,508 7.4
Loans 5,841,585 5,405,440 8.1 5,841,585 5,405,440 8.1
Investment securities 2,139,312 2,031,266 5.3 2,139,312 2,031,266 5.3
Noninterest-bearing deposits 982,066 949,476 3.4 982,066 949,476 3.4
Core deposits 5,387,401 5,473,647 (1.6) 5,387,401 5,473,647 (1.6)
Total deposits 6,024,439 5,959,505 1.1 6,024,439 5,959,505 1.1
Shareholders' equity 687,643 634,798 8.3 687,643 634,798 8.3
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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 June 30, Six Months Ended June 30,
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(Dollars in thousands) 1999 1998 Change 1999 1998 Change
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SHARES OUTSTANDING
Average basic 28,462,854 28,251,597 0.7 % 28,463,663 27,965,344 1.8 %
Average diluted 28,872,807 28,816,180 0.2 28,918,942 28,545,349 1.3
Outstanding at period end 28,465,362 28,231,305 0.8 28,465,362 28,231,305 0.8
COMPOSITION RATIOS (1)
Earning assets to total assets 91.43 % 91.23 % 20 bp 91.37 % 91.43 % (6) bp
Loans to earning assets 73.19 72.28 91 73.12 72.04 108
Interest-bearing liabilities to earning as 87.44 88.03 (59) 87.64 88.00 (36)
Loans to total deposits 97.63 91.68 595 97.51 90.54 697
Noninterest-bearing deposits to total deposits 15.44 14.57 87 15.24 14.24 100
ALLOWANCE FOR LOAN LOSSES (AFLL)
Beginning balance $ 74,139 $ 71,121 4.2 % $ 72,310 $ 68,576 5.4 %
Transfer of AFLL for loans sold (100) - - (100) - -
Provision for loan losses 6,411 3,635 76.4 12,677 7,028 80.4
Allowance of acquired financial institutions - - - 605 2,068 (70.7)
Charge-offs (5,625) (4,579) 22.8 (11,491) (8,430) 36.3
Recoveries 694 1,085 (36.0) 1,518 2,020 (24.9)
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Net charge-offs (4,931) (3,494) 41.1 (9,973) (6,410) 55.6
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Ending balance $ 75,519 $ 71,262 6.0 % $ 75,519 $ 71,262 6.0 %
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Net charge-offs to average loans(3) 0.34 % 0.27 % 7 bp 0.35 % 0.25 % 10 bp
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COMPOSITION OF RISK ASSETS
Nonperforming loans $ 56,085 $ 34,295 63.5 %
Foreclosed property 3,867 6,174 (37.4)
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Nonperforming assets $ 59,952 $ 40,469 48.1 %
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ASSET QUALITY RATIOS (4) Nonperforming assets to:
Loans and foreclosed property(2) 1.04 % 0.76 % 28 bp
Total assets 0.68 0.49 19
Nonperforming loans to total loans(2) 0.97 0.65 32
Allowance for loan losses to total loans(2) 1.31 1.34 (3)
Allowance for loan losses to nonperforming loans 1.35 x 2.08 x (73)
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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 $81.0 million and $100.2 million at June 30, 1999 and 1998, respectively.
(3) Excludes mortgage loans held-for-sale, on average, of $108.0 and $104.1 for the three months ended June 30, 1999 and 1998,
respectively and $116.4 and $85.8 for the six months ended June 30, 1999 and 1998, respectively.
(4) Balance sheet amounts used in calculations are based on period end balances.
All prior period financial data has been restated for the "pooling" with First
Coastal Bankshares, Inc.
0THER FINANCIAL DATA, CONTINUED
CENTURA BANKS, INC. AND SUBSIDIARIES
Three Months Ended June 30, Six Months Ended June 30,
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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 acounts $ 13,527 $ 11,775 14.9 % 0.62 % 0.58 % $ 26,415 $ 22,564 17.1 % 0.61 % 0.57 %
Credit card and related fees 1,762 1,328 32.7 0.08 0.07 3,531 2,758 28.0 0.08 0.07
Insurance and brokerage commission 5,643 4,849 16.4 0.26 0.24 11,461 10,264 11.7 0.26 0.26
Other service charges, commissions and fees 3,213 2,884 11.4 0.15 0.14 5,999 5,241 14.5 0.14 0.13
Fees for trust services 2,743 2,400 14.3 0.13 0.12 5,182 4,500 15.2 0.12 0.11
Mortgage income 5,774 6,014 (4.0) 0.26 0.30 12,810 10,141 26.3 0.29 0.26
Negative goodwill amortization 335 335 - 0.02 0.02 669 669 - 0.02 0.02
Operating lease fees, net 1,814 2,005 (9.5) 0.08 0.10 3,628 3,710 (2.2) 0.08 0.09
Other noninterest income 3,953 3,108 27.2 0.17 0.14 6,817 6,863 (0.7) 0.16 0.18
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Noninterest income, excluding securities
transactions 38,764 34,698 11.7 1.77 1.71 76,512 66,710 14.7 1.76 1.69
Securities gains, net (5) (73) 93.2 - (0.01) 478 229 108.7 0.01 -
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Total noninterest income $ 38,759 $ 34,625 11.9 % 1.77 % 1.70 % $ 76,990 $ 66,939 15.0 % 1.77 % 1.69 %
====================================================================================================================================
NONINTEREST EXPENSE
Salaries and overtime $ 29,293 $ 29,100 0.7 % 1.34 % 1.43 % $ 61,156 $ 56,098 9.0 % 1.41 % 1.42 %
Fringe benefits and other personnel costs 7,026 6,612 6.3 0.32 0.33 14,488 13,060 10.9 0.33 0.33
Occupancy 4,863 4,509 7.9 0.22 0.22 9,958 8,904 11.8 0.23 0.23
Equipment 5,392 5,608 (3.9) 0.25 0.28 10,567 11,136 (5.1) 0.24 0.28
Foreclosed real estate losses and related
operating expense 251 232 8.2 0.01 0.01 679 725 (6.3) 0.02 0.02
Marketing 2,154 2,516 (14.4) 0.10 0.12 4,047 5,034 (19.6) 0.09 0.13
Fees for outsourced services 3,943 3,176 24.2 0.18 0.16 7,465 6,071 23.0 0.17 0.15
Professional fees 3,664 2,917 25.6 0.17 0.14 7,057 6,388 10.5 0.16 0.16
Other administrative 2,532 2,534 (0.1) 0.12 0.12 4,923 5,092 (3.3) 0.11 0.13
FDIC insurance 403 406 (0.7) 0.02 0.02 745 826 (9.8) 0.02 0.02
Deposit intangible and goodwill amortization 2,617 2,228 17.5 0.12 0.11 5,177 4,441 16.6 0.12 0.11
Office supplies, postage and telephone 5,469 5,515 (0.8) 0.25 0.27 10,587 10,037 5.5 0.24 0.25
Merger-related expenses - - - - - 6,858 - - 0.16 -
Other operating 6,361 7,072 (10.1) 0.28 0.35 13,077 13,275 (1.5) 0.30 0.34
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Total noninterest expense $ 73,968 $ 72,425 2.1 % 3.38 % 3.56 % $156,784 $141,087 11.1 % 3.60 % 3.57 %
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OTHER PERFORMANCE RATIOS
Pretax operating profit margin, excluding
merger-related expenses(2) 35.56 % 34.28 % 128 bp 34.29 % 34.26 % 3 bp
Efficiency ratio, excluding merger-
related expenses(3) 59.30 % 62.58 % (328)bp 60.58 % 62.62 % (204)bp
Net interest income analysis-taxable equivalent:
Selected average yields/rates:
Loans 8.51 % 9.20 % (69)bp 8.55 % 9.20 % (65)bp
Taxable securities 6.37 6.62 (25) 6.36 6.64 (28)
Tax-exempt securities 8.65 8.97 (32) 8.92 8.93 (1)
Short-term investments 5.29 5.16 13 5.27 4.84 43
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Interest-earning assets 7.94 8.49 (55) 7.97 8.49 (52)
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Total interest-bearing deposits 3.88 4.38 (50) 3.93 4.40 (47)
Borrowed funds 4.56 5.60 (104) 4.72 5.65 (93)
Long-term debt 5.84 5.86 (2) 5.74 5.93 (19)
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Total interest-bearing liabilities 4.20 4.69 (49) 4.25 4.70 (45)
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Interest rate spread 3.74 3.80 (6) 3.72 3.79 (7)
Net interest margin 4.26 4.35 (9) 4.24 4.34 (10)
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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 2nd Qtr 99
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Second First Fourth Third Second vs.
(Dollars in thousands, except per share data) Quarter Quarter Quarter Quarter Quarter 1st Qtr 99
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FINANCIAL SUMMARY (1)
Assets $ 8,774,091 $ 8,770,262 $ 8,561,203 $ 8,225,607 $ 8,148,591 - %
Earning assets 8,022,462 8,008,631 7,833,188 7,520,744 7,433,697 0.2
Loans 5,872,026 5,849,901 5,611,039 5,446,908 5,372,738 0.4
Investment securities 2,101,580 2,107,805 2,179,818 2,043,215 2,032,376 (0.3)
Total deposits 6,014,766 6,006,459 5,984,683 5,965,263 5,860,150 0.1
Interest-bearing liabilities 7,015,157 7,035,344 6,826,099 6,559,422 6,544,009 (0.3)
Shareholders' equity 696,366 692,576 673,130 652,202 629,539 0.5
Total market capitalization (period end) 1,604,735 1,658,039 2,106,168 1,780,108 1,764,457 (3.2)
Net income 28,789 20,577 25,397 26,347 25,082 39.9
PROFITABILITY/PERFORMANCE SUMMARY(1)
Pretax operating profit margin(2) 35.56 % 33.01 % 33.95 % 34.77 % 34.28 % 255 bp
Efficiency ratio(2) 59.30 61.88 62.25 61.87 62.58 (258)
Net interest margin 4.26 4.22 4.26 4.40 4.35 4
Return on average assets 1.32 0.95 1.18 1.27 1.23 37
Return on average equity 16.58 12.05 14.97 16.03 15.98 453
Average equity to average assets 7.94 7.90 7.86 7.93 7.73 4
PER SHARE SUMMARY
Earnings per share - basic $ 1.01 $ 0.72 $ 0.90 $ 0.93 $ 0.89 40.3 %
Earnings per share - diluted 1.00 0.71 0.88 0.92 0.87 40.8
Cash dividends paid 0.32 0.29 0.29 0.29 0.29 10.3
Book value per share 24.16 24.30 23.88 23.52 22.49 (0.6)
Closing market price 56.3750 58.1875 74.3750 63.0000 62.5000 (3.1)
KEY INTANGIBLE ASSETS (3)
Goodwill $ 119,651 $ 121,162 $ 102,858 $ 104,671 $ 105,204 (1.2)%
Mortgage servicing rights 39,673 37,467 33,464 31,473 30,179 5.9
ASSET QUALITY SUMMARY(3)
Nonperforming assets $ 59,952 $ 41,979 $ 38,105 $ 37,538 $ 40,469 42.8 %
Allowance for loan losses 75,519 74,139 72,310 71,390 71,262 1.9
Nonperforming assets to total assets 0.68 % 0.48 % 0.43 % 0.45 % 0.49 % 20 bp
Allowance for loan losses to total loans(4) 1.31 1.30 1.27 1.33 1.34 1
Net charge-offs to average loans (4) 0.34 0.36 0.26 0.29 0.27 (2)
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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.